Commentary on Sections Powers of Secretary of State Section 1
7.Under section 6(1) of the Railways Act 2005 ("the 2005 Act") the Secretary of State has the power to "provide, or agree to provide, financial assistance to any person –
"Financial assistance" is further defined within the 2005 Act as including "the making of grants or loans", "the giving of guarantees" and "investment in bodies corporate".
8.The Secretary of State provides assistance to the CTRL in a number of ways. These include capital funding through a range of mechanisms including loans, Government Guaranteed bonds, securitised bonds and other debt facilities. In addition, the Secretary of State also provides revenue funding for domestic services operating on the CTRL under a franchise. Train Operating Companies ("TOCs") enter into franchise agreements with the Secretary of State and are either subsidised by DfT, or pay a premium to run train services.
9.The Act confirms – for the avoidance of doubt – that the Secretary of State can, following completion of the construction project, continue to provide financial assistance to the CTRL and the trains that run on it under the powers in the 2005 Act. It was considered that there was a sufficient level of uncertainty as to whether or not these powers applied to the CTRL that there might be an adverse impact on any value generated from a sale of the business without the Act.