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British Rail Subsidiaries

Oral Answers to Questions — Transport – in the House of Commons at 12:00 am on 10th December 1980.

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Photo of Mr Peter Temple-Morris Mr Peter Temple-Morris , Leominster 12:00 am, 10th December 1980

asked the Minister of Transport if he will make a statement on the contribution made to British Rail finances over the last five years by British Rail subsidiaries.

Photo of Mr Norman Fowler Mr Norman Fowler Minister of State (Department for Transport)

The subsidiaries taken altogether have not made a contribution to British Rail finances over the last five years, because profits and depreciation, even including money from non-operational property, have not matched investment in the businesses. The net cash outflow from the board over the period 1975 to 1979 was about £11·6 million.

With permission, I will arrange for a table showing the figures year by year for each business to be circulated in the Official Report.

Photo of Mr Peter Temple-Morris Mr Peter Temple-Morris , Leominster

Does not that answer provide added reason for encouraging private investment in areas that are inappropriate for nationalised industries? Can my right hon. Friend give any guidance on the method and timing, bearing in mind that my hon. Friends and I believe that he should take that action—and the sooner the better?

Photo of Mr Norman Fowler Mr Norman Fowler Minister of State (Department for Transport)

I am grateful to my hon. Friend. The provisions, which will involve the hotel business, Sealink,

Net Cash Flow Before Interest from Subsidiary Activities to the Board
£ million at outturn prices
19751976197719781979Total
Sealink UK Ltd(10·3)(14·6)3·3(11·7)(16·9)(49·6)
British Transport Hotels Ltdnil(0·6)(0·6)(2·6)(2·9)(6·7)
British Rail Hovercraft Ltd(0·1)(2·0)(6·2)(9·4)(1·2)(18·5)
Freightliners Ltdnil(2·0)(2·0)
British Rail Engineering Ltd0·50·40·60·11·02·6
Transportation Systems Market Research Ltd (Transmark)nilnil0·30·30·30·9
British Transport Advertising Ltd1·31·82·02·63·411·1
Total(8·6)(15·0)(0·6)(20·7)(18·3)(63·2)
Non-operational property holdings12·014·28·25·711·551·6
All figures are taken from the British Railways Board's published reports and accounts for the years 1975 to 1979.

Footnotes:

hovercraft and non-operational property, will be included in the Transport Bill, which I hope will be published shortly.

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

Does the Minister agree that he should think again about the disposal of Sealink, which made a £13 million profit last year, in view of the greedy interest expressed by the hon. Member for Dorking (Mr. Wickenden), whose company has set up a private monopoly and who has made it clear by statements issued on the subject that he is not interested in the socially necessary ferry services operated by British Rail?

Photo of Mr Norman Fowler Mr Norman Fowler Minister of State (Department for Transport)

The hon. Gentleman should wait for the proposals. They will enable British Rail to sell the controlling part of Sealink. It will be for the board to consider offers, not only from European Ferries Ltd. but from other organisations and institutions. As regards the general policy, I am sure that Sealink will do much better in the private sector.

Photo of Sir David Price Sir David Price , Eastleigh

In order the better to encourage the subsidiaries of British Rail to conduct joint ventures with private enterprise, will my right hon. Friend have discussions with the Treasury to ensure that when the joint ventures take place the part of the capital that comes from private enterprise will not be debited against the public sector borrowing requirement?

Photo of Mr Norman Fowler Mr Norman Fowler Minister of State (Department for Transport)

One of the aims is to remove the subsidiary companies from the necessary public sector restraints. My hon. Friend should wait for the detail of the Bill. He will then see the method that we intend to use.

Photo of John Prescott John Prescott , Kingston upon Hull East

Is the Minister aware that many people involved in the railway industry see the denial of essential investment in British Rail as a means of exerting pressure on it to sell profitable assets, such as Sealink, to the private sector? Is he further aware that if Sealink and Townsend Thoresen Car Ferries Ltd., which has made a knock-down offer for Sealink, are put together, they will control over 70 per cent. of the market? Is that the Conservatives' policy for private competition?

Photo of Mr Norman Fowler Mr Norman Fowler Minister of State (Department for Transport)

The hon. Gentleman should listen to what I say. The board must decide on the offers. Obviously, European Ferries will not be the only organisation to make offers. Secondly, the Opposition should recognise that the British Rail Board supports what we are doing and does not oppose it.

The following is the table:

1. Sealink has been treated as a subsidiary throughout although it did not formally become one until 1 January 1979.
2.The BTH figures are net of rail catering.
3. Freightliners became a wholly owned subsidiary of BRB on 4 August 1978 (prevciously during this period they were majority owned by NFC). Income and expenditure attributable to VRB in 1978 and 1979 are included.
4. BREL figures take accout only of surplus on work for external clients. Work for the board is undertaken at cost. No allowance is made for depreciation and investment in respect of work for external clients as the figures cannot be broken down in this way.