Grand Committee

 Grand Committee

Thursday, 26 June 2008.

The Committee met at two o'clock.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) in the Chair.]

Crossrail Bill

(First Day)

The Deputy Chairman of Committees (Baroness McIntosh of Hudnall)
I remind the Committee that if there is a Division in the Chamber when we are sitting, the Committee will adjourn as soon as the Division Bell is heard and will resume after 10 minutes.

Clause 1 [Construction and maintenance of scheduled works]:

Lord Hanningfield
moved Amendment No. 1:

1: Clause 1, page 2, line 4, at end insert—
 “( ) The nominated undertaker shall appoint a single infrastructure manager.”

The noble Lord said: Before I describe the amendment, I shall take a moment to thank those noble Lords who sat on the Select Committee. For 29 days, they listened and commented on the concerns of the many petitions deposited against the Bill. Their time and input have been vital to the scrutiny and development of the Bill as it passes through this House.

One topic raised was the level of concern about the infrastructure management of each section of the railway, specifically the tunnel section. As the Select Committee highlighted in its report, the legislation around this topic is complex. However, under the Bill, it is entirely plausible that more than one company could become responsible for the infrastructure management of the Crossrail system. That would increase the complexity of the already multifaceted network of relationships and responsibilities shared between the promoter, undertaker, regulatory bodies and train companies involved. Ultimately, that would have a negative impact on efficiency and accountability and could increase costs.

The purpose of the amendment is twofold. It ensures that a single infrastructure manager will be appointed to oversee the construction of Crossrail from end to end, and that there will be joined-up and clear accountability for infrastructure along the route. Both outcomes—I hope the Minister agrees—are of paramount importance to the timely and efficient construction of Crossrail. The Crossrail project will be Europe’s largest civil engineering project, costing just under £16 billion. It is important that we get the delivery right. As the Select Committee concluded, it would be a concern if more than one body were to be given infrastructure management responsibilities.

Without the amendment being accepted, how can the Minister provide assurances that it is the Government’s intention to have a single infrastructure manager? How binding will the outcome of negotiations be? Will Parliament have an opportunity to consider the proposed arrangements before the Bill completes its passage through both Houses? Perhaps when the Minister responds, as I am sure he will, he will answer those pertinent questions for the benefit of the Committee. I beg to move.

Lord Berkeley
I shall speak to my Amendment No. 21, to which the noble Lord, Lord Bradshaw, has added his name, and for the convenience of the Committee I shall speak also to Amendment No. 22. That will save time, and it is probably more relevant here. Before I do so, and before I support the amendment proposed by the noble Lord, Lord Hanningfield, I should say that I was probably the only Member of your Lordships’ House to appear before the Select Committee as an agent, which was a very worthwhile and interesting experience. I congratulate the committee, not only because my noble friend who is sitting next to me was on it.

Lord Snape
There is another one.

Lord Berkeley
There are two? I am terribly sorry. I am surrounded by members of the Select Committee, which makes me feel very honoured. It gave everyone a good hearing and listened with interest and patience, which is not always the case for some other committees that one has been involved in. It produced a comprehensive and fair report, for which I am very grateful. I declare an interest as chairman of the Rail Freight Group, on which basis I appeared.

In connection with the amendments, it is relevant to refer the Committee to paragraph 233 of the Select Committee’s report. It says that,

“we take this opportunity to state that we would be concerned if more than one body was to be given infrastructure management responsibilities. We would be further concerned if Network Rail were required to be infrastructure manager for the purposes of the ROGs”—

the Railways and Other Guided Transport Systems (Safety) Regulations 2006, SI 2006/599—

“in the central tunnel section without also being given responsibility for the operation and maintenance of the railway in this section”,

which is covered by the infrastructure manager regulations that I mentioned in Amendment No. 21.

Clearly the committee heard evidence on the subject and thought it important. I hope that my Amendments Nos. 21 and 22 provide a good basis for ensuring that Crossrail infrastructure is part of the regulated railway, and that my noble friend will accept them. The Committee will know that that would involve the regulator determining any disputes about access if at some stage in future more than one train operator wished to provide services through the tunnel. The regulator would also fix the access charges; one would hope that everybody would pay the same charge, otherwise it would be illegal. That always causes problems; it definitely did when we debated the Channel Tunnel Rail Link amendment Bill about a month ago. I hope that my noble friend will reflect on the fact that one of Crossrail’s big problems in its development and in the passage of the legislation through both Houses has been the relationship with the British Airports Authority and the Heathrow Express, which is of course not a regulated railway or service. It is the same issue here. If you are on the right side of the fence, have a new project and need lots of money, you want priority over everyone else, but if you are on the other side of the fence—BAA is now; it was not before—you see it differently. My conclusion from all that is that it would be much better if Crossrail tunnel infrastructure were part of the regulated railway and if the industry processes that we spent so many hours discussing were applied.

I do not need to say any more about Amendments Nos. 21 and 22, because they cover much the same ground as the noble Lord, Lord Hanningfield, has covered, and I am pleased to support his amendment as well.

Lord Bradshaw
I too thank all noble Lords who participated in the proceedings of the Bill committee, particularly the two present. I fully endorse what the noble Lord, Lord Hanningfield, said about there needing to be a single infrastructure manager and I believe that it should be Network Rail.

I would like to touch on the question of the application of the Railways and Other Guided Transport Systems (Safety) Regulations 2006 and the Railways Infrastructure (Access and Management) Regulations 2005. It is important that Crossrail is managed and constructed in accordance with the regulations and that, therefore, if at some stage some other operator gains access to it, it will not find itself precluded from so doing by a formulation other than that applying to the rest of the railway.

With that, I am pleased to support the amendments. I believe that my noble friend might have something further to say about the use of the tunnel by other services.

The Earl of Mar and Kellie
These amendments are very important. It is essential that we retain as much flexibility as possible for the future use of the tunnel. I understand that the aim is to run a metro service; I also believe that that is not being legislated for but is merely an operational choice. I suspect that that is a mistake. It is certainly important that the capability for long-distance trains to be integrated into the tunnel should be retained in the future. Of the two Crossrail schemes under way, or at least being thought about, the Glasgow Crossrail scheme, which, for example, would allow people from Gourock or Ayr to travel straight through to Edinburgh—something that has been impossible for many years—is the kind of arrangement that we should certainly be considering for the London Crossrail scheme in the future.

Lord Brooke of Alverthorpe
I do not want to spend a great deal of time on paragraphs 232 and 233 of our Select Committee report, except to say that we were particularly concerned about what would happen with the central tunnel, and that was where we directed most of our inquiries. We felt that ultimately it was appropriate for the negotiations taking place between the different parties to continue and that we would leave it to them. We hope that they find a satisfactory outcome.

My principal reason for speaking is to express on behalf of Select Committee members our grateful thanks to the noble Viscount, Lord Colville of Culross, who, regrettably, is not with us today. He chaired the Select Committee effectively and efficiently, and was a most appropriate chairman. He had great experience of, and a background in, planning matters, which was of great assistance to us. He was firm but fair, and he was extraordinarily patient—to the point where one or two members of the committee reprimanded him for being too patient. I do not look at anyone in particular when I say that. At the end of the exercise, even though a fair number of petitioners went away without having secured what they had hoped to persuade us to give them, I am sure they all felt that they had had a very fair hearing and that the process had all been well worth while. They had seen the House of Lords at its best in trying to see the democratic process work to its maximum.

Secondly, I place on the record our grateful thanks to our Clerk, Sarah Price, who was also extraordinarily efficient and effective in seeing us through some very difficult periods. She ensured that all the petitioners who wanted to see us appeared before us, and even some of those who did not want to see us were persuaded to come to express their views publicly. She did that in an extraordinarily persuasive and quiet fashion, which we all found enamouring. We are sorry to learn that she will not be staying with the House. That is the House’s loss, but I understand that she is going into education and teaching and I am sure that we all wish her well in her new career. We thank her for the excellent report that she has written. It would be inappropriate if I did not also publicly express thanks for her support from Darren Hackett, who had spent 20 or even 22 months working with the Select Committee in the House of Commons before coming to work with our committee. He had therefore spent about two years of his life working on Crossrail, on which I suspect he is the font of all knowledge, probably knowing as much about the subject as anyone, and we express our thanks to him for all the efficient work that he did on our behalf.

14:15:00

Lord Bassam of Brighton
The thanks have all been given. I am grateful to the noble Lord, Lord Hanningfield, and my noble friends Lord Brooke and Lord Berkeley. The committee did a first-rate job and I, too, am sorry that the noble Viscount, Lord Colville, is not here to hear his praises sung. He did an extremely good job. When I found a bit of spare time to listen to the committee’s proceedings, he certainly demonstrated a firm grip on events. I found the committee itself extremely interesting. All those who made their representations through that process will have felt that they had a fair hearing.

The report produced was of the highest quality, and its authors should be congratulated. It has certainly aided us in taking the Bill forward in Grand Committee, for which we are all very grateful—as I am to the authors for the forthright way in which it was produced. Perhaps polishing up our own credentials here, I say that our committee did as good a job in this House as did the committee in the House of Commons; some say even better, because it did not take quite so long. I shall go no further in my comments on that.

I am grateful to the noble Lord, Lord Berkeley for doing a bit of instant regrouping and bringing Amendment No. 22 into this group; I shall deal with that amendment in turn. The noble Lords, Lords Hanningfield and Lord Bradshaw, and my noble friend Lord Berkeley have, in different ways, all raised the question of the infrastructure manager for the central tunnel section of Crossrail. This issue was, as has been said, explored in some detail by the House’s Select Committee on Network Rail’s petition. It is written up very clearly in paragraphs 225 to 233 of the committee's special report, which has been helpful. Also, the special report reproduces at appendix 7 the promoter’s note that describes the complexity of the legislative background to the infrastructure manager issue.

For those who have not read these parts of the special report, I ought to outline a little of the background arising from a number of EU directives. For our purposes, we must consider two sets of regulations that transpose directives. These are the Railways and Other Guided Transport Systems (Safety) Regulations 2006, which I shall refer to as the ROGs, and the Railways Infrastructure (Access and Management) Regulations 2005, which are commonly referred to as the “regs”.

The concept of infrastructure manager arises under both the ROGs and the regs, which is somewhat confusing because these are not identical functions and can be exercised by different bodies—possibly even a number of bodies. I hear what Members of the Committee have said about wishing to constrain that. However, there is, in fact, no formal appointment process for infrastructure managers whether by government, the Office of Rail Regulation or any other means. The identity of infrastructure manager is instead based on who exercises particular functions under the ROGs and the regs.

There is no reason why safety functions and charging for access to infrastructure must necessarily be undertaken by a single body; EU law certainly does not require it. Neatly, Network Rail happens to be the infrastructure manager under the ROGs and the regs in relation to the national railway network, as we have heard. That makes sense, since it owns and controls it in all respects. However, for example, infrastructure management is organised differently for the Channel Tunnel Rail Link, which is not in Network Rail’s ownership although Network Rail is infrastructure manager under the ROGs for it.

The Crossrail central tunnel section is likely to be owned by Transport for London, not by Network Rail, hence it is not an identical situation to the national network. Although it is intended that, for the central tunnel section, Network Rail will perform the functions of the infrastructure manager under the ROGs, this does not mean that only Network Rail can, or must, perform the functions of infrastructure manager under the regs. TfL has a legitimate interest in the operational phase of a project in which it is making a substantial investment. Therefore, the organisational model—defining who does what—must be developed, discussed and decided as part of the project development process.

The debate in Select Committee came at an early stage of this project development process, so was inevitably inconclusive. A good deal of work has been carried out since then and there have been a number of discussions between the key parties—the department, Network Rail and Transport for London. We expect to meet the Office of Rail Regulation early next month to seek its guidance. Therefore it would be premature to announce a conclusion today. As was made clear in the Select Committee, Network Rail is under no obligation to accept arrangements that would prevent it fulfilling its responsibilities.

The amendment moved by the noble Lord, Lord Hanningfield, has a number of problems. As I explained, the ROGs and the regs, which transpose EU law, do not make provision for anyone to appoint an infrastructure manager. Therefore no appointment function could be given to a nominated undertaker as envisaged in the amendment. The identity of the infrastructure manager or managers will be driven by how the project is structured, so as to allocate various functions, and it will then be a matter of legal interpretation of the ROGs and the regs. That project structure will ultimately need to be agreed by all the parties.

