With permission, Mr. Speaker, I would like to make a statement on benefits uprating in the context of this Government's continued fight against poverty and our aim of employment opportunity for all. I shall place full details of the uprating in the Vote Office and arrange for figures to be published in the Official Report. I can confirm that most national insurance benefits will rise by the retail prices index, which is 3.1 per cent. and most income-related benefits will be uprated by the Rossi index, which is 1 per cent. From next April, retirement pension will go up by £2.45 a week for single pensioners and £3.95 a week for couples. When we came to office, the pension was just £62.45 for a single person: from April it will be £82.05, and £131.20 for couples.

As my right hon. Friend the Chancellor set out in last week's pre-Budget report, both next year and in the spending round to 2008, the pension credit will rise faster than inflation by average earnings, meaning that there will be 600,000 fewer pensioners in poverty than if the guarantee was uprated only in line with prices. Next year, the guarantee credit of pension credit will rise so that no single pensioner need live on less than £109.45 a week and no couple on less than £167.05 a week.

The threshold for the savings element of pension credit will be uprated so that it remains equal to the basic state pension. That means that a typical single pensioner will now gain from pension credit if they have an income of up to £150 a week, while a typical couple will gain on an income of up to £220 a week.

More than 3.1 million pensioners are now in receipt of pension credit, with an average award of more than £41 and with average arrears payments running at around £1,000. Each week, the Pension Service works to help pensioners access their entitlements in their local communities. It is a personalised service that has also led to increases in the take-up of attendance allowance, carers allowance, council tax benefit and housing benefit.

Take-up of pension credit has been strongest among the very poorest pensioners. The definitive national statistics figures on take-up rates will not be available for some time, but among those whose incomes would otherwise be below the guarantee element—currently £105—our best estimate is that take-up rates are running at more than 80 per cent. Among those with incomes at or below the basic state pension who do not gain from the savings element, we are now outstripping our expectations at the time of the spending review, in case load terms, by 25,000 households, or by at least £40 million this year in expenditure terms.

Following all the measures introduced since 1997, the average pensioner household will be £1,350 per year better off in 2005–06 as a result of our tax and benefit policies than they would have been under the 1997 system, while the poorest third will be £1,900 per year better off. In total, there will be an extra £10 billion spent on pensioners in 2005–06. That is £7 billion more than an earnings link would have given them, with almost half of the £10 billion extra spending going to the poorest third of pensioners.

As well as targeting our help at the poorest, we have done more for all pensioners than an earnings link would allow. Take for example, a single pensioner aged 76, living alone and with an income too high to be eligible for pension credit. A straight earnings-related uprating would give her £9.90 extra a week. Instead, this year, as a result of our reforms, she has a basic state pension increased in real terms by 7 per cent., a £200 fuel allowance and a free TV licence worth £121 a year. That adds up to an extra £11.62—or £1.72 a week more than the earnings link would have provided.

With 1.8 million pensioners lifted out of absolute poverty since 1997, we have made remarkable strides in tacking the pernicious pensioner poverty that we inherited in 1997, and we will continue to make its eradication our priority. We reject proposals that would see the poorest pensioners fall back into poverty and that would be an unsustainable burden on the public finances.

Around three quarters of individuals below the poverty line live in households with a pensioner or a child, so as well as tackling pensioner poverty, we are right to focus on child poverty. We have lifted more than half a million children out of relative low income since 1997. The child tax credit will increase by earnings, and the maximum eligible child care costs covered by the working tax credit have increased by 50 per cent. to £300 for two or more children.

The standard rate of maternity allowance and statutory maternity pay will be increased by the retail prices index to £106 a week. Last week my right hon. Friend the Chancellor announced the extension of paid maternity leave. Instead of the 16 weeks in 1997, it will rise from six months today to nine months in April 2007, with a goal of an entire year of paid maternity leave. Whereas the maximum maternity pay and child benefit for mothers at home with their first baby in 1997 was just £2,610 for the first year, it will rise by 2007 to £8,300—a real-terms increase of £5,000.

In addition, the pre-Budget report also announced our new measures for child care, including an extra 1 million child care places being made available by 2010 and an increase in the number of Sure Start centres from 600 to 3,500 over the same period. That will not only improve the education opportunities of children but help parents to get into work.

A job is the best route out of poverty, and continued investment in the new deal and Jobcentre Plus will help us to move even further towards full employment and away from the mass unemployment of the 80s and 90s. We have the highest employment rate of the major industrialised nations, with unemployment at its lowest level for 30 years. There are 2 million more jobs than in 1997, with 1 million people helped into work through our new deal programmes. We have seen an increased employment rate for lone parents, disabled people, ethnic minorities, the low skilled and people aged 50 and over. For the fifth successive year, I can announce that we are freezing non-dependent deductions to relieve the pressure on low-income parents who are housing their adult children.

We are determined to ensure that everyone has the opportunity and the incentives to work. Our pathways to work pilots have achieved outstanding early results, with twice as many sick and disabled people getting back to work in pilot areas compared with non-pilot areas. The pre-Budget report announced our intention to build on that success by extending the scheme to a third of the country, covering the areas with the greatest concentration of incapacity benefit claimants, starting from October 2005.

With nine out of 10 people expecting to work again when they first claim incapacity benefits, pathways is helping them to meet their aspirations, fostering a culture change where sickness and disability need no longer mean a withdrawal from work. We are committed to extending that culture change by working with GPs and other health care professionals to embed a more positive attitude towards the beneficial effects of work. We will make a range of support available to GPs, including improved training materials for new and existing doctors to help them to support patients in getting back to work effectively.

We are piloting a scheme, based on innovative projects such as those undertaken in Glasgow, Bristol and Camden, to place employment advisers in GP surgeries. We are allocating £30 million more to expand the number who can benefit from the new deal for disabled people. We want to try to reduce bureaucracy for GPs, but also to build up our understanding of the most effective ways that GPs are helping their patients to manage a return to work.

A key part of that culture change is eliminating discrimination. We are proud to have introduced our Disability Discrimination Bill, which is today being debated on Second Reading in the other place. Combined with our extension of the Disability Discrimination Act 1995 in October, we are radically transforming the rights and opportunities of disabled people. We are also committed to breaking down the barriers that older workers face by taking steps to tackle age discrimination and improve the financial inducements for people who decline to take their basic state pension at the age of 65.

The Pensions Act 2004 improves the rewards for deferring the state pension and gives people the new choice of taking an enhanced pension or a lump sum of, on average, £20,000 to £30,000 for people who choose to delay taking their state pension for five years. Furthermore, the rewards are significant even for choosing to defer for a period of substantially less than five years. For example, a 65-year-old single man entitled to a state pension of £105 a week who defers for two years would be entitled to an increased pension of more than £126 a week, or a lump sum of £11,600.

With today's uprating, we continue our commitment to and progress towards a fair and inclusive society of opportunity and independence for all, tackling poverty and breaking down the barriers that prevent people from realising their own aspirations in the workplace. I commend this statement to the House.

We broadly welcome the statement. We also welcome the Secretary of State to the House. I was half expecting someone else, when I read a story in The Sun today about Labour's

"New pensions supremo, Alan Simpson",

topped with a nice photo of the hon. Member for Nottingham, South (Alan Simpson)—so it is good to see the Secretary of State here.

