Lord Peyton is leading a revolt aimed at forcing the Government to allow British Rail to bid to operate franchises after privatisation. The Government overcame pressure in the Commons to introduce the measure.
Lord Peyton is backed by Lord Marsh, a former BR chairman and a Labour transport minister, now a Conservative. The Lords are expected to debate the amendment next month. If passed, it would undermine plans to break up BR and discourage potential private operators.
The risk of a government defeat will be intensified by the likelihood of strong support for the amendment from crossbench peers. The Government also faces the prospect that backbenchers uneasy about the Bill may be reluctant to support the deletion of amendments passed by the Lords when it returns to the Commons. Brian Wilson, an Opposition transport spokesman, said yesterday: 'The Lords have an opportunity to do the country a service.'
MPs opposed to the Bill are also briefing peers that the all-party group on the West Coast line was told last week by Roger Freeman, the railways minister, that there would be no statutory requirement to allow passengers to use the same ticket on different services on the same line. Mr Wilson said: 'This is highly significant. If there is no guarantee of inter- availability of tickets it is even less likely that the operators will co- operate voluntarily on railcards.'
The Government is also facing objections from Tory backbenchers in the West Country as it prepares to take the long-delayed decision on whether the dockyard at Rosyth, in Scotland, or Devonport should be given the job of refitting Britain's nuclear submarines. The threat comes despite signs in Whitehall that the Government is moving towards granting the work to Devonport.
West Country backbenchers are increasingly worried that a rise in support for the Liberal Democrats has turned once-safe Tory seats into marginals.
The Cabinet is expected to consider the issue - one of the most difficult since the general election - on Thursday and will make an announcement on the same day if it can agree. Ministers in favour of Rosyth argue that, because the nuclear fleet is based in Scotland and the surface fleet on the South Coast, it would make more sense for the nuclear refit to take place in Rosyth.
Last-minute examination of detailed cost figures after further bids by both yards for the work have led to ministerial worries that they are making unrealistically low estimates. The position of Malcolm Rifkind, Secretary of State for Defence, is complicated by his constituency interest as an Edinburgh MP. But there is a strong lobby within the Cabinet for Devonport, not least for political reasons.