The Deputy Prime Minister disclosed that the fines, which could be as high as pounds 1m, will be used by a new Strategic Rail Authority to pay for improvements in services. He secured that concession after lengthy negotiations with Alan Milburn, the Chief Secretary to the Treasury, but Whitehall insiders said the aim of the legislation was to improve services rather than raise cash.
"They can be fined for any breach of the franchise. Once they are in breach, they can be hammered," said a source. "Under the old system, it took weeks but, under this legislation, it delivers a fast track so that they could be fined straight away. But we hope that there won't be lots of fines."
The Conservatives claimed the Bill was a "face-saving manoeuvre" by Mr Prescott, Secretary of State for the Environment, Transport and the Regions. John Redwood, the Tory spokesman, said: "The Bill was cancelled last year, has been delayed this year and may well arrive late in the next Parliamentary year."
After its second reading in the Commons next week, the Bill will go before the Transport Select Committee. It could be continued in the next session of Parliament, but it is likely to be absorbed into a wide- ranging strategic transport Bill in the Queen's Speech in the autumn.
Mr Prescott has already appointed a shadow strategic rail authority to enforce better performance on the rail companies and once the legislation becomes an Act, the authority's chairman, Sir Alastair Morton, and the newly installed Rail Regulator, Tom Winsor, will be able to impose penalties of an "unlimited but reasonable" amount.
Mr Winsor said that the type of past under-performance that could now result in one of the new penalties was the mass cancellation by South West Trains of peak-time services because of a driver shortage in the winter of 1997. Many drivers had been made redundant. However, Whitehall sources said it would be more difficult to penalise overcrowding by rail operators.
The new penalties will not be instant. Operators will be able to appeal against them and apply to pay the penalty in instalments. But any action by operators that caused much disruption but was remedied fairly quickly could now attract penalties - something that has not happened before.
The Bill will also give Sir Alastair the power to ask Mr Winsor to direct the owner of rail facilities, such as tracks and stations, to enhance them to provide new ones - another new power.
The Bill also gives the main passenger watchdog body, the Central Rail Users' Consultative Committee, the chance to work more closely with the new authority and to investigate more examples of poor performance on the railways.
The Transport Secretary will be able to give "directions and guidance" to the new authority and will also determine on any railway closures.
Jonathan Bray, campaign director of the pressure group Save Our Railways, welcomed the Bill, saying: "We hope we can now draw a line under a time when profiteering rather than providing a decent public service has been the norm."
David Morphet, director general of the rail industry umbrella body, the Railway Forum, said performance "will improve, with or without the threat of fines". The penalties were "something of a blunt instrument" and the railways needed "a period of measured, sustained investment", he added.
Mr Prescott said that while rail privatisation had initially tended to benefit shareholders, the Bill would "tilt the balance towards the passenger".
He added: "This Bill will make a real difference in the way the railways operate and will give us the tools to get on with the job".
The Bill omits a plan to change the way in which the taxpayers' subsidy is paid to Railtrack, pending a further review. Mr Prescott had been keen to move the subsidy from the rail companies to the strategic authority as a further lever for higher standards.
The rail regulator said such a move would be possible, but could cause difficulties. Railtrack feared the switch would hit its share price.
Of The Bill
t Cash penalties will be imposed on poorly performing train companies and Railtrack.
t Operators can appeal against penalties and ask to pay in instalments
t Any action by operators that caused disruption but was remedied quickly could attract penalties - something that has not happened before.
t Strategic Rail Authority will have power to ask the Rail Regulator to direct the owner of rail facilities, such as tracks and stations, to enhance them or provide new ones.
t Main passenger watchdog body, the Central Rail Users' Consultative Committee, will work more closely with the new SRA.
t Transport Secretary will be able to give "directions and guidance" to the SRA and will decide on any railway closures.Reuse content