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Commons Chamber

Volume 335: debated on Monday 19 July 1999

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House Of Commons

Monday 19 July 1999

The House met at half-past Two o'clock

Oral Answers To Questions

Defence

The Secretary of State was asked—

European Security

1.

What recent contacts he has had with his opposite number in Russia to discuss issues of European security. [90196]

I have recently written to Marshal Sergeyev, the Russian Defence Minister, to reinforce a long-standing invitation to visit the United Kingdom. I very much hope that we will soon be able to discuss European security issues face to face. Meanwhile, NATO and Russian troops co-operate closely in Kosovo.

Does my right hon. Friend agree that Russia was, is, and will be a great European power, so we need the warmest of relationships with that country; that we must continue ministerial and military contacts with our opposite numbers in Russia at the highest level, to build that relationship; and that, over the long term, we must find a way of building Russia into the European security architecture? The Government can deliver that, unlike the Conservatives, with their puerile hostility to anything to do with Europe, who have absolutely no locus standi in the matter. That was not Russian, by the way.

I am grateful for my hon. Friend's interpretation. I agree that it is important to build Russia into the crucial future relationships in our continent. Contacts at the highest level may be temporarily on the wane, but I hope that they will shortly recover. Thanks to your initiative, Madam Speaker, we had the International Affairs Committee of the Russian Duma here, and its members visited me at the Ministry of Defence. The Duma's Veterans Committee visited my hon. Friend the Under-Secretary, and I met Mr. Vladimir Lukin, Chairman of the Russian Duma's International Affairs Committee, when he attended the opening of the Scottish Parliament on 1 July. All those contacts are invaluable, as indeed are the initiatives for which we have been responsible.

I want to tempt the Secretary of State still further on the amalgamation of the Western European Union with the European Union. If such a policy proceeds, where does that leave Russia as a member of Partnership for Peace, with its association with NATO; where does it leave the 28 associate members of the Western European Union that are not full members of the EU or members of NATO; and where does it leave the four neutral countries—Austria, Sweden, Finland and Ireland—whose neutrality, which they are determined to preserve, will be forfeit if the WEU is amalgamated into the EU? What is the Government's clear policy?

We are not talking about amalgamation. The EU, through a strengthened common foreign and security policy, will be better suited to the present climate if it has a better military capability that allows it to take effective decisions with a military connection. That may mean that the WEU's political elements are brought more within the orbit of the EU. In the military sphere, NATO will retain primacy, and the military elements of the WEU might well find a home within the European security and defence identity of NATO, but we have made it absolutely clear that there will be no discrimination against those powers that are part and parcel of the European security family. Finding a place for the EU powers that are not in NATO and for the NATO powers that are not in the EU, and dealing with Russia, will be among the bigger challenges facing us in the future as Europe comes to terms with the challenges ahead.

Shoeburyness

2.

What area of land will become available for development in consequence of the sale of the Shoeburyness barracks and the reorganisation of the New Ranges in Shoeburyness. [90197]

The whole of the Old Ranges and Horseshoe barracks, Shoeburyness, including Gunners park, will be sold later this year. The joint planning brief approved by Southend-on-Sea borough council is not specific in terms of areas to be allocated for development.

The Defence Evaluation and Research Agency has let its new partnership contract for the New Ranges to SERCO Ltd. Under the contract, both parties will work together to identify and introduce new businesses that can co-exist with the continuing range activities. We do not currently anticipate releasing any of the existing estate as part of the process.

As the land available for development will be substantial and there will be a dramatic effect on the community in Shoeburyness, will the Minister do what he can to ensure that the local community is kept advised of developments? In particular, will he consider making it a condition of the sale of the barracks and of the contract with SERCO for the New Ranges that there should be full public consultation and possibly public meetings, simply to let the community know what is planned and what is likely to happen?

We certainly want to ensure community participation. That is precisely why we have had discussions with the local council, which has made some useful suggestions. It would obviously be for the council, along with ourselves, to undertake wider public consultation and spread information, which is very desirable when, as the hon. Gentleman rightly says, major changes are taking place as a result of the change of use in the area.

Eurofighter

3.

What is his current estimate of the total United Kingdom contribution to the Eurofighter project; and what was the estimate when the project was first commissioned. [90198]

The UK's estimated share of the procurement cost for Eurofighter at the start of development in 1988 amounted to £13.5 billion at current prices, and the present estimate is £16.1 billion, also at current prices.

Does my hon. Friend recall that the Select Committee on Defence said that the Government's control of large projects was financially weak in every respect? The overspend on the Eurofighter project alone amounted to £1.5 billion in January—half the total overspend on large projects of £3 billion—and now my hon. Friend has identified a further overspend on it of £3 billion. The project has been successful as a job creation programme, but the aeroplane might be only as successful in operation as the Apache helicopters were in Kosovo.

Is not it time to reconsider the project? Given that the new German Government appear to be having second thoughts about it, will my hon. Friend live up to his statement, made in the booklet "Modernising Defence", that every pound should count? Will he apply the same financial control to the Eurofighter project as he does to smaller projects? Will he assure the House that, if Germany pulls out of the project, Britain will not take on any additional financial share, and that no commitment will be made to building any more than the 232 fighters already commissioned?

First, my hon. Friend should not believe every report in the newspapers, not least because Germany has a production contract. We believe that Eurofighter is the aircraft best suited to our needs, in terms both of cost and operational effectiveness.

Secondly, with regard to the increasing costs, I draw my hon. Friend's attention to the National Audit Office report on major projects. It stated:
"Most of the costs escalation is not new, having occurred in the earlier stages of the development programme, and the cost escalation has slowed as the development programme has matured."
With smart procurement, that trend will continue.

The conflicts in the Falklands, Iraq and the Balkans have demonstrated that air superiority is the crucial determinant of success in modern warfare. Will the Minister confirm that the Royal Air Force will still procure 232 Eurofighters, and that there will be no degradation of the aeroplane's specifications? Will he also confirm that the Eurofighter will be given the most modern air-to-air weapons at the earliest possible date?

I can certainly confirm the orders that we have placed. Also, we consider that the Eurofighter will be a major addition to the capability of the Air Force. As the hon. Gentleman knows, we are at present holding a competition to ensure that our Eurofighters—and those of our partner nations—have the most effective equipment and weapons systems.

Is my hon. Friend aware that, at the general election, the Conservative party stated that a Labour Government would not go ahead with ordering the Eurofighter? Is it not a tribute to the fact that the Government keep their promises that the order has gone ahead?

Does my hon. Friend recognise that 14,000 jobs will depend on the order, and that the Royal Air Force is satisfied with the aircraft's capability and is convinced that it is needed by the UK military?

I thank my hon. Friend, and congratulate him on his hard work for those of his constituents who work for British Aerospace. I recall the scare stories put about at the time of the election, and the sterling work undertaken shortly after we came to power by my right hon. Friends the Secretary of State and the Prime Minister to ensure that the Eurofighter contract was signed. Production work is now proceeding satisfactorily: when the aircraft is in service, it will provide a welcome addition to the Air Force's capability.

Will the Minister give the Eurofighter's in-service date? In view of the German Government's obvious wobble with regard to the Eurofighter project, what does he suggest would be the minimum number of aircraft that need to be built to maintain the programme's viability?

The Horizon project has been cancelled already, thus ending the joint frigate initiative. The state of the Eurofighter project casts further doubt on whether there really is a European commitment to defence, and puts all the eggs back into the basket that is the American defence industry. Does the Minister agree that Secretary-General Solana should be given the resources to carry out a comprehensive, Europe-wide defence review to determine the respective commitments of Britain and Europe to NATO in the future?

I find that question extraordinary. We expect the project to be delivered to the Royal Air Force in mid-2002. In spite of earlier difficulties, the project is working well. There have been serious expressions of interest from Norway and Greece, and a major platform is being developed in European countries. The project is a success of European collaboration, and I am surprised that the hon. Gentleman's attitude is so negative.

We must consider how best to achieve the cost benefits of collaboration in defence procurement, and how to act consistently with the principles of smart procurement. That is the route to success on a European defence initiative, both in policy and military terms, and for the European defence industry. That is why we signed the statement of intent, and why we are progressing sensible programmes, such as the pan-European programme. We are also considering how to draw on work already done in order to advance further successful programmes, as with the type 45.

Given that senior politicians in Germany have expressed doubt over their future participation in the Eurofighter project, does the Minister believe that tomorrow's launch by the UK and Italian Governments of a bid to speed up creation of a pan-European defence force is a touch premature? Does he accept that, unless there are firm commitments for increased expenditure by our European partners, plans for European defence co-operation will be ineffective and meaningless because we will still have to rely on American assets for our operations?

I am not sure whether the hon. Gentleman wants the Eurofighter project to succeed or fail. We want it to succeed, and that is why the Secretary of State, the Prime Minister and others made such intense efforts to ensure that the production contract went ahead. We believe that matters are moving well, and we have had no indication from the German Government of any change to the contract that they have signed. The European security and defence initiative is vital to Britain and Europe playing their parts in an effective NATO alliance, and it is welcomed both here and in the United States.

Cadet Forces

4.

If he will increase the level of funding for cadet forces. [90201]

The Government are fully committed to the cadet forces. As I have already announced, we are increasing our expenditure on the cadet forces by £3 million over the next four financial years. Up to £12 million is also being made available to provide necessary alternative accommodation for those units affected by Territorial Army restructuring.

Does the Minister accept that there has been a steady decline in the number of cadets in recent years? Does he accept that in real-terms funding, £3 million over four years is not a lot? Does he agree that the cadet movement is a recruiting ground for the armed forces? As recruitment is not currently hitting the required targets, does he agree that more investment in our cadets would mean more people entering our armed forces, as well as dovetailing with the policies of the Secretary of State for Education and Employment on the new deal and on wider education, and with the Home Secretary's policies on tackling youth crime, as it would provide young people with more productive ways to occupy their time?

I am glad to hear the hon. Gentleman identify exactly the position reached by the Government in the strategic defence review. We recognise the historic importance of the cadets, the value of continuing their activities and recruitment, and the need to add extra money to the cadet budget so that the service may develop for the good of both the community and the armed forces.

The Minister seems content to believe that the closure of 87 Territorial Army centres across Britain will have no effect on the cadet force. On 31 March 1998, there were 124,752 cadets in the UK. How many are there today?

I will be happy to look at the precise figures. I again assure the House that, when the Territorial Army restructuring was introduced—that exercise was widely welcomed and has been a success—an absolute guarantee was given that the same level of provision for cadets would be available after the restructuring as before it.

Iraq

5.

How many British service personnel are currently involved in helping to patrol the no-fly zones in northern and southern Iraq. [90202]

We currently have just over 1,000 British service personnel involved in the mission in support of United Nations Security Council resolution 688 to prevent Saddam' s air force from persecuting the Kurds and Shi'a Muslims of northern and southern Iraq.

Does my right hon. Friend agree that we should not forget the very difficult task that those Air Force pilots are performing in protecting the no-fly zones? Will my right hon. Friend assure the House that every check and balance has been put in place to ensure that pilots are targeting only those targets that would secure the no-fly zones, and that every effort is being made to protect innocent Iraqi civilians and Air Force pilots?

I can give that assurance. British and American responses to attacks on alliance planes are strictly limited to proportionate defensive action against Iraqi weapons and facilities that pose a threat to our aircraft.

Let me be blunt: Saddam is out to kill our pilots and navigators. That has been his relentless intention since the end of Operation Desert Fox. More than 190 Iraqi aircraft have violated the no-fly zones and there have been more than 260 other direct threats against our aircrews, including missile attacks and heavy anti-aircraft artillery fire. Saddam has even offered a bounty for shooting down an aircraft. So long as Saddam and his forces continue to threaten the lives of our aircrews, we reserve the right to take action in self defence—and we will continue to do so.

In turning once again to this important unfinished business, will the Secretary of State confirm whether there is any intention to withdraw British forces from the operation? Does he agree that it is in Britain's national interest that there should be stability in the area? Does he further agree that, in addition to targeting British pilots, Saddam and his regime are responsible for killing large numbers of Iraqi people on the ground—and that is why we are there? Given that Saddam is still killing—indeed, executing—100 people a week in southern Iraq alone, does that not justify our continued presence in the area on behalf of the United Nations?

The hon. Gentleman is absolutely right. We have no intention of giving up what is an essentially humanitarian mission to protect people who have been relentlessly attacked by Saddam in the past and who would be attacked again in the future if we were to leave the area.

Our aircrews patrol the no-fly zones daily in the humanitarian interests of the people on the ground and, day by day, our aircrews are under attack. They take their lives in their hands when they conduct those missions. Our aircrews exhibit professionalism and skill, and they should receive the backing of the whole country—as I am sure they do.

If the reports are true, one certainly regrets the loss of any civilian lives arising from the attacks. Can more be done to get the point across in the middle east about why we are involved in the no-fly zones, why the patrols began and why it is necessary that they continue? Is it not the case—as the Opposition spokesman, the hon. Member for Salisbury (Mr. Key), pointed out—that Saddam Hussein is a most notorious mass murderer and is about the last person on earth from whom we should take lectures about the loss of innocent lives?

