Orders of the Day — British Coal and British Rail (Transfer Proposals) Bill

– in the House of Commons at 3:31 pm on 18th May 1992.

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Order for Second Reading read.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee 3:34 pm, 18th May 1992

I beg to move, That the Bill be now read a Second time.

The Bill is short and has a single purpose, so I shall be brief in opening. I say to the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) that essentially it is a technical measure. Comparisons with European directives or major Bills introducing the fundamentals of privatisation do not apply, and I shall explain that simply.

The Bill is an important first legislative step to bringing the benefits of the private sector and privatisation to the coal and rail industries. After dealing with the Bill, I shall devote the majority of my speech to the wider issues.

The Bill is similar to paving bills for previous privatisations—for example, electricity and water; it follows that pattern.

The Bill is very short, with only two clauses. Its sole purpose is to give British Rail and British Coal powers to take any steps necessary to prepare for privatisation. Clause 1 confers on British Coal and British Rail powers to act in relation to proposals for the transfer of their commercial activities to the private sector or proposals for the establishment of new arrangements for their other activities. In particular, it empowers them to consider and take advice on proposals for privatisation, to advise the Government on such proposals and to draw up plans for implementing such proposals. They will be able to employ external advisers to assist them in all those tasks.

Clause 2 gives the short title of the Bill, sets out the financial provisions and extends the Bill to Northern Ireland. The financial provisions deal with the source of any loans and clarify the destination of any repayments, should British Coal or British Rail require additional funding to meet costs incurred in preparation for privatisation.

However, as the financial memorandum makes clear, any expenditure incurred for that purpose will not be significant in relation to the total amount of public expenditure being incurred on these two industries, and will undoubtedly give the taxpayer good value for money. That is therefore all that the Bill does—it does not give British Coal or British Rail powers to implement any scheme of privatisation.

Photo of Mr Joe Ashton Mr Joe Ashton , Bassetlaw

Is the Secretary of State aware that the burning question in my constituency in relation to British Coal is not so much its privatisation as what will happen to the pension scheme and who is in charge of it, and whether the concessionary coal given to widows, pensioners and redundant miners will continue under a private owner? Is he saying that that has not yet been decided and that discussions will take place? If so, will they take place with representatives of the unions and the widows—or have the Government no policy on the question?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

Obviously, they can be debated when we consider the privatisation proposals, but the short answer—my hon. Friend the Minister for Energy will deal with British Coal when he winds up the debate—is that we shall in principle be following previous privatisations. The pension arrangements for existing pensioners will be safeguarded.

Photo of Mr Martin Redmond Mr Martin Redmond , Don Valley

On that point, the Secretary of State may not be aware that the last Secretary of State for Energy gave an assurance in relation to pensions and concessionary fuel. He indicated that the Government would be taking on those two responsibilities and that they would not be transferred to the private sector. Has there been a change of policy or direction?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

If the hon. Gentleman reads my words, he will discover that I said that we should be following previous practice. I gave a broad outline of our position, but, again, it can be considered in detail at the appropriate time. That issue is certainly not relevant to this Bill, as I am sure that the hon. Gentleman will recognise.

I think that the House would wish me to go a little beyond saying merely what the Bill does and then sitting down, so I deal now with the purposes of privatisation and the benefits that it will bring. Privatisation is one of the Government's great success stories. It has been successful in so many different ways, in its scale—

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

The hon. Gentleman says, "Oh, yes?", but the electorate only recently gave a resounding verdict on what we have achieved. It has been successful in its scale, in the benefits that it has brought to the customer through greater efficiency, innovation and wider choice, in the boost that it has given to wider share ownership and the way in which it has been copied around the world.

The sceptics said that privatisation could not be done. I well remember that, in the 1979 election and immediately afterwards, members of the Labour party said that it should not be done. No other Governments were doing it, they said—no doubt we shall hear that again today—but how wrong they were. The Government did it. We led the way and now even many non-Conservative Governments around the world have been seeking to learn how we did it and to follow suit.

Two thirds of the companies once owned by the state have been returned to private enterprise—46 businesses, employing about 900,000 people.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

We have given commercial freedom to major companies and to whole industries—freedom to thrive in the market place, away from the constraints of nationalisation.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Work and Pensions

Was the figure of 900,000 before or after privatisation? Does the Secretary of State recall Mr. Cecil Parkinson promising people in the electricity industry wide-ranging new job opportunities, omitting to mention that, for large numbers of them, the jobs had to be in other industries?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

There have been new job opportunities, and there have also been improvements in the productivity and efficiency of all the privatised industries. I anticipated the intervention by the hon. Member for Holborn and St. Pancras (Mr. Dobson). It shows that the Labour party still does not understand how one remains competitive in the modern world. Worse than that, he shows clearly that, in his mind, the original public sector industries were set up for the benefit of those working in the industries—the providers—and not to pay attention to the services for customers. One reason why there has been an improvement—and, it is true, a reduction in the total work force—is that the customer has a far better service or product as a result of privatisation.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Work and Pensions

Will the right hon. Gentleman, if he is interested in making Britain a competitive economy, explain how it adds to British competitiveness to get rid of 500 scientists and research engineers in the electricity industry?

Hon. Members:

They are elsewhere.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

They may be making contributions elsewhere. That is perfectly true—[HoN. MEMBERS: "In Sweden."] No, they are in other industries in the United Kingdom. We live in a dynamic economy, and we need people to move around. A particular research product does not remain for all time.

British Telecom and other industries have improved not only their productivity but their innovation and investment. The results are there for all to see. In British Telecom, there has been a substantial growth in telephones, payphones, telephone calls and performance, with a slimmer and more efficient work force. Prices are down 27 per cent. in real terms since 1984. That is a real sign of what has been achieved in BT. That is a benefit to a competitive economy and to all those who, in real terms, are now getting cheaper telephone services as a result of privatisation.

British Gas domestic prices are down by 13 per cent. since privatisation and electricity prices have gone down 2 per cent. in real terms in five years. Under Labour—the regime and approach of the hon. Member for Holborn and St. Pancras—they went up 22 per cent. in real terms because there was not a concentration on providing the best and most effective service.

In the transport sector, the achievements have been enormous. Our guiding principle has been the need to secure value for money, and to increase consumer choice and efficiency by promoting greater competition and calling on the initiative and enterprise of the private sector. The private sector has more than met that challenge in transport.

Since we privatised British Airways, productivity per employee has increased by more than 20 per cent. The National Freight Corporation was brought into the private sector through a management buy-out in 1982, and in the past five years, investment in the business has quadrupled. That has led to the first growth in turnover in real terms, with a twelvefold increase in pre-tax profits and an increase in total staff numbers after years of decline. As my hon. Friend the Minister for Public Transport remineded us at Question Time, we have seen what has happened with long-distance buses.

Every privatisation has different aspects and takes a different form—from stock market flotations of whole industries to management buy-outs of small companies. Common to all is the harnessing of the management skills, the financial disciplines, the entrepreneurial spirit and the efficiencies of the private sector, and the removal of the constraints of public sector ownership and its monolithic structures.

British Coal and British Rail in their privatisations are likely to take different forms, but the objectives are clear. The time is right for British Rail and British Coal to go down that path and to reap those benefits.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

The right hon. Gentleman is making comparisons. Will he tell us how he views the privatisation of the water industry and the question of consumer choice? Since privatisation, and in the years before, water charges have risen well above the rate of inflation. How does the Secretary of State compare that privatisation with the others to which he referred?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

1f the hon. Gentleman considers the situation facing the water companies, he will realise that, at present, the major factor affecting charges is their massive capital expenditure programme for the next 10 years—in great contrast to the cutting of capital expenditure that took place under the last Labour Government. We had to spend much of the 1980s repairing that cut, and the water industry is now going ahead with major capital investment to deal not only with the backlog of the past, but with economic growth and with the increasing number of environmental objectives that they have to meet.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

I want to be able to support the measure that my right hon. Friend is trying to introduce today, and I strongly agree that many of the privatisations have indeed enabled industries to keep competitive in a modern world. Will he nevertheless agree that the investment criteria applied by his Department to roads as opposed to rail are one of the most worrying aspects and that any railway, whoever owns it, is likely to fail to be competitive unless his Department reconsiders those criteria?

Does my right hon. Friend also accept that, in the words of the Commissioner of Police of the Metropolis, coach deregulation has had "horrendous" effects on pollution and congestion in London? Does my right hon. Friend recognise that there is a social aspect to the rail privatisation?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

On the latter point, I do not think that the deregulation of coaches and congestion in London are necessarily directly linked. Consumers have increasingly chosen to go by coach. With increased prosperity, there has been greater demand and therefore more services. Inevitably, many people wish to come to London, but that is a separate matter from the way in which we deal with congestion in London. As my hon. Friend will know, much of the congestion is being caused by coaches bringing tourists from the European Community. We must cope with that, too, and we need a different solution. I am sure that my hon. Friend would not wish to argue, however—I certainly would not—that one way of dealing with London's congestion problems would be to return to the previous system and thus reverse all the benefits that we have achieved from the privatisation and deregulation of coaches.

My hon. Friend's first point raised very complex issues, and at some point—I do not think that today is the day to do it—I shall be happy to engage with him in a debate about the respective returns required from road and rail. I can assure him that my Department regularly surveys the matter and that I have been considering it myself since I became Secretary of State.

Photo of Mr Peter Hardy Mr Peter Hardy , Wentworth

The Secretary of State said a moment ago that privatisation can take varying forms. We may have rather more idea of the form that the privatisation of the railways will take than we have for coal. It may be unreasonable for us to demand today that the right hon. Gentleman spells out the precise approach that will be adopted to the coal industry but can he not give the House some idea of the Government's present thinking and whether any possible approaches can be ruled out at this stage?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

I had intended to deal with that question—briefly for British Coal and at slightly greater length for British Rail. I am grateful to the hon. Gentleman for putting his question in that way, because he is right to say that this is not the day to go into detail—for reasons to which I shall come in a moment. I do, however, wish to outline broadly the way in which we intend to approach the privatisation of British Rail.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe and Nantwich

I accept that the right hon. Gentleman regards the present Bill as a paving measure alone, but is he aware that those working in the railway industry would like some idea of what will happen to them in the future, because they have seen what has happened to their counterparts in other privatised industries?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

One reason for the paving Bill is to enable us to engage in more detailed dialogue with British Rail and to enable BR to do its own studies. That is precisely why I want the paving Bill carried urgently.

I propose to deal with British Coal only briefly, both for the reasons that I have given and because it is primarily a matter for my hon. Friend the Minister for Energy to deal with in winding up. There will be plenty of other more appropriate opportunities to deal with the issues at length.

In our manifesto, we said that we would bring forward proposals for privatising the British Coal Corporation. British Coal has a long tradition and a fine record to be proud of—in technical and professional excellence, in mining, in improving productivity and safety. For years, however, the corporation has been artificially shielded from the real world by huge subsidies from taxpayers and electricity consumers. Since 1979, the Government have provided grant of more than £17 billion, which has enabled new investment in the coal industry of more than £7·5 billion and the provision of more than £6 billion in deficiency grant under the Coal Industry Act 1990 to extinguish the industry's accumulated losses as at 31 March 1990. While demonstrating the Government's substantial commitment to the industry over recent years, that expenditure is also testimony to the massive burden that the industry has been on the citizens of this country.

Following the financial reconstruction, British Coal has already demonstrated its ability to succeed, with profits of £78 million in 1990–91, and a further profit is forecast for 1991–92. Privatisation will provide the spur to maintain that improvement. The Government are determined to press ahead with privatisation as soon as possible so that the industry can establish a secure future for itself based on the efforts of its own people and on commercial realities and to free the taxpayer and electricity consumer from the need to provide continuing cushioning.

Much preliminary work remains to be done within Government and in British Coal. Decisions on the future structure of the industry and timing of the privatisation have yet to be made. The Bill will ensure that the corporation can participate fully in the process of preparing for privatisation.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

Does the Secretary of State accept that the coal industry in the private sector or the public sector will have great difficulty in continuing to survive in the United Kingdom if there continues to be a huge influx of subsidised coal from Colombia, South Africa, the United States of America and Australia? Will he have a word with the President of the Board of Trade, who is sitting beside him today, and see what can be done to stop that influx of coal, which is often subsidised and which will decimate the coal industry in the United Kingdom under whatever ownership the Secretary of State proposes?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

No one could possibly argue that British Coal has not been subsidised, and quite a lot of the coal imports are unsubsidised. Therefore, the argument is more complex, but the point can be raised in other debates. I want to consider British Rail because I do not want to speak for too long today, but I want to cover my responsibility for BR.

British Rail cannot be privatised in the conventional way as it exists now, because it is making substantial losses.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

Every time the hon. Member for Holborn and St. Pancras intervenes in the debate, he shows how little he understands of what has been happening over the past 13 years and of the reality of the situation.

As it stands, there would be no buyers for BR en bloc. We are proposing a mix of outright sale and a much greater involvement of the private sector. We have two fundamental objectives: better services for the customer, not least from the very large investment that is now taking place, and a much greater injection of private sector disciplines.

The Queen's Speech makes it clear that we are committed to increasing the role of the railways in meeting the country's transport needs. The greater involvement of the private sector will help us to achieve that with its capacity and incentive to respond flexibly to the market place and by providing the stimulus of competition that the railways need and consumer choice that will attract passengers and freight customers.

Last Monday, the hon. Member for Kingston upon Hull, East (Mr. Prescott) claimed that our sole motive for privatisation was to get our hands on the proceeds from sales of assets. That is clearly nonsense. The benefits to customers that have resulted from our highly successful privatisation policies are plain for all to see.

The privatisation of British Rail is all about improving services through private sector management and efficiency and greater responsiveness to consumer demand. The policies for BR of the hon. Member for Kingston upon Hull, East offer no prospect of any change in the monolithic, nationalised industry structure and no ideas for getting better value for money, greater responsiveness to customers and improvements to services that passengers and freight customers want.

Photo of Mr Andrew Rowe Mr Andrew Rowe , Kent Mid

Will my right hon. Friend give way?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

No. I am anxious to make progress, and I have already given way on many occasions. I may give way to my hon. Friend a little later.

We want to encourage more traffic to use the railway system. However, it is nevertheless undeniable and realistic to state that the vast majority of traffic will continue to go by road. Ninety-three per cent. of domestic passenger traffic and 81 per cent. of all freight lifted goes by road. The rail share is 6 per cent. of passenger traffic and 7 per cent. of freight traffic. It is clear from those figures that, even if we could find a way of doubling the amount of traffic going by rail, the road system would continue to be of fundamental importance for our economic prosperity and for meeting the needs of industry.

I make that point to stress that there is a need to pursue both at the same time; that is why we are right to continue with the very substantial road-building programme that is currently being undertaken. Indeed, it is salutary to reflect that even a doubling of the volume of freight traffic handled by rail would be equivalent in a typical year to only one year's growth in road freight traffic. That shows the size of the challenge and the opportunities and demonstrates clearly that we shall continue to need substantial investment in roads. [Interruption.] If one talks to industry as I have done for the past 13 years, one finds that while, for a variety of reasons, it would like to see more freight that is appropriate for rail carried on the railway, the prospects are not unlimited and there will continue to be a need for massive investment in the road programme.

At a time of rising demand for transport services and increasing road congestion, and when our commitment to protecting the environment is ever more important, it makes sense to make the best possible use of our railway system. That is what we intend to do. The Government's continuing commitment to the railways has been underlined in recent years by support or record levels of investment. Current levels of investment in BR are the highest for 30 years. Investment stands at about £1 billion in 1991–92 and a further £1·5 billion is expected for 1992–93.

In the past two years, Network SouthEast has invested more than £700 million. Since 1986, more than 1,000 new vehicles have been delivered. On InterCity, the electrification of the east coast mainline was completed last year at a cost of some £475 million. So there has been, and there is now, massive investment.

British Rail itself has made significant progress and compares well in terms of efficiency in Europe. InterCity now operates without subsidy, and its passengers charter will improve its responsiveness to customers. Those are all steps in the right direction towards a more modern and efficient railway for the future. I pay tribute to so much that has been achieved by the chairman and board of British Rail and the many dedicated people in management and the work force, but that is not enough to enable the railways to respond to the increasing demands of their customers and to provide the quality of service that their customers want.

The nationalised industry culture of which BR is currently a part cannot ensure the efficient organisation and delivery of services. The monopoly position of British Rail is outdated and provides insufficient incentives for the improvement of its performance. A different approach is needed. Hence the major new reforms outlined in our election manifesto.

Let me give the House the timetable. First, we need to proceed with this Bill with speed to enable us to work on many of the details of implementation for British Rail. Secondly, we shall spell out our proposals for the future of the railways in more detail in a White Paper which I aim to publish later in the summer. Then we shall introduce the main Bill in the autumn Session. But I make it clear now that our proposals will follow the principles set out in the manifesto.

First, we shall provide for the franchising of passenger services. Precise standards, including those of the passengers charter, will be specified in the terms and conditions. It will be my aim to achieve flexibility in the franchise structure, but with particular emphasis wherever possible on reflecting regional and local identities, the source of so much of the former pride in the railways.

Secondly, we shall sell British Rail's freight and parcels businesses and be ready to sell stations. Thirdly, we shall establish a rail regulator to ensure that all companies have access to the track, to award franchises and to ensure that franchisees honour the terms of their contracts. Fourthly, we shall reorganise British Rail's accounting and management systems, dividing the operation of track and infrastructure from the operation of train services. The operating side will continue to provide passenger services where these have not been franchised. Fifthly, we shall ensure that the railways inspectorate has full powers on safety standards.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

On selling stations, will the Secretary of State clarify whether there is any foundation to reports that negotiations are currently being held on the sale of Edinburgh Waverley station?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

I am afraid that I do not know the answer to that question. I shall have to write to the hon. Gentleman.

My proposals are the way forward for a sound and long-term future for the railways. Let me add two other important points. We recognise that many rail services meet an essential social need but rely on subsidy. We have made it clear, and I say it again today, that we shall continue to provide subsidy for those services where necessary. Similarly, as we made clear in our manifesto, our objective is lo sustain the current national network. The arrangements for dealing with closures or the withdrawal of services that have been in existence for many years will be maintained.

Another important aspect of our policy is to liberalise access to the railway network for operators wanting to provide new services. British Rail has already responded positively to our request that it should give sympathetic consideration to proposals by private sector operators.

The first of the new services—an overnight service from London to Edinburgh, operated by the Stagecoach group —began on 11 May. A number of private companies have also expressed interest in providing rail freight services, including National Power and Hunslet Barclay.