The new clause proposed by the noble Lords, Lord Berkeley and Lord Bradshaw, goes further in requiring the infrastructure manager for both the ROGs and regs for the central tunnel section to be Network Rail. This is more than Network Rail has said that it requires, as detailed in evidence to the Select Committee and the special report. For example, Network Rail has not said that it needs to set charges for access to the central tunnel section.

In conclusion on this amendment, I entirely accept that the infrastructure manager issue is very important and needs to be resolved, but this is tied up with the organisational structure to deliver the project and cannot be decided in isolation. It is also, as I said at the outset, and as recognised by the Select Committee, an immensely complicated issue that is being tackled as a matter of considerable urgency by the department, Network Rail, TfL and the ORR. It is important to recognise that Crossrail is not being promoted and financed wholly by Network Rail, so the infrastructure management issue should not automatically be treated as if it were wholly a Network Rail project.

Amendment No. 21, as my noble friend Lord Berkeley, said, is not unrelated. I have described the relevant legislation on railway regulation, and it is perhaps worth saying that the 2005 regulations provide for certain exemptions for networks intended only for the operation of urban and suburban passenger services, for example. We do not believe that these exemptions under the regs would apply in the case of Crossrail, but it would ultimately be for the courts to decide. The issue of the identity of the infrastructure manager arises because of our working assumption that the central tunnel section is not exempted under Regulation 4. Technically the proposed new clause also has problems. Whether one of the exemptions applies is simply a matter of law under the regulations transposing the EU directives. Even if an exemption were to apply it would not by itself limit the types of traffic that could be taken, as implied by the proposed new clause. The main result would be that refusal of access could not be appealed to the ORR.

I hope that I have dealt with the central issues relating to the first set of amendments and that I have given my noble friend sufficient assurance. I can say only what we believe is assumed in our work in developing the project, and cannot of course give a definitive determination on whether an exemption applies under Regulation 4. I hope that having heard what I have said, the noble Lord will withdraw the amendment.

Lord Hanningfield
I am a bit concerned about the Minister’s answer. It was technical, of course, but I think he said that there should be a single infrastructure manager. Everyone—certainly the Select Committee—thinks that that would be beneficial. However, his answer did not seem to indicate that there is a way through it. As everyone thinks it is desirable, particularly for the tunnel section, we should find a way to do it. I understand the points the Minister made, but he did not give a solution. I hope someone can find a solution to this problem because that is what we ought to try to do.

Lord Bassam of Brighton
That is the purpose of the continuing discussions and negotiations. We have to be very careful in approaching this, which is why I set out the argument as carefully as I did.

Lord Berkeley
I am grateful to my noble friend. I think he said that the Government’s intention was to comply with what the Select Committee recommended in this case, but he is not quite there yet. Three issues need to be addressed, which are probably covered by my two amendments. First, there needs to be one timetabling organisation. We cannot have the central section being timetabled from the outside. That is pretty obvious, but we have to ask the question. Incidentally, my two amendments do not mention Network Rail, just one infrastructure manager. I do not see any change, but who knows?

Secondly, who sets the charges? My noble friend did not talk about that. On the regulated railway, the regulator normally sets the charges that the infrastructure manager can make. It is a combination of how much the regulator thinks he needs to spend to maintain and operate the track and, in this case, a premium because it is a new project under Article 8.2 of the 2001/14 directive. When we debated the CTRL, we discovered that London and Continental had given Network Rail an 80-year contract to maintain the CTRL on a cost-plus basis. I am sure my noble friend cannot respond to me today on why it did that because it is historical, but I hope that will not happen on Crossrail. It would be much better if the amount of money that the infrastructure manager was given was fixed by the ORR because it is clear that the department has not done very well on the CTRL and perhaps the ORR would do better.

Thirdly, there is access. Other noble Lords mentioned the possibility of other trains apart from the Crossrail metro going through the tunnel in future. Someone has to act as a sort of referee if there is demand for more access than is available. I accept that the amendments as they stand are probably not right, but I would be grateful if my noble friend could answer on timetabling, on whether the Government support the recommendation by the Select Committee and on charges and access.

Lord Bradshaw
While the Minister is thinking about that, I shall add that the situation he has described to us is that agreement is being sought between the ORR, Transport for London, Network Rail and the department. However, they come at it from different angles and—I have no grounds for saying this—Transport for London may put what it regards as its needs first and by so doing shut out any other ideas that anybody else might have.

Lord Bassam of Brighton
Network Rail is already in the business of timetable control and applied for the access option to run the Crossrail service on its network. It is important that charging is carefully considered in the discussions at the moment—not just in those with the Office of Rail Regulation, but in those with the other stakeholders. There have to be continued discussions, but they already involve timetable control. That should reassure the noble Lord somewhat.

The complexity of this is apparent. Both noble Lords conceded that there might be some technical deficiencies in their amendments. I understand their urgency in wanting to see these issues resolved, but I do not think that they can be resolved by way of an amendment to the Bill. The amendments are not terribly helpful in that respect, although I appreciate the way in which noble Lords have raised these important issues in relation to the Select Committee report. I cannot really go any further than that today.

14:30:00

Lord Hanningfield
We have had an interesting discussion on this issue. I do not think that we have solved it and discussions will continue. Unfortunately, Report and Third Reading will happen rapidly before the Recess and I doubt whether negotiations will come to fruition before then. There is probably no point in pursuing this further today, but perhaps the Minister might know more about where negotiations are by the time we get to Report or Third Reading. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

Schedule 1 agreed to.

Clause 2 agreed to.

Schedule 2 agreed to.

Clause 3 agreed to.

Schedule 3 agreed to.

Clause 4 agreed to.

Schedule 4 agreed to.

Clause 5 agreed to.

Schedule 5 agreed to.

Clause 6 agreed to.

Schedule 6 agreed to.

Clauses 7 to 10 agreed to.

Schedule 7 agreed to.

Clauses 11 to 15 agreed to.

Schedule 8 agreed to.

Clause 16 agreed to.

Schedule 9 agreed to.

Clause 17 agreed to.

Schedule 10 agreed to.

Clauses 18 and 19 agreed to.

Clause 20 [Control of construction sites: appeals]:

Lord Bassam of Brighton
moved Amendment No. 2:

2: Clause 20, page 14, line 17, at end insert—
 “(5) A statutory instrument containing regulations under subsection (4) shall be subject to annulment in pursuance of a resolution of either House of Parliament.”

The noble Lord said: Rarely can we have been so contented for so long. It felt like I was back in church and we were doing salutations. Amendments Nos. 2, 35 and 37 give effect to the recommendations of the Delegated Powers and Regulatory Reform Committee. We are very grateful to that committee for its consideration of the delegated powers contained in the Bill and for its report on 31 January this year. It made three recommendations in respect of the powers of the Secretary of State to make secondary legislation under the Bill. The first related to Clause 60(1), which in turn relates to the power of the Secretary of State to devolve functions to London government. As the committee noted, Clause 60(1) confers what is in effect a Henry VIII power to modify references in the Act to the Secretary of State to references to the Greater London Authority, Transport for London or both, and to make consequential provision, which may include modifying the then Act.

The second and third recommendations related to secondary legislation which makes provision about arbitration. Clause 20 modifies the operation of Sections 60 and 61 of the Control of Pollution Act 1974, so that appeals relating to noise emanating from construction sites are determined by the Secretary of State or, if the parties agree, by arbitration rather than by a magistrates’ court. Clause 20(4) enables the Secretary of State for Transport and the Secretary of State for Environment, Food and Rural Affairs, acting jointly, to make regulations about procedure in relation to such arbitrations. Of course, regulations would be made by a statutory instrument not currently subject to a scrutiny process.

Clause 63 makes provision for the arbitration of disputes under the then Act, unless otherwise provided for such as in the example that I have just referred to. Subsection (5) enables the Secretary of State for Communities and Local Government and the Secretary of State for Transport, acting jointly, to make rules about the arbitration process. Those rules will be made by a statutory instrument, which is not currently subject to a parliamentary procedure in accordance with the Bill.

The committee recommended that, since one or other of the Secretaries of State might be a party to an arbitration arising from the Bill, arbitration rules made under Clauses 20 or 63 should be subject to the negative resolution parliamentary procedure. Having carefully considered the report, I agree with what the committee proposed in each case. For those reasons, I beg to move.

On Question, amendment agreed to.

Clause 20, as amended, agreed to.

Clause 21 agreed to.

Lord Bassam of Brighton
moved Amendment No. 3:

3: Before Clause 22, insert the following new Clause—
 “Objective of ORR in relation to Crossrail
 (1) The list of objectives in section 4(1) of the Railways Act 1993 (c. 43) (objectives of Office of Rail Regulation and Secretary of State) shall be treated, in relation to the Office of Rail Regulation only, as including the objective of facilitating the construction of Crossrail.
 (2) The Office of Rail Regulation shall consult the Secretary of State about the duty under section 4(1) of the Railways Act 1993 (as modified by subsection (1)).
 (3) This section shall cease to have effect on such day as the Secretary of State may by order made by statutory instrument specify.
 (4) A statutory instrument containing an order under subsection (3) shall be laid before Parliament after being made.”

The noble Lord said: I will introduce two new government clauses by first explaining those clauses that I have given notice of my intention to oppose, as these new clauses and subsequent deletions form a package of amendments to the railway matters covered by the Bill. That means that I shall speak for some while, but it is important that I provide the Committee with an appreciation of why I propose to delete Clauses 23 to 34 before we can understand those clauses that I propose to insert. I shall also refer to the amendments to those new clauses tabled by the noble Lords, Lord Hanningfield, Lord Berkeley and Lord Bradshaw.

Clauses 23 to 34 are a dozen clauses that include overriding duties on the Office of Rail Regulation, which affect in particular the process for gaining access rights to the railway network. I have given notice of my intention to oppose all the clauses and remove them from the Bill, and the Department for Transport made clear on several occasions in several statements in April that it would seek to delete them. The clauses were from the outset intended to be reserve powers, as our intention was to use normal railway industry processes where possible, and the Bill process has allowed time for the key process to run its course. As Members of the Committee know, an application was made in July 2007 to the Office of Rail Regulation by the Secretary of State and Network Rail for approval under Section 18 of the Railways Act 1993 of an access option that would grant access rights for Crossrail services on the existing railway network.

The Office of Rail Regulation undertook a public consultation and held a hearing on 1 February involving those who responded, which included many representatives of the railway industry. It issued a proposed decision and invited further comments. The ORR issued its final decision on 14 April, approving the access option with modifications. This means that, having taken careful account of the interests of the railway industry, the ORR has approved firm, long-term access rights to operate the bulk of the proposed Crossrail services on the Great Eastern and Great Western main lines, as enhanced as part of the Crossrail project. Much timetabling and other work to validate the operational viability of these Crossrail services has been undertaken over several years, and will continue iteratively until the opening of the Crossrail service in 2017 and beyond, resulting in a high-performing railway for all users.

The access option consequently provides the Government and others investing in this project with the certainty they need to take Crossrail forward, and should provide Parliament with the confidence that the public benefits of the Crossrail services are sufficiently secure, should Clauses 23 to 34 be removed from the Bill. The access option means that there is no need for the Bill powers, for example, to direct Network Rail to enter into access agreements or to activate duties of the ORR in respect of Crossrail services. The Crossrail train operating company will have no superior access rights to those of any other operator with an access agreement. Any access disputes between operators would be resolved by existing industry processes, and any additional access rights for Crossrail services beyond those specified in the access option will be subject to approval by the ORR under the normal industry processes, and not under any Bill powers. It is notable, also, that the access option provides future growth capacity for other railway users, such as rail freight.

There is one caveat, mentioned by our counsel during the Select Committee hearings, of which I should make the Committee aware. If there were to be a judicial review of the ORR’s granting of the access option, the Government may need to revisit at later stages of the Bill whether there are sufficient railway powers in it to ensure that the project can go ahead. A £16 billion investment cannot be taken forward unless the necessary approvals have been obtained to construct and operate the project in question, or unless the Bill contains the necessary provisions to obtain those approvals. However, this will be considered only if there is uncertainty over the access option, and it is notable that the railway industry has already broadly welcomed the ORR's decision.

In summary, I hope that we will today delete Clauses 23 to 34, which are now no longer necessary following the granting of the access option, and insert two new provisions, which I am afraid that noble Lords will now have to listen to me carefully introducing. In contrast to those powers that I have proposed be removed, neither of these provisions contains an overriding duty on the ORR, nor do they seek to modify access arrangements directed by the ORR under the Railways Act 1993.