We take great care over the targeting that is involved in these missions. We would regret any loss of civilian lives, but we should treat with great caution reports emanating at any time from Saddam's propaganda machine about possible civilian casualties. In fact, Saddam has resorted recently to indiscriminate fire using surface-to-surface rockets as improvised antiaircraft weapons and is putting civilians on the ground at risk. Some of the casualties that he has reported occurred on days when allied planes did not fly, and they were undoubtedly caused by some of his troops on the ground. As I say, when he stops trying to kill our aircrew, we shall no longer have any reason to act against the missile sites that cause the problem.

The Secretary of State is well aware that I support the Government's tough line on Saddam Hussein, but I am doubtful about the efficacy of air power alone in combating his chemical and biological warfare capabilities. In the light of the lessons of the conflict in Kosovo, and the limitations shown by that conflict as to the ability of air power alone to ensure the destruction of individual, hardened targets, has the Secretary of State made any reassessments? What lessons has he drawn on the efficacy of using air power alone to degrade Saddam Hussein's chemical and biological warfare capabilities?

The campaign in Kosovo showed the potential of air power and the potential of the precision attacks that took place there. In many ways, those precision attacks were modelled on what we had to do in the no-fly zones when allied aircraft came under attack. We have to combine the policing of the no-fly zones with a robust diplomatic offensive. That is why Britain has tabled a draft resolution in the United Nations Security Council, co-sponsored by Argentina, Bahrain, Brazil, the Netherlands and Slovenia. That shows how the UN could respond, and respond robustly, to the three reports that were commissioned by the Security Council—the first on a re-engagement with Iraq; the second on humanitarian help to Iraqi people; and the third on the more serious attention that should be given to those people from Kuwait who are still missing after the Gulf war.

Aircraft Carriers

6.

What progress has been made in his Department's plans to procure two new aircraft carriers. [90204]

Bids have been received from two industrial teams for the next phase of the programme, which will develop overall design proposals. The bids are currently being evaluated and contract placement is planned for this autumn. The procurement strategy thereafter sees bids for the demonstration and manufacture phase scheduled for 2003; contract placement will then take place in 2004, following ministerial decision. As part of that, on 16 August, Mr. Ali Baghaei will be appointed as the integrated project team leader for the project. We have made it clear to the teams that the ships will be built in British yards. We will be in a position to make a further statement on the project in the autumn.

I very much welcome my hon. Friend's statement that future carriers will be built in a British yard. Will he confirm that Kvaerner Govan will be able to compete, along with other UK yards, for the work to build those carriers? Does he agree that, until those carriers are built, it is vital that we maintain the present condition of our aircraft carriers? Will he join me in praising the high standard of workmanship of the work force at Rosyth royal dockyard, who are currently carrying out a refit on HMS Ark Royal? Is that not a clear lesson that it is in the interests of the people of Scotland to remain part of the United Kingdom if they want to secure a future for their yards?

I thank my hon. Friend for that well-made last point. I join her in welcoming the announcement last week on the future of Kvaerner Govan and the tremendous work that is being undertaken by the work force, the companies and our colleagues in the Scottish Office. She rightly drew attention to the fact that Kvaerner Govan is one of the potential yards for the future carrier. However, I must mention that there are other contenders—Harland and Wolff, Barrow, Cammell Laird at Birkenhead and Swan Hunter.

I join my hon. Friend in her tribute to the work at Rosyth on the refit of Ark Royal. That demonstrates, once again, the considerable shipbuilding and ship-repairing skills of this country; they will provide a strong future for the industry and for the Royal Navy.

The Minister will recall that, under the strategic defence review, the Government announced that the Invincible class carriers would be replaced with two new carriers in 2012 and 2015. Is that still the Government's intention? What sort of aircraft is it intended to fly from those carriers?

Yes, I can confirm that that is still our intention and that it is consistent with the dates I announced previously. There are several potential contenders for the aircraft: the joint strike fighter, an updated Harrier, a Rafale, a navalised Eurofighter or an F18. All of them are currently being evaluated for a future decision.

You will be aware, Madam Speaker, that I represent part of Portsmouth where we have a great interest in the two new aircraft carriers—not in building them, but in maintenance and berthing. Is my hon. Friend the Minister aware of the excellent facilities in Portsmouth? He will know of the firm FSL—Fleet Support Ltd.—which he managed to formulate by a shrewd decision early last year involving Vosper Thornycroft and GEC. We are very capable of looking after the carriers in the long term and we wish good luck to the company that gets to build them.

Perhaps, Madam Speaker, you would like to add to your duties that of chief auctioneer receiving bids on this matter. My hon. Friend the Member for Dunfermline, West (Ms Squire) and my hon. Friend the Member for Portsmouth, North (Mr. Rapson) rightly draw attention to the excellent facilities and the supremely skilled work forces in both their local facilities and others around the country. We are lucky to have them, and they will all be evaluated in future for construction, maintenance and refit purposes.

Kosovo

7.

What assessment he has made of the effectiveness of European defence co-operation during the Kosovo campaign. [90205]

15.

What assessment he has made of the effectiveness of European defence co-operation during the Kosovo campaign. [90214]

Throughout the campaign, European defence co-operation was excellent and Europeans are now providing 85 per cent. of KFOR personnel. However, Kosovo has highlighted areas where European collective capabilities can and should be improved. The European defence initiative that we launched last autumn foresaw those requirements and is intended to address them.

I am grateful to the Secretary of State for his answer: the lessons of Kosovo are clearly crucial to the future of European defence co-operation. Does he agree with Jamie Shea that NATO knew about the nuclear bunkers and deception tactics used by the Serbian army, the effect of which was to protect much of its equipment from the effects of the NATO air strikes? Given that the battle damage assessments that were made public at the time were widely regarded as over-optimistic, and in light of the knowledge that Jamie Shea claims NATO possessed, what effect did NATO's private assessment have on its judgment of the situation on the ground?

It was not only Jamie Shea who knew about the bunkers and the deceptions practised by the Yugoslav troops: it had been known for many years that they were part and parcel of Tito's tactics against any potential Warsaw pact invasion, so it was hardly news that they were in use. However, the fact is that, if the tanks were hidden and only decoys were on the surface, there would be much less violence against civilians and property. The relentlessness of the attacks by allied air forces increasingly drove the Serb troops into the bunkers where they could cause far less damage than if they had remained on the surface.

As for battle damage assessment, we divulged at the time what we knew—what was apparent to us from the distance at which we had to operate. There is currently a NATO team in the area evaluating the damage, and it would be wiser to wait and see what it produces than to jump to any conclusions now. The answer to the question of how much damage we caused to Milosevic's military machine can be summed up in one simple word: enough.

From a rather intriguing document, "Preliminary Thoughts on Kosovo", which represents a recent speech by the Secretary of State, we learn much about history: we learn about what NATO did not do and how NATO came through the Kosovo conflict strengthened, despite public opinion in Greece and Italy; and we learn how wonderful the Germans were. However, we skim over the fact that more than 80 per cent. of the air power was provided by the United States.

What sort of operation does the right hon. Gentleman think that Europe could have carried out without the United States, given that he says in the document how far Europe has come in responding to conflicts on its doorstep? Secondly, what exactly is he looking for when he mentions that we have some way to go before we have as robust a European defence policy as he would like?

The answer to the second question is the answer to the first one. I hope that we would not need the Americans to supply more than 80 per cent. of our air power in such a situation. They were generous and we should give them appropriate credit for their presence and willingness to take on the expense and risks. That is clearly one of the lessons that we must learn in considering how Europe might build its capabilities for the future.

Collectively in Europe, we have far too few air systems that can deliver precision-guided weapons, which are the weapons for the future. The European defence initiative must clearly address itself to that.

I did not skim over what Europe needs to do. It is one of the fundamental planks of the European defence initiative, on which we feel very strongly but which, it appears, the Opposition think is simply part and parcel of a European crusade.

Amnesty International claims in a letter to me that the United Kingdom Government are planning to deploy 17-year-olds as part of the international peacekeeping force in Kosovo. I do not know whether that is so, but the United Nations guidelines are very clear. They say that the minimum age for peacekeepers should be 18, and preferably 21. Is this really the policy of the Ministry of Defence?

The UN guidelines make it clear that they apply only to conscripts and not volunteers. We seek parental permission for those under the age of 18 who might be deployed as peacekeepers. The British armed forces recruit at that age because we hope to train the youngsters and give them the professionalism and skills for which our troops are known, although we are very sensitive to possible deployments. I repeat that the UN guidelines, to which my hon. Friend draws attention, apply to conscripts and not volunteers.

Have all the offers of troops for KFOR been fulfilled?

Increasingly, they are being fulfilled. Not all of them are in place, but very large numbers of troops are moving into position and, as times goes on, I have no doubt that they will replace British troops. A wide range of countries, inside and outside NATO, are offering troops. We will gradually build the force to 50,000 by autumn, which was the KFOR-plus target established by NATO.

Given that this is the last Defence questions before the likely disbandment of the 5th Airborne Brigade, may I take this opportunity to invite the Secretary of State to pay tribute to it, its leader, Brigadier Adrian Freer, and the 1st Battalion Parachute Regiment, which has done a very effective job in Kosovo?

Will the Secretary of State recognise the grave outrage in Aldershot at the idea that young paratroopers who are trying to enforce peace in Kosovo may be charged with murder? Finally, is he really convinced that the new 16th Air Assault Brigade will be able to do the job that the 5th Airborne Brigade would have been called on to do had it been required to fight in Kosovo?

Yes, of course. The component parts believe that they will be able to do so, and with renewed strength. Of course I pay tribute to the 5th Airborne Brigade and the headquarters, which were present for the initial search inside Kosovo, but are now back home. I pay tribute particularly to Brigadier Adrian Freer, who attracted international attention with his discussion with Russian troops at Pristina airport. No one who saw the pictures of the Paras, the Gurkhas and the Irish guards going into Kosovo on 12 June, on the day of the Queen's official birthday parade in Horse Guards, will ever forget that moment. No one who has flown by helicopter across that route and seen the dangerous circumstances into which they went will doubt their courage and professionalism. No one who met them in Pristina performing a range of duties will question in any way the versatility of the paratroopers, or of any of those who are serving with KFOR in the British sector.

Are we wrong to suppose that NATO went to war, and a mighty army was deployed, all in the cause of combating ethnic cleansing? Therefore, what can be done about the brutal ethnic cleansing currently going on of Serbs and gypsy people? What on earth is to be done about that?

The 19 countries of NATO took military action because there was no other alternative in stopping the systemic genocidal killing being perpetrated by the Serb military inside Kosovo—which had led to the expulsion of almost 1 million people of Kosovar extraction from Kosovo itself. I regret it if some of the Kosovar Serbs are being intimidated into leaving their country. I understand that the number of Kosovar Serbs leaving their country has declined, and that some people of Serb extraction are now going back to Kosovo—as they are encouraged to do.

As distinct from the killers among the Serb battalions who drove the Albanians out, the forces of NATO—KFOR, under General Jackson—have made it absolutely clear that they are evenhanded and will treat alike those who are intimidating the Serbs and those who are intimidating the Albanians. That is the standard that we have established, and I hope that it is a standard that will survive for a long time to come.

The Secretary of State seems to be in danger of contradicting himself. During the campaign, he said quite clearly that a part of its purpose was to debilitate or even to destroy Milosevic's war machine in Kosovo and elsewhere. However, just now, in answer to my hon. Friend the Member for Buckingham (Mr. Bercow), the Secretary of State said that everyone in NATO, including himself, had known about the Serbs' nuclear bunkers and various techniques to hide their equipment and create decoys, so that NATO aircraft would strike the wrong targets. If they knew all that, why did NATO—with the Secretary of State's approval—raise expectations during the conflict of success in destroying Serb army targets, such as tanks and artillery?

We were aware of possible techniques that might be used by Serb forces inside Kosovo. However, from the very beginning, we spoke about NATO's objectives being very precisely to disrupt the violence going on inside Kosovo and to weaken the military machine that was causing that violence. From day one of the conflict, and throughout it, that is what we sought to do. Ultimately, as a consequence of the action that we took, Milosevic capitulated. All of the Serb troops—over 40,000 of them—and all of the armour that they had in Kosovo was taken outside Kosovo. The refugees are back home; NATO is in there. That is a success by any standard that one might care to mention. I wish that all those—the dismal Jimmies—who are determined to drag defeat from the jaws of victory would recognise that.

There may well be lessons to be learned—there will be lessons learned—but there has been a huge success, as any person of Albanian extraction inside Kosovo will be happy to tell the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith).

The Secretary of State is very quick to refer to anyone who asks questions as a dismal Jimmy, but surely the point is that the Government seem incapable of accepting that there are questions legitimately requiring an answer. The Government behave as though they are utterly infallible and incapable of any difficulties or problems. However, the Secretary of State will have to answer those questions.