Photo of Mr Andrew Rowe Mr Andrew Rowe , Kent Mid

Does my right hon. Friend agree that it is possible that, by franchising freight services, a much greater demand for such services will be brought into being than British Rail has been able to encourage? Will he give an undertaking that, when he designs new parts of the railway system, he will take into account that probable increase in freight, rather than the pedestrian and conservative estimates being used by British Rail?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

On the general point, I agree with my hon. Friend and that is my hope and my objective. The interest already demonstrated by some private sector operators, as I have just told the House, shows that that is possible. I well recall estimates of what would happen when long distance bus services were privatised. When that happened, there was a substantial increase in such services, beyond many people's expectations. I cannot predict exactly what will happen, but I hope that private sector enthusiasm and flexibility on our side, especially on liberalisation, will help to achieve that.

Bearing in mind the constituency of my hon. Friend the Member for Mid Kent (Mr. Rowe), I suspect that he has a particular subject in mind when he talks about new services. I hope to make an announcement on that matter before too long.

The next stage of liberalisation will follow implementation of the European Community directive on the development of European railways, which requires, from 1 January next year, rights of access to rail infrastructure for international groupings of rail operators and individual operators of international combined transport.

The third stage of liberalisation will come from legislation to be introduced later in the Session, and will provide greater access to the rail network for all types of domestic rail services.

In a debate last week, the hon. Member for Kingston upon Hull, East gave the House his views on what was wrong with the present system and how he might approach our proposals.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

I was otherwise engaged. My right hon. Friend the Chancellor of the Duchy of Lancaster made a splendid speech on that occasion. I have done the hon. Member the courtesy of reading his speech with care, and I am about to take up one or two of the crucial arguments.—[Interruption.] I am happy to assure the hon. Gentleman that the points I am making are my own, and he will soon see why.

For starters, I shall take him up on two matters. He said that, when public utilities were privatised, they could borrow from private sources, often at a cheaper rate. I am sure that that will surprise the chairman of British Rail, who told a Committee of the House that he preferred to borrow from the national loans fund than from private sources, while it was a nationalised industry, because the rates were better. So the hon. Gentleman was wrong on that matter for starters.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

The hon. Member might at least establish the facts before he begins to engage in the argument. Let me explain—

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Work and Pensions

That supposes that the chairman was allowed to borrow.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

I shall be coming to that; it demonstrates that the hon. Member for Holborn and St. Pancras understands little of these matters. Let me explain why to the hon. Member for Kingston upon Hull, East, because it is crucial to his biggest misunderstanding, which I shall come to in a moment.

Nationalised industries are part of the public sector and benefit from the fact that everyone knows that the Government stand behind them. Their borrowing is treated as Government borrowing by the market. If we tot up and seek to control the total of Government borrowing—I hope that even the hon. Member for Kingston upon Hull, East accepts that we must do so for macroeconomic reasons—we must include the nationalised industries. That is why they can borrow from the national loans fund more cheaply, but there arc other substantial implications. Before I come to them, I must deal with the hon. Gentleman's second point.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

I shall not give way.

We do not prevent the public sector from borrowing for investment purposes. It is nonsense to say so—such nonsense that I must quote the hon. Member for Kingston upon Hull, East, who said last week: Irrespective of whether the investment, public or private, is benefical to the economy, including the consequential effects of it, the Treasury rules prevent such investment taking place if the industry is in the public sector."—[0fficial Report, 11 May 1992; Vol. 207, c. 656.]

Last year, the House passed a Bill increasing British Rail's borrowing powers from £1·1 billion to £3 billion. In 1992–93, as I have already said, British Rail is planning to borrow about £1 billion, most of which will be used for investment purposes. It will, in fact, invest more than that, but a large part of the borrowing will be used for investment purposes.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

Yes, the normal sources from which it can borrow.

It is nonsense to say that Treasury rules prevent such investment from taking place through borrowing if the industry is in the public sector. The fact is that a good deal of additional capital investment has taken place in British Rail as a result of such borrowing.

Of course the Government exercise some control over the nationalised industries' investment spending. I hope that the hon. Member for Kingston upon Hull, East is not suggesting that the Government should not exercise any control over the spending, the borrowing and the external financial limit of the nationalised industries, because if he is, it will be considerable news to his right hon. and learned Friend the Member for Monklands, East (Mr. Smith). Of course the Government exercise some control. The nationalised industries are part of the public sector, so they are not subject to the full disciplines of the marketplace. Therefore, Government control must be exercised.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

May I finish my point?

If the hon. Member for Kingston upon Hull, East does not want the nationalised industries to be treated as part of the public sector—as a result, they could benefit from considerable injections of private sector finance—I hope that he will support out proposals to privatise them. While they are in the public sector, without full market disciplines, we must insist that those industries carry out a proper analysis of their investment proposals. We have made it clear how that appraisal must be done, and the borrowing must count as public sector borrowing. That brings me to the fundamental point that I want to put to the hon. Member for Kingston upon Hull, East.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Work and Pensions

If it is the principle that every publicly owned body's borrowing is included in the public sector borrowing requirement, why is British Nuclear Fuels excepted from that requirement?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

Every nationalised industry has an external financial limit. It has to be debated in the public expenditure round, and it appears in the public expenditure White Paper. When the scale of the external financing limit is such as that of British Rail, obviously it must be included within the public expenditure White Paper totals.

That brings me to the fundamental error of the position taken by the hon. Member for Kingston upon Hull, East. He is prepared to accept one part—as far as I can see, one part only—of our privatisation proposals—the injection of private sector finance. The reason for that is clear. His answer to every issue is simple: spend more money, more taxpayers' money. When the Labour party tried to convince the electorate that the solution to every problem was to throw taxpayers' money at it, the hon. Gentleman promised to spend an extra £3,600 million. That was the calculation of the extra he promised in debates and speeches prior to the election. However, the hon. Gentleman's policies were rejected by the electorate. They chose to spend their money how they think best and did not choose to have the hon. Gentleman and his colleagues spend more of it for them.

That is why the electorate, among the many other things that they rejected in the Labour party's proposals before the country at the election, rejected the proposals for increased spending. That spending was based on the Labour party's then tax commitments, let alone its additional tax commitments had the hon. Gentleman had his way with regard to the injection of taxpayers' money into British Rail.

Photo of John Prescott John Prescott Shadow Secretary of State, Member, Labour Party National Executive Committee, Shadow Secretary of State for Transport

The right hon. Gentleman has repeated another Tory untruth from the election about the £3,600 million. Can he tell us where that estimate comes from and what it is? Is the right hon. Gentleman aware that every European publicly owned railway system borrows from the private sector? Why is Britain alone in refusing to allow its railway to do so?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

Treasury rules obviously constrain us. Is the hon. Gentleman suggesting that, on top of all that British Rail and other nationalised industries can borrow through their external financing limits they should be able to go to the private sector to borrow whatever they wish?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

Because, as there is a Government guarantee behind the investment and the Government have to underwrite borrowing, inevitably there is a potential commitment of public sector funds. Therefore, these would have to be added to the PSBR and to the public expenditure White Paper totals. Furthermore, the hon. Gentleman will find that some of his right hon. Friends will agree with what I have just said. What he has been advocating—I have been looking at his speeches, and I have a list of commitments here—adds up to £3,600 million. What he advocated again in his speech last week was more and more public sector or private sector investment in British Rail. The hon. Gentleman criticised us for apparently withdrawing £3 billion to £4 billion of subsidy from British Rail.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

Yes, the PSO—the public service obligation. Therefore, the implication is that he will add a great deal to the PSO for starters.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

That is typical of the Labour party. The hon. Gentleman makes great claims that we do not invest enough or give enough subsidy and implies to the electorate that the Labour party would spend more. However, when he is challenged, he says that the Labour party will not. No wonder the electorate got confused during the election campaign. They never understood just how big was the Labour party's commitment to extra public expenditure, but they knew that it was large. I read carefully the speech that the hon. Gentleman made last week; every bit of it was, by implication, a promise of further increases in public expenditure totals.

Photo of John Prescott John Prescott Shadow Secretary of State, Member, Labour Party National Executive Committee, Shadow Secretary of State for Transport

So now we have it. The Secretary of State tells us that he knows that we have not made a commitment, but that he had made the assumption that we would replace the £3 billion PSO—the subsidy given for running the railway system. There was no commitment about that, as the right hon. Gentleman knows from our manifesto. We set out different ways to raise private money for private investment in the railway system, and I shall come to that. However, he is agreeing that there was no commitment, and that it was just another Tory lie.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

I hope, although I know that this is a false hope, that from now on we shall not get criticisms from the hon. Gentleman that, over the years, subsidies have been low and British Rail has been under-invested, with the clear implication that the Labour party would increase the funds available for British Rail. That was not the only bit. There were commitments in various Labour party publications up to the election of public funding for high-speed rail links to the channel tunnel, extensions to Scotland, more buses, tubes, trains and lines for London, increased financial support for British Rail, extension of electrification and concessionary fare schemes for all areas.

The hon. Gentleman is typifying the approach with which we had to deal for months, if not years, before the election. We were criticised for not "spending enough" and the Labour party made all sorts of commitments. As we came nearer to the election, Labour spokesmen began to say, "This will happen as the economy can afford it." However, the clear implication was, as it was in the hon. Gentleman's speech last week, that we were not spending enough. I hope that we shall not hear from the lion. Gentleman this afternoon accusations that there is not enough public enpenditure going into British Rail.

Photo of Mr Allan Rogers Mr Allan Rogers , Rhondda

Will the right hon. Gentleman give way?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

No, I shall not give way; I wish to end my speech soon.

I hope that the hon. Member for Kingston upon Hull, East will not suggest that allowing private sector finance to come in on top of the already substantial sums given through the normal public sector arrangements will allow British Rail to have more money without there being an effect on public expenditure totals. Let me tell him why I say that. He is seeing this as the way through his dilemma. He does not want to add to the apparent public expenditure total, but he wants more money for British Rail. He is pretending to take private sector financing out of public expenditure, but he cannot do so. He would not and could not in government, although he calls the Treasury rules nonsense, and he cannot even in opposition.

Photo of Mr Allan Rogers Mr Allan Rogers , Rhondda

Will the right hon. Gentleman give way?

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

The Labour party suggested that there were ways to get private sector finance into housing without it scoring against public expenditure. It had to make a pretty rapid retraction of that. There was a flurry of concern between the two shadow Treasury spokesmen and the shadow spokesman for housing.

A Labour spokesman—I quote from The Times of 5 February 1992—made this comment: We are not making any changes in the definition of the public sector borrowing requirement. My right hon. and learned Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) the former Secretary of State for Transport, wrote to the right hon. and learned Member for Monklands, East and challenged him to say whether that would be the position for the private sector finance scheme that the hon. Member for Kingston upon Hull, East is talking about for British Rail. Of course, answer came there none. It is clear that the answer would not have been acceptable to the hon. Gentleman. If the right hon. and learned Gentleman becomes Leader of the Opposition, I hope that the hon. Gentleman does not try to take his place as Labour's Treasury spokesman. He shows a spectacular lack of understanding of financial and economic matters.

It is clear that the right hon. and learned Member for Monklands, East has not given his endorsement to the plans of the hon. Member for Kingston upon Hull, East to change the PSBR rules. I do not want to intrude on disputes in the Labour party, but it is no wonder that there are certain tensions between the right hon. and learned Gentleman and hon. Gentleman. It is clear that there are real disagreements.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

I appreciate that it may suit the hon. Gentleman's present purposes to be seen as distinctive from certain of his colleagues in his principles. We recognise that it is now distinctive in the Labour party to admit to being a socialist. I appreciate that, in the era of the red rose, the hon. Gentleman wishes to be seen as the last of the red flag wavers. Like the red flag wavers who a century ago were required to walk in front of the newly invented motor car, the hon. Gentleman's waving of the red flag would serve only to slow down the transport system. That is why he is taking up one part of our proposals, but unfortunately, he misunderstands it entirely.

He fails to appreciate that what he advocates would not produce the extra income that he thinks it would. That is why it is right that we should be following through the proposals which were set out in the Conservative party's manifesto, which I have outlined today. We shall be pursuing them by means of a major Bill in the autumn to achieve a British Rail system which meets customers' requirements in this modern era, and which has a full injection of private-sector disciplines.

I look forward to the enactment of the Bill and to working in careful co-operation with British Rail. I look forward also to the active and constructive participation of British Rail in implementing our proposals for the railway industry. That is why I commend the Bill to the House.

Photo of John Prescott John Prescott Shadow Secretary of State, Member, Labour Party National Executive Committee, Shadow Secretary of State for Transport 4:17 pm, 18th May 1992

I have heard various Secretaries of State for Transport make the same speech from the Government Dispatch Box. They have not lasted long in the job, and the transport industry has been in a worse state at the end of their periods of office than it was when they started. If the Secretary of State pursues the same negative approach to transport, I can envisage only his removal from the job. It seems that the Chancellor of the Duchy of Lancaster intends to review the record of each Secretary of State to decide whether he or she is up to the job and should remain in it. If that is the position, and bearing in mind the Secretary of State's speech this afternoon, the right hon. Gentleman does not have much chance of passing the test of the Chancellor of the Duchy of Lancaster, which is whether he is able to run his Department competently.

I think that the right hon. Gentleman is the eighth Secretary of State for Transport to appear at the Government Dispatch Box over the past 13 or 14 years. I had some doubt whether the Secretary of State would continue to have a Department when Brian Redwood said during the "Today" programme—[HoN. MEMBERS: "Brian Redhead".] The same fools are back after the election.

Brian Redhead said that he wondered whether the Department of Transport would be an independent Department. When the Chancellor of the Duchy of Lancaster came into the Chamber, apparently to debate the paving Bill that will lead to the privatisation of British Rail, perhaps that was a sign that what Brian Redhead was talking about was taking place. I see the Secretary of State for the Environment sitting next to the Secretary of State for Transport—

Photo of John Prescott John Prescott Shadow Secretary of State, Member, Labour Party National Executive Committee, Shadow Secretary of State for Transport

The President of the Board of Trade. We must keep up with these new titles. I think that President of the Board of Trade is the title that he had when he welcomed me as a maiden Speaker in 1970, when I came to the House. The office continues, but the reality is that the right hon. Gentleman still has his eyes on many of the things that involve the Department of Transport, as he did when he was Secretary of State for the Environment. We have learnt that he is very much involved with the problems that are associated with Canary Wharf. He is promising to transfer the civil servants of the Department of Transport to Canary Wharf to save it from further bankruptcy.

We shall wait to see whether the Government are prepared to help. Of course, it could not be called a subsidy to Olympia and York. It is just a matter of moving thousands of civil servants down the line—although there is now doubt whether the Jubilee line will be completed, the way that the Government are performing—of the docklands light railway. That line cannot take its current passenger load, let alone thousands more passengers sent to Canary Wharf as the cavalry for the Olympia and York company.

Although I want to talk about transport, the Secretary of State made it clear that the Bill also deals with privatisation of the coal industry, and my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) will deal with that when he replies to the debate. However, as I said in the debate on the Queen's Speech, there is a connection between the fortunes of the coal and rail industries. Some 80 per cent. of the freight income of British Rail is dependent on the movement of coal. The change in energy policy from British coal to imported coal and from coal to gas will have consequences for the movement of coal and therefore for the profitability of BR's freight sector.

The Secretary of State made it clear that any privatisation proposal requires just one element—the one element in which people purchasing public assets are interested—and that is profit. If an industry does not make a profit, no one will want to buy it. Indeed, it is required to make a profit for a number of years before it can be floated on the stock exchange. It is difficult with British Rail to judge whether it can make a profit over the number of years required before it can be floated as a privatised company. That will not be easy in the coal industry either.

The right hon. Gentleman, perhaps inadvertently, disclosed that the Bill is not an attempt to secure money —or the Government getting their grubby hands on the money, as I suggested last week. That is true for both British Rail and British Coal, because looking at their assets makes me wonder who would want to purchase them. Of course, the whole future profitability of British Coal is dependent on what contracts are agreed with National Power. That is a strategic decision, to which no doubt the President of the Board of Trade is currently directing his mind. We shall have to wait to know the final outcome. All that emphasises the interdependence of the rail and coal industries, which are dealt with together in the Bill.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

Before we leave grubby hands and inadvertence, perhaps we could return to a question that I asked the Secretary of State, to which he did not reply, about exactly what is happening at Edinburgh 'Waverley station. It is a most valuable piece of land in the centre of the city and huge amounts of money are involved, yet the right hon. Gentleman says that he knows nothing about the matter. The Scots are entitled to a statement from the Minister of Energy, when he replies to the debate, on what the Government do and do not know about the reports of what is happening in the centre of Edinburgh.

Photo of John Prescott John Prescott Shadow Secretary of State, Member, Labour Party National Executive Committee, Shadow Secretary of State for Transport

My hon. Friend has made his point. Perhaps the Secretary of State would like to intervene now and deny that he knows anything about the matter. There is one important difference between making available for sale the assets of stations and those of services—a great deal of taxpayers' money has been poured into stations and they are very profitable assets. Indeed, many questions flow from that proposal. As the chairman of British Rail, who was appointed by the previous Secretary of State, has asked, how will the proposal fit into the total accountability of the British Rail system?

We want to raise the whole matter of privatisation. The Secretary of State made it clear that we are discussing a paving Bill which does not actually privatise, but which takes important steps towards achieving that. Presumably, the Bill flows from the previous Secretary of State's speech to the Tory party conference, when he appealed to the chairman of British Rail to allow private resources to play an active part. The chairman said that the law would have to be changed to achieve that. Presumably, he was right, and that is the purpose of the Bill. It is the early stages of privatisation.

The Bill is part of the Government's ideological obsession with privatisation. The argument is not simply one of public ownership versus privatisation. Many changes are taking place in our great industries, whether they are publicly or privately owned, and account must be taken of their requirements.

During Question Time, the Secretary of State for Transport referred to bus deregulation. There may be more services on selected routes. One can find a good example of that in Sheffield, where hundreds of buses run at peak times on the profitable routes, but not early in the morning, late at night, or on Sundays. One cannot obtain a timetable, because none of the operators keeps to one. Buses are older, fares are higher and there are fewer passengers with fewer overall services.

I hope that the Secretary of State will send for some of the impartial evidence that is available in abundance, to prove to himself what has happened. He does not need to ask us; he should ask the professional operators. I was surprised to hear the Minister for Public Transport say earlier some of the things that he did about bus privatisation. There is overwhelming evidence that it has been bad for a transport industry that depends on combining profitable and non-profitable services that run at profitable and non-profitable times. There will always be operators willing to run profitable routes.

If the Secretary of State reviews the privatisation of the railways in the 1930s, he will find that a number of operators wanted to run services at peak times, but not early in the morning or late at night—in the way that a modern railway system must. They wanted to run services only at profitable times. If the Secretary of State wants further evidence, he has only to listen to Virgin Atlantic airways, which wants to run non-stop services only on profitable routes at certain times. The logic of Virgin's case is that it must maximise its profits for the benefit of its shareholders or investors. British Rail cannot provide a national service on that basis, which is why most countries have rejected the privatisation route and maintain a public network system.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

I hope that the hon. Gentleman will absolve me of the charge of being obsessed with dogma in respect of bus deregulation. Nevertheless, has the hon. Gentleman considered the success enjoyed by London Transport's contracting-out system? One example is the 24 bus that goes past the House, and which I use regularly. Is there not a case for trying to marry the entrepreneurial and managerial skills of the private sector within the framework of a service provision that incorporates a serious social element?