Amendment No. 3 includes a new additional but not overriding objective of facilitating the construction of Crossrail in the ORR's list of objectives in Section 4(1) of the Railways Act 1993. It is precedented in Section 17 of the London Olympics and Paralympics Act 2006, and follows the wording of that Act in referring to “objective”. This is purely drafting semantics and does not give any special priority over what is listed under the duty in Section 4(1) of the Railways Act 1993.

The clause does not direct the ORR as to how it should meet this new objective. This is properly left to its judgment as the independent Rail Regulator in the circumstances at the time. However, ultimately, the ORR would have to oversee a track possession regime which, by whatever means it considers appropriate and while balancing all its existing Section 4(1) objectives, would enable the Crossrail construction works to take place. Overall, Amendment No. 3 provides an appropriate and reasonable objective for the ORR to help to deliver the Crossrail works, as authorised by Parliament, but within the context of national railway services and the network itself.

More specifically, there has been a long-standing issue regarding whether existing train operators could exercise so-called blocking rights that would prevent the track possessions for the carrying out of Crossrail works. If consultation with train operators and optimisation of the track possessions has taken place in accordance with the network code, and satisfactory compensation has been paid to train operators in accordance with Crossrail information paper H2, then it would not be appropriate for blocking rights to prevent these possessions.

It is doubtful that blocking rights could be exercised in a way that would prevent works being undertaken that had been authorised by Act of Parliament, since that would cause a contractual arrangement to conflict with the purpose of primary legislation—what will be the Crossrail Act. Nevertheless, it is desirable to ensure certainty with regard to this issue, as the consequences of relatively small but none the less essential works being frustrated or delayed could be extremely serious and costly.

14:45:00

Accordingly, an action for the ORR in relation to this new clause would be to consider whether the track possession regime could be conducted under the network code as it is, or whether it should amend the network code to make it explicit that blocking rights could not prevent sufficient track possessions to undertake works approved by Act of Parliament. Once the Crossrail construction phase has been completed, this objective will cease to have any purpose, and the Secretary of State can, by means of an order, remove the objective from Section 4(1) of the Railways Act 1993 as an act of transparency and administrative tidiness. The new clause proposed in Amendment No. 3 has no relevance to the operation of Crossrail services.

I now turn to Amendments Nos. 4 and 5. They require the ORR, when exercising the new objective in the proposed new clause, to have regard to the interests of other railway users and operators. That is unnecessary because the ORR’s existing Section 4 objectives in the Railways Act 1993 require it, among other things,

“to protect the interests of users of railway services … to promote efficiency and economy on the part of persons providing railway services”,

and,

“to enable persons providing railway services to plan the future of their businesses with a reasonable degree of assurance”.

The ORR will necessarily have to balance the interest of Crossrail construction with the interests of affected users and operators. The new objective in the proposed new clause is desirable because the ORR should specifically address issues, such as the one I have just described in relation to the network code, that could frustrate Crossrail construction. But the decision on what, if anything, should be done would naturally take account of the interests of others under the existing Section 4 objectives. The objectives of the ORR are not generally written so that each is individually qualified, as noble Lords propose in their amendments. Instead, the objectives are considered and weighed collectively. The result of the amendments could be very odd and confusing, so I invite noble Lords not to move their Amendments Nos. 4 and 5.

The new clause proposed in Amendment No. 7 requires the Office of Rail Regulation to produce a report on what it has done or proposes to do to meet its new Crossrail construction-related objective, as provided by the new clause in Amendment No. 3, and how it has exercised or proposes to exercise any of its functions in relation to the operation of Crossrail services. The Office of Rail Regulation must do this from time to time, when it considers appropriate. The amendment of the noble Lord, Lord Hanningfield, to this proposed new clause would remove the ORR's discretion as to when it could publish the report. That could actually reduce the benefit of the clause if a particular issue arose outside the reporting schedule—if it were an annual schedule, for example.

The flexibility in the clause enables the ORR to report when such issues arise, or perhaps time doing so for particular stages of the project’s construction. That is supported by the power for the Secretary of State to require a report. She might exercise this, for example, if there were an issue on which she wished to ensure that the ORR published a timely report, or perhaps because she wished to ensure a particular frequency of reports. I doubt whether reporting less than annually would be satisfactory, but I would like to maintain flexibility to maximise the value of this new provision. I therefore hope that the noble Lord will give further consideration to his amendment and not move it.

Subsection (3) imposes a duty on the ORR to have regard to any report it produces relating to future action. However, there is no duty on the ORR to act in accordance with the report in every circumstance. This makes sense because the report is likely to be, in part, a statement of policy and, as is the norm, the ORR may wish to develop its policy in the light of future circumstances. This provision is therefore intended to aid transparency and accountability for the project sponsors and investors, Parliament and the wider railway industry. Crossrail is a major project authorised by Parliament, and the Office of Rail Regulation will be key to facilitating its efficient construction and the high-performing operation of its services. The ORR will do this under its statutory duties and functions, taking account of the interests of other railway operators.

The report produced by the ORR would, for example, assist the work of the Transport Select Committee in another place, which is an important part of the normal accountability arrangements for the ORR. In contrast, Amendment No. 8A, tabled by my noble friend Lord Berkeley to Amendment No. 7, would require the ORR to also report on the impact of the construction of Crossrail on other rail passenger and freight services. That widens considerably what the proposed new clause in Amendment No. 7 is trying to achieve. As I explained a moment ago, that new clause requires the ORR to report on what it is doing in exercising its functions, whereas the amendment requires the ORR to undertake a whole-industry assessment of Crossrail construction and its impact. I question the necessity for that. It could, for example, involve research and investigation into the decisions of others; for example, Network Rail and the industry’s dispute-resolution machinery. Given the repeatedly expressed wish that Crossrail follows normal industry practice, I cannot see why the ORR should have to undertake such a review for those enhancements to the network, which are by no means the largest enhancement works being undertaken.

The ORR has plenty of powers to investigate and enforce, if it considers that necessary; for example, through Network Rail’s network licence. If the concern is over what has happened recently on the west coast main line, then that is an industry-wide issue needing an industry-wide approach. It makes no sense to me for there to be a two-tier process, with special investigating and reporting arrangements on the impact of undertaking Crossrail works on the network. I therefore hope that my noble friend will reconsider his amendment.

Once the Crossrail passenger services are fully operational, they will become part of the national rail network and be subject to normal railway industry processes. Therefore, the usefulness of such reports from the ORR is expected to diminish over time, and the Secretary of State's exercise of the power in proposed new subsection (5) would be an act of administrative simplification, lifting a by-then redundant requirement on the Rail Regulator. In summary, both these new provisions complement the independent regulation of the railway network, and particularly the use of the access option to accommodate Crossrail by allowing special attention to be given to the Rail Regulator’s important role in the implementation of the Crossrail project.

We are at the realisation of a government policy to enable the cutting back of the railway powers in the Bill. It was always going to be challenging for the rail industry to accommodate a new major project such as Crossrail but, to its credit, it has risen to that challenge. The rail industry and the promoter of the project have together devoted considerable time and effort to resolving concerns. Clauses 23 to 34 and the overriding duties on the Office of Rail Regulation that they contain—not any other railway powers in the Bill—were certainly regarded by the petitioners from the railway industry as the most serious issue as the Bill reached the Select Committee in this House, but the Government’s proposals ensured that this was dealt with completely before those petitioners appeared.

Furthermore, the new provisions were published in draft during the Select Committee hearings so that railway industry petitioners and other stakeholders could consider them. Neither the Committee nor the petitioners submitted any comments on or amendments to the draft clauses, reflecting their uncontroversial nature. Indeed, the first new clause was a provision actively sought by some railway industry representatives as an acceptable alternative to the existing railway powers in the Bill.

It may assist the Committee to note that Amendment No. 11 to Clause 35 and Amendment No. 18 to Clause 36 are simply consequential on the insertion of the second proposed new clause following the deletion of Clause 23, and that Amendment No. 36 to Clause 60 and Amendment No. 38 to Clause 65 are simply consequential on the deletion of other clauses. I beg to move.

Lord Hanningfield
moved, as an amendment to Amendment No. 3, Amendment No. 4:

4: Before Clause 22, line 6, at end insert “with regard to the interests of users and operators of the rail network”

The noble Lord said: I also speak to Amendment No. 8. My amendments are a reaction to the new clauses proposed by the Minister. As he outlined in considerable detail, the clauses expand the objectives of the ORR and place a duty on it to publish reports. I shall address each new clause in turn. He asked us not to press our amendments but we should put forward our reasons for tabling them so that we can debate the issue.

The first new clause proposed by the Minister extends the primary objectives of the ORR to facilitate the construction of Crossrail—which I agree is important to have in statute—so that there is clarity of purpose, responsibility and accountability relating to the ORR’s involvement in the project. Although I agree that that is important, at what cost will the Minister be prepared to allow the ORR to achieve this specific objective, especially when the other, more general, objectives relate to protecting the interests of passengers, promoting the use of the rail network and promoting efficiency and economy?

I am concerned that adding a specific, albeit temporary, objective for the ORR to facilitate the construction of Crossrail will lead to that objective being prioritised over the ORR’s more general duties. The Crossrail project will be high-profile because of its size and cost and there will be pressure on all involved to deliver. However, that should not be at the cost of other rail users and operators.

The amendment aims not to remove the new objective from the list but, instead, to ensure that it is balanced against the ORR’s wider duties and will protect the interests of passengers and rail operators from the undoubted disruption to services during Crossrail’s construction. Although it is important that we deliver this crucial project—we all agree on that—we must not deliver it at a cost to the existing rail network, on which our citizens and economy undoubtedly rely.

On the second new clause suggested by the Minister, I applaud the Government for their intention and commitment to increase transparency and reporting—an intention that I hope the Minister remembers when we come to my proposed amendment to Clause 66. As the Committee will see from my amended version of the clause, I do not oppose the purpose or intention; my only frustration is with frequency, on which the noble Lord has commented at length. However, at what point should we expect to receive these reports? The Minister’s amendment would mean that it would be down to either the Secretary of State or the ORR to choose, but I find that level of uncertainty unacceptable. My amendment would therefore place a direct duty on the ORR to publish an annual report regarding its past performance and future strategy to achieve the new objective imposed on it relating to Crossrail.

The aim of my amendment is simply to clarify when the ORR must publish a report relating to its Crossrail activities. On a massive £16 billion, seven-year project, it is important that adequate checks and safeguards are in place. The current wording, “from time to time”, lacks definition and clarity, and provides no reassurance that regular updates to Parliament, the rail industry and the public will be given by the ORR. I hope that the Minister and other Members of the Committee will agree that this is a more pragmatic approach, and support my endeavour for consistent and timely reporting. I beg to move.

15:00:00

Lord Berkeley
The two amendments tabled in my name and that of the noble Lord, Lord Bradshaw, and the amendments tabled by the noble Lord, Lord Hanningfield, have enabled this debate. I have no problem with the two major government amendments to which my noble friend spoke, but I have a problem with some of his statements that seem to backtrack on the industry processes policies that I thought we had all agreed a long time ago. I am pleased that the Government have withdrawn these clauses about the access option and the regulator, which caused enormous problems with the industry.

However, I get the impression that there is still some wishful thinking in the department over how this issue is interpreted. My noble friend mentioned a judicial review. I do not think that a judicial review has been sought by anybody in the industry since privatisation nearly 15 years ago, but I may be wrong. He also mentioned blocking rights. They came up in the Select Committee and the conclusion was that industry processes could be used to resolve them. I hope that the Government mean what they say about using industry processes. The text of my noble friend’s two amendments is fine, and I hope that his statement, which I shall have to read in great detail, is not trying to put the clock back to recover a few things that the Government let go in these railway clauses.

It could be argued that the first government amendment is unnecessary because the regulator has a duty to consider all matters in respect of railways under Section 4 duties. I know that it was included for the Olympics. My understanding from the ORR is that, in practice, these things do not have much effect because it has to consider everything anyway, so why put it in? In future, we will talk about the west coast main line project. It will probably cost about £10 billion as opposed to the £16 billion for Crossrail, but it is still a very big project and nobody has said that there must be special clauses saying that the regulator must look at the west coast main line with or without the effect of the other operators, so I am not sure why this is needed. Perhaps I am arguing against my amendment, but at least we have had an opportunity to talk about it.