A report, for example, states that NATO's ramped-up target and achievement levels appeared at about the time that the No. 10 Downing street press secretary and other political spokesmen arrived at NATO. Will the Secretary of State say, once and for all, whether there was any connection between the upping of achievement levels and the need to win a propaganda war?

The hon. Gentleman takes the conspiracy theory to a ludicrous extent if he suggests that Mr. Alastair Campbell was single-handedly in charge of the achievement levels inside Kosovo. We shall see in due course what damage was done to the Serb army. I can only tell the hon. Gentleman, as General Jackson would tell him, that we did sufficient damage, whether inside Kosovo or inside Yugoslavia generally, to cause Milosevic to capitulate and to take out all of his troops.

I do not deny the hon. Gentleman the right to ask questions. Indeed, he has every right to do so. There are questions that we shall ask and lessons that we shall learn from events in Kosovo. Some of them will be in the defence White Paper that will be published in the autumn. Some of them will emerge from the reviews that will take place by the Select Committees on Defence and on Foreign Affairs. I am not afraid about that.

However, instead of nit-picking over how many tanks we killed, we should reflect on the fact that if tanks were being hidden or substituted by decoys that were blown up, they were not causing the violence which, in the early days of the conflict, led to thousands of people being killed and even larger numbers being expelled.

Bosnia

9.

How many British troops are currently deployed in Bosnia. [90207]

The UK contributes about 4,500 personnel to SFOR, of whom about 3,500 are based in Bosnia.

Does my right hon. Friend agree that the only way in which we can reduce overstretch is to reduce the level of our overall commitments? When does he hope for a reduction in Bosnia, which is now relatively peaceful? When does he hope to announce a cut in numbers in Kosovo now that KFOR is virtually in place?

My hon. Friend is right to point to the success in Bosnia, which I hope will allow us to draw down some of our troops later this year. That will have an impact on the present strain on our armed forces. My hon. Friend is right also to say that we must examine carefully our commitments to Kosovo. The improvements in the security situation there and the continuing arrival in theatre of troops from other nations make it possible for me to announce some further withdrawals of British troops from Kosovo.

Between August and October, we shall be bringing home the 1st Parachute Regiment, the 1st Royal Gurkha, Rifles and the Irish Guards battle groups, together with their supporting elements. These withdrawals, along with withdrawals of units of the Royal Air Force and the Royal Navy which were announced last month, will go a long way to help relieve the overstretch in the armed forces. Further withdrawals, including that of the headquarters of the Allied Command Europe rapid reaction corps, will of course follow.

Will the Secretary of State confirm that even if all the withdrawals that he mentioned go ahead, welcome as they are, there will still be substantially more service personnel in the Balkans now than there were 18 months ago? Will he further confirm that the Government when in opposition having attacked the levels of overstretch that pertained at the end of the previous Government's administration, tour intervals in the infantry, the engineers and the cavalry are now at the worst levels since data began to be collected?

I confirm that there are more troops in the Balkans now than there were 18 months ago. That is pretty well self-evident. Troop numbers were quite high in Bosnia and we have put extra troops into Kosovo. I do not think that anybody among our armed forces or anyone in the House would suggest that because we had a degree of over-commitment before we should not have risen to the challenge that Milosevic posed in his genocidal violence inside Kosovo.

We must now move rapidly to reduce our commitment in as many areas as practicable, and that is precisely what I have said. We look to bringing more troops out of Bosnia because of an improvement in the security situation there. We shall reduce the number of our troops in Kosovo. All of that will contribute to bringing back the problem about tour levels to a position that will be more satisfactory for our troops and for us in the Ministry of Defence. Those are of enormous priority to us. They not only impact on our fighting forces and their efficiency, but they affect the individuals themselves and their families and, having met a number of service families recently, I know how important that is. That is why we are making it an absolute priority when we study the commitments that we have taken on and that we should have taken on.

Church Commissioners

The hon. Member for Middlesbrough, representing the
Church Commissioners, was asked—

Church Land

33.

What is his estimate of the income from rental for Church land for each of the last two years for which figures are available. [90232]

Mr. Stuart Bell
(Second Church Estates Commissioner, representing the Church Commissioners)

Income from the Church Commissioners' agricultural and mineral holdings was £8.6 million in 1997 and £9.9 million in 1998. A large part of the increase was due to accounting changes. Those relate to the commissioners' insurance provision for their agricultural estates.

Is it not a matter of thanks and congratulations to hon. Members that, for ethical reasons, none of those sums will in future be invested in British Aerospace—something that hon. Members have requested for several Parliaments? In addition, are any Church lands under cultivation for genetically modified foods or will they be?

I am grateful to my hon. Friend. Since the inception of the commissioners' ethical investment policy in 1948, they have never held shares in a company whose main business is defence. In view of the proposed sale of Marconi Defence Systems Ltd.—the defence arm of GEC—to British Aerospace, the Church of England's ethical investment working group has recommended to the central investing bodies that they should not retain the shares that are acquired in the new British Aerospace as a result of the sale, as its main business is defence.

On the second question, the growing of genetically modified crops requires, by law, a licence from the Ministry of Agriculture, Fisheries and Food. No licences have to date been granted to grow such crops on the commissioners' agricultural land, but it would be difficult in practice to stop our farmers growing GM crops should they wish to do so. All our farmers have freedom of cropping and any attempt by the commissioners to prevent a tenant growing GM crops might be challenged in the courts.

As the hon. Member for Newport, West (Mr. Flynn) mentioned genetically modified crops, does the Second Church Estates Commissioner agree that it is important to find out whether GM crops have any deleterious effect on people's health or any adverse effects on the environment? Therefore, it is important to have test crop trials to find out the results. While it would be wrong to introduce the commercial growing of GM crops now, test trials organised by licence through the Ministry of Agriculture, Fisheries and Food would be perfectly ethical whether on Church land or not.

I am grateful to the hon. Gentleman for his question. The issue is indeed complex and requires careful and reasoned evaluation. We have received from MAFF a proposal to lease land from the commissioners to research the growing of GM crops under closely controlled conditions. Due to the circumstances surrounding the lease of that land, the decision about the proposed use will rest with the commissioners. The ethical investment working group, on which the archbishops' council is represented, will consider that proposal at a meeting later this month. The points that the hon. Gentleman made are those that will be fully considered at that meeting.

Public Accounts Commission

The Chairman of the Public Accounts Commission
was asked—

Archway Tower

35.

What discussions he has had with the National Audit Office on the resource implications of examining public expenditure on Archway tower, N19. [90235]

The commission meets regularly with the Comptroller and Auditor General to discuss the adequacy of the resources allocated by Parliament to the work of the National Audit Office. The Comptroller and Auditor General audits the accounts of the property advisers to the civil estate, which is the agency responsible for the management of Archway tower and other vacant government property. In 1997, he published a report on the agency's management of vacant office accommodation throughout the United Kingdom, which recommended various ways of minimising the costs incurred. Although that report did not specifically examine the agency's management of Archway tower, I would be happy to pass on any concerns that my hon. Friend may have on that subject to the Comptroller and Auditor General.

I am grateful to my right hon. Friend for his reply and for what he said about passing information on to the Comptroller and Auditor General. I am concerned that a building that has been leased by the public sector—on a long lease to the Department of Social Security at a rent of £1 million a year—after being built by it has been empty for at least the past five years. The net cost to the public has been £1 million a year and, although £5 million has now been spent on refurbishing the building, I understand that the expected rent income will not meet even the existing cost to the public sector of that rent. The public sector has been ripped off and we are throwing good money after bad.

Will the Comptroller and Auditor General seriously consider the massive waste of public money on a building that is unsuitable and disliked locally? It would be better to pull down this expensive white elephant and turn it into something much more useful.

I can confirm that the Comptroller and Auditor General naturally is interested in the matter. Negotiations on the terms of the lease have been protracted, but they are to be concluded shortly. There will be some sub-letting, which will of course provide some income to offset some of the costs to which my hon. Friend refers.

While the Chairman of the Public Accounts Committee is looking into the issue of the Archway tower, will he look into the issue of the Millennium tower at Portsmouth—

Church Commissioners

The hon. Member for Middlesbrough, representing the
Church Commissioners, was asked—

Ethical Investment

36.

If he will make a statement on the effectiveness of the Church Commissioners' ethical investment policy. [90236]

Mr. Stuart Bell
(Second Church Estates Commissioner, representing the Church Commissioners)

The Church Commissioners' ethical investment policy, which has been in operation for more than 50 years, is directed at raising standards in corporate life and encouraging business to develop codes of practice that place high standards of ethical excellence at the heart of corporate vision, thinking and strategy. While following that policy, the commissioners' investment returns have over the past five years exceeded their financial targets and significantly outperformed the pension funds world market all-funds benchmark.

I am grateful for that reply. Can the hon. Gentleman assure the House that the Church Commissioners have no current investments in any country that has been severely criticised in an Amnesty International report which it has neither rebutted nor addressed? If he cannot give me and the House such an assurance, what steps are they taking to ensure that in future their hands are entirely clean?

The wages of virtue have been mentioned; they are certainly greater than the wages of sin. Labour Members, and the Church Commissioners, are happy to be on the side of the angels. I will give the hon. Gentleman a written reply on his specific question. However, the commissioners' present policy excludes about 10 per cent. of the United Kingdom stock market and a smaller proportion of world markets. To exclude a greater proportion could imbalance the portfolio, incurring increased risk as well as adversely affecting financial performance. The question of the export of defence equipment to various parts of the world is often raised. When the Prime Minister raised it and took a question about East Timor on "Question Time", he had a sandwich thrown at him. The House is a little bit more decorous in that regard and I shall give the hon. Gentleman a full response to his specific point.

I wonder whether the ethical investments of the Church of England are being more closely monitored than the ethical investments of the Tory party, which is getting drug money from Belize.

Order. That was a good try. I have stopped one question; I am stopping that one.

Cycling

37.

What the Church Commissioners' policy is as regards cycling on Church Commissioners' land. [90237]

Mr. Stuart Bell
(Second Church Estates Commissioner, representing the Church Commissioners)

The commissioners are always prepared to consider sympathetically requests for cycling on their land, provided that that is not detrimental to the interests of their agricultural or fishing tenants. They would also wish to take account of any nature conservation implications. I am grateful to the hon. Gentleman for his question because, from my reading of Hansard at 4 o'clock in the morning when I cannot sleep, I' know that he has been asking similar questions since 1992.

Is it the policy of the Church Commissioners to refuse to allow the building of a cycle track along the banks of one of the most beautiful stretches of the River Dart between Totnes and Buckfastleigh, preferring to net whacking great profits from anglers who wish to fish there? Is that consistent with the cardinal and temporal virtues?

I am grateful to the hon. Gentleman for referring to the beauty of the River Dart. He will know that I have spent a considerable time on this question. There are always important wildlife habitat questions to be answered, and we must see whether habitats along the river will be disturbed and whether local hostility will be provoked. When my predecessor answered such questions in the past, he said that we should look at alternative routes. The commissioners recently approved the sale of their fishing rights along the river, but we still have no great enthusiasm for cycle paths, for the reasons that I have now given.

Orders Of The Day

Railways Bill

Order for Second Reading read.

I should inform the House that I have selected the amendment in the name of the Leader of the Opposition.

3.30 pm

The Secretary of State for the Environment, Transport and the Regions
(Mr. John Prescott)

I beg to move, That the Bill be now read a Second time.

A year ago we published a new integrated policy. Ours is a transport policy, not just a policy for roads, which appears to be the policy of new Conservatism after the debate last week. Our aim is to improve choice. We want people to have greater choice, rather than a greater dependence on their cars. That means providing a better, more reliable public transport alternative.

The Bill is about providing a more punctual, reliable, accountable railway system as part of an integrated transport system. [Interruption.] The right hon. Member for Wokingham (Mr. Redwood) is still making silly remarks. I should have thought that he had had enough of that this weekend.

Order. If hon. Members wish to contribute to the debate, they should seek to catch my eye before doing so.

The British Railways Board and the franchising director are already working closely together as the shadow Strategic Rail Authority. The Bill is about taking the "shadow" out of the title and putting in more powers to enhance the effort already being made on behalf of passengers in developing our national railways.

The Bill meets our manifesto commitment and the policies described in our transport White Paper. It is consistent with the excellent report and recommendations of the Select Committee on the Environment, Transport and Regional Affairs. The Committee's all-party report on the Strategic Rail Authority and regulation said:
"We support the Government's plan for a Strategic Rail Authority as a practical way of addressing the problems of the restructured railway."
The Select Committee also said:
"The proposal for a strategic body was universally welcomed by our witnesses."
Anyone reading that report will see that the proposal was universally welcomed by the range of people who will be affected by the authority's activities. Indeed, the other day, the right hon. Member for Wokingham was arguing on the "Today" programme with a representative of a rail users consultative committee, who was advocating the establishment of a Strategic Rail Authority.

The Secretary of State has just said that the Bill is in line with the recommendations of the Environment, Transport and Regional Affairs Committee. Why, then, is he using this procedure to send the Bill, which he says has been drawn up following the Select Committee's report, back to the Select Committee before it makes further progress?