I hope that the right hon. Gentleman will explain further the background to his plans for pension credit, because there is an interesting difference between what was stated in the official release of the Chancellor's autumn statement and what the Secretary of State has said today. According to the official release, the Chancellor was going to say last week:

"I can confirm that next year the pension credit will rise faster than inflation—by average earnings"

which of course left scope for a change of strategy after that—we know that the Secretary of State regards the pension credit as a short to medium-term policy only. However, what the Chancellor told the House, as recorded in Hansard, is:

"I can confirm that, next year and in the spending round, the pension credit will rise faster than inflation—by average earnings"—[Official Report, 2 December 2004; Vol. 428, c. 787.]

and it is that formulation that the Secretary of State has repeated today. Does he realise that if he keeps increasing the pension credit by earnings and the basic state pension by prices, the gap between the value of means-tested benefits and the basic state pension will widen? How could that possibly be consistent with what he told us he wanted when he said that we had to

"bite the bullet and look at the state pension system . . . so that if you do a lifetime's work, it will deliver a pension above the basic level of means-tested support."?

His uprating statement today is inconsistent with the strategic aim that he set out in that speech last month. We need to know what he is trying to do, and whether he believes in means-testing increasing indefinitely.

It is all right the Secretary of State being a free spirit, speculating about how he can reform the pensions system when he is giving speeches outside this Chamber or in interviews with The Daily Telegraph, but what happens when he turns up here and gives a totally conventional uprating statement that will lead to more means-testing and more pensioners on means-tested benefits? He must make his strategy clear. Following another of his recent media appearances, I read in the Telegraph on Saturday, I think it was, that he spent his youth playing in a pop group called "The In-Betweens"—perfect positioning in today's Labour party, in between the Prime Minister and the Chancellor, and in between means-tested benefits and pension reform. We want to know his strategy for pensions.

Will the Secretary of State confirm that pensioners who got an extra £100 in their benefits this year will not get that next year but will get a £50 special payment instead, so that, after allowing for inflation, there will be a fall in the real value of benefits for pensioners next year compared with this year? Will he also confirm that that is before further increases in council tax? Studying the small print of the Chancellor's autumn statement reveals that average council tax will increase by 8 per cent. next year; what does that mean for real pensioner incomes?

The Secretary of State's statement was billed as being about not only benefits uprating but welfare reform, so let me ask him about what welfare reform means to him. It is obviously important that we reform welfare, and if ever the Government get around to trying to do so seriously, the Conservatives will back them. However, I admit to a certain world-weariness when I see another enthusiastic, fresh-faced Secretary of State, new to his office, come into the Chamber to announce that he will engage in welfare reform. We have been here before, and reform has never been delivered before. Why should it be any different this time?

Nowhere is the gap more obvious than in incapacity benefit, which the right hon. Gentleman mentioned today. May I quote what the Prime Minister said more than five years ago about reforming welfare and incapacity benefit? He said:

"we are reforming the welfare state, and in particular, we are reforming incapacity benefit . . . There are now more people claiming incapacity benefit than claiming unemployment benefit. That situation cannot possibly be sustained."—[Official Report, 10 November 1999; Vol. 337, c. 1123.]

That was in November 1999, but since then the number of people on incapacity benefit has gone up from 2.267 million to 2.405 million. Having previously been promised welfare reform that was not delivered, why should we believe the Secretary of State this time, especially when the number of young people who are not working, studying or training has gone up since Labour came to office in 1997 and since the introduction of the new deal? It now stands at 1.112 million, which is the highest figure since 1997. Does that not tell the Secretary of State that there is something wrong with his protestations about welfare reform?

The Secretary of State referred to families, but will he comment on something that he carefully removed from his uprating statement? He talked about child tax credit and the uprating of the value of the child element of the tax credit. He did not say anything about the freezing for the second year of the value of the family element of the child tax credit. That is significant, because the child element of the child tax credit is heavily means-tested, and that is the part into which the Government are putting more money. The family element of the child tax credit goes to most families, and Labour is freezing it. The underlying policy for families, just as it is for pensioners, is more means-testing. The direction of policy on families is more means-testing, just as it is for pensioners. I am pleased that the Secretary of State has asked his officials for a note because, sadly, there are not many families in this country who can find their way around the Gordon Brown system. The statement involves more means-testing for pensioners and families, but that is not the direction in which we believe the country should go, and it certainly cannot be called welfare reform.

I reassure the hon. Gentleman that the Secretary of State for Work and Pensions still resides in Hull rather than Nottingham. I was surprised to see the photograph myself—Alan Simpson must be even more surprised.

I thought that there was terrific news in the statement about pension credit, which is something in which hon. Members on both sides of the House should be interested. Her Majesty's official Opposition do not want to do away with pension credit, and neither do the Liberal Democrats, so we all have a shared concern in making sure that we achieve maximum take-up. In my statement, I pointed out that we are succeeding in reaching the poorest pensioners who are on incomes even lower than the basic state pension because they did not make enough national insurance contributions. That is relevant to the point about uprating, as it is tremendous news for those pensioners that we will continue to index the guaranteed element of pension credit by earnings.

It is no good embarking on the task of taking millions of pensioners out of poverty—we are providing them with the reassurance of a safety net, including an additional savings element—and lifting 1.8 million pensioners out of abject poverty only to start to go backwards. The result, as I said in my statement, of linking the pension credit to prices rather than earnings would be 600,000 pensioners falling back into poverty. Indeed, the hon. Gentleman's policy of linking the pension credit to price rather than earnings would mean that, at the start of the 21st century, pensioners who are striving to get closer to average earnings—our ambition is to eradicate pensioner poverty—are, in fact, taken backwards. The statement is therefore good news for individuals on pension credit, and people would be extremely concerned about any political party that seeks to unravel what we have put in place.

The hon. Gentleman said that the proposals were inconsistent with the basic state pension, but there is no inconsistency at all. On the back of the Turner commission, we are looking at a new world for pensioners, in which there is a doubling of the number of people over 65 as a proportion of the population. The birth rate is declining, longevity is increasing and all countries must face the issue of what we are going to do in the long term. That should be a more mature debate than the debate about today's pensions. Of course today's pensions are important, but they must be sustainable into the future. We make no apology for looking at the long term. Part of the accusation was that we had a short-term approach, but there was no more short-term approach than that displayed by the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), the Leader of the Opposition, who said that pensioners were more concerned with today than with what happens in 2050. Society and politicians must be worried about the situation now and in the future.

The hon. Gentleman said that there had been various speeches on welfare reform but that nothing had happened. One does not need to look at figures or statistics. One need only walk into a Jobcentre Plus office to see the transformation in welfare reform. It is not just the practical effect of merging the Employment Service with the Benefits Agency. It is the whole approach to people who need help to get back into work—the eradication of the screens and the dreadful atmosphere in those places, which made the customer feel more like a guilty party than like someone seeking assistance. Our reforms through Jobcentre Plus have been remarkable. The hon. Gentleman's policy of privatising Jobcentre Plus and abolishing large chunks of the new deal should concern us all, were there any danger of the Conservative party being elected.

The other aspect of welfare reform that the hon. Gentleman mentioned was IB. It takes a certain amount of panache and style—I give him credit for having both—to stand at the Dispatch Box as a Conservative MP and a member of the Government in the previous Administration, and speak about incapacity benefit. Let me remind the House that that trebled from 700,000 to 2.6 million between 1979 and 1997. Had we carried on that trend, there would now be 4 million people on incapacity benefit. The figure has risen from 2.6 million to 2.7 million because the inflow into incapacity benefit is down by a third.