Turning to the second government amendment, what is going to be in this report? My noble friend has not said, and it is not in the amendment. My amendment requires the report to include the effect on other operators, which any normal report on project progress would include. What will be in this report? Is it that TfL and the Government have agreed how to finance it, that construction has started or that there is a new regulatory regime? Is it going to be about the finance? It is nice to have a report, but what is so different about this from the rest of the railway? Is it a report by the ORR explaining whether it is meeting its objectives? I am sure that that report would be very short and say yes. If my noble friend can give an outline of what will be in this ORR report, I can look further and see whether I think it is all right.

Lord Bradshaw
Like other Members of the Committee I will read carefully what the noble Lord, Lord Bassam, said. I do not believe that the Office of Rail Regulation is a soft touch; no one in Network Rail regards it as such. I am concerned that the Government allow it to be as independent as possible because then it will fulfil all the duties to which the noble Lord, Lord Hanningfield, referred. If responsibilities are blurred with the department, there is a danger that something might be left out. I shall be interested to read what the Minister has said and will perhaps comment more fully having digested it.

Lord Bassam of Brighton
I appreciate that I spoke at some length and it was not easy to follow. It is Thursday afternoon and noble Lords have been hard at it as legislators all week, so concentration can lapse, eyes can close, and so on. I moved through the arguments carefully, but the noble Lord, Lord Bradshaw, has got it right when he says that he will read what I said very carefully. That is very wise—not because I said it, but clearly because we had to give a lot of detailed explanation, which is not always easy to follow.

The noble Lord, Lord Hanningfield, made points that I expected him to make, and I understand the argument that Crossrail should not unduly disrupt the running and development of the rest of the network. The noble Lord has his special position of protecting all interests relating to Essex—for which I have a lot of affection, as the noble Lord knows—so I expected him to argue in those terms. He made some important points, and I reassure him that there should be no cost to other operators for the new objective. The ORR will have to balance its objectives carefully. There is no overriding priority given to the new objective; it is simply there. That should ensure that the ORR does not try to meet its objective at any cost. That is not our intention.

My noble friend Lord Berkeley, as ever, is a supportive sceptic. That is his role, which he is very good at, and I congratulate him on it. When he takes the time to read carefully what is on the record about the replacement of clauses, he will see that we have set out a careful story, and I am sure that he will appreciate and understand better how we see this working. My noble friend questioned the duty of the ORR, the nub of which was what would be in the reports. It is what it says on the tin. It is in the proposed new clause, which states:

“The Office of Rail Regulation shall from time to time”—
 

which means when the timing is right and proper and there is something valid to report—

“publish a report on … what it has done, or proposes to do, to further the objective given to it under section (Objective of ORR in relation to Crossrail) … how it has exercised or proposes to exercise its functions in connection with the operation of Crossrail passenger services”.

That is pretty clear in its intent. It is a clear statement.

Lord Berkeley
Will my noble friend give a quick example? It may be clear to him but it is not quite clear to me.

Lord Bassam of Brighton
If an event requires thinking through and digesting, of course the ORR will want to report on it and draw conclusions from it—if, of course, it has some impact on or import for some parts of the network to which it is relevant and on the delivery of passenger services. The new clause is intended to cover those sorts of things.

Lord Hanningfield
I agree with the noble Lord, Lord Bradshaw, that we will want to read the Minister’s remarks in some detail. If we need to, we will comment on them further at the next stage. However, I am grateful to the Minister for giving some reassurance, albeit not cast-iron reassurance, about the disruption of other services, particularly those into London, while Crossrail is being constructed. That has concerned us all during the Crossrail debates, so I was grateful for his comments on that.

I am disappointed that there is no time limit on or suggestion of when the ORR reports will be delivered, but I understand why the Minister said what he did. Again, we will read his comments. I beg leave to withdraw the amendment.

Amendment No. 4, as an amendment to Amendment No. 3, by leave, withdrawn.

[Amendment No. 5, as an amendment to Amendment No. 3, not moved.]

On Question, Amendment No. 3 agreed to.

[Amendment No. 6 had been re-tabled as Amendment No. 8A.]

Lord Bassam of Brighton
moved Amendment No. 7:

7: Before Clause 22, insert the following new Clause—
 “Duty of ORR to publish reports
 (1) The Office of Rail Regulation shall from time to time publish a report on—
 (a) what it has done, or proposes to do, to further the objective given to it under section (Objective of ORR in relation to Crossrail);(b) how it has exercised or proposes to exercise its functions in connection with the operation of Crossrail passenger services.(2) The Office of Rail Regulation shall publish a report under subsection (1) if at any time the Secretary of State requires it to do so.
 (3) The Office of Rail Regulation shall have regard to a report under this section in the exercise of any of its functions to which that report is relevant.
 (4) In this section, “Crossrail passenger service” means a service for the carriage of passengers by railway on a line the whole of which, or part of which, forms part of the railway mentioned in section 1(1)(a).
 (5) This section shall cease to have effect on such day as the Secretary of State may by order made by statutory instrument specify.
 (6) A statutory instrument containing an order under subsection (5) shall be laid before Parliament after being made.”

[Amendments Nos. 8 and 8A, as amendments to Amendment No. 7, not moved.]

On Question, Amendment No. 7 agreed to.

Clause 22 agreed to.

Clauses 23 to 34 negatived.

Clause 35 [Award of Crossrail franchises to public-sector operators]:

Lord Bassam of Brighton
moved Amendment No. 9:

9: Clause 35, page 25, line 23, leave out from “agreement” to end and insert—
 “(a) which relates wholly or mainly to the provision of one or more Crossrail passenger services, or(b) which relates wholly or mainly to the provision of one or more other services for the carriage of passengers by railway where—(i) the services run wholly or partly on the route of Crossrail, and(ii) the services are likely to be subject to substantial disruption because of the construction of Crossrail.”

The noble Lord said: I will not take quite so long this time, but I will take a little time. Clause 35 disapplies the prohibition in the Railways Act 1993 on a public sector operator acting as a franchisee, which potentially provides flexibility to accommodate a public sector operator of Crossrail passenger services, if that is considered desirable. This group of amendments, consisting of Amendments Nos. 9, 10 and 12, extends that flexibility in two respects that I shall explain in a moment.

15:15:00

Constructing and bringing Crossrail into operation will be challenging, and flexibility is required to achieve that in the least disruptive way possible. Conventional private sector franchises are best suited to stability, although they can and do cope with a degree of change. However, the point will come in relation to the Crossrail project when, for a period, it may be more practicable and cost effective to manage the passenger train operation in the public sector rather than the private sector.

It may help if I give five key examples that are likely to be encountered in sequence as the project progresses. The first example is in the construction period, during which there will inevitably be some disruption for suburban services, which might be better managed as part of the project. This example relates to the amendments, which I shall return to in a moment.

The second example is later during construction, but before the new central tunnel section is opened. It may be useful to commission the new Crossrail rolling stock by using it for some existing suburban services that will later be subsumed by the Crossrail services, which would enable some trialling.

The third example is once Crossrail services start running through the central tunnel section. The services are likely to be phased in, so there must be close co-ordination with the phasing out of the suburban services that Crossrail services replace.

The fourth example is that ancillary services may sensibly be operated along with Crossrail services. This example also relates to the amendments, to which I shall return in a moment.

The final example is the stabilisation period. Since Crossrail is an entirely new service, it will only be during this period that performance data can be produced on which a competitive franchising process is based. Such a competition in the phasing-in and stabilisation periods could result in franchise bids factoring in at least some element of project risk, which may be better managed as part of the project delivery.

I return to the amendments, which, as I said, do two things. First, proposed new subsection (1)(a) enables ancillary or complementary services to be included within a Crossrail public sector train operation. It does so by allowing a Crossrail public sector franchise to be mainly, rather than exclusively, for Crossrail services that run through the central tunnel. That is to aid franchise mapping, so as to avoid services closely related to Crossrail services becoming orphans because they do not logically fit into another group of services that are franchised.

Secondly, proposed new subsection (1)(b) provides for a public sector operation for services that are likely to suffer substantial disruption because of the construction of Crossrail. Those services might be those where significant compensation would have to be paid as a consequence of the disruption to some of the services in the franchise. Better value for money may be achieved by managing those services as part of the overall project delivery. Whether this is done, and at what time, would need to be decided by the Secretary of State, taking account of not just the project’s interests but also wider policy in relation to franchising.

Once the likelihood of disruption to those services has subsided, or the interim Crossrail public sector operation is no longer considered useful, then the expectation is that the services will be procured from the private sector, on current plans, by means of a concession let by Transport for London. However, the department and TfL have agreed to review whether it would make better sense for the DfT rather than TfL to be the franchising authority. For a DfT-let franchise, the expectation is that the Crossrail services would also be procured from the private sector.

Nevertheless, flexibility is retained in the clause in case some future circumstance applies—we are talking here about unforeseeable events more than 10 years hence—that meant that the Secretary of State found it necessary to take on the franchise and to operate it in the public sector for a time.

The clause, and this group of amendments to extend the flexibility that it provides, is a practical and sensible measure to help ensure that Crossrail is constructed and brought into operation in a way that is both efficient and effective. I beg to move.

Lord Bradshaw
I wonder whether I might reply to this amendment and at the same time, with the leave of the Committee, deal also with Amendment No. 13, which relates to the same subject and could probably have been grouped with Amendments Nos. 9, 10 and 12.

The Minister referred to franchising the services. I heard what he said about the fact that there might need to be an interim public sector operator, although I think that that would be immensely complicated to arrange. However, I will not comment on that further. I wanted to take the opportunity of deciding whether Transport for London is letting the franchise and how that affects the services that use the rest of the network.

Transport for London now lets some franchises for London Overground and it makes a far better job of doing so than the Department for Transport, having put in place a sensible structure. Anyone who has used those overground services will know that they have improved immeasurably since Transport for London took them over. However, it begs the question of how services which may be franchised by Transport for London are to fit in with the rest of the network.

Perhaps I may draw attention to a really serious problem—and I assure the Minister that I have taken the widest possible soundings from the most senior people in the industry. The franchise periods being set by the Department for Transport are ludicrously short if one of the objectives is to draw investment into the system. I instance the new South Central Trains franchise—I hasten to add that I have not discussed that with the managing director—which is for five and a half years. Bearing in mind that the franchising will operate assets that will last for 30 or 40 years, it beggars belief that the Government consider this to be an efficient system. The Welsh Assembly has agreed with Arriva Trains Wales a 15-year franchise, which is scarcely enough to get a payback but it would bring in its train modest improvements. Merseyrail, which has let its own franchise, is a 25-year franchise, and Chiltern Railways was originally let as a 25-year franchise.

In all those cases, there has been substantial investment not only in hardware but in recruiting and training the most competent managers. With a very short franchise term, all the best people will be on the lookout to see where they can go to get away from the franchise reletting process, which is entirely process-driven in the department and does not reflect the interests of the staff, the management or, above all, the passengers. I hope that the Minister will have something further to say about this because I believe that it is a major problem in the industry.

Lord Berkeley
I should like to go back to the amendments in the name of my noble friend. He talked about the amendment allowing the public sector to take over the franchises of lines on which Crossrail trains would run. That, to me, means that the Government would take over the operating of all services on the Great Eastern Railway and First Great Western lines.

If one were suspicious and had a conspiratorial mind—which of course I do not—one might think that, as the Government had failed to achieve their objective of getting priority for the construction of Crossrail in the other clauses in the Bill, another way to do it is to take over running the franchises and reduce the services so that there is more time to close the lines and have fewer trains. It is much easier to do that if you own the franchise and run it than if it has been let to First Group or National Express. I am sure that would not be the case, but it is 10 years out, and something might go wrong with the construction or something else.

It is a good idea to have flexibility in the operation of those passenger services, because there will certainly be some disruption. I hope that my noble friend will give me some assurance that this will not be used to reduce services, to the detriment of people living anywhere between Swansea, Cardiff, Plymouth, Ipswich and Norwich, during a very long construction period—in other words, that it is just a way of managing a franchising process, rather than cutting the services to a degree that will make everyone move back to their cars again.

Lord Bassam of Brighton
I am grateful to the noble Lord, Lord Bradshaw, for regrouping the amendments, and I will address his amendment in due course. I understand his point about the interim arrangements perhaps being complicated by this provision, but we are trying to put a necessary flexibility into the Bill. I thought that I made clear the circumstances in which it would be of value and would enable the Crossrail project to be taken forward. Providing the flexibility to enable the project is important.