Those are the new procedures that the House has developed to provide an opportunity for Select Committees to examine Bills. As the Select Committee in this case has reported on the Bill in a most comprehensive manner, I should have thought that it would welcome the opportunity of this debate and of further examination of the Bill. The new procedure treats our Select Committees very seriously.

May I point out that my Committee not only warmly welcomes the chance to examine the Bill but believes that, because it is founded on the work that we have done, in those very few areas where we shall want to raise the odd omission we can contribute something more to the discussion?

I am grateful for that statement of support. If a Bill like this is presented to a Select Committee, it involves hon. Members in serious examination of legislation—sometimes much better than the examination carried out in Standing Committees. Although I may claim from the Dispatch Box that the Bill is consistent with the Select Committee's recommendations, it will be better to listen to what the Committee has to say once it has examined the Bill in detail. That is right and proper, but I believe that the Bill is broadly in line with the Select Committee's recommendations.

More recently, the support that I claim exists from the industry was confirmed by the Director General of the Railways Forum, David Morphet, who said:
"This Bill is good news for the railways and good news for the transport industry as a whole. As well as forming the basis for a genuine strategic partnership between the Government and rail companies, it ensures Britain's railways are at last at the top of the political agenda."
I do not think that anyone could deny that.

Will the authority's strategic role in promoting the railways explicitly extend to rural areas, not only preserving small stations but reopening some of the ones that we have lost in the past 20 or 30 years?

Very much so. The authority is concerned about the network and can recommend enhancements of the railway system. It has certain funds available to do that. That is one of the reasons why we have given it a strategic role. That will be an important advance in the powers that are available to develop a far better railway system.

My question follows on from that of the hon. Member for Somerton and Frome (Mr. Heath). As the right hon. Gentleman knows, long-haul civil aviation works only where we have good feeder routes and a through-ticketing system. When it comes to renew the franchises for long-haul railway services, will the new Strategic Rail Authority take into account the extent to which those companies are able to provide the feeder services? At the moment, people in my constituency are fortunate in having a bus service from Romsey to Winchester, but that is the only one that they have. Otherwise, they have to resort to the car. Track has been laid. If we do not make full use of that existing track to provide feeder services for long-haul services, they will not work. That is why I wish such services to be a criterion when the authority comes to renew licences, which should be for longer than seven years.

Enhancement of the system is very important, as is how the franchise negotiations take place. There will be some statements about that later, but we have to keep it very much in mind that we do not have to take the traditional patterns but should look at how we may enhance the railway system itself. That is one of the purposes of the Strategic Rail Authority—to take those points on board.

The Central Rail Users Consultative Committee said—

May I give the quote? Then I will give way.

I have said that the Select Committee has endorsed the Bill and will examine it further and that the industry has welcomed it overwhelmingly. The Central Rail Users Consultative Committee has said—I quote from the deputy chairman, Stewart Francis:
"At last passengers will see the benefit of strategic rail planning, leading to focused investment to enhance the network. We have long campaigned for effective performance and the incentives and penalties in the Bill should start to deal with these concerns".
Therefore, the industry, the Select Committee and consumer representatives fully support the Bill.

Will it be possible for passenger representatives to become members of the Strategic Rail Authority? It is not clear from clause 2 whether that is so. The right hon. Gentleman nods from a sedentary position; I take that as welcome evidence that they will be able to be so represented. Will it be possible, in the spirit of choice and of competition, for the rail authority itself to bid for franchises?

On the first point, consultative bodies can be represented. I intend to have them on the board of the Strategic Rail Authority, but not the chairmen of consultative bodies. I wish to keep the independence of rail consultative bodies, but they will keep a watchful eye on the role of the Strategic Rail Authority and will have direct representation in it. That is a proper balance, keeping that independence and accountability.

With regard to whether the Strategic Rail Authority would have the power to bid for the franchises, it would not be involved in bidding for such franchises, but it has to reserve the power to do so. If there were a breakdown in negotiations, or a failure of a company, there would have to be an operator of last resort and that would be the authority. As anyone would know from examining the Bill and from debates in the House, that was the role that we gave the franchising director. As we are transferring the functions of the franchising director to the Strategic Rail Authority, the Bill does not change what was already in legislation.

My right hon. Friend has spoken of the importance of enhancing the system. Does that include the infrastructure and, in particular, stations? Has my right hon. Friend seen the condition of some of the great railway stations of this country? They are dilapidated; they are falling down; rubble is strewn across areas surrounding tracks. They were never like that in the old days of public ownership. [Interruption.] No, they were not. There has been a marked deterioration in the standard of stations throughout the United Kingdom, which any traveller will notice on the north-west line. Has my right hon. Friend anything to say about that?

The Bill is about raising standards. There has been a growing disparity between the state of our major stations, which have received massive investment and have improved considerably over the past few years, and that of stations that are used less often—and, indeed, some that are often used—and have been allowed to deteriorate. That disparity has prompted concern about investment. The Bill is about enhancement: it is about raising standards in the service, and seeing it as a national service rather than the fragmented privatised service that we inherited.

I welcome the broad thrust of the Bill, which deals with the planning of investment and with ensuring that the railways work effectively in an integrated transport network.

Under clause 10, the Strategic Rail Authority will, ultimately, be empowered to run services if no other contractor or train operating company wishes to do so. What concerns me is the relationship with Railtrack, which is seeking a large amount of public money for its network improvements: some £11 billion is included in its proposals. Does the Bill provide any opportunity for even a proportion of Railtrack to become publicly owned so that the company—which, potentially, is to receive such a vast amount of public investment—can be made accountable to the public for the money, rather than money being passed to the shareholders in the form of the considerable profits that Railtrack is currently receiving?

The money given to the rail industry is given to the train operating companies, not to Railtrack. Railtrack raises its own resources and receives no public money except through access charges, which are subsidised. As the money does not go directly to Railtrack, the question of Railtrack's accountability for public money does not arise.

An entirely different question is whether Railtrack should be accountable for network services and for the promised development of the infrastructure. One of the first things that I did when I took office was talk to the regulator, who told me that he did not have sufficient powers to force Railtrack to deliver on the promises that it had made about network services. That is why there is a new regulator, and why there are new powers for enforcement. The Bill will strengthen those powers, to ensure that Railtrack is accountable to the public for what is basically a public facility run in a privatised way.

Will the Secretary of State say something positive about the railways, instead of all these negative things? It should be borne in mind that the number of passengers has increased dramatically over the past four years, that fares have been cut in real terms, and that subsidies have been cut. If the right hon. Gentleman is in any doubt about the massive change that has taken place, let him visit Southend. We used to have a terrible railway line there, which has now been improved dramatically.

Some very negative comments have been attributed to the right hon. Gentleman. Will he now give us some of the facts about the railways? They are much better and far less subsidised, and fares have been cut in real terms.

The problem with allowing so many interventions at an early stage is that it leads to criticism of that kind. I intend, later in my speech, to give due credit for the fact that the increase in passengers did not begin on the day that the Labour Government came to office, but was under way two years before that. That is in my speech.

I thank my right hon. Friend.

My right hon. Friend has spoken of the accountability of Railtrack. Will he ensure in the Bill that Railtrack property development services are brought within the rules of accountability? Is he aware that the Luton railway interchange in my constituency—an excellent example of the linking of rail services and airports in an integrated way—is being held up because of protracted negotiations between Railtrack and its property development side? That is preventing a valuable part of the integrated transport system from opening, at the time when it is most needed.

That is yet another example of Railtrack's failure to live up to its promises and to take account of our integrated investment priorities. That is why we believe that a Strategic Rail Authority and a powerful regulator could play an important part, not only in establishing network investment but in ensuring that it is carried out.

We often hear public statements by Railtrack about the many billions of pounds that it intends to invest. The previous regulator's complaint to me was that although those promises had been made, he could not ensure that they were kept. That was a weakness, and it is a reason why we have proposed a Strategic Rail Authority that will do much more to ensure that we have a network better than the one about which my hon. Friend is complaining.

When we took office we found a fragmented railway that was all too ready to pass the buck when things went wrong.

Very well, but this must be the last intervention because I want to get on with my speech.

The Secretary of State is being generous in giving way. My point relates to the one that arose in the previous exchanges. Given his dislike of Railtrack's standards of service, will he now rule out giving Railtrack an inside track on one of the tube contracts? Will he now promise to open up that contract to proper competition? I read in a newspaper that Bechtel, rather than Railtrack, will be brought in on that contract. Is that correct?

There is nothing new in that proposal. I made that proposal for the channel tunnel rail link. If the previous Government had done the same for the Jubilee line extension, I would not be facing an extra £1 billion cost on a lousy contract that was not implemented properly. I brought Bechtel in on that contract to improve and tighten up the Jubilee line facilities and production, which it has done. I invited Bechtel to become involved in the channel tunnel rail link operation and I asked it to restore that operation following the contractor's request for an extra £1 billion as a result of the lousy contract entered into by the previous Administration.

I learned from that experience to ensure that there is a good project organiser. That is why I have made it clear that I would not leave the tube contract solely in Railtrack's hands and that I expect a project management company to be involved. I have said that from the beginning; it is nothing new. The need for a good project organiser is the lesson that I learned from the inadequacies of the previous Administration's contract negotiations. They were part of the inheritance that I was faced with when I first began to renegotiate some of those contracts.

We found that after an initial improvement in services following privatisation, there was an unacceptable deterioration two years later, which caused great concern. We found that disgruntled passengers did not know who to turn to when their trains were late, cancelled, dirty or overcrowded. We found a rail freight industry that was eager to expand but held back by red tape and underfunding. We found a lack of investment throughout the network and historical underfunding, and parts of the industry felt no sense of urgency about making up lost ground.

In the first 12 months, the franchising director and the Rail Regulator told me that their sanctions were unwieldy and lacked teeth, so they could not enforce them and make the rail companies live up to their promises. Finally, we found that the passenger's voice was neglected.

We took stock of that inheritance. We assessed the problems and the different solutions and then took decisive action. We set the franchising director new objectives, instructions and guidance to ensure high standards of punctuality, reliability and the protection of the passenger's rights. I made it clear that I expected a passenger dividend from franchise changes such as a change of control of a franchise company.

With my encouragement, the Rail Regulator negotiated a voluntary change, called condition 7, to Railtrack's licence to ensure that Railtrack meets the reasonable demands of train operators and funders such as the Office of Passenger Rail Franchising and passenger transport executives.

The new franchising director and Rail Regulator are working closely together, but I would prefer them to do so in the new, powerful framework that the Bill will provide. Last November, I made it clear to the rail industry that performance was unacceptable and that I would call its representatives to a summit the following spring to report on the commitments that they made.

The rail summit in February was a turning point. The Prime Minister and I made it clear to the industry that things had to change. To its credit, the industry has started to respond. At the summit, it committed itself to year-on-year improvements in quality, particularly punctuality, which is what passengers value most. The industry committed itself to renewing half the entire rolling stock fleet by the end of 2002, and it is recruiting 800 new drivers. Having got rid of thousands of drivers, the industry found itself to be desperately short, which caused great delays. It has now started a recruitment programme. It has also set up a hit squad to tackle the 50 worst black spots in the railway system.

The shadow Strategic Rail Authority started on 1 April, in the form of the franchising director and the British Railways Board working together under new leadership to get a grip not just on short-term performance, but on long-term planning.

The Office of Passenger Rail Franchising will, from tomorrow, operate under the title of shadow Strategic Rail Authority. The franchising director and the British Railways Board will, of course, continue to exist as separate statutory entities with their own functions and responsibilities.

The shadow Strategic Rail Authority is monitoring delivery of the summit commitments. It has also started the process of franchise renegotiation to put in place the high standards that the last Government sacrificed in their dash for cash and privatisation. The shadow Strategic Rail Authority is also developing a proper strategic plan for the railways, planning for the growth of freight as well as passenger traffic. We have revitalised the freight grants scheme, with awards totalling £60 million over the past two years—double the amount given by the previous Administration.

The new Rail Regulator has already started asking some very searching questions of Railtrack: about the robustness of the statements in the network management statement about freight; about the absence of costed options for the freight routeing strategy; and about the robustness of proposals for gauge enhancement. He has asked for answers by 13 August. Railtrack will have to demonstrate that its investment plans are up to the task of creating an expanding railway.

We have achieved a great deal within the constraints of the framework that we inherited. However, only primary legislation can remedy the fundamental flaws that I described earlier.

I turn now to the Bill's main provisions. Part I of the Bill makes provision for the Strategic Rail Authority, and clauses 1 to 4 provide for its establishment. Clause 5 sets out the primary purposes of the Strategic Rail Authority: to promote the use of the railway network for the carriage of passengers and goods; to secure the development of the railway network; and to contribute to the development of an integrated system of transport of passengers and goods.

Clauses 5, 6 and 7 impose a new duty on the Strategic Rail Authority to develop a strategy for implementing these objectives in consultation with the regulator.

