Railways Act 2005

Railways Act 2005

2005 CHAPTER 14

Commentary on Sections and Schedules

Part 2: Public Sector Funding Authorities for Railways

Assisting and securing the provision of services

Section 10: Franchising and financial assistance in relation to Wales

64. Section 10(1) provides that the Secretary of State must consult the NAW before issuing an invitation to tender for or, where he does not invite tenders, entering into a franchise agreement under which the services to be provided are or include “Welsh services”. “Welsh services” is defined in section 56 and means railway passenger services which start in Wales, end in Wales or otherwise make at least one scheduled call in Wales. The franchise agreements in question would include, but would not be limited to, those which are the subject of section 10(2).

65. Section 10(2) provides for the Secretary of State and the NAW to be joint parties to a passenger rail franchise that provides services that are or include “Wales-only services”. “Wales-only services” is defined in section 56 and means services that both start and end in Wales and do not make any other scheduled calls outside Wales, and have not been excluded from the definition by an order made by the Secretary of State. In practice this means the current Wales and Borders franchise which is operated by Arriva Trains Wales, since this is the only franchise which at present provides or includes Wales-only services. The Secretary of State will not be able to enter into a franchise agreement that falls within the scope of this section on his own with a franchisee; he may only do so if the NAW joins with him as a co-signatory to the agreement. In future the franchise agreements referred to in section 10(2) could include a different franchise to the current Wales and Borders franchise, or more than one franchise, if they provided Wales-only services. As mentioned in the notes to section 1, it is intended that the SRA interest in the franchise agreement with Arriva Trains Wales will be transferred to the Secretary of State and the NAW jointly.

66. Section 10(3)-(12) provides a power for the NAW to provide financial assistance connected with Welsh services. This power is based on section 211 of the Transport Act 2000. Similar provisions apply to the Secretary of State under section 6 and the Scottish Ministers under section 8.

67. Section 10(3) enables the NAW to provide financial assistance to any franchisee where the NAW is a party to the franchise agreement. The NAW can provide financial assistance to buy services from the franchisee which operate to, from or within Wales. It can also provide financial assistance to the franchisee for any other purpose in relation to such services. This might include the provision of new passenger facilities, such as a station or the re-opening of a disused line, or improvements to existing facilities. The NAW's power under this section is not limited to franchises it is a party to for the purposes of section 10(2). It will be possible for the Secretary of State to invite the NAW to be party to other franchise agreements that provide services that make scheduled calls in Wales. In addition, it will be possible for the Assembly to be a party to a franchise agreement with the Scottish Ministers if the Scottish Ministers and NAW agreed that the Assembly should provide financial assistance to secure a service between Wales and Scotland under a Scottish franchise.

68. Section 10(4) enables the NAW to provide financial assistance otherwise than under a franchise agreement for "Welsh purposes". It will enable the NAW to provide funding, so as to develop the railway serving Wales, to a wide range of parties, such as Network Rail, freight operators and other third parties. In addition, subject to section 10(10), it will enable NAW to provide financial assistance to franchisees where the NAW is not a party to the relevant franchise agreement.

69. Section 10(5) defines the meaning of "Welsh purposes" for the purposes of section 10(4).

70. Section 10(6) enables the NAW to make payments to the Secretary of State or the Scottish Ministers in relation to their respective roles as "operator of last resort". This role arises under amended section 30 of the 1993 Act when a franchise that either of them has let ends and is not replaced with another franchise agreement. Where the NAW secured services as a party to the franchise agreement in question it will be able to provide the necessary financial assistance for those services to continue to be provided.

71. Section 10(7) clarifies what may constitute the provision of financial assistance by the NAW for the purposes of section 10.

72. Section 10(8) gives the NAW the discretion to enter into agreements and other arrangements to provide financial assistance to any party under section 10(3) or (4) on whatever such terms and conditions it thinks appropriate.

73. Section 10(9) relates to section 7 (notification of assistance from the Secretary of State for freight services). It obliges the NAW to consider whether or not, in providing financial assistance in relation to freight services the effect is consistent with any scheme relating to the provision of grants for freight facilities that the Secretary of State has notified to it. The section does not require the NAW to act in accordance with the Secretary of State's scheme.

74. Section 10(10) clarifies the way in which the NAW may enter into agreements or other arrangements under Section 10(4) to provide financial assistance in respect of franchised services. This clarification is needed because Section 10(4) gives NAW a wide power, which enables it to provide assistance outside the terms of a franchise agreement. The clarification is that where the NAW enters into an agreement or arrangement with a franchisee, franchise operator, or employee, agent or independent contractor of the franchisee or franchise operator (a "relevant person") it may only do so under the terms of a franchise agreement. This is intended to ensure transparency in relation to franchise agreements, which are public documents, kept on the public register. Section 10(10) ensures that NAW only enters into agreements with franchisees etc. which relate to franchised services where those agreements are entered into in accordance with the franchise agreement.

75. Section 10(12) defines the meaning of "facilities" and "railway" for the purposes of section 10. For the purposes of section 10 the term "railway" is deemed to have its "wider meaning". This term is itself defined by section 81(2) of the 1993 Act and means a railway, tramway or transport system which uses another mode of guided transport but which is not a trolley vehicle system. The terms "guided transport", "railway", "tramway" and "trolley vehicle system" are defined by section 67(1) of the Transport and Works Act 1992.