Photo of John Prescott John Prescott Shadow Secretary of State, Member, Labour Party National Executive Committee, Shadow Secretary of State for Transport

The hon. Gentleman makes an interesting point, particularly in respect of a bus route that is operating in an area that is not deregulated, and of a private, entrepreneurial operator that opposed deregulation and thought that it would be disastrous for the bus industry. I am not against some combination of public and private operations within the public sector, but it must be within a regulated framework for which someone is held responsible. British Rail has been pursuing certain joint private and public operations. That approach is not unique to the bus industry. It means that one operator remains in control, to ensure that safety standards and the quality of the investment are met. That is as important for public transport systems in Europe as it is here.

The Government's argument represents something of a vendetta against a public rail system. I suppose that I can welcome the fact that the Bill is just a paving measure. A number of Secretaries of State for Transport have, with various degrees of flourish, presented the House with different ideas. One was for a totally privatised British Rail. Another was for a separate track authority. Then we heard about sectorisation to allow competition, and the Prime Minister's solution, with its romanticising of regional railways—of chocolate and cream, and of brief encounters in the waiting room. Incidentally, the regional companies never made a profit, and so never invested in the tracks. The state intervened because those companies were collapsing. Intervention was necessary to ensure track investment and safety. The history is clear for all to see.

The previous Secretary of State for Transport planned to sell off the profitable bits—but then he ran into the Prime Minister, and now we have a new Secretary of State. I am not too sure what he stands for.

Photo of Mr Allan Rogers Mr Allan Rogers , Rhondda

Cannot the same argument be made in respect of the private coal industry, which became so corrupt and was so lacking in investment that in 1919, the Sankey commission recommended that the industry should be taken into public ownership, so that it could be viably maintained? The coal industry was nationalised not as a consequence of socialist dogma but because it was not being properly managed in private hands, and had been run into the ground.

Photo of John Prescott John Prescott Shadow Secretary of State, Member, Labour Party National Executive Committee, Shadow Secretary of State for Transport

There is much in what my hon. Friend says. Indeed, the argument could be extended to cover the gas and electricity industries. When large amounts of public investment were needed, beyond the means of the organisations running such industries—whether those organisations were private bodies or local authorities—the state stepped in and brought them together, reorganising them to meet the requirements of, for instance, the national grid systems. Admittedly, Tory Governments were involved, but I think that they improved the arrangements.

This paving Bill, according to the Secretary of State, gives British Rail powers to take the first faltering steps towards privatisation. The argument appears to be that British Rail has not been able to begin to involve private capital or private enterpreneurs, but there are many examples to the contrary. Even under the existing legislation, 40 per cent. of wagon fleets are privately run; there are private locomotives and a private freight service. It is interesting to note that the private freight service Tiger Rail, which ran from Cornwall to Scotland, collapsed. Who had to step in and take it over? Of course, good old British Rail.

There must always be an authority to ensure that such services continue, because they handle important passenger and freight movements on which the country depends. They have a crucial—indeed, a strategic—role. Similarly, in the case of private catering services, maintenance and property development, many arrangements have come about between British Rail and the public and private sectors. I have no ideological objections to that or, indeed, to the use of private money.

We have heard a great deal about Stage Coach and about the possibility of Virgin's coming in to run certain lines. In many instances, the aim—according to the Government—is to develop a privatised culture and entrepreneurial abilities. I am not necessarily against that, either. A Labour Government introduced a private airline at Gatwick to compete with the state airline; as a result, breakfast was provided on services to Scotland. I am not opposed to an element of competition. That private airline, which was introduced to open up Gatwick, went from success to success, and so did the airport within a regulated public system.

British Rail has in the last few years been run like a privatised company. It has been split into sectors and competition between those sectors has been encouraged. A rate of return has been imposed: InterCity, for instance, has a rate of return that makes it the only passenger-profitable railway system. I might add that a bit of fiddling and creative accountancy has been employed to achieve those figures, as I am sure the Secretary of State knows. The train service to Gatwick may be an instance of that; it does not immediately come to mind as a normal InterCity service.

In connection with the use of private capital, let me tell the Secretary of State—who referred to Treasury rules—that most European railways borrow privately from the market. That applies to investment in, for example, nuclear power as well as transport investment. When we ask why our public industries cannot have the same access to the private market, we are told that it is cheaper to borrow from the Treasury. That is true: I remember the chairman of British Rail telling me that the Treasury was the best bank in town, and I am sure it is. The trouble is that there are not many resources there, and borrowers who are desperately short of money to invest may have to look elsewhere.

If that can be done in Europe, I do not see why it cannot be done here as well. It is not enough to say, "We do such things differently here." European countries have achieved a scale of investment that has enabled their railways to become much more modern and effective.

The Treasury's rules have not always been consistent, as the Secretary of State must know. On aspect has been consistent, however: the rules have been the same for Labour Governments as for Tory Governments. I am not suggesting that the Tories are implementing their policies differently from us, but I think that the arrangements were as crazy then as they are now. Why was British Airways, as a public company, able to lease aircraft, while British Rail could not lease trains? I am not making an ideological point; the same Treasury is involved. When we asked the Treasury to explain that arrangement, we were told, "If British Airways goes bust, aeroplanes can be sold; trains cannot be sold." In reality, of course, neither company would be allowed to go bust.

French railways borrow billions. They have launched bonds on our own market and have raised British capital to finance TGV railway systems. Their Treasury does not guarantee any losses. However, their financial bodies recognise that they will not be allowed to go to the wall, despite the fact that there is no Treasury guarantee. On that basis, borrowing rates are very good. That is precisely how the French, Italians and Germans use private capital. There is no reason why we should not do the same. British Rail is allowed by law to borrow money privately, but the Treasury does not allow it to do so.

A judgment always has to be made about British Rail's borrowing and expenditure requirements. Any Government, of whatever political complexion, would be involved. One limit that has been placed upon investment is the external financing limit. The EFL was introduced first under a Labour Government. I criticise that limit, but I do not deny any Chancellor of the Exchequer the right to limit expenditure requirements.

The Chancellor has referred to a sum of £3,600 million. I did not know what it was. Today I have learnt that it is the difference between the level of subsidy provided in the early 1980s and now, and that that is the amount of public money that British Rail has lost. There was no commitment whatsoever in any document to which the Chancellor could refer that we should provide that level of subsidy. I notice that the previous Secretary of State set a target for reduction of subsidy in the south-east to nothing by 1992. That policy, however, has had to be reversed. The subsidy having been reduced from about £1 billion a year to round about £400 million a year, it is now creeping back up to about £800 million or £900 million a year.

The Government have had to face the fact that all the money cannot be raised from passenger fares. British Rail's subsidy for investment and for running the railways has been steadily reduced. Therefore, it has cut corners on maintenance and safety. If the Secretary of State doubts that, he ought to study British Rail's safety reports. British Rail tried to make up for its loss of income by sacking 6,000 or 7,000 personnel, which resulted in those employees who remained having to work very long hours that left them exhausted.

According to the inquiry, the electrician at Clapham who made that fatal mistake had worked for months on end without a day off because, manpower requirements having been cut, fewer personnel were left to do the work. A direct connection can be made between British Rail having to cut staff and safety levels. The Secretary of State ought to study the report on the Bellgrove tragedy in Scotland. British Rail tried to save money by cutting the line track and the junction points. That is now agreed to have been a disaster. A number of Secretaries of State told me that that was acknowledged by the railway inspectorate. Unfortunately, however, the railways inspectorate is completely subordinate to the Secretary of State's financial requirements. The price that we have paid is a reduction in safety and quality of service. Our railway system is inadequately funded. It receives only 20 per cent. of what is provided in some other countries. That will have consequences for fares, quality of service and investment.

I had some sympathy for the Secretary of State's point, that we spend less on subsidy than many continental railways. I do not suggest that our railway system ought to be subsidised at the same level as the German railway system. The efficiency of our system is better than that of most continental systems. That did not come about only under Tory Governments. If one refers to the Leeds university study in 1979, one finds that exactly the same arguments were used in the 1970s. They have now been reproduced in the Economist intelligence reports on the efficiency of our railway system. Our public sector railway system, therefore, has always been more efficient than most of its counterparts on the continent. Efficiency and productivity did not, therefore, come about as a result of manpower cuts. Others may have increased productivity, but our railway system has always been much more efficient than its continental counterparts.

Nevertheless, the amount of public support for our railway system is inadequate. A good-quality system cannot be run with the amount of money that has been given to British Rail. That is the challenge for the Secretary of State. He must go to the Treasury and argue for more money. Why is it so difficult to get money for British Rail when billions can be provided for the road infrastructure? Secretaries of State have told the House that they have been given £5 billion or £6 billion for roads, but they have told us a different story about rail: they were cutting back on one side and giving it to the other.

I accept the Secretary of State's argument that a 1 per cent. growth in road transport is a small amount, compared with the overall growth in road traffic. However, that 1 per cent. represents hundreds of thousands of lorry movements, which will be relevant in the south-east if it does not have a decent rail network to Europe. Even if the capacity of roads in the south-east were doubled, they would not be able to take that traffic. The Secretary of State will experience such problems in integrating the road and rail system.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

The hon. Gentleman is at it again. He is implying that, despite the record investment in British Rail, a lot more needs to be spent because, he says, of underfunding. During the election campaign, the official Labour party made it clear that it had no additional spending commitments over and above our public expenditure plans, except for child benefit and pensions. Does the hon. Gentleman have the approval of the right hon. and learned Member for Monklands, East (Mr. Smith) for a large further increase in British Rail investment? It seemed clear during the election that he had not.

Photo of John Prescott John Prescott Shadow Secretary of State, Member, Labour Party National Executive Committee, Shadow Secretary of State for Transport

We have had arguments for some time about who has put the most investment into transport, but there is no escaping the fact that more money must be found if we are to have a modern rail system. In my speech in July, I suggested that we take the ideology and the warring between the parties out of this debate. Let us recognise that inadequate investment has been made in the rail system. The Library produced a report on Friday showing that similar levels of investment had been made between the 1970s and 1980s. But it was insufficient. The difference between 1980 and 1990 is that the stock is 10 years older—nearly 30 years old—and needs to be improved. Network SouthEast is a good example of that.

How much investment is necessary? Presumably the Secretary of State accepts that we shall need a fast rail link to Europe, even if it runs only between King's Cross and the tunnel. That will cost £3 billion or £4 billion. Investment is needed for the Paddington to Heathrow link. Also, will the right hon. Gentleman make a statement about the Jubilee line?

I am trying to deal with the point that Governments of both parties have not made sufficient investment in our rail system. The Secretary of State for Transport—whoever he is and of whatever political party—will have to argue for more resources. We have considered the example of Europe and asked why BR cannot borrow from the private sector, as it has previously. Many European railway systems do so, and it is not good enough for the Secretary of State to say that our practices are different.

Our definition of the public sector borrowing requirement is different from Europe's, for a number of reasons. That may be changed under the Maastricht agreement as regards definition of public accounts but the framework in which British Rail must operate is a crucial factor in this argument. It is not right that only private companies can borrow private money; most other railway systems are able to attract it. We argue that that is the way to proceed.

A cause of concern is the way in which the Government have sold many of our assets at knockdown prices. The hotel sector is a classic example. Nineteen hotels were sold for £48 million. They are now worth hundreds of millions of pounds. One of the group's luxury hotels is now worth more than the total sale price. The Treasury would not allow it to borrow privately in order to make the investment necessary or to raise mortgages to bring them up to a good standard. The Treasury has often undermined the public sector by requiring high returns. As a result, the Treasury has had to wipe off the considerable debts of the mining and railway industries.

Sealink, which owned many ports, was bought for £67 million and its shipping fleets were sold for only £260 million. The Government should have utilised those public sector assets instead of running them down and failing to invest in them. The Treasury rules requiring an 8 per cent. return on investment—no such requirement is placed on the private sector—have seriously undermined the public sector. We have not given the public sector a chance. We have tied its hands, undermined it and enforced poorer quality. The Treasury has always imposed a kind of energy tax on the gas and electricity industries, forcing them to charge more through a negative external financial limit. All Governments have been at it, so to that extent it behoves all who want effective public ownership to show that the Treasury rules have been unfair. Report after report in the House has made that clear.

I have an interesting report, "Financing for Public Transport", which makes it clear that different forms of financing and planning are needed for our railways. It makes the point that I have been making. The report was produced by the Bow Group, which I understand is very much concerned with Tory party thinking. It has considered the transport systems of Europe. The Secretary of State should read the report, go to Europe and look at what it does, because perhaps we can learn some lessons.

But what about the Government experience with private capital? What is the Secretary of State going to say about Olympia and York? We have heard nothing from him so far. The Government argue that private capital must be involved in large transport works, yet the Heathrow to Paddington link is collapsing because BR cannot get its 20 per cent. with the private investment that is required. Olympia and York appears to be bankrupt and cannot raise money. The Government agreed to Olympia and York being involved on the Jubilee line project—which was not revealed as a priority for London in Government studies—simply because it promised that it might be able to get £400 million. We now hear that it did not enter into any agreement to that effect and that no down payments are likely to be forthcoming. The Government's insistence on private sector terms has damaged the public sector.

Under section 42 of the Channel Tunnel Act 1987, public money cannot be involved in the channel tunnel rail link. There is no way that the link will be built without public money. Channel tunnel finance was based on a contract agreement between the two state railways in France and Britain. Bankers lent the money because it was underwritten through the public contract. The Treasury did not argue that the public sector liability for the channel tunnel should be put on the public sector borrowing requirement. The Treasury has always been rather flexible in its interpretation of public and private deals.

I appeal to the new Secretary of State to consider the new measures that have been adopted in Europe and see how effective they have been instead of talking simply about bringing Stagecoach in to run the trains. I noticed that the Minister for Public Transport went on the night train to Edinburgh, saying "Isn't it marvellous that the private sector is doing this? British Rail had no money to continue the service." He stayed on board until two o'clock, while the press were there, and then shot off to his public sector sleeping wagon. He slept the rest of the journey and got up and said, "I am 50 and somewhat old." God knows what he will do when he gets on the Virgin train. I do not know whether there will be sleepers on that train, but clearly this is a case of cherry picking—simply taking profitable lines.

I am not against the abilities of private sector entrepreneurs being put against public sector management, but public sector management should be given the resources to do the job. Why should Mr. Branson be able to lease trains when the public sector, using the same track, cannot raise capital in the same way? There is no such difference on the continent. The proposed Virgin train is being treated differently from the public sector for ideological reasons. That is our main complaint.

We have made it clear that we believe that British Rail should be in public ownership. Its record compared with other public operators has been good, but it needs a 10-year plan for investment. The railways cannot be run according to a three-year plan, which the Secretary of State has told us he will introduce. Different forms of financing, such as leasing or public bonds, are necessary. I give him a radical idea if he wants one: why does not he change British Rail's accounts to show a debt-equity relationship—as the European commission has been advocating—and allow British Rail to borrow privately, with equity held by the Government? There is no reason why he could not do that if he wants access to the money.

We need tough standards and quality controls, not the passengers charter nonsense that has been introduced of late, which most people regard as totally irrelevant to their requirements. As has been said, people using the misery Southend line want investment, not a passengers charter. They want a powerful consumer group with the powers of a monopolies commission to investigate and use sanctions against British Rail so that we give the consumer real power against the publicly owned railway system. There is a great need for that, which we advocated years ago, before there was an argument about a passengers charter.

Finally and most important, I deal with the environment and congestion which are now essential elements of any transport policy. We must encourage people to switch from their private vehicles to the public transport system. We cannot build our way out of our congestion problems. The environmental damage is so great that it would be disastrous for us to continue on the Department's projections, of a 140 per cent., increase in cars in 25 years. The railways offer a wonderful opportunity. They can make a major contribution to improving the quality of our lives and to helping with the environmental damage that results from the present mix of our transport system and the massive congestion costs which have the same cause.

A change is as essential for freight as it is for passengers. We are on the periphery of the Common Market, and unless we have the fast, through connections for freight and for passengers we shall remain on the periphery of economic development in Europe. The connections are expensive and we must find other ways of raising the necessary moneys. As I said in the July debate, we have no ideological opposition to the use of private capital within a public ownership framework. We think that it is necessary. It is the Government who are ideologically obsessed and who wish to introduce legislation to pursue a privatised railway system. That is the reality. The cost will be too great for this country. Transport will continue to decline. We offer a real alternative, one which is being pursued to great effect in Europe but which this country is denied for merely ideological reasons.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch 4:51 pm, 18th May 1992

I am grateful to you, Madam Deputy Speaker, for giving me the opportunity to speak on the Bill. My right hon. Friend the Secretary of State for Transport, who opened the debate, will know Perfectly well that I have what some would describe as an obsession with the railways. I do not, I hope, have an ideological obsession either for or against their privatisation.

I have no hesitation in acknowledging that many of the privatisation measures that the Government have introduced have been of substantial benefit to the industries involved, the employees in those industries and the consumer. However, the first question that one must ask is why it has taken 13 years of Conservative government to introduce this paving Bill. The answer is simple. In spite of many fanatical Secretaries of State keen on the principle of privatisation, none has as yet been able to persuade his officials or the Government of the day that there is any practical solution to the need to inject private capital into our railways without affecting the social obligations which many of us believe are an essential component of the railway system.

My right hon. Friend the Leader of the House, who is talking to my right hon. Friend the Secretary of State for Transport, answered my question last Thursday. I asked whether he was able to tell me whether in parliamentary history a Government had introduced a paving Bill for an industry prior to the preparation and presentation of a White Paper on that industry. My right hon. Friend was honest and said that he could not but that there has to be a first time for everything. My concern is that I do not want there to be a first time for this Government—or for any Government—to decimate our railway system and then to look back and say, "What a shame, we got it wrong."

I must declare a possible future commercial interest—I keep saying that, but nothing ever happens—but, having said that, no one who is intimate with the management of British Rail, especially with that of some of its subsidiary companies, could possibly be under any illusion that there was not substantial scope for improvement in the management of some of the national assets under its charge. On that basis alone, it is foolish for anyone who seriously has the good will of the railways at heart to say that absolutely nothing could be done to the structure or ownership of any of British Rail's assets to improve them. I do not believe that to be the case.

When my right hon. Friend replies to this debate, I hope that he will answer one simple question. If he refers to the Queen's Speech, he will see that it contains two sentences dealing with the railways: My Government are committed to increasing the role of the railways in meeting the country's transport needs. Legislation will be introduced to enable the private sector to operate rail services. Should the plan in the second sentence not come about, would the Government's commitment to the first still be intact? Perhaps when my right hon. Friend's civil servants have had a chance to work out what I mean by that question, he can answer at the end of the debate.