I am not going to get drawn into a debate about the length of franchises; that is not the purpose of today’s deliberations. I understand the point that the noble Lord made, and I have probably made the point in the past. I understand the argument that is being put, but that is not for us, and it is not for Crossrail in these terms.

My noble friend Lord Berkeley confessed his cynicism. I cannot see why we would want to run down the timetable and then run the services, having committed ourselves with the City and the mayor to a £16 billion project. I cannot see the sense or the logic in the argument. It does not add up. This is a massive investment, which is designed to make a significant difference to east-west and west-east transportation across London and continue the further regeneration of important parts of London along that route, with all the synergies that it brings. I invite my noble friend to be less cynical at later stages of the Bill. I throw that out as a challenge to him, and I invite him to think further on his approach. We have no plan to take over all services, as he might have implied, on either the eastern main line or the western main line. We are only talking here about suburban services using a slow line and nothing on the fast lines at all.

On Amendment No. 13, which the noble Lord, Lord Bradshaw, regrouped, the expectation is that Crossrail services will be procured from the private sector and, on current plans, by means of a concession let by Transport for London. The department will participate in the detailed service and timetable planning of the franchise to ensure that the interests of all railway users are properly represented during the franchise specification. Noble Lords have accepted that premise. However, as I said, the department and TfL have agreed to review the position, which makes good sense. That review will take place in good time, before operating contracts are entered into with the private sector. It will consider whether it would make better sense for the department rather than TfL to be the franchising authority. An issue, for example, is whether Crossrail services should be franchised on their own or with some other service groups. Alternatively, Crossrail may be extended in the future to Reading, for which there is a powerful lobby, which would see services extended significantly further beyond the Greater London Authority area to a regional centre. The department's expectation is that such an extension would see the franchising authority revert back to the Department for Transport.

15:30:00

Ultimately, the current plans in relation to TfL letting the Crossrail franchise reflect the unique circumstances of this project, but the Committee will appreciate that significant detail will need to be worked through in the coming years between the department, Transport for London, the mayor and train operators as to how exactly Crossrail will be integrated into national rail services and the railway network.

In conclusion, we need to retain flexibility in relation to who should be the franchising authority. That will ensure that a Crossrail train operating company can be procured in the most effective and efficient manner available at the time. For that reason, I invite the noble Lord not to move his amendment and I hope that the Committee will agree our amendments.

On Question, amendment agreed to.

Lord Bassam of Brighton
moved Amendments Nos. 10 to 12:

10: Clause 35, page 25, line 23, at end insert—
 “( ) The following may in particular be taken into account in determining whether, for the purposes of subsection (1)(b), services are likely to be subject to substantial disruption—
 (a) the frequency with which the services are likely to be disrupted;(b) the duration of the period in which the services are likely to be disrupted (and, in particular, its duration relative to the length of the franchise term);(c) the severity of any likely disruption.”

11: Clause 35, page 25, line 25, leave out “23(9)” and insert “(Duty of ORR to publish reports)(4)”

12: Clause 35, page 25, line 26, leave out “and “franchise agreement”” and insert “, “franchise agreement” and “franchise term””

On Question, amendments agreed to.

Clause 35, as amended, agreed to.

[Amendment No. 13 not moved.]

Clause 36 [Disapplication of franchising and access exemptions]:

Lord Bassam of Brighton
moved Amendment No. 14:

14: Clause 36, page 25, line 30, leave out “the LRT Order or”

The noble Lord said: This group of amendments, which starts with Amendment No. 14, deals with a rather subtle legal point, but before I get to that, I will explain the context.

The LRT order that is referred to in the Bill was made in 1994. It exempts the London Underground network from regulation under the Railways Act 1993. To be more precise, it exempts from regulation trains, stations and infrastructure that are used by only a Transport for London group company. That is the case on most of the London Underground network. When we were preparing the Bill, our objective was to ensure that potential impediments to the delivery of Crossrail services could be removed. It is clearly important that appropriate rights of access for Crossrail passengers in the central tunnel section can be secured. For example, Crossrail passengers will need to be able to enter and exit the station at Tottenham Court Road, parts of which will be shared with London Underground and which, therefore, are currently exempt from regulation. Such access for passengers might need to be provided through normal, regulated station access contracts. Hence, Clause 36 provided the explicit ability to amend or revoke the exemption from regulation that the 1994 order provides for stations, should that have been needed.

More recently, we have been considering a range of related issues to do with the way that Crossrail will be operated and, hence, how the central tunnel section of Crossrail will be regulated. The Secretary of State would expect to see a case demonstrating a clear, overarching detrimental impact from 1993 Act regulation before she would exempt the Crossrail central tunnel from such regulation. I can confirm that the Department for Transport does not today see such a case. Equally, the Secretary of State recognises that the project—in terms of the way it will be operated—is at a relatively early stage of development. She will therefore need to retain flexibility on this position, in case such a detrimental impact should become clear at a later stage.

The department also recognises that different considerations are likely to apply to the central area stations, including the relevant areas of existing London Underground stations. These underground stations are currently exempted from regulation, and the Secretary of State would want to see good reason before deciding to change the status quo.

Ultimately, amendments will almost certainly be required to the 1994 order. For example, as I have already explained, we expect that Crossrail services will be operated by a private sector operator working to—on current plans—a concession let by TfL. Unless the 1994 order is amended, the consequence of that would be to bring not just the Crossrail tunnel, but also Crossrail stations and common parts of the relevant London Underground stations, into 1993 Act regulation—even if that is not the intended effect.

At the same time, I have said that the department and TfL have agreed to review whether it would make better sense for the DfT rather than TfL to be the franchising authority. We therefore need to allow for the possibility of the department rather than TfL letting the Crossrail franchise. A DfT-let franchise would need to gain proper access to the central area stations, including the relevant areas of existing London Underground stations. An agreement for access must be on appropriate terms, and we cannot rule out whether that should involve the application of 1993 Act regulation. I hope that that explains why we need to retain flexibility on how the 1994 order is amended.

This brings me back to the subtle legal point that I referred to at the start. To reiterate, the purpose of Clause 36 was to make explicit the ability of the Secretary of State to amend or revoke the LRT order in relation to the stations that Crossrail will share with London Underground. But, as I have explained, the effect of the LRT order on Crossrail may go a little wider, depending on the way Crossrail is operated. When we re-examined this clause in that context, we became concerned that, by seeking to clarify that specific provisions of the LRT order can be revised in one set of circumstances—for stations shared with Crossrail—we might unwittingly create an implication that the LRT order cannot be revised under the Railways Act 1993 in other circumstances.

Primary legislation is intended to clarify rather than confuse. Leaving Clause 36 as it is would have left the position unclear. Extending the powers in Clause 36 to enable all the possible changes to the LRT order that we expect might be needed would have taken us into the problematic territory of a rehybridising amendment. The Committee will appreciate why that route did not appeal. Instead, we have looked again at the powers that the Secretary of State already enjoys under the 1993 Act. We concluded that we would be able to amend the order as needed. On balance, therefore, we believe that the better approach in terms of legal certainty would be to rely on the Railways Act 1993 and accordingly remove these references to the 1994 order in the Bill.

I hope that the Committee has followed that exposition and that I have been able to explain the context and reasons for these amendments. I beg to move.

On Question, amendment agreed to.

Lord Bassam of Brighton
moved Amendments Nos. 15 to 18:

15: Clause 36, page 25, leave out lines 39 and 40

16: Clause 36, page 26, line 11, leave out subsection (4)

17: Clause 36, page 26, leave out lines 32 to 34

18: Clause 36, page 26, line 40, leave out “23(9)” and insert “(Duty of ORR to publish reports)(4)”

On Question, amendments agreed to.

Clause 36, as amended, agreed to.

Clause 37 [Closures]:

Lord Hanningfield
moved Amendment No. 19:

19: Clause 37, page 26, line 46, at end insert “provided that 6 months notice is given for closures that last for periods greater than 4 days (including Bank Holiday weekends)”

The noble Lord said: In considering this amendment, we can reflect on the debates in this House and another place. It is clear that we are all aware that the construction of such a great project cannot come without some disruption. However, the great British philosopher, Alfred North Whitehead, once said:

“The art of progress is to preserve order amid change”,

and that is something that I will try to secure with this amendment.

The amendment would ensure that adequate notice is given to passengers and operators before services, stations or lines are closed for a significant period of time. This will allow operators to plan for alternative travel solutions to be put in place and will allow passengers to be aware well in advance of disruptions to rail services. Clause 37 removes the statutory consultation and notice period required by Sections 22 to 31 and 37 of the Railways Act 2005. Those sections require a consultation period of 12 weeks and a notice period of six months before any closure relating to passenger services and networks, operational stations and experimental passenger services comes into effect. Clause 37 theoretically allows the closure of entire passenger services, stations and networks with no prior consultation or notice. That would provide no protection to passengers and operators if closures were to be unilaterally announced at short notice and has the potential to cause chaos for commuters and businesses. Noble Lords may joke that I always refer to Essex, but in the past few weeks we have experienced such disruption because of incidents on the Great Eastern main line that runs through Essex. Hundreds of people have been stranded in small towns.

I do not believe it is the intention of the Government to cause havoc on our railways, and I also accept that all reasonable measures need to be taken to facilitate the speedy construction of Crossrail. However, it is not unreasonable to expect a six-month notice period for long-term closures of lines or stations for major construction works so that train operating companies and franchises can make appropriate alternative travel plans. I accept that it may be necessary to close services, lines or stations for shorter periods, such as four days over bank holidays or for two or three days for emergency works, where a lengthy notice period cannot be given. This amendment would not prevent that, but it would ensure clear and transparent project planning for major construction works and would facilitate vital communications with operators and passengers to allow them to plan their alternative transport arrangements in advance. Can the Minister tell us under what circumstances Clause 37 will be used and advise us of how the Government plan to ensure that disruption is kept to a minimum without giving sufficient notice to affected parties? I beg to move.

Lord Bradshaw
I support the noble Lord, Lord Hanningfield, because we are all well aware that there have been some disgraceful delays and closures because of overrunning work. That is mostly unnecessary if the work is planned properly and professionally well in advance. The noble Lord, Lord Hanningfield, is right to draw attention to this and, through the Minister, to draw to the attention of the promoters the need to behave to neighbours in a neighbourly fashion so that train services into places such as Liverpool Street and Paddington are not disrupted by overrunning engineering work.

Lord Berkeley
I support this amendment. I am not sure that this section of the Railways Act—I do not have a copy of it with me—applies to some of the things that the noble Lord, Lord Hanningfield, spoke about, but he is right, and I just wish this amendment could apply to the whole network, but that is probably beyond the scope of the Bill. As the noble Lord, Lord Bradshaw, said, it is essential that the industry processes, which require this kind of notice, are adhered to. If Network Rail is to be the infrastructure manager of the surface section, as we all believe, it is up to the regulator, through the industry process, I think, to make sure that this happens. No doubt my noble friend will be putting enormous pressure on everyone to make sure that it does happen because it is an important point.

Lord Bassam of Brighton
I am grateful to the noble Lord, Lord Hanningfield, for his amendment. He confessed that he accepts that there will be disruption, which is a realistic starting point. I suspect that it will not come as a surprise to him that I do not think his way of attempting to deal with it is necessarily the right one. I shall explain in part the purpose of Clause 37.

The clause is designed to ensure that the closure provisions of the Railways Act 2005—Part 4 on “Network Modifications etc.”—do not apply when such a closure is required in connection with the construction or maintenance of the Crossrail works, or as a consequence of Crossrail passenger services. The 2005 Act provisions include the circumstances and procedures that apply for proposals to close—that is, permanently discontinue—certain railway services, networks or stations.

15:45:00

To deliver the Crossrail project, it will be essential to alter track and stations and reorganise suburban services; Members of the Committee have accepted that. Some of these have the potential to be classed as “closures”, even quite small changes; for example, the closure of the bay platform at Ilford station in order to permit platform lengthening could be covered. While such small changes may fall under the definition of “minor modifications” in the Railways Act—so the closure provisions do not apply anyway—others may not; for example, the replacement of the Docklands Light Railway station at Pudding Mill Lane on a new alignment. The hybrid Bill process has been the appropriate forum for considering the likely impacts of the project in context, including closures. If Parliament approves Crossrail, it is not appropriate for essential elements of that project to be subject to another consideration and approval process that could place the ability to bring the project to fruition at risk.