We must improve the situation even further. Pathways to work is an incredibly important element of that, and I am pleased that the Chancellor last week announced its extension to a third of the country. Given that we have the most stringent gateway into incapacity benefit in the world, as measured by the Organisation for Economic Co-operation and Development, we must examine why people are coming on to that benefit. One factor—the hon. Gentleman asked for some of our thoughts on the subject—is that a third of people are flowing on to incapacity benefit direct from the workplace. They were originally on statutory sick pay. When that runs out, they lose their link with the workplace, stay on the same rate but are suddenly into incapacity benefit. Then we spend an awful lot of time seeing how we can turn those people around and get them back into a job.

There are some important lessons to be learned there, but the most important lesson from pathways to work is that so many people on IB want to be back in work. They do not want to be treated as they were by the previous Government—condemned to a life on benefits. They want a helping hand to get them into work. That is what pathways to work is all about.

The hon. Gentleman mentioned the NEET figure—those not in education, employment or training. The increase is entirely explained by the increase in population. Nevertheless, it is too high and we need to tackle the problem. That is why there were a range of measures in the pre-Budget report last week, including the concentration on skills and the change to the benefit arrangements so that those who are in full-time training unwaged can pick up some financial assistance, in the same way as others get the education maintenance allowance. There are important issues that need to be dealt with.

Finally, the hon. Gentleman asked a question about which I make no excuse for having sent for a note. My understanding, before receiving the note, was that the issue was part of the changeover to working tax credit. The family element stays at £545, so families will receive exactly the same, in nominal terms. Since we came to power in 1997, families with two children and an income of £50,000 have received a large boost, raising financial support for their children from £20 a week to £38.90 a week next year—a real-terms increase of 59 per cent.

There is no better way of improving the income of people at the bottom of the income ladder than helping them off benefit and into work. Will my right hon. Friend look at the pathways to work project figures for the Glossop Jobcentre Plus office in my constituency? At the beginning of the project, the office was set a target of ensuring that 12 people on incapacity benefit moved into employment over six months. It achieved that result in 40 cases, which is a real success, and I hope that my right hon. Friend will pay tribute to it. My only criticism of what he has announced today is that the roll-out of pathways to work is not fast or great enough.

My hon. Friend makes an important point about the work that our people on the ground, including those in Glossop, do to achieve such remarkable results. I am not surprised by what has been achieved. When I visited Gateshead I met the staff involved, who have years of experience of dealing with people and trying to get them into work, and they said that the results exceeded all their expectations. As for my hon. Friend's disappointment, the scheme is still in its early days. It is barely six months old, and in the expansion not only in the other areas being covered but in existing pathways to work areas, where we will now move on to those who have been on IB for three years or longer, we will have to take things carefully, so that we are absolutely sure that we are learning all the lessons to keep this remarkable momentum going.

The Liberal Democrats welcome a number of aspects of the statement, including the planned improvement in maternity provision. If I might briefly don my anorak, may I congratulate the Secretary of State on freezing non-dependent deductions for the fifth year running? When young people are increasingly being forced out of family homes, anything that reduces the pressure on low-income families and makes it easier for those young people to stay is a good thing. That is an obscure corner of the system, but I welcome the direction of Government policy.

I also welcome the courageous, visionary and pioneering way in which the Secretary of State is agreeing with the Liberal Democrats on the subject of the citizen's pension. I welcomed his weekend comments in the press about his approach to that issue. Will he give us a flavour of the response that he has received from ministerial colleagues in other Departments when he has broached with them the ideas that he is thinking about in this reform to pensions?

On the specific group of childless adults, will the Secretary of State tell us his thinking as reflected in today's statement? He will be familiar with the New Policy Institute's recent report highlighting poverty among childless adults, who have inevitably been a lower priority than children and the elderly, but are not irrelevant. Let me give two examples that arise from the statement. A woman of 59 on income support gets £56.20 a week—an increase of just 55p was announced today—but the next year her income will go up to £109, and almost double. In one sense, it is good that women can receive a generous amount at 60, but the disparity is growing every year. Can it go on like that? Can there be any logic in doubling somebody's income when she moves from 59 to 60, although her needs may be no different from one year to the next?

The other example is the case of a young woman under 25 with a partner who becomes pregnant. If the partner is not interested and disappears from the scene, she will be living on £44.50 a week—the increase will be just 45p. An expectant mother will be living on less than £45 a week. What does the Secretary of State think that it will mean for the well-being of the child if the woman receives only the single under-25 adult rate? Is it not about time that he considered discrimination in the system against under-25s? Can it really be justified any longer?

I thank the hon. Gentleman for his support. He said that he was an anorak, but Labour Members think that he is well on the way to becoming a cagoul. I welcome his welcome of the freezing of non-dependent deductions and the increase in maternity provision.

I do not think that I will get involved in talking about internal discussions with other Ministers—

Why not?

Okay, then. They all support the drive to take pensioners out of poverty and to have a sustainable and equitable pensions system into the future. For every Labour Member, the argument about the citizen's pension is not about whether we are for or against doing something for women pensioners or recognising that they have particular difficulties. The hon. Member for Northavon (Mr. Webb) knows the arguments about the contributory principle and the other elements that are there to help. There is, however, absolute unanimity that we must tackle the problem of women's pensions. The citizen's pension, for which the Liberal Democrats are now claiming credit, has been advanced by many Labour Members for many years. The importance of the issue among Labour Members reflects the fact that more women, although not enough, have entered the House of Commons, and that shift is reflected in many areas of policy that have changed dramatically since 1997.

The hon. Member for Northavon raised the Joseph Rowntree Foundation report, which states:

"There has been substantial success over the last decade in reducing child and pensioner poverty and unemployment."

The Rowntree report raises some points about childless single adults, and we must examine that area, but I hope that everyone understands that when we formed the Government, our priority was to tackle the fact that one in three children and 2.8 million pensioners were in poverty. The employment market is benign, and reducing unemployment has had a beneficial effect on all strata of society. We have been working to our priorities, but the Rowntree report rightly points out other areas that we should examine, now that we are seven years into government.

Although the Secretary of State was right to draw attention to the good news that the Government have unfolded in their programme, does he accept that voters quickly acclimatise to Government success, and then look to what the Government might do next? Given that the Tory party and the Liberal Democrats have outlined their plans for long-term reform, does he think that it will be easier for us to fight an election if our election manifesto includes a hint about our long-term pension reforms? [Hon. Members: "Wait for Turner."]

We do not have to wait for Turner. My right hon. Friend is right to say that long-term pension reform will be an issue at the next election. We can point to the Pensions Act 2004, which is a crucial element in tackling that problem. It involves major reform on informed choice and security, in the form of the pension protection fund. Many of its other elements are linked with the Finance Act 2004, which merges eight different tax systems into one. Those measures are all progressive, and they will be crucial in this debate.

Many people would do well to wait for the Turner report, because Turner's analysis of the problem is exceptional. He says that even if the Government pushed him to produce his report more quickly he would not do so, because he believes that a comprehensive report that tackles the issues is much more important than a speedily produced report. [Interruption.] Perhaps that is Alan Simpson, asking what I am doing imitating him at the Dispatch Box.