Clauses 8 to 17 confer on the Strategic Rail Authority the various powers, in the form of functions, which it can use to work towards its purposes and to achieve its strategies. It must use these powers in the manner best calculated to balance various considerations as listed in clause 7, subject to directions and guidance from the Secretary of State, and any payments which it makes must achieve value for money.

When will we see the new guidelines to the authority for the issuing of new franchises? Will any provision be made for the ending of existing franchises in the near future, or for renewed, extended franchises—perhaps for a 10-year period—to encourage the operating companies to invest in the new rolling stock required? I gather that some 7,000 wagons are possibly on order, but my constituents—like many others—are fed up with being treated like cattle and want to see the new rolling stock. The investment in rolling stock ought to be a criterion in granting the new licences.

The criteria to be considered in the renegotiating of franchises have been spelt out, and it is a pity that those criteria were not put in the earlier franchise agreements—the hon. Gentleman would not then be complaining to the House. My complaint is that promises were made but were not written into contracts. One of the advantages of having a contract is that those concerned can be held to it. If the contract makes no requirement for new investment, there is a difficulty.

One of our major changes will be to consider the extension of franchises, although that does not necessarily mean that they will be in exactly the same form. However, the commitment to investment, quality and value for money for the taxpayer will be put in guidance to the Strategic Rail Authority for the negotiations, which are in their final stages. When these are completed, I will let the House know. As we said at the summit, that would be our broad approach to the renegotiation of franchises.

Many of the franchises are set at seven years and they will all be up for renewal in one rush, a few years into the new millennium. I want the franchises to be spread out, so we can negotiate them individually to secure not only what is best for the passengers and for investment in the railway system but best value for the taxpayer, who is constantly involved in one way or another.

If the hon. Gentleman waits for the guidance, he will see that it is very much in line with what he wants. It is a pity that such guidance was not issued in the first place, but the franchises were rushed through without any such requirement, and he voted for that. I am happy to say that we will do what we think is necessary to produce a good-quality railway system. That is what the Bill and the powers are about.

I assume that the Opposition will support the Bill, although I cannot be sure what line new Conservatism will take. I know what old Conservatism did. I do not know whether the hon. Member for Croydon, South (Mr. Ottaway) is new or old Conservative, but he said:
"Such a complex privatisation needs constant fine tuning."
That is certainly true. He continued:
"The previous Government would have concluded that a strategic rail authority was necessary during this Parliament."—[Official Report, 25 March 1998; Vol. 309, c. 452.]
That was old Tory; I await with interest to see whether new Conservatism is the same.

Clause 8 gives the authority the power to give grants, loans and guarantees and to enter into agreements with third parties to secure railway investment. The guarantees can be backed by the Government, and the authority may borrow within prescribed limits. The borrowing limit is £3 billion, which is the limit inherited from the British Railways Board. Before anyone rushes in to ask whether that amount is available, it should be realised that almost £1 billion of British Rail debt is to be transferred to the authority.

I shall want to consider precisely how the debt is to be managed. The previous Administration set up the changeover, and the debts and liabilities of the British Railways Board will be transferred accordingly.

I understand that the budget for the Strategic Rail Authority has not yet been determined. We will not hold the Secretary of State to the odd £10 million, but could he give us a rough idea of the figure?

The current Opraf expenditure will remain, as the body is transferring to the Strategic Rail Authority. We estimate that the extra cost for the authority will be about £5 million a year. That is why the House is to consider a money resolution.

Clause 9 gives the authority the basic power to secure or provide railway services. That preserves the capacity to run services in the public sector in the last resort, as identified in our integrated transport White Paper. Clause 10 makes it clear that if there are no bids for franchises, or if the bids received are unacceptable, or in the event of a failure, the authority will become the operator of last resort.

Many of the authority's powers, of course, will be inherited from the franchising director, the British Railways Board, the regulator and the Secretary of State. All the franchising director's functions and all the British Railways Board's property and liabilities will transfer. Transfers from the British Railways Board will include responsibility for the British Transport police.

The shadow authority has considerable powers to do much of what is being done in the Bill, although perhaps in a different way. We do not have to wait for the Bill to be enacted to get on with modernising the railways.

The right hon. Gentleman has been very generous. He has taken about 10 interventions in 15 minutes. I have them written down here.

I appreciate the co-operation that my right hon. Friend has shown to Back Benchers.

I am concerned about land in the ownership of the British Railways Board and the fact that, under the previous Administration, instructions were given to sell that land as quickly as possible. It is important to retain the land because we may need to open lines, especially in the north where we often travel east-west rather than north-south. I hope that my right hon. Friend will seriously consider requiring the Strategic Rail Authority to retain the land in case further development is required.

It will indeed, and I have given instructions to that effect. Some land contracts have already been let, but I have made it clear that land that could be used for expansion of the rail system should be retained.

The powers that the authority will inherit include those of the franchising director and the British Railways Board, and they will be sufficient for it to begin work. The authority will also acquire responsibilities for consumer protection from the regulator, and for administering freight grants. The office of the franchising director, and the British Railways Board, will be abolished.

All staff who transfer to the SRA will do so with their existing conditions of service preserved. Staff transferring are also assured that there will be full protection of pensions. Nothing in the Bill will override the statutory protection for pensioners in the Railways Act 1993, for which we fought so hard in opposition. The SRA will also assume responsibility for the continuity of the rail industry staff concessionary travel schemes.

Part II of the Bill amends the regulatory regime set up under the Railways Act 1993. Clause 17 allows the SRA to ask the Rail Regulator to direct facility owners to provide enhancements to existing station and rail facilities—a point raised by my hon. Friend the Member for Normanton (Mr. O'Brien). That power could be used to achieve greater rail capacity in the network or even to secure new network.

The 1993 Act has left the regulator acting in isolation, because the Secretary of State's power to give guidance expired in December 1996. I am pleased that the new regulator and the shadow SRA have already begun to work more closely together, and the Bill will confirm that. I have said already that the authority will need to consult the regulator on its strategies, and clause 18 provides for the regulator to facilitate the SRA's strategy. As Secretary of State, I will also have the power to give general guidance to the regulator. The measures will ensure that a coherent railway policy can be decided and then carried out consistently by the SRA and the Rail Regulator.

I am grateful to the Secretary of State for giving way, but I think that my question will help our deliberations. If the plans go ahead as described, will he say how much of the borrowing limit of £3 billion will be available in the first full year?

I have already made it clear that debts of about £1 billion will remain after the transfer. However, the right hon. Gentleman has asked a proper question, and I intend to make a statement shortly about how the debt will be managed and about the borrowing powers available to the Strategic Rail Authority.

Clause 18 also provides that the duty on the Rail Regulator to promote competition will now be balanced by a requirement that competition must be for the specific benefit of railway users. The Rail Regulator needs to balance competition against the public interest of network provision. We are not concerned solely with the promotion of competition.

The previous franchising director and Rail Regulator complained about the weakness of their powers to enforce the promises of train companies and Railtrack. The enforcement regime is tightened by the Bill. Monetary penalties, which must be of a reasonable amount, will be payable for all contraventions of licence conditions, franchise requirements and contraventions of orders made to secure compliance with a licence or franchise agreement.

The Government have agreed in principle that the Strategic Rail Authority will be able to retain income from penalties and to reinvest it in the railways. I hope that the industry and the House will welcome the fact that that income will not be returned to the Treasury. That innovative approach is a one-off exception to the normal rules for such income. We are currently developing the details of the arrangement.

It will be of interest to the House that clauses 21 and 22 amend the closure provisions, including some dealing with major closures. The Rail Regulator's functions are to be transferred to me, as Secretary of State. I, or any future Secretary of State, will be responsible for determining major closures, so I will be accountable to the House. I am sure that the House will welcome that approach.

The definition of minor closures is extended to include the track involved in a minor closure. Under clause 23, the remit of the rail users consultative committees, whose sponsorship will pass to the SRA, is widened to cover all passenger services. The committees' independence will be maintained, and I referred earlier to the welcome that the independent central users committee has given to the Bill.

Part III makes provision for the devolution of some functions to the Welsh Assembly and to the relevant Scottish Ministers. That provision delivers parts of the agreed settlement for devolution. Other elements have been handled by orders under the Scotland Act 1998. Part III also makes provision for the consequential amendment and repeal of other Acts. We will need to add to those provisions in due course.

In conclusion—

No, I am in my final stages.

The way in which British Rail was privatised was a national disgrace. Our Bill brings public accountability back to the railway industry; it will allow the new SRA to plan for an expanding network; it will require those who own the network to meet their obligations; and it will require train operators to fulfil their franchise agreements.

The railway industry has had plenty of well-deserved criticism but there are now positive signs of a revival of Britain's railways. Passenger traffic is rising. Over the past five years, passenger kilometres have increased by approximately 20 per cent., and roughly 14 per cent. of that growth has occurred in the past two years. Around 1,000 extra services are being run each day to help meet that growth.

Rail freight is also increasing, and is up by roughly 20 per cent. in the past two years. The industry has promised that by the end of 2002 half the passenger fleet will have been renewed. Some 433 station car parks will soon have video camera surveillance. Twelve stations have been opened since May 1997, and four more are due to open this year. All that is part of the agreement that the previous Government failed to achieve with the industry. There is a new spirit of co-operation and responsibility in the industry, and a new attitude that we need to restore a national railway in the public interest.

The Bill will reinforce those trends. It will create a new guardian of the public interest—the Strategic Rail Authority. It will plug the loopholes in the last Government's rail legislation, to provide tougher enforcement and to protect the passenger.

I commend the Bill to the House.

4.6 pm

I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof:

"this House declines to give a Second Reading to the Railways Bill because the introduction of this Bill now, when it will inevitably fall due to lack of legislative time and will have to be reintroduced in the next Session, is not the best use of the time of this House and represents a new definition of pre-legislative scrutiny which the Government is using as a way of side-stepping its own decision-making responsibilities and covering its doubts and internal divisions about the wisdom of the measures which the Bill contains."
I am grateful to the Secretary of State for making some of my speech for me. He concluded with sterling words about the successes of the privatised railway industry. I agree that there has been welcome progress over the past five years, and it was good of him to state that we had enjoyed the advantages of the privatised industry over that period, which takes us back to before the change of Government.

Over the past four years, the number of passenger trains has increased by 14 per cent.—one extra train for every seven previously running. Passenger miles have increased by a quarter. We all want freight to transfer from road to rail wherever possible, and freight tonne miles have risen even more impressively—by 35 per cent. during the past three years. Those are impressive figures, but we are not yet satisfied. Privatisation has many more achievements to come, provided that the Government work with the industry rather than get in its way or mess it up.

My worry is that the Bill has been drawn up by Ministers who do not like the privatised industry and who are secretly trying to find ways back to nationalisation. They do not seem to understand that the beginning of a transformation in our railway industry has occurred under Governments of both parties and as a result of privatisation. The industry never worked when it was nationalised, whether under Labour and Labour-Liberal Governments in the 1970s or under Conservative Governments in the 1980s. During the 1990s, it is beginning to work, and the Labour Government must not impede the progress of a very good Conservative policy.

Before the right hon. Gentleman finishes his eulogy of the privatisation of the railway network, will he comment on the increase in the number of complaints against individual train operating companies, and on their inefficiency since privatisation began?

People think it more worth while to complain now than they did under nationalisation because there is a proper complaints system and it is more likely that something will happen. As a train user myself, I know that services in my area have improved, but also that they are not yet good enough. I want further progress to be made as a result of more investment and more enlightened attitudes. Services are a great deal better than they were 10 years ago, although considerable room remains for improvement. As the Secretary of State has often pointed out, performance around the country is patchy. We would welcome anything that could sensibly be done to raise the performance of many operators to the performance of the best.

The right hon. Gentleman should be wary of saying that services are a great deal better than they were 10 years ago. The passenger figures to which he referred followed a dramatic drop during the recession engineered by the previous Conservative Government. The numbers have risen merely back to where they were before that recession.

My point was well made from my own observation of standards of service in my local area. It can be borne out by many of my constituents, who recognise that there have been improvements in punctuality and reliability, but that there could be even more.

Does the right hon. Gentleman accept that the sale of Railtrack for £1.9 billion—it is currently valued at more than £8 billion—is a clear example of how the British taxpayer was ripped off by privatisation? Does he further accept that giving away Railfreight for £240 million of taxpayers' money, just so that people would take it off our hands, is a complete disgrace? Any idiot could have predicted the increase in freight transportation under Governments of either political persuasion. This Government have advocated constraining the growth of road traffic, and everyone wants to see more rail freight and greater profitability in that industry.

I remember how the then Labour Opposition succeeded in doing everything that they could to undermine the rail privatisation and sale. Labour did everything it could to damage the sale price and to lower the proceeds. We warned at the time that Labour was doing damage, and that is what occurred. The shareholders of that company are now benefiting from its success. It has picked itself up after that unwarranted criticism—and in the face of unwarranted criticism from the Secretary of State on bad Tuesdays—and has developed a much better business.