This proposal is the biggest change for our railways since the Beeching report of ill repute. The Government of that time thought that they could make changes to modernise the railways, to make them more efficient and to provide a better service for the customer. Many people were, sadly, disillusioned by what happened and, indeed, very few people at that time listened to those who understand the complexity of running a railway.

I intervened on my right hon. Friend at Question Time today and listened to him just now repeating the hoary old statistic about 93 per cent. of the country's commercial traffic going by road. Will he confirm that that includes the postman, the dustman and the milkman, to name but three? As far as I know, no one is proposing to build railways into every house and home in the land. May I say to him in his new post; beware civil servants bearing statistics, because very often the statistics produced by the Department of Roads—I mean, the Department of Transport—are prepared to prove a case to him.

May I try to take my right hon. Friend with me? Does he agree with the proposition that we all know where we are at the moment with the ownership and operation of our railways, that we know where we want to get to but have no idea how to arrive there, so we are introducing a paving Bill and shall introduce a White Paper later this year, discuss its contents and then introduce legislation? Would that be a fair or an unfair assessment of the situation?

My right hon. Friend again used the word "franchise" this afternoon. I wonder how many of us know what is meant by "franchising" in terms of the future of the railway. Many hon. Friends and members of the Opposition will know that for many years I have been involved in a major hotel group, probably one of the main franchised organisations in the world. Any proposition purporting to suggest that railway franchising can be undertaken on the same basis as that carried out by, say, Holiday Inn or McDonald's is unlikely to be taken seriously. We are entering uncharted territory. It is as well to put these issues on record—that is not to say that solutions cannot be found, but we are entering uncharted territory.

As my right hon. Friend said, our manifesto had three main aims. He mentioned a fourth and a fifth, but the three main ones were to franchise passenger services, to sell the freight business and to liberalise access to the network. May I put a simple thought in my right hon. Friend's mind? There is a potential conflict between selling the freight business and thereafter liberalising access to the networks. Does that mean selling a part of the business to a company but saying that it will nevertheless be open to competition in the future? By selling the freight business, do we mean to create a national freight monopoly as the Japanese have done, or do we mean something different? There is an enormous number of questions to be asked.

My right hon. Friend the Secretary of State for Transport touched on the possibility of certain private sector operators coming into the business. We often hear about Virgin Airways. I sometimes find it hard to agree with the hon. Member for Kingston upon Hull, East (Mr. Prescott), but I am forced to agree with him on occasions. He raised the point, which I raised in debate last week and which I make again to my right hon. Friend, that it would be unacceptable for us to create conditions in which the private sector had access to funds, and conditions of financing and operation which were not available to British Rail. That would be a foolish thing to do.

It is no wonder that Mr. Branson is reputedly interested—I do not know whether he is interested, because, despite three attempts to contact him, I have never had a reply—in the east coast main line and in the London to Edinburgh services—

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

The hon. Gentleman says that it is London to Aberdeen. I thought that it was London to Edinburgh. It is probably part of Mr. Branson's continuing vendetta with Lord King, who runs the airline services on that route.

There has been £500 million of public sector investment in the east coast main line. Is it really in the national interest for us to allow cherry pickers to pick off the bits that they think that they would like? There may be a case for the regulator, or whoever will make such decisions, to say to the operators: "Yes, you pick the services that you want to quote for and we will give you one as well. If you want bits of the east coast main line, you can have the Dartford loop line too." We could then see the measure of their commitment to public services.

I will not repeat the points made by the hon. Member for Kingston upon Hull, East. My right hon. Friend's predecessor as Secretary of State claimed, with every justification, that our European competitors and others are rushing here for lessons on how we run our railways. It is perfectly true that the train kilometres per member of staff employed on British Rail reflect favourably when compared with the figures for SNCF or Deutsche Bundesbahn. That is a comment on the quality of management of British Rail rather than on what may be done in the future.

It would be unwise for the debate to proceed without putting on record the fact that some of the other countries that have considered railway privatisation have wholly rejected it. The Japanese are frequently mentioned. I took the trouble of talking to them. They told me that I was the first British Member of Parliament who had ever bothered so to do. I drew up with them an agreement so that I was clear that I understood what they had done. I have that agreement here, but I will not weary the House by quoting from it. The Japanese have not privatised their railways; they have restructured them, and they have created six regional public sector passenger monopolies and one public sector freight monopoly.

In Germany, Helmut Kohl set up a Government railway commission two years ago to study the relationship between the German state and the railways. After 18 months, the Germans have rejected privatisation. Helmut Kohl is not a raving socialist. He was looking for a solution to the problems of the cost of the German railways to the German taxpayer. He did not find the solution in privatisation.

Sweden has been mentioned. Sweden has set up a corporate railway, but all the shares are held by the state and there is no intention of trying to sell off those shares. SNCF, as we know, is the pride of France. As I pointed out in Question Time to my right hon. Friend the Secretary of State for Transport, even the Americans—the United States is the home of capitalism—had allowed their private sector passenger railways to fall into such a state of total disrepair and awfulness that the passenger railways have been virtually nationalised by the creation of Amtrak.

There must be lessons here for us. My plea to my right hon. Friend is not to judge what he intends to do by the privatisations that we have effected in other industries. He should look at and learn from the experience of other countries whose state-owned railways also cost them a great deal of money and which have also had the benefit of studying the position, but have come to their conclusions after, and not before, they have considered the pros and cons, and the possibilities of what we are about to do. I will not discuss the Stagecoach experiment or the experience of my hon. Friend the Minister of State. However, they show that opportunities exist within the present framework and that ownership of railways is not the real nub of the problem.

I issue a friendly warning to my right hon. Friend. Many of our constituents use the railways. British Rail carries 2 million passengers daily. Some 458,000 of them come into and out of central London between 7 am and 10 am. Unlike the gas, water or electricity industries, which are turned on and off by the twist of a tap or switch, the railways are a "people" industry. People catch their train from their station and they talk to the staff. We must be very careful that we do not do anything that causes serious disillusionment among the public if our proposals fail to continue to provide them with at least the minimum level of service to which they have been used.

The Bill is a paving Bill and we have a long way to go. By way of reference to reality as opposed to theory, I will ask my right hon. Friend the Secretary of State one or two questions. I presume that he will start with what I call the "easy" bits of privatisation—the retail side of the relationship between the railway and the passenger, such as car parking, catering, on-board staff and the termini. No one doubts that there could be improvements there or that there may be a role for private sector finance and private sector management.

We then come to the far more difficult part of the task —what one might call the "production" side of the railway, such as drivers and the maintenance of rolling stock. I speak now to my right hon. Friend advisedly and after personal contact. He should not assume that all trade unionists in the railway unions are wholly opposed to everything that the Government propose. He should not assume their hostility. He should recognise that some of them are open to discussion. Will my right hon. Friend—I do not expect an answer now—consider at an early date having meetings with some of the trade union leaders, not necessarily those of the previous generation, but those of the next generation who have been directly elected by secret ballot among their members? He might then be favourably disposed to realise that some of them are interested in only one thing—a good railway and making a good railway better.

We have an awful lot of questions to ask. We must consider British Transport police. Who will pick up the bill for the £82·8 million that British Rail had to spend on its police force last year? Who will pay for the enormous heritage costs with which British Rail is involved? Is my right hon. Friend aware that last year alone £7 million had to be set aside by British Rail for safeguarding the structure of the St. Pancras station hotel? That is just one building, and there are hundreds that need to be funded.

My message to my colleagues is this: let us not concentrate only on the political aspects of railway ownership and railway activity. My right hon. Friend was courteous enough to say that he recognised that his Department must examine the investment criteria for road and for rail. I should have liked him to be a little more positive. I should have liked him to say that in his new job he intends to start again with a blank sheet of paper. I should be grateful if he would consider casting aside all the things that he has been told about the criteria and methods used by his Department and start again in the light of the social requirements of the railway as we approach the 21st century.

The docklands have been mentioned. Some £400 million is anticipated from Olympia and York before the Jubilee line can get the go-ahead, yet £250 million of taxpayers' money was put into 1·5 miles of the Limehouse link road. That was automatically coughed up by the taxpayer and no questions were asked. That is the sort of double standard that many of us hope that my right hon. Friend will re-examine as part of his remit as Secretary of State for Transport.

My right hon. Friend the Prime Minister was generous to me before the election in giving me plenty of time to put forward to him privately some of the views that I put to the House now. He asked me at one stage why I was so keen to defend a nationalised industry. I said that I was not keen to defend a nationalised industry but that I was keen to defend the railway, which I believe to be the last means of civilised travel known to man.

We have much to lose. There is much at risk: a national timetable, through ticketing, interchangeable tickets, national products such as travelcards, senior citizens' concessions and facilities for disabled travellers. Many people, including pensioners, anxiously await answers to questions concerning those services.

I have described railway privatisation as a potential poll tax on wheels. I am glad to see that the words "railway privatisation" are not included in the Queen's Speech. I take that to mean that there has been a reduction in dogma but that the Government maintain a determination to try to improve the railway service. I accept that that is the intention of my right hon. Friend and his colleagues and, for that reason, I have no intention of voting against the Bill; but, before I can be persuaded to vote in favour of a Bill that may be presented to the House later this year, I shall need to be convinced that my judgment of my right hon. Friend's intentions towards the future of our railways is backed by the words of the legislation that they produce.

Photo of Alan Williams Alan Williams , Swansea West 5:10 pm, 18th May 1992

As one who is sponsored by the Transport Salaried Staffs Association, I always enjoy hearing what the hon. Member for Christchurch (Mr. Adley) has to say about the railway industry. I apologise to him if I do not follow his arguments today. I shall touch briefly on one aspect of the railway industry but I have been prompted to take part in the debate principally because I am concerned about the implications of the form of the Bill for the House of Commons.

I have always had a high regard for the Secretary of State in his various offices and thought that he was a good Leader of the House. That is why I find it sad that, as the ex-champion of Back Benchers' rights, he has come to the House today with a Bill that is a constitutional obscenity. I am deeply sorry that he comes here today as the ex-gamekeeper—the ex-leader who has become leader of the poachers.

As I shall show, the Bill is utterly in keeping with the arrogance and contempt that the ex-Prime Minister always showed to the House. The Secretary of State referred to the Bill as a "standard form" Bill. That is how democracy and the rights of the House are eroded. It is standard form, is it? I remind the right hon. Gentleman that this so-called standard form was introduced in 1988 when the former Prime Minister, with typical disregard for the House, wanted to drive through her measures relating to the electricity and water industries.

The Bill represents another step in the erosion of the powers of the House. I ask hon. Members—particularly new Conservative Members, who, I understand, are full of excitement at being here and full of conviction that their party must be right, to look at the form of the Bill. I ask them what they would say had a Labour Minister introduced a Bill containing powers anything like as obscure or general as the powers contained in the present Bill.

Clause 1 states: Where the Secretary of State is at any time proposing that any functions, property, rights or liabilities … should be transferred … the functions of the relevant corporation shall include the power to do anything … appropriate for … facilitating the implementation of the proposal. Then comes the provision which I think should be unacceptable to the House, and above all to the Secretary of State. Clause 1(5) provides that "the powers"—that is, the powers now given to those industries— shall be exercisable whether or not Parliament has given any approval on which the implementation of the proposal depends". Only in one other piece of legislation have I ever seen anything so constitutionally absurd and so potentially dangerous in the breadth of its implications.

I have expressed my regard for the Secretary of State as an individual and I have no doubt that he has included those words honourably because he knows what he intends to do. Unfortunately, however, we have recently had something of a rush hour at the Department of Transport: one might almost say that we need a signal box system to usher Secretaries of States in and out of the Department. We have had seven of them—and a Prime Minister who likes playing trains, too. Yet the Bill contains a general power to do anything: it is a "Freedom for the Minister to do what he likes Bill". It is a Bill giving him an absolute power, introduced in the absence of a White Paper against which we can judge his future actions, in the absence of a Bill against which we or the courts can decide on his future actions and in the absence of any firm indication from him of precisely how he, as the latest transient incumbent of his office, would envisage using that power.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe and Nantwich

Is not the position even worse than that? Does not the Bill also say that anyone designated by the Secretary of State should be able to act on his behalf in the same extraordinarily wide-ranging way?

Photo of Alan Williams Alan Williams , Swansea West

Yes, and it is a constitutional monstrosity. There is a joke about getting one's reprisal in first; the Bill is about getting one's retrospective legislation in first by giving oneself the power to do that which may be deemed necessary at some time in the future but of which the House cannot be told at present.

The Minister said that the use of the powers would impose small costs, with the interesting qualification that those costs would be small in relation to the total public expenditure involved in the industries. In fact, it will be a substantial sum, and we have precedent to demonstrate it. In the case of the denationalisation of the water industry, the cost came to £39 million. That may be small in relation to the total expenditure of the industry, but none the less it has to be borne by the industry's customers. In terms of parliamentary accountability, it is a cost that Ministers refuse to recognise.

I am a member of the Public Accounts Committee, and I refer the House to its minutes. A short time ago, we interviewed Sir Terence Heiser, permanent secretary at the Department of the Environment, who has now retired. Asked by the present Chairman of Ways and Means—not a Labour Member— Why do you exclude the £21·4 million national awareness campaign and indeed the £17·9 million regional campaign, both of which, it is stated, were a necessary forward activity for a successful flotation?", Sir Terence Heiser said, the industry had already decided beforehand on the marketing, the awareness campaign.

Why was it excluded? Because under the standard form clause—as it has become at its second usage—the Minister had given in advance powers for the industry to undertake spending that it thought were necessary to implement his policies. But when it comes to accounting to the House for the cost of implementing his policies, the Minister refuses to accept that those costs were attributable to privatisation because they were costs incurred under the enabling Bill. Accountability is virtually all that Parliament has to enable it to exercise control over the Executive, and the Bill represents yet another minor nail in the coffin of accountability.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee

Naturally, I was concerned to hear the right hon. Gentleman's misgivings about the Bill. He was right to say that, as Leader of the House, I was jealous of safeguarding the powers and position of the House. However, the right hon. Gentleman misunderstands his main point, particularly in relation to clause 1(5). None of the proposals for privatisation could go ahead until we have introduced the main Bills and had them approved by the House. There is no question of our trying through this small Bill to assume in advance what will happen to the major Bills.

The Bill simply enables British Rail and British Coal to incur expenditure and consult outside advisers so that the Government can engage in discussions with those industries about the proposals and some of the questions that will be raised in relation to the proposals as the main legislation makes progress through the House. British Rail and British Coal do not have powers at the moment to engage outside advisers for some of the purposes that we shall want so that Parliament can be better informed by the time that we consider the main legislation. If the right hon. Gentleman wants to raise any other points, I shall be happy to consider them. However, there is no endeavour in the Bill to pre-empt debates in the House about the main proposals.

Photo of Alan Williams Alan Williams , Swansea West

The Secretary of State has proved my case. He sincerely believes what he has just said. I do not doubt his honour or ability in this matter for a second. However, the Government refused to recognise that £39 million was spent prior to the privatisation of the water industry under a power which is also contained in clause 1. Clause 1(1) states that the corporation shall include the power to do anything … appropriate for the purpose of—(a) facilitating the implementation of the proposal; The tab for the £39 million, which was spent on an awareness campaign, was picked up by the customers of the water industry as a result of a power equivalent to that in clause 1(1). The Secretary of State is facilitating a similar power today. I accept that he is also facilitating the freedom to take part in discussions, but the industries do not need legislation to do that.

I was a Minister in the Ministry of Technology when it was responsible for coal, power and gas. We had wide-ranging and regular talks with the industries. We do not need an Act to allow an industry to talk to its Minister about its activities. The Bill authorises what would otherwise be illegitimate expenditure of that industry's money in facilitating a political privatisation.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

I served on the Standing Committee on the paving Bill in relation to the water industry. My right hon. Friend is right: provisions were made in that paving Bill to allow a charging structure—namely, compulsory water metering trials—in a water authority. We had such a trial in my constituency. The Government were involved in that expenditure and the private water companies could not recover that cost. There are hidden charges in this paving Bill and my right hon. Friend has every right to express his concern about them. We all share his concern and I hope that he will develop his points further because they should be revealed in every detail.

Photo of Alan Williams Alan Williams , Swansea West

My hon. Friend is very helpful.

What would happen if an industry incurred another £39 million of expenditure in order to facilitate moves towards franchising—which happens to be the hobby-horse, or hobby-train, of the Secretary of State? What would happen if the Secretary of State were replaced by the equivalent of Cecil Parkinson—1 am not sure what we call him now—

Photo of Alan Williams Alan Williams , Swansea West

Has he been enobled already? I must have missed that. I apologise; I meant no disrespect.

What would happen if we had a new Secretary of State for Transport when the main legislation was introduced? What would happen if the new Secretary of State were more impressed with what Viscount whatever-his-name-is had to say than with what the present Secretary of State has to say? Who would pick up the bills? Would there be compensation for the Government if they changed their mind? They might claim that they did not reveal what they were thinking and that they had not enacted anything yet. They might claim that they were simply having talks. If that were the case, the customer would pick up the bill.

Photo of Mr Richard Page Mr Richard Page , South West Hertfordshire

I want to raise a point with the right hon. Gentleman because we both served on the Public Accounts Committee and both considered privatisation costs. Those costs are huge. Does not the right hon. Gentleman believe that the Bill would help to clear away doubt and confusion, so that, when and if privatisation occurs, it will be more focused and concentrated, thus saving more money in the long run?

Photo of Alan Williams Alan Williams , Swansea West

The Bill does nothing of the sort. It simply adds extra obscurity. The hon. Gentleman's point about privatisation being better financially for the taxpayer in future echoed a point made by the Secretary of State earlier. He said that privatisation will undoubtedly give the taxpayer good value for money. The hon. Member for Hertfordshire, South-West (Mr. Page) sat beside me when I asked the former permanent secretary at the Department of the Environment about the privatisation of water. That industry was one of the first industries to be affected by a Bill like this one.

From my questioning, it became clear that 10 companies worth £34·6 billion were sold for £3·5 billion—ten were sold for the price of one. Undoubtedly, that gave taxpayers good value for money. I asked the then permanent secretary about the cost, but he said that one could not take it into account and that we should consider the value on the stock exchange. I asked him how much it would cost the 10 companies to set up the industry today. I asked whether they could set it up for £3·4 billion. He told me that it would cost £34 billion to recreate the industry. That good value for taxpayers' money was £1 back for £10 that the taxpayers put in in respect of the water industry.

We also provided a cash injection of £1·5 billion. I asked the former permanent secretary whose money that was and he told me that it was taxpayers' money; yet the Secretary of State still says that privatisation will undoubtedly give taxpayers "good value for money".

It did not end there. We are talking about industries that are not known for their profitability. We also wrote off £5 billion-worth of debts to the national loans fund which was providing an income to the taxpayer of £500 million a year. Having provided a £1·5 million cash injection and £34 billion-worth of assets for a mere £3·5 billion, we then provided £7 billion-worth of tax allowances so that future profits could be written off against those tax allowances. That was the first time in a takeaway that the teller paid the customer. Private companies have walked away with industries and they are bleeding their customers now despite the massive subsidies that they have already received from the Government.