However, the noble Lord's amendment is intended primarily to refer to the temporary track possessions required by Network Rail in order to carry out the Crossrail works on the existing national railway network. That is not the purpose of the clause, and the amendment would simply require the Secretary of State to give six months’ notice of any closure relating to Crossrail, as closures under this clause relate to a discontinuance under the Railways Act 2005—which will, by definition, last for longer than four days. This notice period is redundant; such closures are likely to be small changes that will be carried out within the context of the Crossrail works as a whole.

Taking the spirit of the amendment, I can again reassure the noble Lord that the Crossrail works on the network will be carried out by Network Rail, and so will be carefully planned and managed by Network Rail through the normal industry processes. Therefore, all train operators will be given notice of planned possessions and disruptions, enabling them to keep their customers informed and to put in place temporary alterations to their services. The majority of the works will be carried out at weekends and during overnight blockades, and Network Rail would also look to integrate the works with other infrastructure renewals and maintenance on the route, as it would with any other network works. Some temporary impact on passenger and freight operators from Crossrail infrastructure enhancements and network modernisation work is unavoidable given the scale of investment that Crossrail will bring to the existing network, but this disruption should be considered in the context of the public benefits that the project will bring overall.

On the noble Lord’s area of interest, the works planned on the Great Eastern main line are much less extensive than on the Great Western main line, partly because it is already electrified. It will involve elements such as platform lengthening, some track work and new sidings and, importantly, station works and enhancements at Shenfield; I am sure that Essex County Council will be pleased about that. I hope that, having heard my explanation, the noble Lord will feel able to withdraw his amendment.

Lord Hanningfield
I thank the Minister for that reply. It does not completely reassure me; I will read his answer again. We might have to look at this again at a future stage of legislation. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 37 agreed to.

Clauses 38 and 39 agreed to.

Clause 40 [Duty to co-operate]:

Lord Bassam of Brighton
moved Amendment No. 20:

20: Clause 40, page 28, line 19, at end insert—
 “( ) Subsections (1) and (2) do not apply in relation to—
 (a) a matter which pursuant to any enactment must or may be dealt with by the Office of Rail Regulation, or(b) a matter relating to an agreement which pursuant to any provision of that or any other agreement must or may be dealt with by the Office of Rail Regulation.”

The noble Lord said: Amendment No. 20 was foreshadowed by the promoter's response to the House of Lords Select Committee's special report, which said:

“The Promoter is considering an amendment to make the intention explicit that clause 40 of the Bill—and, consequently, clause 41—should not be invoked by either party where the matter may be dealt with by the Office of Rail Regulation in accordance with its statutory duties or functions, as recommended by the Committee. The Committee’s support for this approach to these clauses will assist the House in its consideration of the amendment when it is brought forward at the next Bill stage”.

Therefore, the amendment is in direct response to petitioners' concerns, heard by the committee, that Clauses 40 and 41 could be used to subvert normal regulatory processes. That was never the purpose of these clauses, as I will explain in a moment. However, I note that the noble Lords, Lord Berkeley and Lord Bradshaw, have given notice of their intention to oppose that Clauses 40 and 41, and the associated multiple proceedings clause, Clause 42, stand part of the Bill. I hope that my explanation of my amendment and the circumstances in which the clauses might apply will reassure the noble Lords that we have indeed dealt with the railway petitioners' concerns to the satisfaction of the committee, and why the provisions are still required.

Clause 40 is based on a provision contained in the Channel Tunnel Rail Link Act 1996, and provides an obligation to co-operate between the nominated undertaker and controllers of railway assets with which Crossrail construction, maintenance or operation interact. Either party can require the other party to enter into an agreement. The purpose is to ensure that neither the nominated undertaker nor the controller can act unreasonably in dealing with a problem relating to the interaction of the Crossrail works with overland or underground railway assets. The asset controllers in question include London Underground and the public-private partnerships, BAA and Network Rail.

If the parties cannot reach agreement under Clause 40, the matter is referred to arbitration—the mechanism for which Clause 41 sets out. The Secretary of State may then, under Clause 41(3), direct the arbitrator as to the results that are to be achieved by the settlement—in practice, to set the arbitrator strategic policy objectives. If a direction were given, the arbitrator would have full control over the terms, including as to compensation, for achieving the overall results that the Secretary of State specifies.

Clause 41(3) is necessary to avoid the possibility that the result of the arbitration prevents something that is critical to the delivery of the Crossrail project, as authorised by Parliament, from happening on fair terms. Therefore, the direction of the Secretary of State will generally only be to facilitate the completion of the Crossrail works, or completion within a reasonable timescale, or the subsequent maintenance or operation of the all-important services that Crossrail will deliver. Even then, the Secretary of State would ensure that Crossrail is not delivered to the unreasonable detriment of the rest of the transport network—an issue that has been a particular concern this afternoon.

Amendment No. 20 ensures that Clause 40 cannot be used in circumstances where the matter may be dealt with by the ORR, in effect requiring a solution to be reached under the aegis of the normal regulatory processes. Indeed, Clause 40 should not supplant or override the allocation of access rights under the Railways Act 1993, the taking of possessions under the network code as overseen by the ORR, nor our stated intention to work within normal industry processes as far as possible in connection with the Crossrail project. If Clause 40 does not apply in these circumstances, Clause 41 will be irrelevant in these circumstances, because Clause 41 applies only to arbitrations referred under Clause 40.

However, there are other circumstances where Clauses 40 and 41 might apply. For example, the Crossrail works at Farringdon station will involve a complex interface with other construction works and non-regulated asset controllers, such as London Underground. It is therefore recognised that this complexity requires managing in order to ensure the successful delivery of the Crossrail project at this location. In particular, it may be necessary for the Secretary of State to ensure that the terms of a London Underground or PPP contract, which is not regulated by the Railways Act 1993 or within the ORR's jurisdiction, do not unreasonably prevent something that is critical to the delivery of the Crossrail project, which has been defined as part of the Bill process, from happening on fair terms. Nevertheless, Clauses 40 and 41 remain only as fallback provisions, as it is also recognised that, in this example for instance, London Underground, as a key delivery partner to the project, will have a direct interest in integrating Crossrail works successfully with its own existing assets, and many agreements are already in place regarding these matters.

It has also been put to me that Clause 40 might be used to deal with Crossrail’s interaction with the unregulated Heathrow Express service. The department has negotiated a number of specific agreements with BAA and Network Rail about the construction and operation of Crossrail, which means that it is highly unlikely that the Secretary of State would need to rely on Clause 40 in relation to Crossrail’s interaction with Heathrow Express.

I apologise again for the lengthy exposition, but I know that these clauses have excited considerable interest, and hope that my explanation provides some of the context and reasoning behind the amendments—for example, why Clauses 40 to 42 are still necessary and should stand part of the Bill. In those circumstances, I hope that noble Lords will withdraw their opposition to Clauses 40 to 42. I beg to move.

Lord Berkeley
I am grateful to my noble friend for his explanation of the context of Amendment No. 20, which we all welcomed when it was first published. I do not understand why the three clauses are needed at all. That is the purpose of the noble Lord, Lord Bradshaw, and I giving notice of our intention to oppose clause stand part.

During the Select Committee discussions, the Government agreed to take away the railway clauses, as we called them, and rely on the industry processes led by the ORR to settle disputes. There still seems to be a problem with settling disputes with London Underground and its PPP. It is a coincidence that effectively the regulator of the PPP is the same person as the chairman of the Office of Rail Regulation—Chris Bolt. It is interesting that the Government are happy with his role wearing one hat, but not with the other one.

Noble Lords will remember the immortal words of the chairman of the Select Committee, the noble Viscount, Lord Colville, about Clause 41(3), when he said that it was Stalinist. You do not often hear people in your Lordships’ House using that word, but he being an eminent lawyer, he felt—and I agree—that having a clause that allows the Government to tell the arbiter what decision to make is, shall we say, unusual? I do not see why with the standard industry processes the arbiter for London Underground and the PPP—Chris Bolt—needs to be told the decision he should make when the Government have accepted for the rest of the railway to leave it to the ORR.

My noble friend mentioned Farringdon station. Of course, LUL will have a very strong objective in sorting out the problems. If there is a problem, and Chris Bolt and the ORR are able to deal with it on the railways, why, wearing his other hat—which I think is for two days a week—cannot he do it for London Underground? Requiring people to co-operate may be a good idea but if they then take it as far as arbitration, which is expensive, and they know that they will then be told by the Government what to do, that degrades the whole process that has been so nicely agreed for the rest of the railway.

I also hear what my noble friend said about BAA, and it is good that there is nearly an agreement. It is completely unregulated. At least the PPP is regulated in part. I do not know what BAA thinks about this clause but I am not sure that my noble friend has persuaded me that we need these three clauses at all. If we are to keep them I certainly welcome his Amendment No. 20 to Clause 40.

Lord Bradshaw
I support what the noble Lord, Lord Berkeley, has said. Clause 41(3) is actually quite objectionable. It says:

“The Secretary of State may, on request or otherwise, direct the arbitrator as to results that are to be achieved by the agreement for which terms are to be determined by the arbitration”.
 

It sounds very much as if you appoint an arbitrator and then the Secretary of State tells him what result he must come to. It certainly reads like that—and it is not the sort of thing that should appear in a Bill before your Lordships' House.

16:00:00

Lord Bassam of Brighton
I repeat what I said earlier. While I sort of understand why the noble Viscount, Lord Colville, might have used slightly extreme language in the circumstances, we have always said that it is our stated intention to work within normal industry processes as far as possible with the Crossrail project. All the parliamentary processes have been aligned with the intent of securing Crossrail in a reasonable timeframe, at a reasonable price and by agreement. Credit should be given to Crossrail promoters; an awful amount of work has gone into this and a fantastic degree of consensus has so far been archived. The hybrid Bill process has enabled many issues that had seemed deeply contentious to be resolved in terms that seem reasonable to all parties.

So our track record to date is pretty good. It is not our intention to depart from that but there may be some circumstances in which the Crossrail project is frustrated by an unknown provision in a PPP that had not been anticipated or did not in itself anticipate Crossrail. In those peculiar circumstances, this fallback provision—and that is what it is, as we have made clear—may well be necessary.

Although I can understand the noble Viscount’s description, it is not appropriate in terms of a power that is designed to ensure the successful completion of the project. That is not an unfair observation on our part. I appreciate the fact that the noble Lord, Lord Berkeley, can see that we have attempted to offset and mitigate that with our amendment. I ask him to take that as a fairly solid expression of good faith on our part, to recognise that there is, in extremis, potential for some abuse to be delivered by the provision—but that is not our intention. It is really only to be used as a term of last resort.

All that I can observe about Chris Bolt is that he is the arbiter for London Underground PPPs. He is not a regulator in any sense parallel to the Railways Act; that must be properly understood. I do not accept the noble Lord’s point on that.

I invite the Committee to support our amendments as they are a practical way in which to deal with and meet the objections raised, while giving us the reserve provision to be used only in circumstances which many of us at this stage cannot even envisage.

Lord Bradshaw
I hear what the noble Lord says, but I return to the fact that this is an objectionable subsection; I cannot see the purpose of it. If he is saying that if the parties—the constructor, the ORR and Network Rail—cannot come to an agreement, then they can bring their problems to the Secretary of State who will somehow dissolve those problems, I do not believe it. The clause may give the noble Lord comfort, but it gives me none at all. I urge him to go away and think about it before Report.

Lord Berkeley
I know that the arbiter for the PPP is a different name and has different functions from the ORR, but when it comes to appeals or arbitration, they are effectively the same. He is called an arbiter for the PPP, and there is the regulator, but we are not talking about all the other duties. It is purely arbitration. There are enormous similarities, and the noble Lord, Lord Bradshaw, has made the point succinctly.

On Question, amendment agreed to.

Clause 40, as amended, agreed to.

Clauses 41 to 45 agreed to.

[Amendments Nos. 21 and 22 not moved.]

Schedule 11 agreed to.

Clause 46 agreed to.

Schedule 12 [Transfer schemes]:

Lord Bassam of Brighton
moved Amendment No. 23:

23: Schedule 12, page 197, line 34, at end insert—
 “Scheme for grant of lease3A Any power under paragraph 1, 2 or 3 to make a scheme for the transfer of any property from one person (A) to another person (B) may be exercised instead so as to make a scheme under that paragraph for the creation by A in favour of B of an interest in, or right in relation to, the property.”