Will my right hon. Friend assure the House that, if the Government produce privatisation plans—they tell us occasionally that they will do so, as is the case with air traffic control—he will not call from the Opposition Front Bench for renationalisation? Will my right hon. Friend enable the Government to secure the true market value of the industry concerned—unlike Labour did to us?

My hon. Friend can rest assured that I am unlikely to call from this Bench for renationalisation. He will also be well aware that I am always in favour of taxpayers getting a good deal. Conservative Members will do everything in their power to encourage a fair—even a good—valuation of any assets that the Government wish to sell.

I recall that a previous Administration nationalised Rolls-Royce—but I shall leave that aside. Does the right hon. Gentleman remember that when the then Opposition attacked the then Government's privatisation programme for British Telecom—there was concern about the share price—the Government did what we advocated with regard to Railtrack: they waited until after the general election and then brought forward the proposal so that the taxpayer did not lose out in terms of the share price? The previous Government could have done that with Railtrack, but refused—presumably because they thought that they would lose the election.

We thought that we needed to get on with it because the railway industry deserved privatisation. We have seen that the results of the privatised industry are much better than those achieved under the nationalised regime.

Does my right hon. Friend agree that the hon. Member for Croydon, Central (Mr. Davies) has a brass neck to level the charge that he has just made? The twenty-fourth report of the Public Accounts Committee on the flotation of Railtrack, which was published on 13 July 1999, underlines precisely the point that my right hon. Friend has made—namely, that political opposition to the flotation undermined investor confidence and the share price. Does my right hon. Friend think that the hon. Gentleman should do his homework before contributing to the Second Reading debate?

My hon. Friend is right, but I must now make some progress.

The Secretary of State began by saying that "A Fair Deal for Motorists"—a popular policy that we launched last week—represents the sum total of our policies in this area. He should know from our debate last week that our fair deal is popular, but it is only part of our transport policy. We also have exciting policies to promote more rail, tube and bus travel to ensure that people get out of their cars and on to the buses and trains. The Government still do not seem to understand that most people do not live by a bus stop or a train station. We need to make it easier for motorists to get to the bus stop or the train station and be able to park when they get there. That is a truly integrated transport policy—rather than the disintegrating policy over which the Secretary of State is presiding.

Is my right hon. Friend aware that the Public Accounts Committee report, to which my hon. Friend the Member for Buckingham (Mr. Bercow) referred, revealed that an unprecedented four pages of Labour's policy document spelling out what it would do with the railways should it be elected depressed the price of the sale by well over £100 million? Therefore, the Secretary of State cost the flotation of Railtrack more than £100 million.

Is the right hon. Gentleman aware of one of the key findings of the PAC report? It states that:

"The timing of the sale was a factor in the poor value achieved, and the Department themselves acknowledge that the large increase in Railtrack's share price since flotation was because it had been undervalued and sold in haste"
Does that not completely undermine the case that the right hon. Gentleman is making?

It reinforces my case. The main reason for any undermining was because Labour made matters as difficult as possible by putting the accent on all the negatives and on none of the positives—as they were so good at doing in respect of privatisation policies and much else.

The Secretary of State said that the other day I was on the radio arguing with a train operating company representative over railway policy. He clearly did not listen to the broadcast. As I made clear on that programme, my argument is with the Secretary of State himself: it is his policy that has miscarried; it is his inability to persuade the Treasury to give him the money that he needs in order to do up public transport facilities; it is his transport policy that is falling to bits—clobbering the motorist but not providing a better alternative. I hope that the right hon. Gentleman will listen a little more carefully the next time that I am on the radio.

I am grateful to the right hon. Gentleman for giving way. As John Humphrys pointed out, we were talking about the Strategic Rail Authority—we can listen to the tape if the right hon. Gentleman cares to do so. The train operating company's representative made it clear that the operating companies fully supported the authority. That was his point. It was also John Humphrys' point—even though the right hon. Member for Wokingham wanted to talk about anything but the SRA.

My worry about the way in which the Government have presented the Bill to the public and to the House is that, until today, they have concentrated on only two clauses—those that relate to the power to fine companies that do not perform—and have ignored the wide-ranging powers contained in the other 32 clauses. Those powers will greatly strengthen the hand both of the Secretary of State and of his creature, the new quango. I have repeatedly made the point that that is a dishonest spin on a massive piece of legislation; it is a backdoor nationalisation measure, which would give the Secretary of State extremely wide-ranging powers to play at trains exactly as he sees fit.

Today, the Secretary of State comes to the House unable to answer the most fundamental and obvious question: how much of the £3 billion in the borrowing limits outlined in the measure will be available as new money to spend on buying shares, making investments in railways, running train services and setting up new tramways? The Bill will give massive powers to a new quango and to the Secretary of State so that they can play at trains and tramways and provide all kinds of public transport facilities, but we do not know to within £1 billion or £100 million how much money the right hon. Gentleman will have to play with. How on earth can we treat the matter seriously?

The previous Administration gave exactly the same powers and resources to the British Railways Board—they already exist, and will be transferred to the Strategic Rail Authority. In respect of financing facilities, we have made it clear that it is not our intention to renationalise the railways. We made that judgment before we came into office. We want to make the system work. It is not necessary to have the borrowing powers to which the right hon. Gentleman refers. I said that I would report back on reconstruction because, as we know from the experience of the British Railways Board, whenever the debts were reconstructed, there had to be a report to Parliament.

I take that to be some kind of reassurance that the provisions will be used only for existing debts and not for new debts. However, that is not how the Bill reads. The Bill gives extremely wide-ranging and open powers; it leaves open the large amount of money—well in excess of what is needed—to handle the existing debts. The Secretary of State himself told us that about £1 billion of inherited debt had to be dealt with under the measure. We are entitled to ask why he needs a £3 billion borrowing limit for the body, when he thinks that the problem is about only one third of that amount. That is most suspicious.

Is my right hon. Friend aware of paragraph 73 of the Government's response to the PAC report? On the question of whether they would be interested in renationalisation, it states

"we have made clear that renationalisation would be … expensive, and cannot be a priority."
Am I right in presuming that, if it is not a priority, it may be somewhere further down their agenda?

My hon. Friend has drawn out an interesting point—it is an interesting exchange. If the Bill is passed unamended, it will give the Secretary of State all or most of the powers that he would need to renationalise portions of the railway, and to set up a new nationalised railway or tramway system—or both—in parallel with the existing privatised industry. The measure offers no guarantees as to fare competition. There is nothing about fare levels and the rate of return that would have to be earned in order to secure fair competition. Some people in the industry are extremely worried by these wide-ranging powers. This whole piece of legislation has been dogged by controversy and trouble.

Is not the right hon. Gentleman's argument that the Bill needs careful scrutiny rather odd given the reasoned amendment, which complains about the scrutiny process?

I was just coming to our reasoned amendment. We believe that today's debate shows that the Secretary of State has failed to carry his colleagues. The Bill was cancelled last year and delayed this year and it might—if the right hon. Gentleman is lucky and we are unlucky—arrive late in the next parliamentary year. Today's debate is therefore a misuse of the House's time. We would be happy to have Second Reading and go straight into a Standing Committee in which the Bill could be given the detailed scrutiny it needs. If the Secretary of State is willing to proceed in that way, my right hon. and hon. Friends and I are more than willing to sit on such a Committee, starting as soon as possible, to give the Bill the necessary scrutiny. However, the right hon. Gentleman is no position to deliver. He has obviously been vetoed by the Prime Minister and other members of the Government, so the Bill has been shunted off into a siding and cannot make proper progress.

As the Chairman of that particular siding, may I ask the right hon. Gentleman one simple question? Are we to take it that he does not approve of Select Committees performing a pre-legislative function, or is it simply that he objects to my Committee performing that function?

I have no objection to the Committee considering the Bill, and may it take a good long time: there is much in the Bill that is disturbing, and I am not the one trying to rush through those provisions. However, let us look at matters from the perspective of the Secretary of State, who tells us that the Bill is crucial to his strategy and that he cannot have an integrated transport policy without it. If that is so, why are we having a Second Reading debate now, but no Standing Committee to follow? Why cannot the right hon. Gentleman get the Bill through more quickly?

Why is the Bill being offered to the Select Committee? If the scrutiny that the Select Committee is to give it is truly pre-legislative, why have Second Reading? Why not have proper pre-legislative consideration in the Select Committee, whose members are wise and whose scrutiny would be useful? Then, the Government could amend the Bill and return to the House with a proper Bill that had been properly considered, on which we could then have a Second Reading debate. That would be far more welcome to us than the bodged approach that is being taken today.

The Secretary of State never addressed one of the points raised in our reasoned amendment. Why is the Bill being treated differently from all the others, which have been referred to Select Committees before Second Reading? Is it not the case that the process being used is a panic measure, initiated by Downing street to cover up the botch job that the Secretary of State has made of transport policy?

That is the only possible explanation. There has obviously been a compromise: the Secretary of State said that he must have his Bill, but the Prime Minister said that he could not have it, so they hit upon the ridiculous compromise—a camel instead of a horse, with everyone getting the hump—of the Bill being given Second Reading and then going off to the Select Committee, rather than through a proper Standing Committee.

I have made it clear on several occasions that the real problem with the legislative timetable is what happens in the other place, not what happens here. The other place is starting its recess later and returning earlier than this House. We can argue about who is responsible, but the fact is that legislation has to pass through both Houses. Under the new procedures arising from the modernisation process, Bills have been sent to Select Committees and Special Standing Committees for different forms of examination. The process adopted for the Railways Bill is simply another new way of proceeding.

It will be useful to hon. Members and to people outside to know the House's opinion on the powers contained in the Bill. I hope that the House and the Select Committee will give the Bill an overwhelming endorsement. The right hon. Gentleman has not yet said whether or not he supports the Bill, and it would be useful to know that. If the House expresses its support in a vote today, it will be clear that the current actions of the shadow Strategic Rail Authority are consistent with the will of the House.

In that spirit, I shall press on to address the Bill itself, even though my right hon. and hon. Friends and I still think that we are following an odd procedure—one that tells us more about the divisions in the Government than about the need for proper scrutiny—or the need for a Railways Bill, which the Secretary of State has urged on his colleagues for many months.

The Opposition are worried that the powers in the Bill are too wide ranging and lack specific drafting through which they can be controlled. I draw the House's attention to several of the important clauses. The purposes of the authority have already been read out to the House by the Secretary of State. They are extremely wide ranging and should be read in conjunction with the powers to borrow, direct, invest and spend money. The authority is allowed to promote the use of the railway network, to secure development of it and to contribute to the development of an integrated system of transport.

I will not give way to someone who has not been present throughout the debate. The hon. Gentleman should listen a little more before intervening. I have given way to everyone else.

The wide-ranging purposes are backed up by the most enormous powers, which would leave the Secretary of State and his creature—the quango—free to run a railway within a railway and to buy up chunks of the existing network. Under clause 6(3), the Secretary of State is the person pulling the strings. The quango may be apparently independent, powerful, expensive and all such wonderful things—many millions of pounds will be spent on it—but the Secretary of State can be in charge if he so wishes. He can give the authority directions and guidance over all its strategies, stipulating what should be covered by them,
"the issues to be taken into account … the strategy to be adopted in relation to any matter",
and how to update such strategies. That is extremely comprehensive. The Secretary of State wants to buy a train set to play with, and this Bill gives him the crucial powers.

May we have clarity? Does the right hon. Gentleman agree that there should be a Strategic Rail Authority—yes or no—particularly given the words of the hon. Member for Croydon, South (Mr. Ottaway), who thought that there should be one? If there is a Strategic Rail Authority, should it have any budgetary powers? If so, which powers and how will it be accountable to Parliament? The right hon. Gentleman is very unclear.

I shall be crystal clear, as I have been on the powers and the conduct of these proceedings. The Opposition believe that there is a role for sensible regulation of the railway and support good regulation of it for as long as there continues to be monopoly elements and the power to use fares as surrogate taxation. It is most important to have a regulatory power. We do not support the creation of this regulator with these massive powers because the Secretary of State is trying to create not just a regulator but an actor, an investor and a business as well. In my experience, when the role of a regulator is muddled with that of someone providing services or interfering with service provision, one gets into difficulties, which can damage the taxpayer and the passenger or customer.

Does the right hon. Gentleman accept that it was a great mistake not to regulate the rolling stock companies when the railways were privatised? One witness told the Select Committee that ROSCOs were receiving a guaranteed income stream and profit under contracts that did not require them to invest, which led to their sale at double the price that the public got for them and their making a third of their capital value in profit? Does he accept that that was a huge mistake of the Conservatives' privatisation?

I am not sure how that problem is covered by the Bill. Perhaps the Committee disagrees with the Government in that area. We have already discussed at some length the history of privatisation, to which the Labour party, with its clumsy intervention, did much damage.