The Government face problems in relation to such major industries. They do not know how to get rid of them. They are simply driven to get rid of them. They think, "If it's publicly owned, get rid of it." They know that they cannot get rid of the whole railway industry. It is a loss-maker and always was. It was a loss-maker before it was nationalised. It was a loss-maker before the wars.

Even under private ownership, the railways have always existed on the basis of cross-subsidisation. In the days of GWR, LMS, LNER and Southern Rail, the profitable lines subsidised the non-profitable ones. What will happen now? We know what will happen. The cream of profit from one sector which previously helped to subsidise the feeder lines will be hived off to the private sector. So where will the money come from for the feeder lines? It will either come from the customer or the taxpayer—more likely the taxpayer—or it will come from cuts in services.

We have already had an indication that the Government intend to cut services. The Secretary of State said something which I must admit I have not heard before. He said that privatisation could mean selling off stations. Why does one sell off stations if one is not getting rid of the services that go through them? The Government are already planning for the cuts that will be made as a result of giving the profit to private shareholders. At present, that profit goes to subsidise the commuters. We in Wales know very well that our local services, our mid-Wales service and even our high-speed service between Cardiff and Swansea are likely to be casualties of the process. The Secretary of State called the Bill a small Bill. It is a small Bill which combines constitutional obscenity with industrial absurdity.

Photo of Mr Iain Sproat Mr Iain Sproat , Harwich 5:31 pm, 18th May 1992

As this is my first speech as Member of Parliament for Harwich, before I speak strongly to support the Bill, I wish to take this opportunity to pay great tribute to my predecessor, Sir Julian Ridsdale. He represented Harwich for some 38 years with great distinction as both a Minister and a Back Bencher. For all those years, he served the constituency faithfully and well, and he has left an enormous legacy of respect, admiration and affection—feelings of respect, admiration and affection which cross party lines. I am sure that hon. Members from all parties wish to send their good wishes to Sir Julian in his retirement.

I said that I supported the Bill, and I do so for two broad reasons. The first is because, as my right hon. Friend the Secretary of State said, it paves the way for more privatisation. In my opinion, privatisation has proved itself demonstrably and comprehensively successful, whereas nationalisation has equally comprehensively proved itself a failure.

There are many ways of judging the success or failure of privatisation and nationalisation, but I suggest that one clear, practical and straightforward way is to ask two simple questions. First, which system provides the individual customer with the best service? Secondly, which system is most economically successful? If we take an industry such as British Telecom, of which we have had experience as both a nationalised and a privatised industry, the answer to the first question can hardly be in doubt. There cannot be a Member of the House of Commons who does not remember that, when British Telecom was nationalised, one had to wait weeks, months or even up to a year for a new telephone. Today, a new telephone is available on demand.

In the days of nationalisation, when one obtained a telephone it was either black or white. It was of a simple design. One could not say what one liked. Practically every telephone kiosk one tried to use was vandalised and out of use. Today, 96 per cent. of public telephones are in working order. When one made an appointment for someone to come and fix one's telephone, British Telecom would not say whether someone would come in the morning or afternoon. It would not tell one if it came not at all. It would not say whether it would give compensation. In contrast, today, under privatisation, one can make an appointment for the morning or the afternoon. If by chance the engineers do not turn up, there is guaranteed customer compensation.

The benefits that arise from privatisation seem clear beyond dispute. Of course one must be careful about making comparisons in too much detail, but I cannot believe, certainly after Question Time today, that there is a person in the country who would claim that the nationalised British Rail, which is one of the industries with which the Bill deals, is better than the now privatised British Airways in any respect—whether care for the customer, efficiency or profit. Whether one takes an industry that was nationalised and is now privatised or compares an industry which is still nationalised with one in a roughly similar sector, the success of privatisation is massively apparent.

The second question that I suggested one ought to ask was whether nationalisation or privatisation had been economically successful. We all know that the history of nationalisation from 1945 onwards has been studded with gigantic losses. My right hon. Friend the Secretary of State gave us some staggering figures for the British coal industry, but no doubt, when we come to the Bill for which today's Bill paves the way, we shall be able to discuss the coal industry in much more detail.

When British Airways was privatised about five years ago, the chairman said that the losses of all nationalised industries since 1945 had amounted to more than £200 billion. Successive Governments had to fund the losses of that nationalised industry. Think what could be done with that money to provide better schools, houses, pensions and roads.

My right hon. Friend the Secretary of State referred to wider share ownership as a result of privatisation. I believe that the figures are that, in 1979, when the privatisation programme started, about 1·5 million individuals in Britain owned shares. Today that figure has risen to about 12 million—a real redistribution of wealth away from the state to the individual family. Not only is that the type of redistribution of wealth that we want to see in Britain, but a high proportion of those employed in former nationalised industries own shares in them. Some 90 per cent. of employees of the National Freight Consortium own shares in their business. More than 90 per cent. of the employees of British Airways own shares in that business. That must be good for the stability and profitability of those businesses.

I said that I strongly supported the Bill for two reasons. The first was because it leads to privatisation. The reasons that I have given are what one might call the reasons looked at from the outside. But I have a second reason. When I was previously a Member of Parliament, I was lucky enough to be the Minister of Aviation and Shipping when we were preparing British Airways for privatisation. British Airways was still a nationalised industry.

I was horrified when I looked into the internal workings of the running of a nationalised industry and the mechanisms by which the sponsoring Government Department ran it. I saw how Government Departments interfered in the commercial running of the business in both great and small matters. Government Departments would interfere with the most minute commercial matters and prevent the business from being run properly.

In 1982, I discovered that there was no financial director on the main board of British Airways—it was absolutely amazing—although the company was about to turn in losses of £544 million and had a debt of f 1·2 billion. The then and present chairman of British Airways, Lord King—a splendid man—found a finance director and agreed what to pay him. I had to write to the Chancellor of the Exchequer to ask if that was alright. To my amazement, the Chancellor wrote back saying that he thought that we were overpaying him by about 20 per cent. The absurd epistolary ping-pong went on for months between the old Department of Trade and the Chancellor of the Exchequer, who said that Lord King was wrong and did not know how much Gordon Dunlop—that great man who became the finance director—ought to have been paid.

I am arguing in support of what the hon. Member for Kingston upon Hull, East (Mr. Prescott) said earlier. The Treasury was interfering in the way in which British Airways was run, by not allowing it to appoint the finance director that it considered necessary at a time when it was facing gigantic losses and had a vast debt.

I saw the internal workings of the Department of Trade vis-a-vis industry and its absurd interference in commercial decisions. Almost without exception, the customer came second to the vested interests of the industry, and the Department and the industry colluded in that. The interests of British Airways passengers came second.

I also saw the way in which the private sector always came second to the interests of British Airways. Other public sector bodies, such as Manchester airport, also came second because they were not a sponsored industry in the same sense as British Airways was. Ministers and Governments of all parties interfered to put the interests of the nationalised industry above those of the customer and of other private sector companies, and thus did them down.

Photo of Mr Iain Sproat Mr Iain Sproat , Harwich

I saw the absurd financial distortions which resulted—the losses written off, and the subsidies and grants given. The mushy fudge of public dividend capital was merely an excuse to dish out money to nationalised industries without any real return. I do not know whether any nationalised industry has ever paid a dividend on its public dividend capital. I do not think that British Airways ever did. It was just another excuse to inject money into nationalised industries, money that they were not competitive enough to earn.

I also witnessed costly time-wasting exercises. Executives in nationalised industries prepared corporate plans and explained them to civil servants, then tinkered with them and readjusted them after discussions. The civil servants and the Department then went over the plans, saying that they did not like this, or that had to be changed. They rewrote them, fixing performance and financial targets. Once the Government Department had gone over the plans with the company, the Treasury then had to go over them. The company, the Department and the Treasury spent endless hours tinkering about with corporate plans.

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. The hon. Member knows well that sedentary interruptions of that kind are to be deplored.

Photo of Mr Iain Sproat Mr Iain Sproat , Harwich

The Government's policies have done so much to get rid of another aspect of what was badly wrong with the relationship between Government Departments and nationalised industries—nationalised industries' preferential access to the ears of Ministers and civil servants. That is why I welcome the Bill, because it will get rid of that problem with British Coal and, in part at least, with British Rail. The industries were allowed access to Ministers and civil servants, which enabled them to affect relevant policies as they were being made, and to ensure that the policies were more in their interests than in those of the customer or of private sector companies.

When I was at the Department of Trade, I think that it would be true to say that, if the chairman of British Airways ever wanted to see me, he usually did so within 24 hours. However, if the chairman of Britannia or British Midland—two fine airlines—wanted to see me, it would be difficult. They would be told that the Minister's diary was booked up and several weeks would pass by, because they did not have a proper arrangement.

Nationalised industries got preferential treatment. As a result, there was a cosy consensus between the nationalised industry and the Department. The Department did not wish it to be that way—it just happened because of years of preferential access and agreement between civil servants and the industry.

For example, the busiest internal air routes in the United Kingdom were, and perhaps still are, Heathrow to Glasgow, and Heathrow to Edinburgh. Yet the Government had granted British Airways a monopoly of those routes. The chairman of British Midland said, "I'd like to have a go at that monopoly and compete with British Airways." I had to consider the matter. Without violating any detailed advice that I received, in the new spirit of Government Departments being opened up I can reveal that not one person or body asked for official advice recommended that there should be competition. Everyone recommended that the monopoly should remain.

We broke that monopoly, and what happened? We got more services, lower prices, a better service and a wider range of fares. Everybody was pleased. Everything that is supposed to happen under competition happened. Given that that was such an obvious case—the busiest route in the country—one must ask oneself why, under a Conservative Government, no competition was allowed. The answer is that years of preferential access had constructed a cosy consensus, whereby the values of British Airways—which had the monopoly—gained a monopoly over the culture of the Department. That was an evil thing, and privatisation has helped to sweep it away.

I welcome the Bill, because it will provide for more competition. I hope that it will sweep away such problems in two other industries. I look forward to the Bill bringing closer the day when British Rail will be as efficient and profitable, and thoughtful and caring for its passengers, as British Airways.

Photo of Malcolm Bruce Malcolm Bruce Shadow Spokesperson (Trade and Industry) 5:48 pm, 18th May 1992

I am interested to follow the hon. Member for Harwich (Mr. Sproat), who, on the previous occasion, left the House as I came in. No doubt he will be hoping that the people of Harwich prove a little more stable than the people of south Aberdeen, who have had five Members of Parliament, not one, in the past 25 years. His style and approach do not seem to have suffered from his absence, and no doubt we shall be hearing more from him. He has warned us how Ministers can become prisoners of their Department. One wonders why he did not change the Department.

Photo of Malcolm Bruce Malcolm Bruce Shadow Spokesperson (Trade and Industry)

One does not necessarily have to turn the ownership and structure of an industry upside down to reform it. If that were the only way forward, Ministers would have a limited course of action open to them.

I shall tackle both aspects of the Bill, taking the coal industry first. The Bill is, of course, an enabling one. It is relatively general and it is about bringing private money to and the restructuring of both industries. Liberal Democrats believe that the coal industry needs restructuring and that it needs access to private capital. The same is true of the railways. The terms of the Bill are necessary and acceptable because we recognise that anybody who is to change either of the industries would need such a Bill.

The real areas of potential division will arise when the detailed proposals for each industry are published. That was achnowledged by the hon. Member for Christchurch (Mr. Adley). However, I echo the view that, in the past, money has been spent on paving the way for privatisation in an unnecessarily profligate manner. One hopes that by going through such a process as set out in the Bill and having a proper and systematic explanation of events, we will not see such substantial amounts of public money squandered as a sweetener for privatisation. However, at present, the Government do not appear clear about the way forward.

I am worried about the Bill and the words in the Queen's Speech that state that the Government will bring forward proposals to return British Coal to the private sector. I remind the Government that British Coal was never in the private sector. It is an extraordinary idea to return it to a place from which it never came. The implication behind the Government's statement is rather worrying and I hope that the hon. Member for Harwich can see exactly why that is so.

It is proposed to take British Coal as a single entity, and to transfer it as such to the private sector. There are no proposals to introduce competition into the coal industry or to open it up to possible employee participation or that of other groups. The Minister is looking quizzical, but the Queen's Speech talks of returning the industry to the private sector. If the industry is to be sold as a single entity, perhaps even offered to a multinational company, I assure the Minister that the Liberal Democrats will oppose it.

We will seek to press the Government to use a little more imagination and flexibility than they have with some of their previous privatisations. On two previous occasions, I tabled amendments to coal Bills to try to change the basis on which coal is owned and how it is licensed. Under current legislation, British Coal is the owner of all coal reserves in the United Kingdom. It would be quite inappropriate to transfer the company, in whatever form, to the private sector should it continue to be the owner of all coal assets in the United Kingdom, whether mined or not.

I suggest that this is an appropriate time for the Government to follow something similar to the practice for oil and gas reserves—to transfer the ownership of coal to the Crown and license it through, perhaps, a Crown agency. That agency could be the regulator for the coal industry and of the extraction of coal and it could set the conditions under which the licences operated and determine to whom they should be allocated. In those circumstances, the industry could be opened up to more than one company and there could be different approaches and tests.

Mining is a matter of judgment, as well as of knowledge and technology. Different people have different views on the efficient and competitive extraction of coal. That suggests that, to benefit from such different approaches, more than one company should operate our pits.

The Minister will know that I have taken a particular interest in the mining consortium that is seeking to operate Monktonhall colliery in Midlothian. At present, British Coal has provisionally allocated a licence to that consortium, and negotiations are under way on the terms under which the colliery will be taken over. My up-to-date information is that a meeting will take place next Monday between the consortium and senior British Coal officials to discuss the future. Evidence will be given that the consortium has sufficient capital to run the colliery efficiently and safely.

The consortium is looking for a 10-year licence. Its members have each agreed to contribute £10,000 of their own money, which is five times their original pledge. Those people are ex-miners, and they are prepared to put up £1 0,000 of their own money to take over the pit that they used to operate. They say that they will be supported financially by the Clydesdale bank, the TSB, the Royal Bank of Scotland and the Bank of Scotland. I do not know the terms of that support, and questions have been raised in the past few weeks as to whether it will be a viable proposition. I hope that it will prove feasible for the consortium to take over the pit and that it will be able to demonstrate success in the production of coal where British Coal has previously failed.

My only regret is that, until six months ago, the Government's attitude towards that consortium was one of indifference, if not hostility. The Labour party's attitude was sustained and total hostility until it looked as if the consortium would be successful in obtaining the licence for the pit. The members of the consortium have demonstrated real commitment, and I believe that that proposal is the way forward. If that consortium succeeds, I hope that it will prove a model for others to follow.

A detail arises, on which I hope that the Government will be responsive. If the consortium is successful, as it intends to be, it will quickly reach the ceiling, under current legislation, on the number of people that is is entitled to employ under the existing licence. Presumably, once the coal industry is privatised, all terms and conditions will change. If that situation arises and the consortium reaches the ceiling before the completion of the process of privatisation, will the Government be responsive and receptive so that the consortium is not left at a disadvantage?

That example shows why British Coal cannot possibly continue to be the sole licensor for the rights of extraction. If it is the major producer, it cannot control who else is allowed to enter the market and on what terms and conditions. British Coal cannot be regarded as an unbiased or disinterested party. I hope that the Minister will be able to respond constructively, at least in principle, to those points, which I hope that he agrees are important.

The coal industry has been starved of some of the research and development funding that is available to other energy-producing industries. In the context of privatisation, I hope that the Government will recognise the need for continued research and development into more environmentally friendly ways of using coal, whether through gasification, carbon reduction or other more efficient mechanisms. I hope that privatisation will not lead to a further reduction in research funding.

There are two problems facing the industry. The first is that our European competitors continue to subsidise their coal industries. I thought that the European Commission had a piece of cheek to suggest that we should follow suit when its job in trying to create the single market in Europe, should be to require our competitors to end the subsidies to enable British Coal to operate on a fair and equal footing.

The second problem results from the prior privatisation of the electricity industry, which has created an effective duopoly controlling the market for coal. Without going into details, the privatisation of British Coal reinforces the case for restructuring a genuine competitive market for electricity in a way that ensures that all sources of fuel have genuine access to the market and that the monopoly of the main electricity producers is not allowed to squeeze the new privatised coal industry unfairly.

I have both a party and a constituency interest in the railways, which are of considerable importance to the north-east of Scotland. Among the other hon. Members who are seeking to catch your eye, Mr. Deputy Speaker, we may find that some of the points that I make are held across the party divide. Our concern has already been brought out in the debate. People continually refer to the east coast main line as being between Edinburgh and London. This causes anger and outrage in Aberdeen, because we think that that is the prevailing view, and that that is why electrification has stopped at Edinburgh. There is a substantial and important chunk of Scotland north of Edinburgh that makes an important contribution to the general wealth of the United Kingdom economy, and it is entitled to be treated rather better than it has been in recent years in terms of services and investment.

For some time, there has been a campaign for the electrification of the line between Edinburgh and Aberdeen. The question that we shall ask of privatisation is whether it is more or less likely to result in further electrification. I was not being facetious or cheeky when I wrote to the managing director of Stagecoach saying that the people of the north-east would naturally welcome the fact that his company was providing a service that had been withdrawn by British Rail, and that we would also welcome his company's support for the campaign for railway electrification of the route on which he was now providing a service.

The question that arises out of this is why Stagecoach can operate a service with a train that is pulled by a British Rail engine, on a fare basis no different from that of British Rail, but can do so at a profit where British Rail could not. That has implications for the future management and direction of the service. However, passengers in the north-east of Scotland welcome the fact that there is now seated accommodation where there had not been for a while. We hope that this will continue.

The impressionist Rory Bremner says that the Prime Minister comes from a long line of train spotters. That makes me a little concerned about the proposals for the franchising of services. I can see the populist appeal of the idea of going back to the romantic days of the Great Western railway, of LMS and LNER. However, as has been said, we have to remember that none of these companies made a profit. They may be romantic in retrospect, but they were not efficient. Much of the competition was cut-throat, to the disadvantage of the shareholder and the travelling public.

I am sceptical about the proposals on how to deal with British Rail. The expression "cherry picking" has been used to express our natural concern that private companies will choose to pick out the best and most profitable services and leave the Cinderella services either with nobody to operate them or requiring an even greater subsidy because profitable services have been withdrawn from British Rail's revenue-earning base. The question that the Government have to answer is whether British Rail, as franchise holder, would generate more revenue from the private companies than it could by providing the service itself. At this stage, the Government's plans are so shrouded in mystery that it remains unclear whether that will or can be achieved.

There is a line north of Aberdeen as well, running to Inverness, which a previous Transport Minister described as a branch line, but which is an important service to the people in the north-east of Scotland. This case illustrates our concern over whether railway transport is being given fair and equal treatment on all fours with the roads.

