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Earl Ferrers: My Lords, will the Minister be kind enough to explain that point again? He keeps talking in acronyms. I do not know whether he is saying PTEs, PTAs or what; I do not understand them either.

Lord Davies of Oldham: My Lords, I apologise to the noble Earl. There is a great danger in the interests of making the speech in the time that I am allowed to use those symbols familiar to all of us involved with the industry. I recognise that I owe the House the courtesy of explaining the acronym. I am talking now about the passenger transport executives. I am referring to PTEs, and I am sorry if my enunciation is not as precise as it should have been. I hope that the noble Earl will forgive me.

The measures in the Bill do not mean that the passenger transport executives can never be co- signatories to franchise agreements or that they will be immediately removed from the current franchises. However, it is right that PTEs should be co-signatories only where their role clearly contributes to the White Paper aims of driving up performance and controlling costs.

In relation to London, the Bill will give the Mayor a greater role. It replaces the Mayor's ability to issue directions and guidance to the Strategic Rail Authority with a duty on the Secretary of State to consult Transport for London before issuing an invitation to tender. As with the passenger transport executives, Transport for London would be able enter into agreements with franchised train operators, subject to the Secretary of State's agreement. This could include being party to franchise agreements.

London has by far the most extensive and complex public transport network in Britain. There is potentially much to gain from better integration
 
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within and between different forms of transport. That is why the White Paper also identified some specific London issues. The Government have set up a working group to explore these issues, including rationalising fare structures and ticketing technology across different forms of transport; and whether the Mayor should be given a greater role in relation to services and infrastructure that operate only within London. These issues are being considered and no decision has been taken.

We are also looking at the options in terms of giving Transport for London a role on the rail network in an area slightly beyond the Greater London Authority boundary. Passenger transport executives already have a role up to 25 miles outside their area. I assure your Lordships that no decision will be taken on the matter without full consultation with the Greater London Authority and neighbouring local and regional bodies.

However, if it is decided that Transport for London should have a role outside London, the Bill includes provision to require the Mayor to appoint two additional members to the TfL board to represent the interests of rail passengers outside Greater London.

I turn to the parts of the Bill that move safety regulation from the Health and Safety Commission to the Office of Rail Regulation. The proposal has been warmly welcomed by those in the industry, stakeholder groups and in the other place. I would like to make a commitment that there will be no reduction in safety standards or loss of expertise as a result of the move. I know that that is a most important issue with regard to the railways.

The board of the Office of Rail Regulation has begun thinking about how the organisation should be structured when it becomes both safety and economic regulator. The ORR has published its initial thoughts: copies are available in the Library; and it will begin wider consultation shortly.

I would now like to touch on an issue to which I have not so far referred: the reform of the Rail Passengers' Council. Under the Bill the RPC would be established as a single national body reporting to the Secretary of State and the federal structure of the regional committees would be dissolved. The railway industry has changed and we want to see a strong voice within industry representing passengers. We want the Rail Passengers' Council to provide this, but currently there is very little public awareness of its work.

More than 90 per cent of passengers do not know that the RPC exists. The changes proposed in the Bill will allow the Rail Passengers' Council to address this and create a more effective organisation. The current chair, Stewart Francis, has announced plans to reform the structure of the council. The Government support his proposals and he is currently working to deliver them. But he continues to welcome the views of interested parties on the future direction of the new organisation.

Around a third of the clauses in the Bill refer to network modifications. That aspect of the Bill has led to cries in some places of "Beeching mark 2" and
 
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suspicion that there is a hidden agenda for widespread closures. I should like to reassure the House that that is simply not the case. There is no secret agenda of closures and it is certainly difficult to hide 22 clauses in the Bill.

The changes to the current closure procedures set out in the Bill are mostly a result of the other changes to organisations and structures that I have already discussed. Under the current system the Strategic Rail Authority has an important role to play. With its abolition, and the greater level of devolution in relation to rail, changes have to be made. The dissolution of the rail passengers' committees also means that changes are needed.