In the foreword to his first report, Turner said that, looking ahead to 2030 or 2050, the issue is so important that knee-jerk reactions are not right, and that we—none more so than the Conservative party—were all living in a fool's paradise in the '80s and '90s. He also made the point that the problem requires a measured mature response from politicians. We should say something in the manifesto. Between now and the manifesto, however, we should not say that we have all the answers without waiting for the second report from Turner, and without having a debate, which the Turner report will instigate throughout the country.

I welcome much of what the Secretary of State has said. I welcome the Disability Discrimination Bill, which is better late than never. Given that it has been introduced so late in this Parliament, I hope that it will reach the statute book. I also welcome the extra £30 million for the new deal for disabled people, which has been so successful that some of the organisations involved, such as the Shaw Trust, have been told to stop placing disabled people in work.

I also welcome the extension of pathways to work. Liberal Democrat Members have long said that it is a travesty that the disabled, who face the most obstacles to getting back into work, get only 3 per cent. of the £750 million budget for the new deal. In extending pathways to work to a third of the country, is the Secretary of State rethinking the policy of using the constant threat of benefit sanctions to try to force people into work? Personal advisers at one of the early pilots in Chesterfield in north Derbyshire told me—I have raised this before, in Committee—that they have to do a lot of work to undo the damage done when a disabled person claiming incapacity benefit receives a threatening letter saying, "You must turn up for a work-focused interview, on pain of losing your benefit, or part of it." The adviser has to try to ring the person before the letter arrives, to reassure them that the intention is to help them into work, not to threaten them or to take their benefits away.

The hon. Gentleman suggests that the Disability Discrimination Bill is better late than never, but we promised it in our last manifesto and said that it would be introduced in this Parliament—as, with a fair wind, it will be. That is why we gave it a First Reading the day after the Queen's Speech, and why it will have its Second Reading shortly.

The hon. Gentleman also mentioned that another £30 million is going into assisting some of the problems identified by the Shaw Trust, and by other charities.

I disagree with the hon. Gentleman about sanctions. The pathways to work project has the backing of the disability lobby on the basis of rights and responsibilities. There is a responsibility to attend a work-focused interview. The £11 sanction for not turning up is fair and reasonable, given that the programme involves condition management and assistance such as a £40-a-week in-work credit to help disabled people once they get into work. I understand that insistence that they attend, to the extent of using the £11 sanction, is very rare. When I went to Gateshead I asked the people there how many times they had had to implement it, and they find not only that they do not have to do so, but that people who are not even part of the project, because they have been on IB for longer than a year, beat a path to their door to ask for help. The rights and responsibilities approach must continue. If there are any specific problems I should like to consider them, but that is the right approach, and we have wide support for it.

The Government's ambition to abolish child poverty is the most important that we have, and I welcome my right hon. Friend's comments on child tax credit. However, will he address the concerns of a constituent of mine to whom I spoke at the weekend, who had her initial award for child tax credit reduced by 80 per cent. in subsequent years because officials overestimated what she was due? She is not alone in that. What can my right hon. Friend and his Department do to ensure that such overestimates, and the misery and distress that they inevitably cause, are minimised?

I understand that my hon. Friend has an interest in these matters, his partner having given birth to a child quite recently. Every MP has examples of such problems, and we are working closely with the Treasury to try to solve them. To see what we have done to tackle child poverty, one need only look at the level of income support and child allowance that existed in 1997. Then, for a child of 0 to 11 years it was £16.90; next year, it will be £43.88—an increase of 127 per cent. We have to work to eradicate the genuine problems that my hon. Friend has identified, but that must not detract from the success of our attempts to eradicate child poverty.

In the context of welfare reform, the Secretary of State will be aware that the working tax credit leaves many couples, and therefore any children that they have, up to £36 per week worse off than if they were on their own. That is in marked contrast to other social security systems, such as that in Australia. Will the Secretary of State investigate that anomaly to ensure that tax credit or benefit recipients are not worse off by living together than by being on their own? It must surely be wrong to penalise people for coming together as couples if they choose to do so.

I am not absolutely sure whether the hon. Gentleman is right—but he spoke with such panache and was so positive that I shall assume that he is, and the issue needs to be examined. However, the working tax credit and child tax credit have meant an enormous increase in reducing poverty. There are anomalies in the system, and they need to be tackled.

My right hon. Friend knows that I support 100 per cent. the Government's pension credit policy, which helps the poorest pensioners. I also acknowledge that the pension centres have helped many pensioners in all our constituencies to get other benefits to which they are entitled. My right hon. Friend said that take-up was 80 per cent. That means that 20 per cent. do not get the credit to which they are entitled and which, in many cases, they desperately need. How do we reach that 20 per cent. and ensure that 100 per cent. of the pensioners who most need the help get it?

The first thing that we can do is knock on the door of every pensioner who we believe should claim the credit, but does not. That was suggested to us, and we will do it. On the point about the 80 per cent., we expected to have a rate of 70 per cent. take-up at this stage. The other point was that we are missing the poorest pensioners, and we must consider that carefully. Every indication that I have received suggests that part of the problem arises because some people are not sure whether the savings credit element, which can sometimes be £5 or £6, is sufficient. There is some confusion about that. There is also a belief among some people that if they claim pension credit they will lose housing benefit or some other payment. We must deal with that. We are also considering whether small payments could be paid as a one-off annual payment rather than a weekly payment, thus making the credit more attractive to claim. We are considering all those aspects, and we want to get 100 per cent. take-up if possible.

I welcome the success of the pathways to work pilots in helping people on incapacity benefit to get back into work. As my right hon. Friend rolls out and broadens the programme throughout the country, will he further consider the way in which medical rehabilitation services for people of working age could help to get them back to work? That could be an important part of the process.

My hon. Friend is right. That is why the Health and Safety Executive has a project under way. Rehabilitation has been underplayed by employers, who could use it to continue a link with people on long-term sickness, and do more to maintain that link and give them help. However, in pathways to work we also find that it is important for people to have not only the expertise of a personal adviser who is looking to place them in work, but condition management from the national health service, as well as GPs' awareness that getting them back into work could help their health. The suicide rate among those who are long-term unemployed is 35 times higher than that of people in work. For people with mental conditions, for example, being in work will be better than being out of work. When we all realise that and work together, that will be a success for pathways to work.

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

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

The White Paper, "The Future of Rail", which I published in July this year, set out new proposals for reorganising the structure of Britain's railways. The Bill takes forward the legislative elements to implement that White Paper to simplify and restructure the railways and put right many of the problems caused by a botched privatisation 10 years ago.

The main provisions of the Bill are to wind up the Strategic Rail Authority; to transfer the railway safety functions to the Office of Rail Regulation; to change the way in which access charge reviews are calculated; to give the devolved Administrations more responsibility; to allow passenger transport executives and London to take greater responsibilities for services in their areas; to establish a rail passenger council as a single national body and end the formal federal structure of the passengers' committees; and to put in place a better way of changing rail services to allow more flexibility and to provide for rail, light rail and bus schemes. I shall return to all those points in greater detail shortly. Before I do, I should point out that other important changes need to be made, which were set out in the White Paper but do not require legislation, and I shall return to those later as well.