I see that a Minister from the Scottish Office is here. He will know the background to the campaign that I have been running, which is aimed at upgrading the A96. I make no apology for that, given the traffic and the population of the north-east of Scotland. A parliamentary question elicited the information that this road was more dangerous than the A74, which is being upgraded to motorway status. In the Minister's presence, I will say that I welcome the fact that the campaign produced a positive response. The Government have made a commitment to upgrading, and next month there will be a seminar to discuss how that programme can continue.

However, if we do not make full use of the railway line that runs alongside the road, we shall increase the problems—such as the passenger traffic that uses the road because the rail service is inadequate, and the freight that will be forced on to the road. The proposal to discontinue freight carrying other than by train loads threatened a massive discharge on to the road of additional lorries from the paper mills and the timber and whisky industries. We have managed to negotiate ways to keep freight transport going, but only on a short-time basis. If we fail in the long term, and Railfreight does not continue to provide a service, an enormous number of lorries will take to that road, which will have a detrimental effect on all users.

I have a regular flow of complaints from passengers on the line who say that the quality of the stations is appalling. In Huntly, some taxi drivers have refused to take passengers to the station because of the potholes in the drive. When I went to look at them, they had suddenly and mysteriously been filled in, but only temporarily. Trains are overcrowded to the point where there are more people standing than sitting, but British Rail will not provide additional trains. That is one of the negative effects of investment on the cheap. The new rolling stock is inferior to the stock that was there before. The trains are smaller and do not provide the same standard of comfort, while their reliability has been far from what we would wish.

There are campaigns to open additional stations so that the line can tap more traffic. One of the most successful station openings in the north-east of Scotland was that of Dyce in my constituency, which now carries over 1,000 passengers a day in and out of Aberdeen, to the great benefit of road users as well as to the passengers themselves. We thought that we might get a station opened at Kintore and we got close to it, but have now been told that there is a shortage of land for British Rail, which does not seem to me to be a satisfactory excuse.

A few years ago, there was a manager in the north-east of Scotland, John Gough, who believed that his job was to ensure that the railway services responded to the travelling public. He was so successful in doing this, and therefore so popular, that British Rail gave him early retirement. That was not what it was looking for in the rail service in the north-east of Scotland, but it is what the public are looking for and it is what we expect.

When the White Paper is published, we shall ask how an area such as the north-east of Scotland, which contributes so much to the national economy, can ensure that it gets a fair share of investment in railway and road transport. How can we be sure that the privatisation of the railways takes on board the contribution that the railways can make to both keeping traffic off the roads and encouraging a switch? That does not mean that we do not need investment in roads, but it does mean that we need to make best use of our railway assets.

Tourist traffic on the line has considerable potential, and as a result there is a desire to run steam trains on it, but London prices make no sense. The potential for developing tourist services will be apparent only if a Scottish company is entitled to determine the prices in terms of what the Scottish market will bear. At the moment, InterCity in London imposes an absurd price for the locomotive that is out of all proportion to what the market can realistically bear, and that effectively kills off any tourist initiative in the north-east of Scotland before it gets off the ground.

The Bill paves the way for two important privatisation measures, and we shall have ample opportunities to debate them. I hope that Ministers will respond to my points about how coal should be restructured. I hope that they will take on board the practical points for the north-east of Scotland. These are real issues which the public will determine. They will decide whether they believe that the privatisation of British Rail is for the good of the passenger, or simply for the good of those who will make money out of it.

Photo of Mr Hartley Booth Mr Hartley Booth , Finchley 6:10 pm, 18th May 1992

I rise for the first time in the Chamber to welcome the Bill. The way in which privatisations took place during the 1980s gives us hope that the Bill will prove to be greatly popular with the public. I know, however, that it is exceedingly risky to start any parliamentary career by talking about coal. Disraeli nearly scuppered his chances of a fine career by early speculation in mines. However, anything that can be done to improve the rail service must be good news. I have been impressed by the fairness that has been shown by hon. Members on both sides of the House during the debate, and I have to say, in fairness, that my train was two minutes early this morning.

I come to the Chamber with some modesty. I was experienced as a barrister and I declare an interest—although I have not had briefs for many years from this source—because I represented the National Union of Mineworkers. I have great admiration for miners and I obtained compensation for them for going down pits and getting dust in their lungs as they worked. I have great admiration for the way in which they risked life and limb. Whatever else happens as a result of the Bill and the subsequent privatisation Bill—I shall ask my hon. Friend the Minister for certain assurances—I hope that the safety of miners will be assured. I used to sue that great colossus, the National Coal Board, and we now want to take its successor off its pedestal on behalf of miners and on behalf of the public generally. I wish the Bill a good start and a fair wind.

As the new Member for Finchley, it would be wrong of me not to pay a warm tribute to my predecessor. My seat has been kept well and truly warm, if not hot, for the past 33 years. Few could be called to follow greater. In her time, the world respect for Margaret Thatcher was a phenomenon. She gives the lie to those who call anti-federalists little Englanders. Margaret Thatcher was determined to raise the status of Great Britain and she pushed back the frontiers of socialism with her policies. She was determined to see the United Kingdom have a world role. She wanted to see horizons pushed back across the world for the people of this country.

Margaret Thatcher came to the House in 1959 and it might amaze some people that she was here for two years before making her maiden speech. Patience, however, was part of her demeanour. In 1989, she said: I am extraordinarily patient providing that I get my own way in the end. She had the will of an iron lady, but it was married with practicality. In 1986, she said: No one would remember the good Samaritan if he had only had good intentions; he had to have money as well.

Margaret Thatcher was deeply practical. She will be remembered by those who were close to her for her phenomenal energy and amazing hard work. Those who worked closest to her knew that come 1 o'clock in the morning she would be saying, "I get a new lease of life at this time of day." She will be remembered in Finchley for her assiduous hard work. She never turned aside a letter from a constituent, and constituents whom I have met in Finchley were devoted to her. Indeed, there was a feeling of love for Mrs. Thatcher.

Behind Margaret Thatcher was Finchley and the allied place of Friern Barnet, a place of mediaeval origin. Friern Barnet is known not for its culinary past but because of the riars who lived there. Finchley is a constituency which was known ultimately from Australia to Alaska because of its Member. It had the sort of fame that doubtless is now being earned by Huntingdon. The inhabitants of Finchley, whom I am proud to represent, valued their British independence, about which Margaret Thatcher spoke so eloquently in the Chamber. They do not want to be citizens of another country and they want to see our country strong. They certainly do not want orders from another country, but that presages a debate that will take place later in the week. They will value the benefits that will flow from the Bill that is before us if it leads to privatisation. They will value cheaper and better coal production, as they will value better services on the railway.

I seek assurances from my hon. Friend the Minister. First, I want to be assured that part of the programme that will be worked on during the progress of this paving Bill and beyond will permit shares to be owned by miners and others who work in the coal industry. Part of the success of the privatisation programme during the 1980s was that those who drove trucks for the National Freight Corporation, for example, were allowed to own part of their trucks as a result of share ownership. I want to see miners have a stake in the mines from which they bring coal.

Secondly, whatever else is done during the process leading towards privatisation, I ask for the assurance that thought will be given to ensuring that Britain has the necessary powers to stop international predatory dumping. Any private coal industry that has to suffer international dumping will be weakened and could be killed. The European Community has powers to stop such dumping and they are useful, but we must look to our national needs.

Thirdly, I ask for an assurance that the new environmental regime that must be considered alongside coal privatisation will not be so draconian that any private sector proposition is immediately snuffed out or killed off. It must not be forgotten, however, that the polluter must pay. We must have a balance, but that must be considered as a package. I hope that we shall be given an assurance that environmental considerations will continue behind the scenes.

The House would not be considering the Bill but for my predecessor in Finchley. I look forward to its safe passage and beyond that to the privatisation of the coal industry and British Rail. However, I have a warning for my colleagues on the Government Front Bench. If my hon. Friend the Minister gives the assurances for which I have asked, takes the necessary steps and moves on to privatisation, the process will be so popular that there will be a strong risk that he will have to bear office in a fifth term of Conservative government.

Photo of Mr Peter Hardy Mr Peter Hardy , Wentworth 6:19 pm, 18th May 1992

It is a great pleasure to follow the hon. Member for Finchley (Mr. Booth). I suspect that not a few Conservative Members, let alone Labour Members, are pleased to see him here. He fulfilled the conventions while also making an interesting speech. As I make my relatively short speech, I hope that Conservative Members will hear a slight echo of one or two of the demands that he made. It is interesting to listen to a Conservative Member who has at least a little knowledge of the mining industry and a significant and welcome concern for it. We look forward to hearing him in future. His speech this afternoon was certainly memorable.

The House will be aware of my dominant interest in the mining industry, so I shall not say much about the railway industry. However, it is a bit much for Conservative Members to talk about privatisation resulting in a timely, cheap, comfortable and efficient rail service. We do not have to go far to find wise central Governments who recognise the benefits of efficient, publicly owned railways. France, Germany and Switzerland are models for that. Their Governments have had their supportive arms around the shoulders of their rail industries while the British Government have had our industry by the throat. That is one reason why Conservative Members come up with successive complaints, when in fact they have not perceived who bears the responsibility for the inadequate investment in and the costly fares charged by British Rail.

My main concern is with the coal industry and I want to repeat some of the points raised in the debate. Above all, when the Minister for Energy replies to the debate, I want him to assure us that the Government will ensure that there is a long-term future for the coal industry. I want him also to assure us that the contracts that are about to be signed will sustain the industry rather than plunge Britain into a state of energy dependency that results in extensive and ever-rising balance of payments deficits and further bitter blows to mining areas.

We need a guarantee that, even if the industry is to be privatised, and even if the Government wash their hands of it, a viable deep-mine industry will remain in Britain. We need that not only because of the interests of the industry but because, as the Minister should recognise, the mining engineering industry and its related activities face a growing world demand as man scratches ever more deeply into the surface of this planet for mineral resources. If we do not have an adequate home base for the development and sustenance of mining technology, we will throw away important economic opportunities for this country.

We need a substantial and continuing coal industry. It is little use Conservative Members suggesting that miners invest in their pits when, given the precedents of recent years, they would have grounds for real anxiety about that investment. With the Government's encouragement, British Coal invested substantial sums in collieries that were closed only weeks or months later. That has brought a sense of bewilderment and horror to the people in mining constituencies who have witnessed that thwarted intention.

The hon. Member for Finchley referred to mine safety. He may not be aware of this, but I am sponsored by the National Association of Colliery Overmen, Deputies and Shotfirers. Because of his previous experience, he will be aware that that association now has only a small number of members, but they are the men charged not only with the supervision of production underground but with the basic and statutory responsibility for safety. They have made a marked contribution to ensuring that the British mining industry is the safest in the world.

There are those on the Conservative Benches—there may still be some in Hobart house—who were happy with the prospect of the statutory base upon which that safety was built being squandered and turned into a reliance upon a voluntary code with a great deal less force and meaning. Before any further steps are taken on the road to privatisation, the Government must make it clear that that statutory base will not be removed. It must be retained, if only because if it is not, the Government will be seen to be running a coach and horses through the requirements of the Health and Safety at Work, etc. Act 1974.

I do not have time to go into detail on that matter, as others have done in the past, but I trust that the Minister will not lose sight of it. It is of fundamental importance because precedents show that without such a statutory authority and without proper concern, privatisation will mean that more lives are lost and more blood is spilt. That is the price of privatisation that may be placed on the coalfields of Britain.

I want to stress a few other points. First, we need assurances about the concessionary fuel scheme. Secondly, we need assurances about the pension funds. It is a fact that the pension funds in the British mining industry today may be worth more than the industry itself. Although we may get assurances and fine words from Ministers, the fact remains that there are more greedy people around than the Government care to admit. Robert Maxwell was not the only one to take an interest in pension funds. There will be greedy people who will recognise the vast size of the pension funds in the mining industry. Maxwell's actions have given rise to genuine anxiety and we need to be sure that there are absolute and clear structures of protection to prevent greedy people—who are more likely to support the Minister and his hon. Friends than Labour Members—from running riot through the pension funds of the mining industry.

There has already been a passing reference to the fact that, if the mining industry is sold for the sort of figure that the Treasury perceives to be likely under the estimates of public income and expenditure, unless there is a system that separates the ownership of the coal from the ownership of the industry, the Government may adopt the most prodigal and profligate attitude witnessed in modern times. On the basis of the Treasury calculations, if the coal is sold together with the mining industry, it would mean that the Government would be disposing of the country's coal reserves for 2p or 3p a tonne. Even in these days when people seem to believe that nuclear power, gas and oil should have priority, it would be scandalous for the country's coal reserves to be treated so flagrantly and irresponsibly.

Adequate attention must be paid to those matters and also to the needs of the country. People need to be shown that the Government are taking the privatisation of the mining industry rather more seriously than they did some of the previous privatisations, when the people were softened by skilled television presentations. The prices were increased in advance to falsify the prosperity and the profitability of those industries.

We need evidence and information. As I said to the Secretary of State in an intervention, perhaps this is not the time to expect the Government to give detailed information about their plans. I trust that the House will be given an ample opportunity to consider seriously and properly all the matters that I mentioned before any final decisions are made. As matters stand, and bearing in mind the Government's record, the decisions that we fear are likely to come from the Department of Trade and Industry will not be welcome on this side of the House.

Although the Government claim to have a mandate, the Minister for Energy must confess that it has not been provided by the constituencies that my right hon. and hon. Friends and I represent.

Photo of Mr Raymond Robertson Mr Raymond Robertson , Aberdeen South 6:29 pm, 18th May 1992

Thank you, Mr. Deputy Speaker, for allowing me to catch your eye, so that I may address the House for the first time. It is a tremendous privilege to be here as the new Member of Parliament for Aberdeen, South. It is with great pride that I take my seat as a new Scottish Member of Parliament—and on this occasion if no other, right hon. and hon. Members may allow me to remind them that, yes, I am also a new Scottish Conservative Member of Parliament.

Right hon. and hon. Members who know Aberdeen and Aberdonians will not be surprised to learn that Aberdeen, South is back in the Conservative fold. Mine is a diverse constituency of many contrasts. It has captured the old and blended it uniquely with the new. It can boast a magnificant past, and look forward to a bright and formidable future. My constituency has, sadly, seen in recent times the end of some of its traditional industries, such as shipbuilding and deep sea fishing, but it has not been frightened to reach out and to embrace new industries. Most notable among them are the oil and oil support industries. Aberdeen, South had adapted to change in a dynamic and positive way. The Aberdeen that stands on the threshold of a new century is one of which its forefathers would have been justifiably proud.

My constituency covers the southern part of that great city stretching from western end down to its commercial hub, to the beach, and to Pittodrie—the home of Aberdeen football club. It takes in world-famous Union street, and extends across the River Dee to its southern boundary. Beyond that is the North sea. It includes Aberdeen's buoyant international harbour, which, since a Conservative Government had the courage to abolish the national dock labour scheme in 1989, has enjoyed some of its best years ever.

I am well aware that most new Members of Parliament are haunted by the ghosts of their predecessors. I am not so much haunted by the ghosts of Members of Parliament past as plagued by their reincarnations. I arrived here to find myself elected president of one of the House's most exclusive and select dining clubs. I refer to that patronised also by former Members of Parliament for Aberdeen, South who are still Members of Parliament. Its membership is cross-party and includes the hon. Member for Glasgow, Garscadden (Mr. Dewar), who represented my constituency between 1966 and 1970; my hon. Friend the Member for Harwich (Mr. Sproat), who spoke earlier, and who is the longest-serving member of the club—having sat for Aberdeen, South from 1970 to 1983; and my hon. Friend the Member for Winchester (Mr. Malone), who has just arrived, who served the constituency from 1983 to 1987.

I should not be too unkind about my hon. Friend the Member for Winchester, because it has been said to me often that greater love hath no man than this: that he loses his seat so that his friend can win it back. My right hon. and hon. Friends will be pleased to know that membership of that exclusive club is now closed, because I intend to remain its newest recruit for a long time.

Apart from existing Members of Parliament who once represented Aberdeen, South, I must make mention of my immediate predecessor, Frank Doran. I want to thank him on behalf of my constituents for his time as their Member of Parliament, when he represented them in the House and worked on their behalf outside it. It would be wrong and totally insincere of me to wish Frank Doran well politically, but I do so at a personal level. Perhaps his former boss, the hon. Member for Holborn and St. Pancras (Mr. Dobson), will convey my best wishes to Frank Doran.

Aberdeen's wealth and prosperity is very much based on the oil and gas industry. The rapid expansion of that and related industries has brought tremendous benefits to the city and to its people. Oil, in common with coal, is one of this country's most precious natural resources. Unlike coal, however, it is relatively new on the British scene. It is little more than 25 years ago that the first significant discoveries of North sea oil and gas were made. Few then could have expected or predicted what would follow—and if they had, even fewer would have believed them.

In just over a quarter of a century, the United Kingdom has become one of the world's biggest producers of offshore oil and gas, creating 100,000 jobs. In the 1990s, North sea oil continues to be an outstanding success story for Britain and free enterprise. The unprecedented investment in, and expansion of, the United Kingdom continental shelf over the past 10 years occurred because the Government allowed the private sector to get to work and to get on with it. I say to Opposition Members who are fearful of a privatised coal industry that they should not be. The challenges may seem great, but so, too, are the opportunities.

Much concern has been expressed, rightly, and will continue to be expressed about the danger of coal mining and the industry's inherent risks. Unlike coal, the greatest obstacle that our oil and gas industry has to overcome is nature itself. The North sea can boast—if that is the right word—some of the most hostile and treacherous conditions anywhere in the world. They are not easy for most of us to imagine—waves up to 80 ft high, freezing air temperatures, thick fog blankets falling at any time, and wild gusts and violent storms daily. In any one year, 250 days will be officially designated as bad.

Those who work in such conditions day after day deserve the highest praise. Just as the North sea is a vibrant, healthy, free enterprise success, so, too, can be the coalfields of Britain. As the Government get down to the detailed job of returning coal to the private sector, I urge them to consider operating a licensing system similar to that which operates in the North sea. I agree with the hon. Member for Gordon (Mr. Bruce) that our traditional coal industry should learn a trick or two from its younger offshore brother.

Private enterprise never flourishes unless the right climate is created by the Government—and they have unquestionably done so in the North sea through their licensing policy. Such an imaginative scheme can do the same for a private coal industry. The purpose of a licensing policy is fourfold, and can be directly translated from the oil fields of the North sea to the coalfields of Britain.

A licensing policy enables companies to compete and to operate commercially; ensures that exploration is undertaken thoroughly, expeditiously, and—most importantly—safely; maximises the economic exploitation of resources; and ensures that a fair share of financial and economic benefits of exploration is enjoyed by the entire nation.

Such a regime, translated from oil to coal, can give this country's proud coal industry a second chance and a very real future. It will enable the industry to look forward to the next century with new-found confidence.