As part of these we are moving away from a test based on passenger hardship towards an appraisal taking account of a broader range of factors, similar to other transport appraisals. Guidance on this will be produced by the Secretary of State and Scottish Ministers. The Bill does not set out the contents of the guidance. However, we have indicated that it is intended that proposers of closure will be required to undertake an assessment based on the standard approach for assessing value for money for transport projects and policies, covering environmental, economic and safety issues, accessibility and integration. The effects on passengers will be a key part. Compliance with the guidance will be assessed by the independent regulator.

The Bill ensures that people's rights to be consulted if a proposal affects them will be maintained. That would include train and freight operators and there continues to be a strong role for the passenger voice, since the Rail Passengers' Council will be a statutory consultee. Ministers have provided the House with their initial views of what could be included in the guidance and, as required by the Bill, there will be full consultation before it is finalised.

I should now like to talk briefly about the aspect of the Bill that refers to buses. Under the Bill we are increasing the scope for passenger transport authorities to introduce bus franchising in their areas. Under the current legislation PTAs can introduce bus quality contracts only as a means of implementing their bus strategy. The Bill widens this to allow them to consider bus franchising for the substitution of rail services.

This will give the passenger transport authorities greater flexibility to make choices about the balance of local transport provision in their area. They will have the right to buy additional rail services or reduce rail services in their areas and retain the savings to invest in other priorities.

There is one element of the work underway to encourage local transport authorities to develop quality contract schemes. For instance, from March the minimum time between making a scheme and bringing it into force will be reduced from 21 months to six months.

I mentioned that Network Rail will become more directly responsible for the day-to-day running of the railway, including operating the network, and for its performance.
 
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This is not in the Bill, but it is important to see the Bill in the context of the wider work that is under way in this respect. Network Rail is starting to work more closely with train operators to deliver a more reliable service for passengers. It has set up a number of joint control centres together with train operators, in order to work more closely together to improve day-to-day operations and quickly recover normal services following disruption.

Network Rail is a private company, but it operates in the public interest in accordance with the terms of its network licence and of its contracts with train operators. In particular, condition 7 of its licence requires Network Rail to operate, maintain, renew and enhance the network in a timely, efficient and economical manner so as to satisfy the reasonable requirements of its customers and funders. Network Rail's delivery of those requirements is monitored, and where necessary enforced, by the Office of Rail Regulation.

As part of the reforms set out in the rail White Paper, Network Rail will be taking over responsibility for preparing route utilisation strategies which are currently produced by the SRA. The purpose of these strategies is to study those parts of the network where capacity is currently under pressure, or may come under pressure in the future, and to identify how to make the best possible use of the available capacity in the public interest. The strategies look around 10 years ahead. The Office of Rail Regulation intends to bring forward an amendment to Network Rail's licence, in order to ensure proper governance of this crucial new role.

As I said in my opening remarks, the railways are not just about passengers. The transport of freight by rail can bring real benefits. Efficient freight transport is essential to our economy and to our prosperity. There is not a huge amount in the Bill about freight, but there does not need to be. Freight is rightly a matter for the private sector. Nothing in this Bill overrides the contractual rights of freight operators. The Government's role is to ensure that the right environment exists for freight operators and their customers to be confident about investing in rail freight. The Government have worked closely with the industry and the regulator to agree the basis for long-term access contracts and greater certainty about rights of access to the network.

The Office of Rail Regulation is now consulting on proposals for access contracts for freight operators of up to 10 years. That will help to provide the increased stability and certainty that rail freight needs in order to continue to thrive in the future.

Taken together, the changes laid out in this Bill and the other steps outside legislation that the Government are taking to implement the rail White Paper will deliver a robust structure that will stand the test of time. Ultimately, the increased investment and improved structures will deliver stability for all those involved in the industry. That in turn will deliver what people really want—improved performance. Passengers should come
 
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first. We believe that these are the right changes and that they will lead to better performance and a better service for all rail users. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Davies of Oldham.)

1.22 p.m.

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