Before I turn to the provisions of the Bill, I want to put the proposed legislative changes in context. The railways are a vital public service and an essential part of the country's transport infrastructure. Whereas the railway industry was seen as an industry in decline in the early 1990s, today it is growing. Last year, more than 1 billion journeys were made—the first time that that milestone has been reached since 1961.

Does the Secretary of State put this renewed confidence in the railway industry down to the way in which the private companies have increased their customer numbers?

Actually, I would say that, despite the difficulties encountered by the railways over the past 10 years, it is to the credit of everyone involved that they are now carrying more people than at any time in the past 40 years. I am sure that the hon. Gentleman would agree that the railways have been through a very difficult time in the past 10 years, involving a traumatic privatisation—Railtrack was an absolute disaster in terms of its lack of stewardship of the railways and of its failure to get to grips with costs and allowing them to get out of control—and the dysfunctional organisation of the railways, some of which problems we are putting right in the Bill. I made it clear when I announced the review of the railways in January last year that the partnership between the private and public sectors is an important one in relation to the railways, but I am very sure that, without substantial public commitment—not just in organisational terms—and public investment, we could not bring in the corresponding private money, let alone anything else that is needed. I think that we part company with the Tories over this issue. Their idea is that all that they need to do is withdraw public funding—presumably the railways would have their share of the £1.8 billion of transport cuts that they are planning—but that would almost certainly result in a reduced amount of private money coming in. I am glad that the hon. Gentleman gave me the chance to make that point.

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If the hon. Gentleman wishes to be as helpful, I shall certainly give way to him.

I should be delighted to help my hon. Friend the Member for West Derbyshire (Mr. McLoughlin) on this matter. If the Secretary of State chooses to describe privatisation as a disaster, how would he describe the creation of the Strategic Rail Authority? If that was anything other than a disaster, why is he abolishing it?

What I said was that the way in which the railways were privatised by the previous Conservative Government was a disaster. It was bad for the railways and hugely disruptive, and the decision to set up the SRA was—

A disaster.

No, it was an attempt to bring some order to a very disorderly railway system. Under its chairman, Richard Bowker, the SRA made a very good job of sorting out some of the problems that had resulted from the privatisation. I shall come back to the SRA shortly. The hon. Gentleman ought to be aware that the Conservative amendment implicitly calls for the retention of the SRA. He had better have a look at what he is being invited to vote for before he calls it a disaster.

I welcome the development of a publicly owned railway system in this country and the measures that my right hon. Friend is taking to ensure that the railway is publicly accountable and publicly run. Is he prepared to go a little further and say whether the train operating companies and franchises should also be publicly owned and run, where appropriate, on the ground that that can be done very efficiently?

I shall come to the question of franchising later. If I do not say anything about my hon. Friend's point, perhaps he will remind me of his question; I shall certainly come back to it. That is one way of guaranteeing an audience for at least another 15 minutes, because he will have to stay put until then. I would say to the hon. Member for Spelthorne that he should not worry; this would not be the first time that hon. Members had been taken aback by the fact that their amendment did not say quite what they thought it did. He should have a good look at the one tabled by the Conservatives.

There has been significant success on the railways, which is a tribute to all who work on them. Moreover, our investment nearly doubles railway investment over five years. Total investment in the four years to 2006 will be almost three times the amount at the time of privatisation. It is important to make that investment to back up the Bill.

Just 10 days ago, when we were discussing the Bill in the context of the Queen's Speech, the hon. Member for South Suffolk (Mr. Yeo)—the Conservative spokesman—made the surprising allegation that we had cut spending on transport. I did not intervene at the time, because I was puzzled by his assertion. Let me put the record straight now.

The hon. Gentleman compared the Department's spending according to the 2002 spending review—£11.2 billion—with that in the 2004 review, which he saw as £10.4 billion. The reason for the apparent reduction is that about £450 million of planned DFT spending is going into transport, £138 million of which is going into the ScotRail franchise and therefore goes through the Scottish Executive's books. About £300 million funds the Health and Safety Executive and goes through the books of the Department for Work and Pensions, while about £50 million goes directly to local authorities for concessionary fares. I do not want to labour the point, as I appreciate that it is some years since the hon. Gentleman was a Minister and the intricacies of public accounts are sometimes baffling, but I assure him that we have not cut transport spending. Only he and the Conservative party propose to do that.

Is it not the case that, even if we include all the figures that have been buried in other Departments' accounts but are—we are now told—available for transport spending, the figure for the current year will be substantially below that projected for the current year in 2002?

Those figures are not buried. They are properly accounted for, as is necessary unless we are to hear a row from the Public Accounts Committee. In fact, we are spending about £200 million more than we had planned. The hon. Gentleman should note that, because we are not going to let go of the fact that, between now and the next election, he will have to explain how he will get £1.8 billion out of transport. I shall say more about that later, because it is relevant to the amendment. I did not realise that he had rubbished the David James report on efficiency savings quite so much, but I shall leave him to ponder on that for a few moments.

I do not know whether it was a Freudian slip, but the Secretary of State said that he hoped to get parts of the dysfunctional structure right. Are there other parts that he is not trying to get right?

Even for a Liberal Democrat, that is a pretty poor point. We had already fixed the other parts; now we are finishing the process. The Bill deals with only some of them.

The White Paper sets out six key changes that are necessary for us to build the right structure and which underpin the Bill. First, the Government will take charge of the strategic direction of the railways, because only a Government can do that. Over the years, at various times various governments have sought to distance themselves from the consequences of their spending decisions. I firmly believe that only the democratically elected Government of the day can decide how much to spend on the railways and roughly what their shape and size should be. That responsibility rests fairly and squarely with the Government.

When we looked at the organisation of the railways last year, we concluded that one of the first principles should relate to who is best placed to do what. When it comes to strategic direction, only the Government can decide.

The Railways Act 1993 placed a duty on the Secretary of State to promote use of the railways, which was transferred to the Strategic Rail Authority in 2000. Will that duty be transferred back to the Secretary of State?

Is my hon. Friend talking about the duty to promote freight?

I was referring to passengers and freight.

Of course, promoting the railways is one of the Government's duties. The 1993 Act explicitly gave the SRA a role, but that is not explicit in this Bill. However, it follows from everything that I have said that, where the Government have a responsibility to decide the size and shape of the network, it is for the Government to be accountable for that. It would be difficult to impose on a Minister a duty to promote the railways. We are different from the SRA in the sense that we are elected. It would be open to another Secretary of State from another party such as the Conservative party to say, "I was elected to do something completely different." One has to live with the electoral consequences of that but, as far as we are concerned, the strategic direction of the railways and the responsibility on funding lie fairly and squarely with the Government and therefore with the Secretary of State. That is the first key point of the White Paper. It is important that people recognise that only the Government can do that, but the Government are in a slightly different position from an organisation that they may set up that has more specific responsibilities. The Government have a more general responsibility. Let us not shrink from that. It is up to the voters which Government they elect. They may want to elect a Government who slash and burn the railways, but I do not think that they want the Conservatives just yet.

The Secretary of State has said twice that it is only the Government who can choose a strategic direction for our railway system. Why therefore does the Bill give such big powers to the Mayor and Transport for London? The White Paper says:

"We will also consider whether . . . there should be any scope for Transport for London to take revenue risk from train companies".