Photo of Keith Hill Keith Hill , Streatham 6:38 pm, 18th May 1992

I congratulate the hon. Member for Aberdeen, South (Mr. Robinson) on the fluency of his maiden speech. I rise with a sense of awe and history to make my own maiden speech. Since its creation as a separate seat in 1918, Streatham has always been represented by Conservative Members of Parliament. On 9 April 1992, for the first time ever, Streatham elected a Labour Member of Parliament. The voters of Streatham made a little bit of history that day. Interestingly, it was made in the London borough of Lambeth.

Among my many distinguished predecessors, perhaps the most notable was the late Lord Duncan-Sandys, who was in his time the holder of nine ministerial offices—all but one as a Cabinet member. It is said of Duncan Sandys, no doubt apocryphally, that he was not the most assiduous attender of his constituency. The story goes that he was once upbraided by a junior member of the local Conservative association, to whom he majestically replied, "Young man, 1 was elected to represent Streatham at Westminster—not Westminster at Streatham."

I hasten to add that no such charge could be levelled against my immediate predecessor, Sir William Shelton —to whom I willingly pay tribute. Sir William—or Bill Shelton, as he was universally known in Streatham—was Member of Parliament for part or the whole of the Streatham constituency for 22 years. Among the literally thousands of Streatham residents whom I met before and during the general election, I found a deep recognition and appreciation of his work for the constituency. The result of the election in Streatham was a reflection of political and demographical change; it was in no sense a judgment on his record of service. I intend to maintain the high standard set by Bill Shelton during my stewardship of the Streatham constituency.

The constituency, embracing as it does communities in Balham, Brixton, Clapham and Streatham itself, may truly be said to represent the heart of London south of the river. It is a constituency of great variety, ranging from the inner city to the tree-lined streets of the suburbs—pluralist, multi-ethnic, in considerable demographic flux and with a dynamic population full of potential. That potential, I regret to say, is now under great stress and strain.

In the Streatham constituency as a whole, unemployment currently stands at almost twice the national average. The impact of the recession is nowhere better signposted than in the increasingly derelict condition of our major shopping and recreational area—Streatham hill and Streatham high road, once known by Streathamites as the west end of south London. Now, no fewer than 50 of its shops stand empty; a year ago, there were 30. It is a sad irony that the only new building to appear in Streatham high road in recent years is Wentworth house, our local jobcentre.

The recession has torn the heart out of what was once a busy and thriving community. Locally, we are not willing to resign ourselves to inevitable decline. Under the auspices of the Streatham Association, which brings together local traders and of which I am the newly elected president, we shall continue to explore every avenue to bring businesses back to the high road—and especially to the site formerly occupied by the John Lewis company, whose departure was such a tremendous blow to our locality.

Central Government, however, must also accept their responsibilities. Partly as a result of the recession, but for other reasons too, the entire Streatham constituency is increasingly taking on the character of an inner-city area. I therefore give notice that, in this Parliament, I shall be pressing for an extension of the urban programme beyond the present boundary set by Government at the A205 south circular road. The statistics of decline, deprivation and distress warrant such an extension, and that demand unites all political parties in the constituency.

Nevertheless, it is clear that the core of deprivation lies in the Brixton area of the constituency. In our town hall ward, unemployment ranges between 20 and 25 per cent., much of it long term; among young men, the figure is much higher. The Brixton area also ranks high on all the other standard indicators of deprivation—homelessness, poor housing and overcrowding, low incomes and poor health. For too long, we have heard expressions of concern for the condition of the inner city which have been followed up by all too little action.

I am only too well aware of the recent political history of Lambeth council. Lambeth has been easy meat, and doubtless still presents a few choice targets for Ministers; but I believe that the new administration in the borough is making genuine efforts to turn things around. I very much hope that Ministers will recognise that change, and not succumb to the temptation to play political games for short-term political advantage.

The trouble with punishing the politicians is that the people are punished as well. There must be a constructive relationship between central Government and local authorities, and between the public and private sectors, to improve the conditions of the inner city. Central Government now have the chance to signal a new and positive approach.

Last week, Lambeth presented its impressive City Challenge bid. That bid is supported not only by the police and local community organisations, but by major private-sector concerns—BAT Industries plc, P and 0 Developments Limited, ICL, Higgs and Hill and Laing. In the past few days, Regalian Homes has also lent its support to the bid. Those companies want to do business in Brixton. They have confidence in its future, and they want to work with the local authority. The Government have a unique opportunity to boost the prospects for both enterprise and social improvement in this inner-city area, and I hope that they will grasp that opportunity.

I now turn to the substance of the debate. I must declare my interest as a Member of Parliament sponsored by the National Union of Rail, Maritime and Transport Workers. Efficient transport links are vital to the well-being of an overwhelmingly commuter constituency like Streatham; that such links are not efficient is the daily experience of my constituents and of most Londoners. The CBI has estimated that the London economy loses £1 billion a year as result of the inadequacies of our transport system, and all the current signs are that the position will get worse rather than better.

With what strikes me as staggering complacency, the Department of Transport has forecast that traffic on Britain's roads will increase by between 83 per cent. and 142 per cent. by the year 2025, with London taking its full share. That forecast beggars the imagination: it just cannot be managed. It conjures up a future of super-jams on our roads in an ever more polluted city environment. Clearly, we need a strategy aimed at creating a modern public transport system that will attract car users off the roads.

One part of that strategy, incidentally, must be to add further tube lines to the notoriously sparse underground network in south London. We in Streatham expect to be high on the list, with the extension of the tube line to our area which has been promised by London Transport since 1926. No such strategy exists, however: indeed, there is now a super-jam in the projects that might have formed the beginnings of that strategy. There is no money for Crossrail; Thameslink 2000 has been stopped; the east London line has been stopped; and, to say the least, there is now a major question mark over Olympia and York's Jubilee line.

So what is on offer to Londoners? The answer appears to be bus deregulation and red routes. In the past six years, bus deregulation has produced a massive drop in the number of bus passengers; that is hardly an encouraging omen for London. While speed and traffic volume are the only criteria for red routes, there is justifiable anxiety about their damaging effect on local businesses, and about their role in splitting up communities and increasing pollution and road accidents.

In Streatham, we are also threatened with the red-routeing of our high road. We believe that a sensible compromise is possible, and I hope that the Department of Transport will be willing to listen to our arguments. We believe, however, that the interests of the neighbourhood must come first.

Speaking candidly, I have little confidence that the proposals foreshadowed in the Bill will assist the plight of rail commuters in my constituency. I seriously doubt whether my constituents can look forward to a 17.10 Virgin service, all stations to Streatham hill, or to a 17.40 Stagecoach service, all stations to Streatham common—much less to the provision of such services in off-peak periods. Moreover, I somehow doubt that Virgin and Stagecoach will be very enthusiastic about laying on less profitable off-peak services on major InterCity routes.

Nevertheless, some method of franchising is to be expected, and it will be necessary to secure proper guarantees in regard to safety, staff training and the retention of through-ticketing facilities. It remains to be seen just how far the Government will succeed with their franchising plans and with their more ambitious scheme for the widespread privatisation of rail services. Neither approach, however, promises to deal with the kernel of the problem—the need in this country to reach the levels of investment in rail services and other forms of public transport that have been maintained over very many years by our partners elsewhere in Europe. Sooner or later, the Government will have to bite the bullet of sustained higher investment in rail.

There is, however, an additional route to increased investment—the route of co-operation between the public and private sector, discussed earlier in the debate but described in detail by my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) in his especially important speech on 11 July 1991 in this House, in which he set out a new financial framework for the railways, drawing upon the French experience of co-operation between SNCF and the French banking system. As a trading company in the public sector, there is a special case to be made out for British Rail.

I hope that the Government are still ready to look seriously at those proposals. Throughout my speech, I have tried to argue that partnership between central Government and local government, between the public and the private sector, must act as the motor of economic and social progress. Such partnerships have amply demonstrated their success in other economies and other societies. They ought now to be allowed the scope to succeed also in our country.

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside 6:51 pm, 18th May 1992

Thank you for calling me, Mr. Deputy Speaker, and giving me the opportunity to address the House for the first time. I congratulate the hon. Member for Streatham (Mr. Hill) on an exceedingly articulate and fluent maiden speech. I look forward to debating many issues with him in the forthcoming years. I am not sure that I can guarantee how long that will be for him on his side of the House, but it will certainly be for as many years as I can manage on this side.

I congratulate you, Mr. Deputy Speaker, on pronouncing my name correctly. Since I came to the House, everybody has been incredibly kind and helpful, but the one thing that has caused some problems has been the pronunciation of my name. More often than not, I am afraid that the pronunciation has been mistaken for that of the Leader of the Opposition. I am not sure whether that has been an advantage or a disadvantage for me. However, when I told people that I came from Kincardine and Deeside, all was revealed and everybody was happy.

I pay tribute to my immediate predecessor, Nicol Stephen. He was a Member for Parliament for only four or five months, yet during that time I know that his constituents in Kincardine and Deeside very much appreciated the amount of work and effort that he put in on their behalf. I hope that his colleagues will convey his constituents' thanks to him.

It would be wrong of me not to mention his predecessor, Alick Buchanan-Smith, who served this House for 27 years, first as Member for Parliament for North Angus and Mearns and then as the Member of Parliament for Kincardine and Deeside. I know that the respect in which he was held in all parts of the House, by all sides of the political spectrum—in Scotland in particular—and throughout the United Kingdom meant that his sad death last year caused a lot of sorrow and led to a major loss to British politics. I am pleased to be able to pay tribute to his widow, Jan, whom I must thank personally for the tremendous help, assistance, guidance and encouragement that she gave me over the last few months.

Kincardine and Deeside stretches from the south-west corner of Aberdeen city out through the dormitory towns that house many of the employees who work in Aberdeen, associated with either oil, or oil-related industries, and along the most beautiful valley of the River Dee, then on past Banchory, Ballater and Balmoral castle to Braemar and down to the ski slopes of Glenshee. It stretches south from Aberdeen through Stonehaven to the fishing ports of Gourdon and Johnshaven and inland to Laurencekirk and the Mearns where agriculture is the main industry. Kincardine and Deeside is arguably the most beautiful constituency in Britain. I am privileged to stand here today and represent all its electors.

The constituency has benefited significantly from the last years of Conservative government. A measure of that is the recent unemployment figures. Unemployment in Kincardine and Deeside stands at 1,306. In 1987 that figure was 3,289. There has been a drop of 60 per cent. in unemployment. Conservative policies have worked well for the constituency of Kincardine and Deeside. The major industries are oil and oil-related industries, tourism, fishing, agriculture and the small businesses associated with each of those industries. It is appropriate, therefore, that I should be speaking in a debate concerning rail transport in particular. Communications and transport are of prime importance not just to the north-east of Scotland but to Scotland as a whole.

I concur with some of the comments made by the hon. Member for Gordon (Mr. Bruce) regarding rail transport in the north-east. The beginning of Stagecoach's involvement in the service south from Aberdeen is a step in the right direction: to provide the service that the customer wants. We are trying to provide a flexible, targeted service that meets customers' requirements.

I know of two instances where nationalised industries have not worked. Before British Airways was privatised, it ran an air service between Inverness and London. I remember being visited by a senior local manager of British Airways and asked why, as a local business man, I did not use its service. I was told that it was perfectly tailored to the business man: that I could do a fine day's work in London, using British Airways, which timed the aeroplane to leave Inverness at 9.30 am. That meant that one did not reach central London until midday. The return flight left London for Inverness at 5 pm, which meant that one had to leave central London at about 3 pm.

That is not providing a service targeted at the customer. The air route made losses for British Airways, yet, when it was taken over by Dan-Air, it did a marketing job and filled its aeroplanes. Dan-Air now provides a service that leaves Inverness at 6.50 am. One can therefore be in central London by 9.30 am. Furthermore, one does not have to leave central London until 6 pm. That is what I believe bringing private enterprise and private involvement into transport is all about.

Another example has been mentioned—Japanese railways. In my business life, I have been to Japan several times during the last few years. What is commonly known as the bullet train but what is properly called the Shinkansen runs on the main line between Tokyo and Osaka. That train comes into a perfectly clean station, exactly on time, to the second—and I mean to the second. It pulls out, exactly on time, to the second. It pulls up at the platform at a predetermined mark, so one knows exactly where one will be getting into the train.

That is private involvement alongside public involvement in a transport system, yet the competition in Japan is producing a service that is second to none. If, however, British Rail intends to emulate the Japanese, I suggest that it should realise that the one thing that the Shinkansen does not do very well is to provide comfortable seats. Unfortunately, they are tailored more for the Japanese body than for the slightly larger Western frame.

Before ending, it would be wrong and strange if I did not mention the electrification of the line between Edinburgh and Aberdeen. I understand the hon. Member for Gordon being slightly upset about no mention being made of electrification north of Edinburgh. Having been involved in business, I know that such a project cannot be carried out without a proper feasibility study. As the Bill is passing through the House, we should ensure that ScotRail gets on with a feasibility study rather than waiting, as it is, until the study of the line north of Glasgow is completed. What relevance does that have to the line north of Edinburgh? I ask my right hon. Friend the Secretary of State for Transport seriously to put pressure on ScotRail to get that feasibility study going, because it wold be an added benefit if it were completed before considering franchising the rail service or involving private enterprise.

The Bill is good for Scotland and for my constituency and I commend it to the House.

Photo of Paddy Tipping Paddy Tipping , Sherwood 7:01 pm, 18th May 1992

The House should know of the excellent productivity standards that the new Minister for Energy has set himself. He caused some consternation last week when he visited the Nottinghamshire coalfield for the first time and decided that he was going to go down two collieries in one day. Given that excellent record, I hope that he witnessed at first-hand the productivity of the Nottinghamshire coalfield.

Last year, six of the Nottinghamshire group's 15 pits produced more than 1 million tonnes, and all set new productivity records. British Coal in Nottinghamshire made a substantial operating profit last year, rumoured to be about £80 million. In addition, 17·2 million tonnes of coal was produced at a cost of £5·26 per man shift in Nottinghamshire. That was a 64 per cent. improvement compared with 1985, when it sold coal at £42·60 a tonne; this year, it is doing so at only £42·93 a tonne. At the same time, electricity prices have risen by 45 per cent. The basic price of coal has remained steady, but the price of electricity has increased by almost half.

The Minister, as a productive man, must recognise those impressive productivity records. One wonders, therefore, why there is a drive to privatisation. The British coal industry is the most productive in Europe. It produces coal at half the cost of the German industry. All over Europe, people think that we are crazy to be closing our collieries.

The Government's policy on the coal industry seems to be driven by dogma and by a belief that private is good and public is bad. What other industrial sector in Britain or Europe can speak of such productivity increases? I hope that the Minister listened carefully to the voices of the coal industry in Nottinghamshire.

Perhaps what is important to the Government is not productivity but opening up the marketplace. In reality, the marketplace in energy has never been as open as it is today. Coal competes with gas, which competes with nuclear and all compete against cheap imported coal. Those associated with the coal industry ask for a level market and a policy by which coal has the same advantages as gas and nuclear.

The plan to privatise the coal industry is an empty prospectus because the reality is that there is nothing to privatise. The industry will have no shape until the pressing problem of the new contracts between British Coal and the generators is resolved. The Secretary of State for Trade and Industry has a reputation as an interventionist. Now is the time to intervene to maintain a prosperous coal industry in Nottinghamshire and across the country.

In the current year, British Coal will supply 65 million tonnes to the generators. There is a rumour of a new contract for only 25 million tonnes. It is clear that the generators—National Power and PowerGen—want a low-volume, short-term contract. Why, then, can gas generators have contracts for 15 years? The Minister should intervene in the discussions between British Coal and the power generators and argue forcefully for a high-volume, long-term contract. He has the power and the muscle to do so, because 40 per cent. of both generators are still owned publicly. He should use that muscle now to facilitate those discussions: unless he does, the hopes that the hon. Member for Finchley (Mr. Booth) expressed of the work force having a share in the industry will come to nothing. If the contract is short term, low volume, there will be nothing left for the work force to have a stake in. We shall be talking, as the Government's advisers are, of a rump of perhaps 12 collieries throughout the country.

I put some specific questions to the Minister, which I hope that he will be able to answer. Will he continue with the present commitment of no compulsory redundancies in the coal industry? Will he guarantee that those who work in the industry, who have been productive and have turned it around will not be thrown out on their ear, and that there are plans and schemes for a proper reduncancy scheme offering a real commitment to the work force and real pay-offs? Will he ensure that the people who leave the industry do so on agreed terms and are not thrown out compulsorily?

Will the Minister make some pledges on pensions, which are a part of earnings? British Coal's pension fund is perhaps the largest in the United Kingdom. It is a large profitable fund, but most particularly it is in surplus. It has been accumulated by the work force, who are anxious about its future. Will the Minister say today that those assets are the assets of the people who have worked and built them up and that they will not be cherry-picked by some private company?

The Bill has been described as short, but the issues behind it are complex. They deserve careful and considered thought. Issues such as those raised by the hon. Member for Finchley and by my hon. Friend the Member for Wentworth (Mr. Hardy) deserve consideration. The future of the coal mining industry lies in the balance. It must not be driven by dogma and ideology or by policies that are geared to pride and prejudice and ignorance and arrogance. The Minister must live by the commitment that he made in Nottinghamshire last week that he would consult widely and listen to informed voices in the coal industry. If he does so, he may win few friends, but he will win a great deal of respect.

Photo of Richard Spring Richard Spring , Bury St Edmunds 7:09 pm, 18th May 1992

May I add my congratulations to you, Mr. Deputy Speaker, on your election to office and wish you well for the future. I also congratulate the hon. Members who have made their maiden speeches today, in particular my three hon. Friends the Members for Finchley (Mr. Booth), for Aberdeen, South (Mr. Robertson) and for Kincardine and Deeside (Mr. Kynoch) who made especially good speeches.

Some hon. Member may not be familiar with an event that took place in the summer of 1989 during the Japanese general election campaign. An Opposition socialist politican found himself on the bullet train—the express train—going directly to Tokyo, but he had to undertake a speaking engagement somewhere along the way. He was very alarmed, so he managed to persuade the driver to stop the train to let him off so that he could fulfil that engagement. The next day, the national press got hold of the story and the politician was forced to resign. The reason for his resignation was not so much that he had behaved in an imperious fashion as that the bullet train was two minutes late. Somehow, I cannot conceive of that happening on the Norwich to London inter-city line.

The latest evidence is that about one in eight of the inter-city trains which pass through Suffolk are more than 10 minutes late. Many thousands of cancelled or delayed appointments and sheer frestration make up that picture. The net result is that a successful and popular bus service has started between my constituency and central London. The journey is cheap and comfortable and, needless to say, that bus service is private.

There is no doubt that, in the 1970s, British Rail, as it was then, was very much production-led. It has moved on and has become more consumer-oriented and sensitive, and management has been forced to be more aware of income and outgoings. However, it is clear that there is still much to be done.

