The dispute, which has broken out in the Lords, could further damage the Government's chances of getting the Bill through before the end of this Parliamentary session.
Ministers are already pondering damage inflicted on the Bill last week when the Lords voted to allow BR to bid for the new rail franchises. Another serious delay could endanger the whole Bill.
The new row follows a Lords select committee report on procedure which sharply questions the Government's handling of BR pensions. The report, to be debated next week, suggests that the Government has failed to allow for parliamentary debate on what will happen to BR pensions after privatisation.
More important, it raises the complex matter of 'hybridity' - the issue which plunged the Labour government into chaos in 1976 over its plans to nationalise shipbuilding. Hybrid Bills are those which combine changes in public policy with those that affect only private individuals or particular groups. Under normal Parliamentary procedures, the two types of change have to be separated into different Bills. This allows the individuals or groups affected to petition for change.
The rail Bill combines privatisation of the network - a matter of public policy - with measures to end further contributions to the BR pension fund - affecting BR employees alone. It would normally be hybrid and therefore invalid. The Government, however, has clauses in the Bill which, in effect, exempt it from these rules. It provides for the pension changes to be effected by later statutory orders, which ministers can introduce without parliamentary debate. It then says that, even if such orders are hybrid, they will not be treated as such for the purposes of the Bill. Lord Tordoff, the Liberal Democrats' transport spokesman has tabled an amendement which would delete this catch all clause. But the Department of Transport insisted yesterday that even if the amendement was carried it would not delay the bill.
The select committee report invites the Lords to consider whether the Government should get away with it.
The Lords is proving an unexpected obstacle to completion of the most fraught Parliamentary session since 1979. Lord Peyton yesterday refused to rule out a Lords-Commons collision if, as the Government hopes, the Commons reverse the franchise amendment.
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