Can the Secretary of State confirm that the Bill will not involve council tax payers in London taking risky ventures on railways in London or inflation-busting fare increases on top of the one that we have just had?

The Bill does not do that and I will come to London shortly.

The second key point of the White Paper was to give Network Rail clear responsibility for operating the network and for its performance, timetabling, route utilisation and so on. Thirdly, train and track companies must work more closely together, and they are doing that now. Fourthly, as I said, there will be an increased role for the Scottish Executive, the Welsh Assembly Government and the London Mayor, and more local decision making in London.

Will the Secretary of State give way?

I will in a moment.

Fifthly, the Office of Rail Regulation will cover both safety performance as well as economic regulation. Finally, there is a better deal for freight, which will enable the industry and its customers to invest for the long term, which is an important point.

I want to talk about the proposals in the Bill that will help us to put in place some of those key changes. I will come on to the Scottish point, if that is what the hon. Member for North Tayside (Pete Wishart) wishes to raise, in a moment. First, clause 1 provides for the winding-up of the Strategic Rail Authority and will enable the Secretary of State, accountable to Parliament, to take charge of setting the railway strategy. That means that the SRA's strategic responsibilities and financial obligations will pass to the Secretary of State, although, in some cases, strategic responsibilities will also pass to the devolved Administrations. It also means that the Secretary of State and the devolved Administrations will take over some of the SRA's role, particularly that of awarding train company franchises. In order to put those changes into effect, it will be necessary for some staff to transfer from the SRA to the Department for Transport, or in some cases to Network Rail or the Office of Rail Regulation.

Again, I want to make an important point that has a bearing on the amendment that has been tabled by the Conservative party. This may be news to Conservative Members, but it wants, apparently, to keep the SRA because, it says, it does not want civil servants and/or politicians to take part in the award of contracts. Let us make one thing clear. Ministers will not be involved in evaluation and discussions in relation to the award of contracts. Of course they have to sign them off, as we did anyway with the SRA. When the SRA went through the contract process, of course it had to come back to the Secretary of State to sign off because there are huge financial implications.

As for the idea that people employed by the Department for Transport cannot do that work, they do it in the Highways Agency, which has long been recognised as an extremely good organisation in procurement. It is done on behalf of the Government, but the contract-awarding process is completely separated from Ministers, as it should be, so that will not happen. The idea that Ministers will be involved in negotiations or have any improper influence on awarding contracts is absolute rubbish, as the Opposition should know. The rail group within the Department is being reorganised to reflect that.

Will my right hon. Friend make it clear that there is no question of any franchise being awarded on the basis of the known personalities or political connections of particular persons? The suggestion is going round the industry that a particular company will not get a franchise simply because of its direct connections with the Conservative party. That is ignorant nonsense and I want it denied here and now.

My hon. Friend is right to raise this point. I have not heard the suggestion to which she refers, but it is absolute nonsense and she can have the categorical assurance that she asked for. Franchises will continue to be awarded on the basis of completely open and transparent published criteria. Frankly, I do not care about the political allegiance of anyone running the railways; all that I want is for them to work and for the trains to run on time. That might not be a very high ambition but it is all that I want, and I doubt whether the public will care whether it is the Tories, Labour or even the Liberal Democrats who manage to do that.

Secondly, safety is of course of paramount importance, but we believe that it should be integrated more closely with other issues, which is why we want to combine the Health and Safety Executive's functions with those of the Office of Rail Regulation. The ORR will shortly consult on how it will organise itself to ensure that both its primary functions—economic regulation and safety—can be properly discharged.

On accident reports and investigations, schedule 3 states:

"The Office of Rail Regulation may authorise a person to investigate and . . . report on any accident".

Is that not duplicating the current work of the rail accident investigation branch, or is the intention to complement or supplement that work?

I see such work as complementary. It has been agreed that, from next year, when the RAIB is established, it will take the lead in the event of an accident, go to work as quickly as possible, find out what has happened and report as soon as it can, thereby operating in much the same way as the air accidents investigation branch and the marine accident investigation branch, which have worked very well for a number of years. In order that the rail regulator can discharge its safety obligations, it may well want to examine some of the issues arising from such incidents. What we are putting in place is a complementary system. On too many past occasions, there have been a number of people with a legitimate interest in investigating such matters. This will be a far better way of working.

My hon. Friend the Member for Dumfries (Mr. Brown) will doubtless want to pursue this issue. If he is lucky enough to get a place on the Standing Committee, those of my hon. Friends who share that pleasure with him will be happy to go through the memorandum of understanding involving the RAIB and other organisations. However, I think that he will find that the system is complementary.

The Secretary of State seems to be saying that he wants to set up an organisation similar to the AAIB and the MAIB, but I think that I am right in saying that there has been no public inquiry into an air accident in this country since 1967. When the Government took office, they launched a public inquiry into the incident on the River Thames involving the Marchioness, even though the MAIB had already been set up. Is the Secretary of State saying that he hopes that, if the RAIB secures the same reputation as the AAIB, he would see no need for public inquiries in future?

No. First, the RAIB was in fact set up in legislation passed last year—this Bill is not setting it up—and it is due to come into operation early next year. Secondly, of course, no Secretary of State will ever be in a position to say that there will never be a public inquiry. The principal way in which such matters are handled is through the prerogative powers that Secretaries of State can exercise, and it would be very foolish to rule out such a possibility. What I can say is that I hope that the RAIB will do as the other investigation branches have done and satisfy many of the requirements that have hitherto led to calls for a public inquiry. Certainly, the MAIB and the AAIB—thankfully, major air accidents are comparatively rare—have proved very effective in getting to the bottom of such incidents, mainly because they begin on a no-blame basis, get on site and find out what happened. Certainly, of the three transport modes, air is probably the most mature in that everyone in an air accidents investigation branch is not bothered about whose fault it is; they just want to know what happened to ensure that it does not happen again. Ideally, that is precisely where we should be in respect of the railways.

I am not sure that the hon. Member for West Derbyshire (Mr. McLoughlin) was in his place when I made my statement following the recent accident at the level crossing in Ufton. What was good about those proceedings was that, rather than adopting a mood of identifying who was to blame, people focused on what was necessary to find out exactly what happened.

Thirdly, to return to the Bill, the Government want further to devolve decision making for public transport, including rail, to the Scottish Executive, the Welsh Assembly and to passenger transport executives, and a substantial part of the Bill deals with that.

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I will give way shortly; I believe that I know where my hon. Friend is coming from.

We believe that, where it is possible to devolve powers, it is right to do so, because it makes for better transport planning. As to PTEs—

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Hold on a moment. I promise that any hon. Member who wants to intervene will get to intervene, unless you, Mr. Deputy Speaker, call the Adjournment or something like it. It may be helpful to the House to say that I intend to say a few words about PTEs in England, then speak about London, then go to Scotland—actually, I would love to go to Scotland, but not just yet—and then back to Wales. My first subject is PTEs, so does anyone want to intervene?

Does my right hon. Friend acknowledge the important role that passenger transport executives have played in securing, developing and monitoring rail services during some very difficult post-privatisation times? If he does, why is he seeking to reduce and remove so many of their existing powers and, if he is mindful of restoring those powers under the Bill, would that not represent an unnecessarily bureaucratic and confusing process?