Clause 8 sets out the functions. It states that the authority may
"make grants, make loans, or give guarantees, for any purpose relating to any railway or railway services."
"Railways" for these purposes include tramways, and in certain conditions, bus and taxi services too. So this body will be enormously powerful and wide ranging. The grant, loan or guarantee may be subject to any conditions as the authority considers appropriate:
"The Authority may enter into agreements for the purpose of securing the provision, improvement or development of any railway services or railway assets."
The powers are even stronger in clause 9, which states that the authority may provide
"services for the carriage by railway of passengers and goods as the Authority considers desirable."
In other words, the Bill creates not just a regulator but a body that can take public money, with the Secretary of State's consent, and run passenger and goods railway services. Clause 9 states that the authority may include in that the provision and operation of
"network services, station services and light maintenance services, entering into agreements … for … carriage … acquiring the whole or any part of an undertaking, and storing goods and consigning them from any place to which they have been carried by rail."
That is the kernel of our case—the power is a very wide-ranging one, allowing the backdoor—or frontdoor—renationalisation of the railways, should the Secretary of State be so inclined, and should he be able to persuade the Prime Minister and the Treasury of the need to do so.

On the combined provisions of clauses 8 and 9, but especially the provisions of clause 8, surely the Strategic Rail Authority will not really have the expertise to second-guess the investment decisions of both Railtrack and the train operators. Essentially, the consequence of the provisions would be that those who make the investment decisions will not be able to raise necessary capital, as there would be no certainty that the Strategic Rail Authority will not change all the terms.

I certainly agree with that statement in the light of the fact that the Secretary of State would be pulling the strings and providing the advice.

We propose transferring already existing powers. The regulator is already able to require Railtrack to invest in the public interest, as that was a condition of the licence. If the regulator is not satisfied that Railtrack is meeting its requirements, he is able to enforce those requirements. Therefore, under powers created by the previous Administration, the regulator is able to act by asking for further investment. The powers are already there.

The right hon. Gentleman should say what new extra enforcement powers he thinks could be created for the regulator. The complaint about both the previous and the current regulator is that, although powers were available to them, they did not use them. However, this one intends to use them.

The proposed power is a very new one, and it is much wider and stronger. It is one thing to say that a regulator is able to instruct a private sector company to make a bigger investment because it is in the regulated sector, but it is quite another to give a power to an authority to do anything that it considers desirable for the purposes of the provision of railway services. The proposed power is extremely wide ranging—

I hope that the Secretary of State will look again at the drafting, because that is not how it reads in the Bill. He may now be claiming that his intentions are rather more modest than they seem to be in the Bill. I therefore hope that he will re-examine that point.

In Committee, the burden of the Opposition's argument will be that we wish to narrow the regulator's powers to that range of limited powers that the Secretary of State says that he wants and are necessary, so that the regulator—the authority—falls short of playing trains on a huge scale—which I still believe it would be entitled to do under the provisions of this very wide-ranging legislation.

If the Secretary of State would like to look at clause 16, he would see how the powers are emphasised and underlined still further. The clause states that
"The Authority may do anything which it considers—
(a) is necessary or appropriate for or for facilitating … its functions. In particular, the Authority may
  • (a) enter into agreements,
  • (b) acquire or dispose of property,
  • (c) invest money,
  • (d) form bodies corporate or acquire or dispose of interests in bodies corporate, and
  • (e) promote or assist in the promotion of publicity."
  • That gives the authority the power to run railways, to buy assets, to build stations, to own track, to own rolling stock and to run services. I do not see how the Secretary of State can deny that.

    Most sinister of all—but then it is the little bit of new Labour creeping in—is the power to spend public money, collected by the authority and borrowed by the Government, on spinning at the taxpayer's expense.

    I am grateful to the right hon. Gentleman for giving way; he is generous with his time. However, is he really arguing that, if a private company were not prepared to continue the franchise or were offering a very bad deal, that the public sector should not, in the taxpayer's interest, have the right to maintain and run that service? The previous Administration accepted that argument. In their legislation, they gave the British Railways Board the right—which the Bill will be transferring—to intervene to secure such services. Such an intervention would be made by the public sector when the private sector failed to produce promised services.

    We have now, at last, teased out of the Secretary of State the power's importance. In Committee—if the Bill reaches that stage—we shall be pressing hard to try to limit the power rather more than he has done.

    Currently, the power is far too wide ranging, and the Bill does not make it clear that it will be used only in extremis, after something has gone horribly wrong—something far worse than has yet happened in the privatised industry. I think that it is very unlikely that something will go wrong on that scale. if the Secretary of State saw fit, the power could be used in totally different conditions—and it is to that that I and my right hon. and hon. Friends shall be objecting. I hope that the Secretary of State now has a clear understanding of the Opposition's view of the Bill. We believe that it needs a fundamental rewrite. We are all in favour of sensible regulation, but we think that the Bill goes far too wide.

    I am still not absolutely clear about the official Opposition's position. Do they wish to keep the present regulatory structure as set up at the time of privatisation, or do they accept that that has proved inadequate and that there needs to be a strengthened regulatory structure, albeit not the one presented today?

    We would be happy to examine a sensible revision of the structure. It is always possible to improve things in the light of experience. However, I do not think that the Bill presents the right approach. It is clear that it goes considerably further than the Railways Act 1993, for example. The powers of that Act are expressly amended by provisions set out in the Bill. It is proposed to make things tougher and to give the regulator more wide-ranging powers to intervene and to interfere in the running of the railways.

    We are suspicious of the costing of £5 million per annum for the authority. That may prove to be an underestimate given the enormous range of strategies and functions that the authority will have foisted upon it. We wish to return to the question of £3 billion. It is most important to know how much of that money will be available to do the sometimes worthy things that are demarked in the Bill.

    We are worried about the length of franchises and we believe that decisions are pending. These decisions have been delayed for many months and this is becoming an impediment to proper investment and success in the railway industry. I have heard complaints from those in the industry that decisions have been sitting in the Secretary of State's "in" tray for many months. That is a great pity. I thought that there was cross-party support for the idea that the privatised industry should be given its head to make the necessary investments. We are all impatient to see new rolling stock and better services.

    The Opposition urge the House to adopt our reasoned amendment to the procedure for the handling of the Bill. An enormous mess and muddle has been revealed at the top of Government, a huge row between the Prime Minister and his deputy and obvious second thoughts around the ministerial table about the wide-ranging powers that are being offered through the Bill to the Secretary of State and to the quango creature that is being established beneath him. If this were the world of "Thomas the Tank Engine", this would be the Bill to make the Fat Controller wax lyrical at night at the great strengthening of his powers.

    We shall be offering strong scrutiny of the Bill. It is not the right Bill at the right time. The Secretary of State should concentrate on better tube investment, better car parks at stations and easing the flow of cars to stations. We could then have an integrated transport policy. We see chaos and disintegration surrounding the Secretary of State. There is a lack of ability to win the investment that he needs for public enterprises from the Treasury and a willingness to get in the way of sensible investment by the private sector. The Bill will not help and that is why we are opposing it tonight.

    4.38 pm

    The Strategic Rail Authority is the first intelligent attempt to bring together a proper planning system for the future of a new and modern railway system, and is a long overdue recognition of the fact that the privatisation and fragmentation of the railway system unfortunately resulted in the passenger receiving a far from acceptable level of service.

    In its report on the Strategic Rail Authority, the Transport Sub-Committee made it clear that there were considerable problems if a modern railway was to be worked in the disorganised and disorientated manner that had ensued with privatisation. It made it clear also that we would not be able to remedy the situation without some reintegration of the various companies and an acceptance of the fact that some of the powers handed to both the franchising director and the Rail Regulator were not sufficient to cope with the lacunae that had appeared in both the administration and operation of the railways.

    Today's debate is not only extremely welcome, but long overdue. My Committee warmly welcomes the opportunity to examine the Bill in considerable detail. We believe that it contains many aspects of policy that we have already examined in such detail, but inevitably there will be areas where the Committee will want not only to make suggestions but to consider the wording.

    Given the way in which, in recent years, some legislation that has been put before the House has not been in its final form, it is tremendously important to use such a Committee to consider the detail, as a pre-legislative Committee can do. Far from the Select Committee delaying the passage of this legislation, it can, if need be, produce a polished Bill and perhaps even a better formulation—if my right hon. Friend the Secretary of State will forgive me for saying so.

    Am I right in thinking that the hon. Lady's Select Committee, on which I serve, reserves the right to make possibly trenchant and fundamental changes in the Bill, or will it merely be a rubber-stamping operation?

    I do not know to which Select Committee the hon. Gentleman is referring. If he seriously thinks that any Committee that I chair would be known as a rubber-stamp Committee, I can only assume that his frequent absences from the Committee have been such that he has forgotten what goes on.

    My right hon. Friend the Secretary of State will have noticed that the business motion on the Order Paper suggests a date by which the Select Committee's examination of the legislation will conclude. That is helpful. By next Session, the legislation will have been considered and extra evidence will have been taken. Points that need to be made by the operating companies or various other elements, including passengers, will be not only welcomed but registered in a way that ought to be constructive and useful.

    The Bill contains tremendously important provisions. Railtrack will now have to comply with investment requirements not simply by producing a number of wish lists, but by demonstrating that it is serious about its investment programme. I do not want to digress by discussing some of the more interesting recent developments, but I would mention the network statement, for which Railtrack got the support of consultants who said that they had not checked any of Railtrack's figures but could nevertheless project them into the future to produce particular results. That is not the sort of expertise or, frankly, detailed work that my Committee finds acceptable.

    Clearly, Railtrack must not merely talk about what it intends to do but demonstrate that it means to do it. It must produce concrete plans that are not just based on extra money from the taxpayer. If Railtrack is to fulfil its responsible role, it has to get on with a programme to deal with its very old infrastructure. Railtrack has known for a long time about the problems of pinch points, for example, and of some track that needs considerable maintenance and improvement. It knows of the need for reinvestment in lines such as the west coast main line. The sooner it makes those changes rather than talking about them, the better the passenger will be served.

    I know my hon. Friend's constituency well. As she is aware, I spent some time as a railway engineer maintaining bridges in and around Crewe. Will she tell the House whether Railtrack has delivered on its promises and commitments on bridges in the relatively small area in and around her constituency; and will she tell us how detrimental its failure to produce has been to the immediate economy of her constituency?

    I do not want to get diverted, but people who enter my constituency have to cross antique rail bridges; indeed, three of the main roads are on rail bridges. The previous time one of them was examined and modernised, it managed to sink 11 inches during one night, so I am somewhat sensitive to the difficulty arising from trying to rebuild an ancient system. Not only will working on bridges be an urgent part of Railtrack's work, but it will have to work closely with others to provide a properly programmed advance in the provision of proper infrastructure.

    Will the hon. Lady at least admit that investment expenditure under Railtrack is more than double what it was under British Rail? If British Rail had not been privatised, where would her Government be getting that money from, given that public investment in transport, for which the Deputy Prime Minister is responsible, is being cut?

    I am getting pretty bored with these absurd interventions from Conservative Members. The whole of the west coast main line would be modernised today and there would not be such poor standards if the money that was spent on privatisation—including that which was identified by the Public Accounts Committee as going directly to people whose only contribution was making the most absurd suggestions about how particular contracts should be framed—had gone into the railway system. Rail companies certainly would not be adding 10 to 15 minutes to every timetable in the pretence that services are getting somewhere near their original arrival times. I am bored with all that and the time for going over and over such absurd suggestions is gone.

    The Strategic Rail Authority will be able to retain fines, rather than pass them back to the Treasury, and spend them on the infrastructure. That is not only a sensible development, but one that will soon be seen to be advantageous. I believe that the acceptance of a public sector benchmark, which will provide for the assessment of all franchise bids, is not only long overdue, but will mean that the passenger will be much better served in future. The Strategic Rail Authority will have responsibility for publicising rail services—not, if I may say so, for providing beautiful posters at conferences saying what a wonderful investment programme there will be in the next 30 years. It will tell rail travellers, "In future, you will be able to travel safely, cleanly and punctually." At present, all those "minor" points are not taken seriously by many of the companies.

    I believe that open access and the changes proposed in the Bill will make a difference. Companies will not only have to face up to the real problems of competition, but seriously consider what to do in order to attract more passengers. Some aspects of the Bill, such as the permission to promote light rail, will transform a lot of other railway services. People want clean and comfortable access to various forms of rail transport and they believe that an integrated system means getting on a train at their chosen station, comfortably and safely, and getting off where they want to be—not a considerable distance from their ultimate destination.

    When my hon. Friend's Committee examines the Bill and other developments in railways legislation, will she look enthusiastically at the possibility of reopening a large number of mothballed, underused or unused lines so that we can develop properly integrated local transport systems? We should bear it in mind that some lines would be loss makers initially, but over time integration would encourage people off the roads and on to the rail system, which they are not attracted to at present because they live too far from the main lines.

    I hope that the Strategic Rail Authority's powers to borrow will enable it to look forward to means of developing the network; it should not simply rest on the present system. Although my hon. Friend specifically mentions services that may have been mothballed, there are all sorts of other developments. For example, many of us look forward to a real increase in freight once lines are available. If there were a new freight line through the centre of England, we would begin to see a serious movement of large amounts of freight off the roads and on to the railways, where it belongs. That would not only promote a better environmental response in many areas but would demonstrate efficiency and represent something that people genuinely want. Part of the SRA' s powers will be to consider such schemes and the occasions on which investment should be made in them, and to encourage others to take up new and more imaginative schemes.