The noble Lord said: These amendments will not detain us too long. They are technical and they relate to the granting of new land interests. Schedule 12 already provides for the granting of new land interests as part of a transfer of assets between or from public bodies, which are known as “transfer schemes”. The amendments to Schedule 12 would enable the simple grant of new land interests, such as a lease, to happen by way of a transfer scheme, even where this is separate from the transfer of other assets.

The amendment will enable the Secretary of State to retain flexibility over how she puts the land ownership arrangements required for Crossrail in place. Given the long duration of the project, it is sensible for her to retain that flexibility. The amendments proposed to Schedule 13 are consequential and avoid a tax distinction arising based on the type of transfer scheme under which a lease is created. I beg to move.

On Question, amendment agreed to.

Lord Bassam of Brighton
moved Amendment No. 24:

24: Schedule 12, page 203, line 22, at end insert—
 “Agreements relating to schemesThe Secretary of State may by agreement fetter the exercise of his discretion relating to his powers under this Schedule.”

The noble Lord said: The amendments will ensure that the Secretary of State and London government can give an unqualified commitment at the start of the Crossrail project in relation to a potential transfer of assets between Transport for London and the Secretary of State at a later stage.

Governance arrangements for the project currently allow that if the forecast final cost breaches an agreed level, the department has the right to take back control of the project, including ownership of CLRL and therefore, indirectly, assets of Crossrail. However, the GLA Act provides that, at any given time, TfL should follow the guidance or directions of the mayor in the exercise of its functions and that the Secretary of State must consent to the disposal of assets by TfL. The provisions being sought are permissive and do nothing more than clarify that the obligations entered into on signature of the sponsor agreement will endure. The amendment covers actions for purposes connected with Crossrail only and is not an amendment to the general applicability of the GLA Act. The provisions also allow agreement to be reached now about the use of a transfer scheme, for example, for a possible transfer of assets between TfL and DfT. I beg to move.

On Question, amendment agreed to.

Lord Bassam of Brighton
moved Amendments Nos. 25 and 26:

25: Schedule 12, page 203, line 38, at end insert “(or the person in whose favour any interest or right is created pursuant to paragraph 3A)”

26: Schedule 12, page 203, line 40, at end insert “(or the person by whom any interest or right is created pursuant to paragraph 3A)”

On Question, amendments agreed to.

Schedule 12, as amended, agreed to.

Clause 47 agreed to.

Lord Bassam of Brighton
moved Amendment No. 27:

27: After Clause 47, insert the following new Clause—
 “Application of Greater London Authority Act 1999
 (1) This section applies where—
 (a) Transport for London or a subsidiary of Transport for London enters into an agreement or arrangements with the Secretary of State (alone or with other persons), and(b) for purposes connected with Crossrail, provision is made in the agreement or arrangements for the transfer of any property, rights or liabilities of Transport for London or a subsidiary of Transport for London to the Secretary of State or a company which is wholly owned by the Secretary of State.(2) Sections 154(3) and 155(1) of the 1999 Act shall not prevent or restrict, or authorise the prevention or restriction of, the discharge by Transport for London, or any subsidiary of Transport for London, of its functions in accordance with the provision referred to in subsection (1)(b).
  (3) Consent is not required—
 (a) under subsection (1) of section 163 of the 1999 Act for any disposal of a freehold interest in land, or grant of a leasehold interest in land, which is made in accordance with the provision referred to in subsection (1)(b), or(b) under subsection (2) of that section for any transaction so made.(4) In subsection (1)(b)—
 (a) the reference to the transfer of any property includes the creation of an interest in, or right in relation to, the property, and(b) the reference to a company wholly owned by the Secretary of State is to be construed in accordance with the provision made by paragraph 3(2) of Schedule 12.(5) In this section—
 “the 1999 Act” means the Greater London Authority Act 1999 (c. 29);
 “subsidiary” has the same meaning as in that Act.”

On Question, amendment agreed to.

Schedule 13 [Transfer schemes: tax provisions]:

Lord Bassam of Brighton
moved Amendments Nos. 28 to 34:

28: Schedule 13, page 208, line 25, after “paragraph” insert “3A,”

29: Schedule 13, page 209, line 31, after “paragraph” insert “3A,”

30: Schedule 13, page 212, line 2, after “paragraph” insert “3A,”

31: Schedule 13, page 212, line 27, after “paragraph” insert “3A,”

32: Schedule 13, page 218, line 11, after “paragraph” insert “3A,”

33: Schedule 13, page 221, line 15, after “paragraph” insert “3A,”

34: Schedule 13, page 221, line 19, after “paragraph” insert “3A,”

On Question, amendments agreed to.

Schedule 13, as amended, agreed to.

Clauses 48 and 49 agreed to.

Schedule 14 agreed to.

Clause 50 agreed to.

Schedule 15 agreed to.

Clauses 51 to 56 agreed to.

Clause 57 [Application of Act to extensions]:

On Question, Whether Clause 57 shall stand part of the Bill?

Lord Bradshaw
This brings us to the issue of the application of the Bill to extensions. Our amendment requiring the Government to seek permission under the Transport and Works Act to extend the line to Reading after a certain period was not accepted as drafted, and we accepted that because we do not wish to delay the Bill. However, everybody who knows anything about railways regards Maidenhead as a ridiculous place at which to terminate Crossrail. I have said before that it must have one of the highest rates of employment in the country. It would mean creating a train crew depot, a stabling point and all sorts of things on extremely valuable land with the prospect of it being almost impossible to get staff, whereas going to Reading, which has already been catered for in the plans for rebuilding Reading station, makes for a much more suitable terminus. I am not seeking for any reference to that in the Bill, but rather to know the Government’s intentions. There is also a strong conflict between people who want to see Crossrail as a metro service calling at all stations between Maidenhead and the other end in Essex—

Lord Berkeley
Shenfield.

16:15:00

Lord Bradshaw
Yes, Shenfield. Those people who travel from further out—Reading, Twyford, Maidenhead on the western region and probably further out on the other side—want to enjoy a much faster service than one that calls at all stations. There is also a conflict in that very expensive high-speed trains are being used to take commuters from places such as Reading and Maidenhead for journeys to London of less than 30 minutes. It makes much better sense to have Crossrail as a sort of mixed service, with metro stops within inner London, or as far out as Slough and further on, and to have semi-fast trains which will prove attractive to people travelling from Reading. I know that that matter was ventilated in the other place, but it is extremely important that the Government, by moving a Transport and Works Act procedure, give some impetus to starting Crossrail at Reading, possibly quite outside the Bill, and give attention to thinking about the services that would operate on the lines leading to Crossrail so that, as well as a metro service, there is a semi-fast service that would cater for people who make longer journeys. By so doing they would shield the high-speed services that carry passengers from further out and stop at Reading, for the most part, because many people from other parts of the country wish to get off there.

I am not asking the Minister to accept any sort of amendment to the Bill, but I should like to hear about the Government’s intentions. There is obviously going to be some conflict between Transport for London, which is interested in slow metro services, and the wider railway, which is interested in something better.

Lord Berkeley
My name is down to this clause stand part debate, and I support what the noble Lord said. Clearly any amendment to the Bill about an extension would be wrong. It would delay things and cause obfuscation in the project costs and delivery, which clearly nobody would want to see. Everybody would say that it would cost more if Crossrail were extended; of course it would cost more, but that does not mean that it would be less efficient.

What should happen—and I hope that my noble friend can give some positive words on this—is that Network Rail should apply for funding, although I question whether it needs Transport and Works Act approval to electrify from Maidenhead to Reading. Crossrail would not have to build the maintenance depot at Maidenhead. I entirely agree with the noble Lord’s comments about employment, and it could be built at Reading for the same cost. It is the cost of electrification. The Crossrail trains are already provided for in the excellent Reading refurbishment scheme.

The problem may be that somebody will say that there is no business case. Not many people from Reading are going to take an all-stations train to Crossrail and go down the hole. The noble Lord said that clearly the answer was to have a fast and a slow service; the fast ones would clearly go on the fast lines and the slow ones on the slow lines. When we get near London, the same comment applies to the Heathrow Express, which should be going into the Crossrail tunnel—BAA does not want that, presumably because it will lose revenue on its £20 single second-class fare—and it would need some kind of grade separation outside Paddington. Looking at this strategically, I hope that my noble friend can say that they will at least look at this and not start the works at Maidenhead, which are necessary for the project, until there has been a really good debate about whether there could not be a fast service. It does not matter who runs it, whether it is Crossrail, a state or government-funded operator or a franchise, but the thing should be looked at holistically. I am convinced that it is the answer. The Crossrail project as it is needs revenue from trains going through the central tunnel to help the funding situation. I am convinced that faster trains going through would increase the revenue, and perhaps the noble Lord, Lord Hanningfield, would like to see them going on to Essex, rather than starting at Shenfield and stopping at all stations to London, but I leave him to comment on that if he wishes. I look forward to my noble friend’s comments.

Lord Bassam of Brighton
The noble Lord, Lord Bradshaw, is exercising his mind on this matter, as one would expect. He is, after all, an experienced railway manager and he understands how the network operates. This afternoon he has reined back his expectations of where Crossrail could end up. I have a feeling that at Second Reading he made a case to extend it to Milton Keynes, or perhaps that was my imagination. I do not quite recall, but I have a feeling that he raised that prospect at an earlier stage.

Clause 57 allows any Transport and Works Act order which relates to a proposed extension of Crossrail or to the provision of a railway facility connected with Crossrail to apply provisions of the Bill, with any modifications necessary, or to provide for any provision of the Bill to have effect as if the extension or alteration in question were part of Crossrail.

The Bill establishes a bespoke regime for Crossrail, modifying or disapplying various bits of legislation and replacing them with a tailor-made regime, based heavily on that created in the Channel Tunnel Rail Link Act 1996, as I explained earlier. This afternoon we have debated, for example, how the Bill modifies the railway regulatory regime. It also modifies the planning and control of pollution regimes in connection with Crossrail.

Were a Transport and Works Act order subsequently sought for an additional Crossrail railway facility, such as a modified station, additional tracks or freight loops, it could not necessarily apply the regime established by the Bill to those works. That is because TWA orders, as a form of delegated legislation, are limited in what can be done by way of modifying the application of legislation. Clause 57 allows any such TWA order to make the provision needed to ensure that any new facility or extension is subject to the same regime as the Crossrail scheme covered by the Bill. That is the purpose of the clause, and we believe that that makes sense.

The noble Lord is using this clause as a sort of hook on which to hang his Reading expectation. He made points about Maidenhead, although I am sure that Maidenhead would not recognise itself in quite the way that the noble Lord described it. However, we have made it very clear in Written Statements, and I announced on 6 February, that as a Government we intend to safeguard the additional land between Maidenhead and Reading, as a measure to give the flexibility to extend Crossrail in the future should there be a business case—a point raised by the noble Lord, Lord Berkeley.

The difficulties with the business case are, in a sense, part of the argument that the noble Lord, Lord Bradshaw, provided this afternoon: that there should be a mix. I understand that line of argument. In any event, a semi-fast diesel service from Reading is planned to complement the Crossrail services. Clearly, if Crossrail were extended to Reading, the mix of services would need to be looked at further, but it has to be recognised that there are limits to the capacity of the slower lines for taking semi-fast services. Therefore, I do not think that it is quite as easy as the noble Lord, Lord Bradshaw, would have us believe, but I understand the thinking behind what he said.

There is no need to include the extension of works powers to Reading in the Bill. The noble Lord, Lord Berkeley, understood the potential impact of doing that. It would delay the progress of the Bill. We would have to go back, which would take up parliamentary time, and it would add additional costs to the project, which, as we all know, is currently projected to cost £16 billion. I do not want to risk delaying the start of construction. That is why we have enabled the route to be protected; so that there is flexibility.

There is currently little passenger demand to take a Crossrail service from Reading to London. I understand why there may be some pressure for that to be considered, and we are not closing off that option—that is the important thing—but there would need to be other, wider reasons for deciding to extend Crossrail that far. The industry recognises the importance of keeping the option open. We endorse that approach and support it, and we will be taking forward the safeguarding of additional land between Maidenhead and Reading in the future.

I have nothing further to say on this matter. We recognise that Reading will be and continues to be an important part of the overall network. That is why we are making this investment. It is designed to become a first-class rail centre. Obviously, with the growth in passenger numbers that we have seen in that particular corridor in the past few years, we recognise the importance of continuing that investment. But we have a project that is constrained to Shenfield at one end and Maidenhead at the other. We understand the costing of that, and that is where we are going at the moment. However, we reserve the position for the future, and future Governments with different pressures may well consider it appropriate to seek support for an extension on the terms argued by the noble Lord today. On that basis, I invite the Committee to support Clause 57 as it stands.

