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Railway Safety Levy Regulations 2006

My Lords, I thank the Minister for presenting this regulation. He said that it would be a short debate, and I shall try to keep it that way as we all want to get to our Easter Recess as soon as we can. As the Minister explained in his opening remarks, the Office of Rail Regulation will take over from the Health and Safety Commission and the Health and Safety Executive as the health and safety regulator and enforcement body in relation to railways on 1 April. As he described, these regulations will permit the ORR to cover its costs for these activities by means of a levy on the rail industry. The Opposition support moving Her Majesty’s Railway Inspectorate from the Health and Safety Executive to the ORR. However, I must raise a number of concerns. The ORR’s policy is that the levy will be payable by each railway service provider by reference to its relevant turnover. Relevant turnover is the turnover derived from the activities of the rail service providers that are regulated by the ORR for health and safety purposes. However, that is not explained further. If a train operator also provides terminal services or operates road vehicles as part of its distribution service to its customers, why should that proportion of its turnover be relevant to the levy calculation? Also, the proposals do not give any details about how the overall levy of ORR safety costs are set and controlled. Significant cost escalation will simply be passed on through the mechanism as set out, with rail service providers having little or no control over costs and no alternative but to pay. There may well be circumstances that affect the viability of a company during any year in which such a levy is disproportionate. Is there a method of appeal for a rail company that is not satisfied with the levy being charged? Many within the rail sector are concerned that the proposed scheme would place a disproportionate burden on small-scale operators, such as heritage railways. I welcome the steps that the Government have taken to ensure that companies with a small turnover—principally those in the heritage sector—will be protected from the measures, including those with a turnover of less than £1 million, which will continue to be exempt. However, there continues to be general unease, especially among those heritage companies with a turnover higher than the £1 million or £5 million thresholds and among those whose payments would increase compared with the existing system. Is the Minister aware that eight heritage companies have a turnover higher than the higher threshold, together with a number which are close to that figure? I stress that those organisations are dependent entirely on voluntary contributions and efforts. I should welcome any further reassurance that the Minister can provide to such organisations. Perhaps he could answer two specific questions. First, will the threshold be inflation-linked—that is, not pushing more companies into the levy scheme proper? Secondly, how long are the thresholds at both the £1 million and £5 million mark likely to remain and under what circumstances would they be changed? As I said, on the whole, we support the order and what it tries to achieve. It is interesting to bear in mind that the levy system at present contains no specific incentive for a company to improve its safety standards. Each railway company simply pays a flat fee in accordance with its annual turnover. Surely the Minister would agree that it would be sensible at least to consider a scheme that acted to improve the safety of rail companies and the safety of our rail network. I hope that the Minister will answer my questions.