No, quite the opposite. I am glad that my hon. Friend intervened because I thought that he might say what he did and it provides me with an opportunity to explain what we are doing. At the moment, franchises are the joint signatory of both the Strategic Rail Authority as it is now and the PTEs. In some cases, where the franchises involve more than one PTE, they have more than one or two parties to the contract. That means that it is complicated, because more parties are involved in the negotiations, and it can lead—let us be blunt about it—to a lot of horse-trading. At the moment, the PTEs do not have to meet the full consequences of the services that they specify because it all comes ultimately from the Government. In operational terms, we can end up with more and more services being purchased to run through a network that may not be able to take them. It may not be able physically to do so. My approach was to try to simplify the structure as much as possible, to make it less complicated and therefore less expensive. The more people involved, the greater the expense.

I agree with my hon. Friend that the PTEs are very important, not least because they must have regard to all transport within their area—not just railways, but light rail, buses, cars and so forth. The Bill provides that the Secretary of State must consult the relevant PTEs before issuing an invitation to tender, so the Secretary of State knows what the PTEs want to buy. If they want to buy more services, they can do so; if they want fewer, we intend to arrange it for them to receive the money for that and be able to spend the remainder on other things as well. In other words, they will be given greater power.

The Bill is necessary to ensure that we have a far simpler system than the one we have at the moment. Since the publication of the White Paper, I have made one change that was not contemplated in it. Because it may be necessary, for contractual reasons, to have the PTE as a signatory, it can, at the invitation of the Secretary of State, be a co-signatory, if necessary. PTEs thus have nothing to worry about in respect of their interests, which will be taken into account. There is a statutory obligation to listen to what they have to say. What we are doing is to streamline the procedure and, critically—I make no apology for it—I am determined that, in future, if PTEs can buy more services, they must accept the financial consequences of what happens. The present position is a nonsense.

The position in the constituency of the hon. Member for Pudsey (Mr. Truswell) may not be quite the same as the position that the Secretary of State has set out. What is the position when a PTE has entered into a franchise agreement already? Can it be retrospectively altered? For example, Nexus in the north-east has committed to making further improvements to the metro in Newcastle and Sunderland and to improving railway stations. Will its position be altered by the Bill?

No, because it is a general rule that legislation is not retrospective, except with the express consent of the Law Officers. The Bill will apply to new franchises. Existing franchises may be varied if that is agreed, but the Northern franchise was signed relatively recently. I remember an example that led me to believe that we needed a simpler way to deal with such negotiations. In the course of the negotiations on the Northern franchise, it emerged that one PTE had one service a day that went into the Northern franchise area, but it was able to hold up negotiations because it wanted something in its own franchise area. That is not a very satisfactory way of proceeding.

Notwithstanding what my right hon. Friend has said about the safeguards that he hopes to build into the Bill for PTEs in the future, does he agree that removing them as co-signatories to franchises weakens their position with franchisees? Can he give some examples of the difficulties and complications that the present system has caused?

It would not weaken the PTEs' position. The newer franchises have a far greater degree of specification—of performance and so on—than the older ones. Those specifications can be enforced in the future because a contract to provide services can be enforced by the Department, which will be the contracting party. My difficulty with what my hon. Friend says is that negotiations have not been a matter only for the PTE and the SRA—or the Government in the future—and the TOC. Often, negotiations have been between the PTE and the Government or the SRA. Those discussions have held matters up on several occasions. To put it bluntly, sometimes matters have been resolved by a compromise under which the Government pay some money to the PTE. I can see why the PTEs might think that that is a jolly good arrangement, but it is not, to coin a phrase, a very good way to run a railway.

We are trying to develop a rational system that is simpler than the present one. It will not diminish the role of the PTE. Indeed, what we propose—this is the whole thrust not only of the railways White Paper, but of the transport White Paper published a few weeks later—is that over time we will decentralise funds as far as possible to give the PTAs greater power and, crucially, to give them greater flexibility. At the moment, railways are regarded as somehow different from the transport that PTEs do, such as bus and light rail, but they should all be considered together. In some circumstances, it might not be right to run heavy rail because light rail would do the job better.

We are planning to give the PTEs greater power; when they get greater control over the money, that will provide greater influence over the TOCs. No doubt such matters will be explored further in Committee, but our proposals are an improvement. I know that a group has been organised in the past two weeks to campaign against the proposals, but its concern is misplaced.

Will my right hon. Friend give way on that point?

Yes, but then I am going to London.

While he is still in the metropolitan areas, I remind him that I chair the group that he has just mentioned. Will he agree to a meeting with us so that we may make representations on that issue?

I am sure that either my hon. Friend the Minister of State, who will take the Bill through Committee, or I will meet my hon. Friend. I have always made it clear that it is one of the responsibilities of Ministers to meet their colleagues and I am sure that we can arrange an opportunity to go through the arguments.

In relation to London, let us again be clear what we are talking about. The Mayor and TFL have substantial responsibility for most of London's transport. It is logical that, if we can bring rail travel within the Greater London authority closer to what TFL is doing, it will provide a better transport system for the public, not least in relation to fare structures and ticketing. At the moment, it is sometimes difficult to work out why it should cost more to go between one place and another by rail, by bus or by tube, so the principle of greater co-operation is a good one.

In relation to the Silverlink services in London, which run within the GLA boundary—with the exception of the service that goes to Watford—it seems sensible to say that if TFL is responsible for transport in London, it should look after those as well.

The allegation that sometimes arises, certainly from the Conservatives, is that, somehow, we will give the Mayor of London power over all the services that run into London. The hon. Member for South Suffolk is right: about 70 per cent. of train services in this country go to London. There is no way that we will hand over power for those services to the Mayor of London. What I said was that there may be a case, in discussion with the local authorities that surround London, for looking at services—especially commuter services—that come into London where the Mayor wants to specify greater stopping in his area. Clearly, that would have a knock-on effect on services going outside London. That needs to be discussed. That will be done on a slightly longer timetable—it will not happen imminently—but any sensible transport planner would accept that we need to consider the way in which those services are organised.

I thank the Secretary of State for giving way on the question of London, before he goes off to Scotland. In his proposals for Scotland, the Scottish Parliament will be given control over the track. I welcome and support that. Does he envisage a situation where TFL and the Mayor would have control over trains in London, as well as the track infrastructure, particularly on the entirely suburban cross-London routes that are not inter-city by any stretch of the imagination?

No, I do not, and I had better explain why. In Scotland, most of the railway network is operated by one franchise, ScotRail. Although the Anglo-Scottish services run up to Glasgow, Edinburgh, Aberdeen and Inverness and include one or two sleeper services, the dominant provider of trains is ScotRail. The track will remain under the ownership of Network Rail, but the Scottish Executive are largely involved in specifications, enhancements, improvements and so on for ScotRail, the dominant operator, so it makes sense that they should specify what is appropriate for the track. Bluntly, if they want to open up services or take them away, that is a matter for them.

The situation is almost the opposite in London. As I said, 70 per cent. of train services in this country come into London, and a large number of them start well outside London. It would be very difficult—in fact, it would be administratively and operationally impossible—to extract those parts of the track in London that no one else but London uses. I do not understand the strength of doing that, so we do not propose to do it.

