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Legislative and Regulatory Reform Bill

My Lords, I have added my name to the amendment because I believe, as the two previous speakers have said, that the question of independent regulation is fundamental not only to regulating monopolies but to attracting private finance. I shall speak mainly about the railways, because that is what I know most about, and I declare an interest as chairman of the Rail Freight Group. In that sector, £1.5 billion of private investment has been made since privatisation. This industry likes regulators; it does not feel that they are a constraint. It likes them because regulators give certainty and confidence. Independent regulation is fundamental not only to attracting investment, but to avoiding, as others have said, the interference and shocks which would have a disastrous effect on business confidence. Even while this Bill is going through your Lordships’ House, the Government have introduced a Bill to build a railway called Crossrail—many noble Lords will know about it—which does exactly what the Legislative and Regulatory Reform Bill seeks to do, but for one particular project. Clauses 22 to 44 of the Crossrail Bill allow the Government to direct the Office of Rail Regulation to do as it wants—to trample over the rights, obligations and business prospects of other operators and users of the railway on the surface. I am sure that your Lordships will consider that Bill in due course if it gets through the other place. Even while Ministers are saying that this is all covered, the Government are already trying to constrain the independence of a regulator. Having more or less failed to do so on one type of timetabling with Crossrail in the summer, they have now come back and said that all the timetabling work—and therefore how much investment there is and how many trains can run—will be decided by the rail regulator in accordance with industry processes. Everybody will say that that is fine, until you go back to Clauses 22 to 44 and find that, if the Government do not like the regulator’s answers, he can be directed to give different ones. That is unacceptable. The Government should say, ““Yes, there was a problem””, possibly when Railtrack when into liquidation. People said, ““Ah, the regulator is going to milk the Treasury dry””. I do not believe that. Since then, however, Parliament has passed the Railways Act 2005, which puts a little constraint on the independence of the regulator by saying that the Office of Rail Regulation must have regard to the funds available to the Secretary of State for the railways. That seems perfectly fair, but still emphasises the independence of the Office of Rail Regulation in deciding how those funds should be spent. I could give a lot of quotations from the passage of that Bill through your Lordships’ House in which Ministers emphasised the importance of independent rail regulation. If any noble Lord wants those, I can see them afterwards. I do not need to quote them now, but Ministers emphasised the importance of independent rail regulation at least three times at various stages. We do not need this particular section of the Bill for the railways. It would be very worrying if it is passed as it is. I therefore support the amendment, which is designed to stop the Government interfering in the work of independent regulators when the legislation is already there.