    The hon. Lady is most gracious. If she is right in suggesting that investment will be considered for light railways and the reopening of disused lines, might not we have to consider a considerably higher budget than the £5 billion that the Deputy Prime Minister mentioned in answer to my earlier question? The central railway line alone would take £5 billion, plus some change.

    As the hon. Gentleman knows, many people would be interested in such a development and might be prepared to talk seriously to the SRA about how it could be financed.

    Is my hon. Friend aware that, in Croydon, the Tramlink project that is due to be completed at the end of this year involves both private money—to the tune of £75 million—and public money? Moreover, it uses a disused railway line to create a new commuter link, which is proving popular. We have the finance, and I hope that my hon. Friend will come to Croydon at the end of the year when we open the line.

    My hon. Friend tempts me into all sorts of interesting debates about how passenger transport authorities' and local authorities' transport plans can be fed into the plans for a shiny new railway system. That is what I look forward to in the next millennium, but I do not wish to speak for too long today.

    My right hon. Friend the Secretary of State would not expect me simply to tell him that the Bill is absolutely marvellous, because it has left out some of the bits that I think are important, and I shall want to ask him a number of questions in the future. I hope that the SRA will have the power to prevent another round of rural closures. Many of us who have lost railway stations know that that directly contributes to a drop in the number of passengers in some areas. Some of the stations that are now being warmly welcomed by the Opposition were paid for by local authorities, which got absolutely no credit and were then told by Railtrack that they would have to pay towards the maintenance.

    Perhaps I can satisfy my hon. Friend by saying that, when the closure of a line is requested, the decision will no longer be dealt with by the regulator but will come directly to me as Secretary of State. It will be a decision for which I shall be answerable to this House.

    I welcome that tremendously important development; passengers will want not only to see it carried through, but to have an input into any decisions that are taken.

    I hope that the public borrowing figure for the SRA, which seems pretty generous to us, will be fairly secure and that the whole question of whether the SRA can borrow on the open market will be discussed. If the SRA is to create public sector comparators for franchise bids, that will be helpful, but if for any reason the franchises collapse—I am afraid that, if we are not careful, privatisation will create a two-tier railway system in which some companies can run well but others will come perilously close to being non-viable—the SRA may need to assess accurately exactly what should happen to their bids. It will therefore need a base so that it can consider whether it can run those services as the owner of last resort.

    I take the point that my right hon. Friend made earlier in the debate about the absurdity of the Opposition objecting to the transfer of powers that were in the hands of the British Railways Board before the introduction of this Bill. One aspect, however, has not been transferred. I am a bit anxious about it. My Committee made it clear that it thought that BRB should not sell rail land before decisions that could have an impact on the railway system. The Secretary of State knows better than anyone that, in the previous century, railway companies were extravagant in their acquisition of land. It would be extraordinary if we were trying to plan for a new system but, because of a hangover from previous legislation, the BRB was selling sites. There will always be some bits of land that it is happy to let go, but it is important that strategic decisions be taken in relation to particular land before it is put on the open market.

    I know that the Select Committee will want to examine the difference in the powers between Wales and Scotland. It will also want to examine the role of the London mayor and whether, in the Bill, the mayor's powers should appear transparent to the voters.

    I was glad that the Secretary of State mentioned that he wanted passenger representatives to be on the Strategic Rail Authority. It is extraordinary that we all talk about the internal debates between the operating companies, Railtrack and Ministers, but that, even with the only slightly improved passenger rail authority set-up, we still do not hear the voice of the passenger as strongly or as usefully as we should. It is vital that passengers, freight users and railway employees should have a direct input, so that their views are heard. I am not suggesting that they should automatically be given precedence over other aspects of rail policy, but unless their voice is heard there will be a real worry. One hopes that the new consumer structures will be broader than existing ones.

    I hope that, somewhere in the legislation, we can look at the whole question of rail safety. Despite its age, the railway system is very safe. People are carried safely, but there are still problems about some of the slam-door stock and the speed at which it is being replaced. There are worries, too, about the signalling system and about its age.

    Without being unkind about it, if Railtrack feels that it is necessary to issue a notice to its contractors saying, "Please do not touch the signalling because the wiring is so old it may automatically go wrong," we have to worry about some aspects of the working of the system. We need to look at them closely.

    Will the Strategic Rail Authority have the right to say to companies, "We do not want you to carry on with some of the rolling stock—certainly, mark one rolling stock—and we want it to be replaced as quickly as possible"? The Government so far do not seem to have told us exactly how many train operating companies they believe should be in existence. It is possible that, at the end of the franchise renegotiation, there will be no need for quite so many companies. It would be helpful to know exactly what my right hon. Friend has in mind for the future.

    I am concerned about the tension between competition policy and the integration of a railway system. We know that, once there is privatisation, there is a need for regulation. Those two things are likely to grate against one another. The arguments advanced by individual operators are the sort of arguments that have been used by some Conservative Members today: when it comes to the crunch, the shareholder and profit-maker must take precedence over the passenger and the need to run the system. That is not in anyone's interests. I hope that it will not be the case when the time comes for a renegotiation.

    No. I am coming to the end of my speech and many hon. Members are waiting to speak.

    I welcome the opportunity that the Secretary of State has given my Committee to look closely at the Bill. It is long overdue. It has tremendous opportunities for every one of us. It is the first time for many years that any senior Minister has come to the House with a plan for the future that is optimistic. My right hon. Friend's plans relate to the future, not the past—whatever that murky and unhappy place may be. I assure my right hon. Friend that we shall play our part in the passing of the legislation, and the securing of the examination, on time. I trust, however, that he will not expect us to work at quite the same pace for the rest of the current Parliament; if he does, we may have the odd thing to say.

    5 pm

    I am glad that at long last—more than two years after the general election—some transport legislation is before the House. I have repeatedly offered the Secretary of State our support for the passage of the Bill at the earliest possible opportunity, and I am disappointed that it will clearly not be enacted until some way into the next Session. The travelling public will be disappointed as well: they have not seen the improvements that they may have expected following the change of Government. Those improvements are vital, and we will do what we can to ensure that the Bill is passed sooner rather than later. The Secretary of State's role has, I think, been to do all that he can internally, within the Government, to speed up the process.

    How does the hon. Gentleman intend to give the Bill a fair wind, given that no member of his party serves on the Select Committee on the Environment, Transport and Regional Affairs which will consider it?

    We have negotiated to enable the sole Liberal Democrat member of that Committee to work on its Transport Sub-Committee in this instance, for the very reason that the hon. Gentleman has given. I personally feel that, if Select Committees are to be split into two sections—as not only this Committee but at least one other has been—they should have enough Liberal Democrat members for our party to be involved in both parts of their work.

    As the hon. Gentleman will know, we have agreed to the provision of a place for his colleague for the purpose of consideration of the Bill. I am sure he will understand, however, that the Committee of Selection—on the basis of the rules of the House—decides how many Liberals should be on a particular Select Committee. If I may say so without being immodest, the Select Committee that I chair has done an enormous amount to try to ensure that there is a balance. I hope that the hon. Gentleman is not suggesting that the addition of another Liberal to the Committee would solve the problem; in fact, it would cause some difficulty.

    I do not think that you will allow me to proceed much further with that subject, Mr. Deputy Speaker. I must say, however, that, although the Committee of Selection is responsible for the numbers on Select Committees, it is not responsible for decisions made by those Committees about the division of their work. We should consider whether Select Committees should be all-party or not, and whether all-party reports should be published. I personally feel that they should be—although I am delighted to say that on this occasion the problem does not arise. That is the answer to the very reasonable question asked by the hon. Member for North Wiltshire (Mr. Gray), and, indeed, asked by me at an earlier stage.

    Although the Bill is welcome, I do not think that we can pretend that it will solve all the industry's problems. Those problems can be traced back a long way: the railway industry has not had an easy time for most of this century. Opposition Front Benchers seem to forget that nationalisation was not carried out on an unwilling private industry, and that it was intended to rescue an industry that was rapidly going bankrupt.

    The privatisation conducted by the Conservatives caused problems. We argued that it would, and so did the Government, when they were in opposition. I listened with interest to the Conservative Front-Bench spokesman, who skirted around the issue, as he and his colleagues do in their amendment. Do they believe that the system of regulation and the system for co-ordinating the development of the rail industry are inadequate, or do they believe that they got them right? They skirt around those questions in their amendment, which simply says that they are not in favour of the way in which the Bill is being introduced. They do not say that they do not like the proposal in its own right.

    The right hon. Member for Wokingham (Mr. Redwood) argued that the Conservatives do not like this particular proposal but that they are not necessarily opposed to taking action. That is about as near as the House is likely to get to an admission from those on the Conservative Front Bench that something must be done. They were not prepared to state that, however, and they were certainly not prepared to apologise. Once again, the Conservative spokesman needs to listen to his leader, who said that Conservative Front-Bench spokesmen should be willing to apologise for the mistakes that they made in government. The right hon. Gentleman should not, therefore, feel embarrassed about doing so.

    The right hon. Member for Wokingham admitted, however, that regulation of the industry needs to be more robust. It will be interesting to see whether the Conservatives can bring themselves to make any constructive proposals to achieve that. Privatisation has not been the success that they suggested it has been, and if they listened to passengers for one moment, they would understand that passengers do not believe that it has been a success.

    As the economic cycle dipped, passenger numbers fell, and as it recovered, they increased. When I have met rail executives, they have said that they are pleased with what they have achieved, but they have admitted that the increases in passenger numbers are largely equivalent to a recovery to pre-recession levels and no more. They do not know, any more than the rest of us do, whether the same decline would occur if there were another recession, causing severe problems to the industry's investment plans.

    The punctuality figures show no sign of improvement and those on reliability remain below the desired level. Complaints continue to soar. The Conservative party, therefore, has reason to acknowledge that there needs to be an improvement in the strategic co-ordination of the industry and the powers of regulation and enforcement. The regulators have asked for that improvement, and it is noticeable that the Association of Train Operating Companies, rail operators and Railtrack are not opposed to the principles behind the Bill.

    Liberal Democrats should have preferred a more comprehensive Bill to implement the entire transport White Paper. I hope that before too long there may be legislation to tackle the wider issues raised in the White Paper. We should have preferred the Bill to set up an authority with a role similar to, but not as great as, the proposed Strategic Rail Authority to resolve problems in the bus industry. The current competition authorities in that industry are far too slow to tackle effectively many of the problems, including anti-competitive practices which are not in the interests of the consumer.

    We want the proposed authority not only to co-ordinate rail, which is just one part of an integrated transport strategy, but to draw up plans for all public transport within that strategy. The Secretary of State could consider those plans and the House could debate them.

    Will the House have a chance to debate the authority's annual reports? Will any strategic proposals that are made be reported to and debated by the House? There is a proper role in that process for the Secretary of State, but there is also a role for the House in a wider debate on transport.

    I believe that those matters should be debated in this House. I want a public debate about the strategic network, and the approach adopted by the Strategic Rail Authority should be debated by the House. I am sure that that will happen.

    On the integration of bus services, the hon. Gentleman is right to criticise the competitive forces and the slowness in dealing with the deregulated bus industry—a major issue, requiring legislation. However, the integration can be achieved within the local transport plans that I have asked local authorities to produce and for which I have found £800 million to enable that work to start now. They are producing those plans; that does not require legislation.

    That is half the answer, but not the full one as it does not allow the regulator to tackle problems. Bus privatisation saw a massive decrease in the level of bus services, particularly in rural areas such as my own. In contrast, passenger use in London has increased—partly, at least, because there is an effective co-ordinated and regulated network. I am not arguing for the formal regulation of every single bus route, but we need a body with the ability to crack heads together, given some of the appalling anti-competitive and anti-passenger practices of some of the bus operators.

    The hon. Gentleman suggested earlier that the train operating companies are not opposed to the Bill, although they have expressed some comments. Perhaps one reason why they are not being too vigorous in their opposition is that whereas, previously, the renewal of their franchise would have been the responsibility of the franchising director, under the Bill it will be the responsibility of the Secretary of State. Therefore, the companies do not want to upset him.

    The hon. Gentleman may be right, but given the poor public service record of some of the companies, the public might rather welcome the idea that they will be cowed into submission.

    With the train operating companies' subsidies set to fall over the coming years, real questions arise about how we get the investment that is needed in rail infrastructure so that the second if not third-class travel conditions that passengers have too often suffered are improved and match the first-class returns that shareholders have enjoyed. I hope that the Strategic Rail Authority will be able to address directly the high levels of profits, the high returns for shareholders and the high levels of pay for some of the bosses in the rail industry, as well as the low returns to the travelling public.

    Does my hon. Friend agree that however the Strategic Rail Authority is established, it should not impact upon existing projects such as the revamp of Sutton station—a joint venture by the British Railways Board, Connex and the local authority, which should proceed smoothly and quickly?