However, we recognise that where something is wholly within London—such as, for the most part, the Silverlink Metro services—it is logical that TFL should take it on. In relation to services that go outside London, if commuter services might usefully take people to places with no transport links in London, that ought to be discussed. But I repeat that it can be done only after discussion and a general agreement on the way forward with the surrounding local authorities. I am sorry to disappoint the hon. Member for South Suffolk, who would love us to propose a rather different policy, but there is no question of giving the Mayor say over trains that run outside London. That is not what we are proposing at all.

TFL representatives tell me that they want to get their grubby little hands on all the tracks and stations in my constituency and that they plan to improve facilities by increasing fares. What guarantee can the right hon. Gentleman give to my constituents that the extra fares that they pay to TFL will be spent in my constituency, and not on some grandiose, half-baked scheme that Ken Livingstone thinks up?

I would be surprised if TFL put the proposals in the way that the hon. Gentleman describes. I do not want to repeat myself, but we have no plan at all to transfer the track, as I was just explaining to my hon. Friend the Member for Islington, North (Jeremy Corbyn); the hon. Gentleman is wrong on that.

Let me now deal with Scotland and Wales, although I have almost explained the Scottish policy.

Will my right hon. Friend give way?

Will the Secretary of State give way?

I shall let both hon. Members intervene, but let me say first that the Scottish Executive has run the ScotRail franchise for two or three years, and the arrangement has worked well. There will have to be a transfer of resources to reflect the fact that the Executive is to take over responsibility for specifying what they want in terms of track; that is now being discussed.

Will that allow the Scottish Executive to have what is called vertical integration, so that one company is responsible for both track and the train operating company?

No, but the position in Scotland is better than in some other parts of the country. Network Rail and the TOCs are now setting up joint control rooms, so that ultimately, when the number of franchises has been reduced, we will have alignment between the Network Rail regions and the single franchises, which will allow closer co-operation between track and train. That is much easier in Scotland, because ScotRail is the dominant operator; although, because of the Anglo-Scottish services, it is not the only one.

I have been keen to intervene to congratulate the Secretary of State on overseeing the biggest devolution of power since the Scotland Act 1998 was passed. It confirms the view of devolution as a process, not an event. Hopefully, the Railways Bill will represent the first of many steps in that process. However, can the right hon. Gentleman convince the House and Scottish Ministers that resources will follow the devolution of powers, so that the Scottish Executive can pursue their objectives in the coming years?

The Scottish Executive are well provided for thanks to the excellent spending settlement for the next three years that we were able to make in the summer because of the strong state of our economy and the strength that we derive from being part of the United Kingdom, something on which the hon. Gentleman might want to reflect. He should not count on a stream of further devolution measures regarding the railways; the Bill is sensible and practical, but it is all that is required.

Returning to the subject of London, clause 15(3) refers to consultation that must take place before an invitation to tender for a franchise agreement is issued in respect of services that

"are or include London railway passenger services".

Given that 70 per cent. of all rail services pass through London, is not the Secretary of State setting up a huge bureaucracy, whereby he must consult and agree with the Mayor of London before such invitations are issued? If not, what will happen if there is disagreement between the two?

No, that is not so. The hon. Gentleman is letting his imagination run riot. The franchises will be awarded through a division within the Department for Transport set up for that purpose. Yes, we have to consult all sorts of people where appropriate, but the position will be infinitely simpler than it is now.

I welcome the proposals that will lead to the Scottish Executive having more influence in discussions with the Department for Transport and Network Rail on the strategic objectives of the system as a whole. That will require resources to be transferred. Is it clear that the Scottish Executive will be responsible for all improvements to rail infrastructure throughout Scotland, including the whole of the east coast main line from Edinburgh north?

The Scottish Executive will be responsible for specifying and paying for those enhancements that they want. As for the east coast main line, the Scottish Executive might want to administer a series of comparatively minor upgrades, but so might Network Rail, depending on its requirements for, say, Anglo-Scottish services. However, the White Paper makes it clear that if a major upgrade were in prospect like the one for the west coast main line, the decision would be made by the Department for Transport in association with the Scottish Executive. However, the Scottish Executive could decide to upgrade the line from, say, Edinburgh to Aberdeen—a stretch that my hon. Friend knows something about—if they chose to expend their resources in that way. The Executive will now have that power, which I think is a major step forward.

Under the asymmetrical devolution that we have in this country, each part of the country has to be dealt with differently. The Welsh Assembly Government will be able to, and will, specify the Wales and Borders Trains services, but we will remain responsible for the few Wales and Borders Trains services that operate wholly within England. That is consistent with devolution.

The Bill includes greater powers to make it easier to change services. Earlier, I spoke about wanting to encourage better decision making when choosing between heavy and light rail and so on. Such procedures must be changed because the SRA is going, but the procedures will be much better than those we have at present. Changes to the Rail Passengers Council have been largely instigated by the council itself to enable it better to represent passengers' needs and have been welcomed, by and large.

I said that there were other changes that do not require legislation. Network Rail will be given clear responsibility for operating the network and changes to the agreement between Network Rail and the Department are being discussed at the moment. In reply to my hon. Friend the Member for Cunninghame, South (Mr. Donohoe), I said that track and train companies must work together more closely.

The House may be interested to know that, in January this year, I opened the first joint control centre between Network Rail and South West Trains. In the first nine months, performance has improved by 35 per cent. If anyone had any doubts about the wisdom of separating track and train, which was contemplated by the authors of privatisation, that example shows that there is a huge difference in performance, which will continue. I also said that there would be a reduction in the number of franchises; on 19 October, I said that they would fall to 19, and that there would be a further reduction to align them with the Network Rail regions. Network Rail will take over responsibility for drawing up utilisation strategies to make the best use of the network. Finally, the discussions on the rolling stock companies are continuing.

Before I conclude, I ought to do justice to the amendment tabled in the name of the Leader of the Opposition; it is only a courtesy to do so. I do not want to labour the point, but while it is critical of the Government, as one would expect, it is hardly illuminating about what a future Conservative Government might do. That is curious; at this stage in the electoral cycle—unless the hon. Member for South Suffolk is a 2006 man—one would have expected the Conservatives to give a hint of what they would do in the unlikely event of their being returned to power.

The hon. Gentleman is silent about the £1.8 billion-worth of cuts that he would impose. Implicit in his amendment is his wish to keep the SRA, given that he is critical of the changes that we are making to abolish it. I should tell him that Mr. David James, who was hired by the Tories to look at efficiency savings, has banked the savings that derive from abolishing the SRA. I was therefore surprised by the amendment, until my attention was drawn to something that the hon. Gentleman said in an environmental publication in September:

"There's no commitment to implementing these recommendations"—

the efficiency savings—

"I'd be surprised if there is not some scope for efficiency savings but whether those are of the order that the James committee suggested I don't yet know. It isn't a priority for me—it's much more important to get our policy indicators clear so people know exactly what we stand for."

The hon. Gentleman has shot himself in the foot regarding savings; at the same time, he has disappointed us, as we do not have a clue about where he stands. We do not know what the Conservatives' policy is, except that they want to cut £1.8 billion from spending on transport. It is difficult to see how on earth we could have an effective railway system, especially as they have some history, or baggage, as the privatisers of the railway, which led to so much difficulty.

I believe that the railways in this country have a very good future. I accept that there are difficulties and problems to be overcome—reliability, for example, needs to be improved—but we now have the funding and management, and the right organisation, for the railways to make sure that they carry more people and freight. I am optimistic about the future of rail, and I commend the Bill to the House.