Clause 57 agreed to.

Clause 58 agreed to.

Schedule 16 agreed to.

Clause 59 agreed to.

Schedule 17 agreed to.

Clause 60 [Power to devolve functions of Secretary of State]:

Lord Bassam of Brighton
moved Amendments Nos. 35 and 36:

35: Clause 60, page 36, line 26, leave out from “(1)” to end of line 27 and insert “shall be subject to annulment in pursuance of a resolution of either House of Parliament”

36: Clause 60, page 36, line 30, leave out “25(6),”

On Question, amendments agreed to.

Clause 60, as amended, agreed to.

Clauses 61 and 62 agreed to.

Clause 63 [Arbitration]:

Lord Bassam of Brighton
moved Amendment No. 37:

37: Clause 63, page 38, line 47, at end insert—
 “(6) A statutory instrument containing rules under subsection (5) shall be subject to annulment in pursuance of a resolution of either House of Parliament.”

On Question, amendment agreed to.

Clause 63, as amended, agreed to.

Clause 64 agreed to.

Clause 65 [Interpretation]:

Lord Bassam of Brighton
moved Amendment No. 38:

38: Clause 65, page 39, line 34, leave out “(except in the expression “facility owner”)”

On Question, amendment agreed to.

Clause 65, as amended, agreed to.

16:30:00

Clause 66 [Financial provisions]:

Lord Hanningfield
moved Amendment No. 39:

39: Clause 66, page 40, line 28, at end insert—
 “(2) CLRL shall publish an annual statement setting out—
 (a) all relevant details as to the monies received and used to fund the construction and maintenance of Crossrail;(b) incurred costs to date;(c) projected total outturn costs to date; and(d) which bodies shall bear responsibility and liability for any costs associated with the building of Crossrail.(3) The Secretary of State and Mayor of London shall publish an annual response to CLRL’s annual statement setting out all relevant details relating to—
 (a) expenditure in last 12 months for the purposes of constructing Crossrail;(b) total expenditure incurred to date for the purposes of constructing Crossrail;(c) projected total expenditure for the purposes of constructing Crossrail;(d) the proceeds of any land and property disposed of to date by CLRL; and(e) the use to which the disposal proceeds of any land and property have been applied to date.”

The noble Lord said: I am sorry to stop the smooth flow of the finishing of the Committee stage of the Bill this afternoon. As discussed in my previous amendment to Clause 22, transparency and reporting will be a key determining factor of the delivery of this project on time and on budget. I suspect that the Committee will be aware that the amendment builds on one tabled by my honourable friend Stephen Hammond in another place. He suggested an amendment to put a requirement on a mixture of the Mayor of London and the Secretary of State to produce reports relating to the objectives, expenditure and revenue generated during the construction of Crossrail.

The Government gave assurances that this would already happen within the current regulatory framework and heads of terms, and said that it did not have to be specifically highlighted in the Bill. Following a Division, the amendment was rejected. I share the concerns of the honourable Member for Wimbledon and should like to push the point about transparency and accountability again in this Committee.

The purpose of the amendment is to require transparent annual reports to be published detailing how the project is progressing against budgeted costs and the agreed funding agreement. Given the huge scale of the project—some £l6 billion over seven years, as we have said several times today—we consider it vital that annual accounts of activity are published by Cross London Rail Links so that Parliament, the Secretary of State, the Mayor of London and all private sector funders can see how their money has been spent and what the projected outturn costs are.

This level of transparency is particularly important and necessary given that two other huge projects have endured great difficulties in recent years. The Channel Tunnel Rail Link, which impressively was delivered on time and on budget, nevertheless required two financial restructurings and £6 billion of government-backed debt to see it through to completion, while the modernisation of the west coast main line, which was originally forecast to cost £2.5 billion back in 1998, helped to force Railtrack into administration, and it is now forecast that it will have cost more than £8 billion when it is completed in late 2008—more than three years later than the planned completion date.

We cannot afford to let history repeat itself. The amendment would ensure clear project management and financial reporting, giving confidence to all stakeholders and funding contributors that the construction of Crossrail is being delivered within or to budget. It would also ensure that any potential funding problems could be identified as soon as possible, thereby allowing plans to be made and action to be taken to steer the project back on course. I hope that the Committee agrees with my argument and can see the benefits that this level of transparency would bring.

Moving away from the amendment but keeping on the topic of finance, it is important that we touch on a few other concerns that I have in relation to the funding and budgeting of this project. I should like to ask the noble Lord, Lord Bassam, whether the budget of almost £16 billion has taken into account the inflationary costs that we are likely to see in the future. Obviously, there is the topic of fuel prices, which will add to the costs, but have the Government budgeted enough for the cost of labour and so on in 2010 and beyond?

Over the next decade, a number of major engineering and construction projects will fully involve the construction industry. Some examples are the Building Schools for the Future programme, the tremendous number of waste facilities in the south-east, the Olympic Games, and various other projects, including two enormous port projects in my own county, to name but a few. Those projects will reduce the supply of skilled labour that is available to deliver the Crossrail project and will be coupled with high demand for specialist labour, in particular. Can the Minister confirm whether the inflationary elements have been taken into account in the £16 billion budget?

One point that has not come up at all today, but which was raised several times at Second Reading, is that the funding of Crossrail is very dependent on the legislation that will take into account the small part of the business rate that will provide funding. That is how the whole project was agreed. I think that the Prime Minister said in his pre-Queen’s Speech announcement in the summer that this legislation was to be protected in the coming year. If it does not happen and that legislation does not go through Parliament, the current funding mechanism for Crossrail will not be available. Perhaps the Minister will comment on that for everyone’s benefit, so that we will know that Crossrail will definitely be funded. I beg to move.

Lord Berkeley
I very much support the amendment. I think that the noble Lord, Lord Hanningfield, went a little wider in his remarks, but it is probably good to do that in order to find out whether my noble friend is able to tell us today, or soon, the current status of the financing. The noble Lord, Lord Hanningfield, raised the question of the Bill that may come before us following the next Queen’s Speech and what will happen if it does not.

When the Bill started its passage through the other place, I thought there would have been a requirement to produce a financing plan or budget. I checked with the Clerks and that applies only to private Bills, not hybrid Bills because the Government usually provide all the funding. There was a hybrid Bill for the Channel Tunnel, but that was not government funded, so I am not sure where it comes. I think it is reasonable that, three plus years after the Bill started, we should have a financial report about how the money is to be raised and whether, as the noble Lord, Lord Hanningfield, said, the estimated costs are going to go up. Assuming that the Bill he talked about will take a bit less than a year to get through Parliament and that there are the procedures to do it, at what stage will a commitment to go ahead be made? It will be interesting to hear my noble friend’s comments on that.

Lord Bassam of Brighton
The noble Lord is seeking to ensure transparency, which is always a desirable objective.

Lord Hanningfield
Dangerous!

Lord Bassam of Brighton
I cannot believe that. I believe that transparency is important. The noble Lord raised questions about Crossrail’s funding and the project's continuing finances. We share the aim of transparency and recognise the importance of keeping the public well informed about Crossrail. In the past few weeks, I have read some doubting copy in the press suggesting that the Government are not committed to Crossrail, and I refute that. We are totally committed to seeing this project through because we see it as an important addition to the network. The Government have demonstrated through our investment plans and more our determination to raise the standards of the railway network and ensure that it can cope with the capacity pressures. We see Crossrail as vital to dealing with some of those issues and securing long-term regeneration and investment in London and elsewhere in the south-east. Its ability to deliver connectivity across the network is an important part of that story.

As to transparency, we have already published the heads of terms that were signed by the department and Transport for London last October. They set out the funding arrangements for Crossrail and the key terms of the deal between the co-sponsors. We also fully intend to publish information about the project during the course of construction, provided that that does not compromise commercial confidentiality. I am sure that the noble Lords, Lord Hanningfield and Lord Berkeley, respect the importance of commercial confidentiality. We do not want to do anything that undermines the success of the project in those terms.

Indeed, paragraph 3.11.2 of the heads of terms makes clear that CLRL will be required to publish information,

“to ensure a high level of transparency as to the progress and cost of the Crossrail project”.

In that light, we would be concerned about proposed paragraph (2)(d) as it is widely drafted and could compromise our ability to protect commercially confidential information when we publish plans, information and details of the project’s development. I ask noble Lords to reflect carefully on that point.

We are currently working with CLRL and TfL to turn the heads of terms into a suite of full and binding legal documents. It is our intention that it will include a requirement to publish annually information on: the funding provided to CLRL for the construction of Crossrail; expenditure incurred so far; whether the project remains within budget or whether measures are being taken to bring it back on target; and information on the proceeds of any land and property disposals, provided that does not affect commercial interests. We plan to make those agreements public—again, subject to the appropriate protection of commercial interests.

Although I sympathise with the sentiment underlying the noble Lord’s amendment—he explained it in terms and suggested that the debate has already been had once before—it is unnecessary, as it will be covered by the legal agreements governing the project. Furthermore, as drafted, it would compromise and run the risk of undermining the commercial interests involved in the development of the project.

The noble Lord asked a few questions and made a few important points. The convergence of the Olympic construction and Crossrail will, with other projects, place a big demand on the construction industry in the UK but, as we know, there is considerable international mobility in the construction industry, particularly for tunnelling projects, and we are confident that we can manage major projects such as this one alongside each other. The noble Lord also made a point about cost and asked whether we had taken account of inflation. The figure of £16 billion includes what we describe as a prudent allowance for inflation during construction and the risk of other cost escalation, and it is fully inclusive of all project costs, such as land acquisition, compulsory purchase and contingency. We are confident that the figure represents a fully inclusive cost for the project, which is why we have approved funding at that level.

In October 2007, we produced a White Paper setting out proposals to introduce a power for local authorities to raise supplementary business rates to fund economic development such as infrastructure. It stated that there would be a national limit set at 2p in the pound of rateable value, with exemptions for businesses with a rateable value below £50,000. We have indicated that we expect to bring forward legislation in due course that will enable the mayor and local authorities in London to raise and retain supplements on the local business rate.

What I can say to the noble Lord is already public knowledge—that the Bill is included in the draft legislative programme for 2008-09. I do not know whether the noble Lord knows more than I do; I cannot see his party objecting to that or producing a Back-Bench revolt from my party. I should have thought that, with the overwhelming support that we have received for Crossrail from the noble Lord’s party and others, there should be little difficulty in securing that legislation. I remain confident, as I did at the outset of bringing the Bill through the House, that not only will we see those carefully planned parts of the budget fall into line but the element that is to be secured through the supplementary business rate route will be put in place as well.

The noble Lord asked what would happen if the legislation was late. As set out in the heads of terms, if for any reason the legislation is late, and provided that the funding from the source is likely to be forthcoming, the DfT will provide additional grant to the GLA to make up any shortfall. There is a high degree of certainty in this project, and that last statement should be read and understood very much in those terms. I understand the amendment, which has been rehearsed before in another place. We do not think that it is necessary because we have covered all the points made by the noble Lord with regard to transparency. As I carefully explained, it is our intention not only to make the heads of terms more accessible but to make the agreements public, subject to the necessary commercial protection needs. We intend to produce information at least annually on the funding provided to CLRL for the construction of Crossrail and to make details available in the same terms on expenditure incurred so far, and to describe where that spending is in relation to budget and meeting our targets.

We understand the amendment, but reject it on the basis that it is unnecessary. By the way in which we have planned the project, we have already secured that the information will be published in a format that is as identical as it can be.

Lord Hanningfield
I thank the noble Lord for that answer. We will consider before Report whether there is enough scrutiny to see whether the money that will be spent will be publicly scrutinised and transparent. I am still somewhat concerned. I think that the legislation on the business rate probably will get through, but the Queen’s Speech is fairly late—in December—and there is an enormous so-called legislative programme planned for next year. Because the financing of Crossrail was based on the deal that was announced by the previous mayor, which a lot of people supported, there is a bit of putting the cart before the horse. We support Crossrail and want to see it happen, but the money has to be available to do it. I have been surprised the whole time that this was going forward before legislation was in place to fund it.

I note what the Minister said and will see how the legislation progresses in the next year. It puts a little doubt in mind about Crossrail’s funding. Perhaps we shall come back to it, but for today I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 66 agreed to.

Clause 67 agreed to.

Bill reported with amendments.

The Committee adjourned at 4.47 pm.