Substantial sums have been invested in British Rail. In my region, the line between Ipswich and Norwich has been electrified and there has been a magnificent reconstruction of Liverpool street station. By the end of the year, the age of the rolling stock in Suffolk will have decreased from an average of more than 20 years to only two years. That pattern of substantial investment is happening all over the country.

However, it is true that no business or service can survive and prosper unless it attracts customers. That is a universal truth, and British Rail must compete with buses and the motor car. There are also other problems and there always will be as long as BR remains a monopoly. That is the central cultural problem of any nationalised industry.

Let me illustrate what I mean. Two Saturdays ago, my wife and young son Frederick, who is five, were travelling home to Suffolk on the train. On the journey, which takes one and a quarter hours, my son became thirsty so they went to the buffet car to ask for a glass of water. No such thing was available but my wife was invited to purchase a bottle of expensive carbonated water. I do not think that any hon. Member or sensible parent would want to indulge his five-year-old son in an early taste for expensive designer fizz. My wife declined to do so.

It is incredible that one can buy an expensive, gourmet, Clement Freud sandwich from the buffet car but not a glass of water—what an extraordinary disincentive to parents who wish to take their young children on rail journeys. It is extraordinary that such a basic provision is unobtainable. I do not wish to criticise the buffet attendant who was merely carrying out orders, but I criticise the overall culture of British Rail. It is not sufficiently user-friendly.

In time, the House will want to consider the proposed detailed structure for our rail services. The formula set out is eminently sensible. I said that BR needs to be market-orientated and customer-driven, but there is still one vital missing ingredient. I have been struck many times by the friendliness and courtesy of BR staff. It cannot be much fun to be a platform guard, a conductor or a ticket inspector when one is always having to apologise so embarrassingly for BR's poor performance.

People are motivated by a variety of reasons. Some want to make a lot of money from employment while others are not interested in that, but there is a common thread among individuals who work for all successful organisations—pride and motivation. British Rail—the great state monolith—frequently ill-serves its own work force. It lets them down.

Before the Anglia board of British Rail was wound up, it produced a report on privatisation and the future of the railways. It stated: BR's workforce is characterised by…lack of dynamism. Almost all promotions or new jobs are filled from within with little new blood injected from outside…lack of external orientation and preoccupation with internal railway community issues…little awareness of market needs or potential defensive attitudes…abysmal communication skills both inside the organisation…or outside. It continues: At all levels, BR is largely populated with people who are…lacking positive attitudes…Many BR employees at all levels give the impression of being under siege which in turn gives BR the reputation of being a place to avoid if one is seeking employment. It concludes: The organisation has stagnated at exactly the time that fresh insights were needed to meet the challenge of improved efficiency and market orientation. No business or public service can thrive with such manpower difficulties.

As we begin to restructure our rail services, let us fill in the one vital missing ingredient—a keen and motivated work force. We have seen how productivity soared in our once moribund car industry. We have seen the effect on British Airways where attitudes were transformed after denationalisation. Rail franchisees will have the opportunity to compete to provide the best, thus spurring on a sense of involvement and commitment in the work force, which will have an infinitely greater chance of being motivated if they have pride in a railway system that is effective, punctual and liked by the British public.

From the vantage point of 10 years hence, I hope that we—passengers and rail employees alike—shall be able to look around at the best railway service in the world. The environmental advantages would be substantial and the advantages for the economy and for the taxpayer would be enormous.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton 7:18 pm, 18th May 1992

May I first congratulate you, Mr. Deputy Speaker, on your appointment. This is the first opportunity I have had to offer you my best wishes, and I am sure that you have the confidence of the whole House. I also congratulate the hon. Members who have made their maiden speeches in this very important debate.

The debate covers two significant businesses—the rail and mining industries—and it is clear that a substantial number of the hon. Members who have spoken have knowledge of those industries. I shall refer specifically to the mining industry in which I worked for many years and about which I know most. The Secretary of State compared the Bill to the Public Utility Transfers and Water Charges Bill which paved the way for the privatisation of water and electricity. I served on the Standing Committee that considered that legislation. This Bill is just as pernicious and mischievous, and it is even more dangerous than the paving Bill for the water and electricity industries.

The privatisation of water benefited greatly from the paving Bill. One of the issues that became clear during the debates on paving the way for water privatisation was the shape and way in which privatisation would come about. We knew that there would be 10 water authorities and we knew their boundaries.

Can the Minister tell us how the coal mining industry will be reorganised for privatisation? Is there a set programme? Will it involve the sale of coal or the sale of collieries? If individual collieries are sold, how will that take place? People in the mining industry want to know how the privatisation of the industry will evolve, and what practices and procedures will be followed. We had such information when we talked about the paving procedures for water. I hope that we shall be given some information about how the mining industry will be presented for sale.

My interest is the mining industry, but I will refer briefly to the provisions for the privatisation of rail. I draw attention to the development in West Yorkshire under the auspices of the West Yorkshire passenger transport authority. There is investment, mainly by local authorities, to use British Rail lines and to use the facilities to develop contacts between communities and town centres. The authority is providing stops for some of the villages to link them with the towns of Pontefract, Castleford, Wakefield and Leeds, thus reducing the amount of road traffic needed to take people from the villages into the town and city centres. That is an example of how municipal authorities are developing rail communications in their areas.

I hope that that principle will be upheld and that the service being developed by local authorities will not be withdrawn if private companies consider that the profits—if any—from those links are insufficient for them to be maintained. I hope that the development and planning by the local authorities that form the West Yorkshire passenger transport authority will be maintained and further developed to link the communities with the towns and cities.

Mining is my background. I reflect on the history of the mining industry before and after nationalisation. Nationalisation was introduced because of the working conditions that people in the mining industry had to endure, especially during the war years. There were terrible working conditions and the pay structure could only be described as a system of slave labour. There was a tremendous shortfall of the supplies and supports needed to ensure that people in the industry could work in safety. Not only people connected with the mining industry, but many who supported the Conservative party were concerned about the conditions that miners and their families had to endure and they believed that something must be done about them. That is the basic reason why nationalisation was introduced.

There were tremendous advances as a result of nationalisation. There were improvements in working conditions. There was an improvement in the consultation between the work force and the management. There were improvements in the mining communities with the development of the social welfare programme. Those were all results of nationalisation.

I and people who live and work in the mining communities fear a return to an industry in which profit comes before quality of life. We fear that corners will be cut in safety in the mining industry. I hope that any legislation will include safeguards for the people who work in the industry and for the communities that depend on ming operations.

There used to be 80 or 90 pits in West Yorkshire. We are now down to four and there are question marks over two or three of the pits as a result of the Bill. The House should understand the concern that I, my colleagues and those whom we represent in the mining communities have when such legislation is introduced.

I remind the House of the miners' loyalty to the nation for many decades. With the introduction of nationalisation, we secured the five-day week. The miners were immediately asked to work Saturdays to secure greater production. No one can doubt that the loyalty that had been demonstrated throughout the history of the mining industry was shown again when the miners produced the coal that was necessary for the economy. The loyalty and service given by miners in the past should not be forgotten. There is a great deal of suspicion in the mining community because of the way in which the mining industry has been decimated over the past 10 to 13 years.

The miners and their families in West Yorkshire especially and the mining communities in general deserve a better deal. There must be better provisions for protecting the health and safety of the communities in the mining areas. We await with interest the outcome of the negotiations between British Coal and the electricity generators and are watching carefully to see what form the contracts will take. Short-term contracts will not help the mining industry to plan or assist its long-term development. The suggested three-year contract period for the supply of coal to the generating industry is insufficient and will not give the industry an opportunity to plan for the future. At present, 65 million tonnes are supplied annually, and that figure should be maintained. The level of supply to the power stations should be safeguarded. A reduction of 25 million or 30 million tonnes will not do anything to help the mining industry.

I am not asking for the industry to be protected. I am merely reiterating what has been said by the Coalfield Communities Campaign—local authorities that realised the problems that would develop with the closure of pits —which has made it clear that the nation will face problems if we do not strike the right balance in the provision of electricity. If we are to have a long-term contract involving North sea gas reserves being used to generate electricity, we shall have to accept that we may eventually have to depend on Russian gas if the generating industries' demand for gas cannot be met from North sea gas reserves. That could mean electricity consumers paying dearly for their electricity.

The chairman of British Coal recently warned that "short-sighted and uneconomic" decisions on gas generation would rebound on electricity consumers. He said that the dash for gas was not about competition giving lower prices but about competition to secure a market share and that electricity customers would have to foot that bill. Such warnings come not from Labour Members or the miners' representatives but from captains of industry—people who have been appointed by Ministers. They are now telling those same Ministers that we need to examine provision for the generation of electricity, but that gas is not the answer and that coal should be preserved for electricity generation.

The chairman of British Coal, Neil Clarke, went on to say that, at the same time, each gigawatt of gas-fired generating capacity will render redundant some of the most modern coal-fired power stations in Europe. He said that the threat was growing quietly but frighteningly and quickly and that gas could replace more than 40 million tonnes of British Coal's 1992–93 sales of 65 million tonnes to the generators.

Meanwhile, the Chairman of the Select Committee on Energy said that he suspected that in 15 years' time gas prices would have risen so high that no stations would be under construction and that the ones now being built would probably be closing down. So Conservative Members are sounding warning notes, telling the Government that their policy on the generation of electricity is both inadequate and wrong.

Much has been said in the past about British Coal Enterprise Ltd. and the money that is being spent to generate jobs and retrain mineworkers who have been made redundant through pit closures and for whom no alternative work is available. In many of the villages where pit closures have taken place, no job opportunities are available. Job opportunities in the pits have been dramatically reduced in our area, but, according to my research, very few opportunities are being afforded to redundant mineworkers. Indeed, in the whole of the West Yorkshire area, which has suffered 14,000 redundancies in the past five to seven years, a maximum of 200 jobs have been created by BCE and its associates, including the Wakefield Pension Trust.

The issues will have to be addressed. We are talking about redundancies and retraining, the future of the mining industry and the nature of the privatisation exercise. We are talking about building up confidence in the communities and in areas where people still depend for their livelihoods on going to the pits. As we have heard nothing today about the practice and principle of the sale of the mining industry, we should vote against the Bill, which does nothing to help the mining industry or, indeed, British Rail.

Photo of Mr Eric Clarke Mr Eric Clarke , Midlothian 7:36 pm, 18th May 1992

I congratulate you, Mr. Deputy Speaker, on your appointment to the Chair and thank you for calling me to speak in the debate.

As an ex-miner, I propose to talk about the coal industry and to address my remarks not to miners or those who work in the mining industry but to those outside who are aware of the importance of energy. The Minister should take note of the fact that, in a modern society, the top priority of any nation must be an abundance of power for industrial and domestic use. In the United Kingdom, we are extremely fortunate in having oil, gas and coalfields as well as nuclear know-how. In that respect, we are better off by far than many of our industrial rivals, including Germany and Japan.

The trouble is that the Government have a short-sighted attitude to our energy requirements. There is no Government control of the rate of exploitation of North sea gas or oil. The Government take a laissez-faire attitude to the power companies building gas-fired generating units and also to the increased importation of so-called cheap coal, from whatever source.

How long will that continue? The obvious damage to our strategic energy resources in the North sea, the rundown of our coal industry—with massive unemployment and a loss to the nation of skilled miners—and an increasingly severe balance of payments deficit caused by fuel imports are all the result of short-sighted policies, and the nation is paying a high price merely to retain its present standard of living.

The forecast in the oil export trade is that costs will rise dramatically in the future. Many exporting countries will withdrawn from the world market because of an increase in home demand for coal as their standard of living rises and industrialisation advances. We need only consider Poland and China. Although they have not ceased to export coal, they are finding it very difficult to provide for their markets because of home demand. If there is an increase of 5 per cent. in home demand for energy in third-world countries, the cheap coal available today will disappear more or less overnight.

There is worse to come: it is forecast that freight rates for bulk carriers are to rise. If the cost of replacing existing Panamax bulk carriers is added to the pit head price of coal, the present price advantage will be wiped out. Most of the flag of convenience, third-world crewed bulk carriers are at the end of their working lives. There are no more surplus, moth-balled bulk carriers tied up in fjords or sea lochs to replace them cheaply. Practically all the European shipyards which built bulk carriers have closed or diversified into shipbuilding or North sea activities. It will be a seller's market in future. As a consequence, prices will be high and freight rates are forecast to increase. Those costs will obviously be passed to the customer.

Other costs will increase because exploitation and exploration are forecast in offshore waters, particularly in depths of more than 300 ft. It has been forecast that there will be submersible platforms in the Bering strait. Such exploration is technically possible. BP Alaska has exploited oil reserves in very difficult circumstances, but that was expensive and has an obvious knock-on effect on prices.

Would it not be sensible to control the rate of North sea oil reserves? Would it not be sensible to preserve our natural gas reserves for domestic and industrial markets and not generate short-term electric power which burns massive amounts of our precious gas reserves? Would it not be sensible to retain an indigenous coal industry and the skills of the work force and the mining supply companies, with their export potential to other coal mining and producing countries?

We should to that not just in our name or that of the Government, but in the names of our children and grandchildren before it is too late. Those and many more problems could be handled if the Government gave back to energy its proper priority. The Government should re-establish an Energy Department. The responsibility for energy should not lie with a so-called industrial Department. The Minister said that there is a Minister for Energy, but he is part of the Department of Trade and Industry. Energy does not deserve such a relegation.

Energy is very important, but the Government have relegated it. I believe that they have relegated it because they do not like the Select Committee on Energy, which might ask too many embarrassing questions. If that is not the case, perhaps you can prove it by resurrecting that Select Committee.

Many people would agree with what I have said. I hope that our future generations will be prosperous because we will take care of our resources in this country and elsewhere. We will have to face those energy problems whether or not British Coal is privatised. I hope that you will face them efficiently with the help of all hon. Members because our future is very important.

I do not want to refer at great length to the comments of the hon. Member for Gordon (Mr. Bruce), who has now left the Chamber. However, he referred to a colliery that is in my constituency. If one of the people who puts up £10,000 to get a job loses that money, I will hold the hon. Member for Gordon responsible because he and others seem to be encouraging that practice. That is not the right way to get a job in the mining industry. The hon. Member for Gordon is playing political football with that colliery and the people in Midlothian cannot afford to pursue that course of action.

I hope that I will not upset anyone, but the hon. Member for Aberdeen, South (Mr. Robertson), in his maiden speech, said that the mining industry can learn lessons from the North sea industry. I believe that the reverse is the case. The regulations in the coal mining industry are far better than the regulations for the North sea industry. Similarly, Her Majesty's inspectorate in the coal industry is better than that in the North sea. Recognition of trade unions is also better in the coal industry than in the North sea. Victimisation in the coal industry is not as bad as it is in the North sea.

I believe that the North sea industry can learn a great deal from the coal mining industry. However, the industry in the North sea has learnt that we sometimes have to have a disaster before legislation is changed. We should not have to pay that price. The Piper Alpha disaster was one too many. Similarly, any disaster in the mining industry is one too many. We are concerned that safety standards might be watered down if there is privatisation.

Having made my maiden speech, I have waited patiently for some time today to make my second speech. I believe that the British Coal and British Rail (Transfer Proposals) Bill is an appendage to the privatisation of the coal industry. The coal industry is a major and important industry. If it is handled properly, it has the potential to supply energy and be more important than gas and oil in future. You have the responsibility of the nation's future in respect of the coal industry in your hands. I hope that you will act accordingly because we will be watching very closely how the privatisation develops. I hope that it will be carried out sensibly.

Several Hon. Members:

rose

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Order. The hon. Member for Midlothian (Mr. Clarke) has just made his second speech in this House. In future, when referring to right hon. and hon. Members, he should not use the word "you", because he refers to me when he uses that word.

Photo of Andrew Mitchell Andrew Mitchell Assistant Whip (HM Treasury) 7:46 pm, 18th May 1992

It is an honour to follow so many brilliant maiden speakers from both sides of the House. I particularly enjoyed the speech of my hon. Friend the Member for Aberdeen, South (Mr. Robertson) who demonstrated so eloquently that the Conservative party in Scotland is alive and kicking, making gains and doing very well indeed.

I support this paving Bill. It is hard to understand why any hon. Member should not support it in the Lobby. It is an important measure which ensures that the pledge given during the general election in the Conservative party manifesto for the privatisation of the railway and mining systems are carried through in the most sensible way possible. The Bill is necessary so that preliminary work can be carried out and the right method of privatisation can be assessed and discovered.

The Bill is clearly a logical continuation of the privatisation programme which the Government have been pursuing for 11 years. We have seen its obvious success in many other industries. We have seen the success for workers in those industries, for the customers and for the shareholders. It is right that those successes and opportunities should be extended to rail and coal.

I welcome rail privatisation, the guiding star for which should be benefit for the customer of a better railway service. We should try to achieve the environmental gains that we want to make. We should see more freight traffic on the railways instead of on the roads. I hope that the railway network will be expanded. I am certain that that expansion will take place only in the private sector, and I look forward to reading in due course about the Government's plans for how that privatisation will take place.

I must apologise to you, Mr. Deputy Speaker, and to the House for having to slip out at one point during the debate. Unfortunately, I missed the speech of the hon. Member for Sherwood (Mr. Tipping), with whom I share a common boundary. I apologise to him. However, I have ascertained what he said and I am sure that he made many points with which I would agree. I know that he will not mind my saying that in a coal debate, we on this side of the House miss the presence of Andy Stewart. That is no criticism of the hon. Gentleman's speech. No coal debate in the past was complete without Andy Stewart's wise words. He was a staunch advocate of the coal industry not only in Nottinghamshire but elsewhere. My hon. Friend the Minister is in some ways fortunate that he is not here. His knowledge of the coal industry was unrivalled in the House and he always made an immense contribution.

In spite of the comments from Opposition Members, my hon. Friend the Minister is very much the Minister for Energy and for coal. His visit to Nottinghamshire last week was widely welcomed and appreciated. At the weekend I spoke to some of the people he met. They particularly appreciated his visiting the area so early in his time as the Minister for coal. I am grateful to him for that and I hope that he will visit often. Unfortunately, there is no longer a colliery in my constituency. Sadly, Gedling colliery closed at the tail end of last year. However, my hon. Friend's visits to Nottinghamshire must be in our interest, and we look forward to seeing him there many times in future.

The hon. Member for Normanton (Mr. O'Brien) once again referred to the performance of British Coal Enterprise Ltd. He does it and its work a disservice by belittling it. There is a lot more than it could do. The hon. Gentleman and I are on common ground on that point. But it is important to place on the record that £70 million has been provided for projects which have attracted almost £500 million of private sector funding. British Coal Enterprise has helped 3,600 former miners into new jobs in the past year alone. In total, 70,000 new job opportunities have been created nationwide. Some 39,000 of those are in 3,200 businesses supported with loans or equity investments from British Coal Enterprise.

I want to place it on the record that we should not belittle the achievements of British Coal Enterprise. We should encourage it. Those who have an interest in the coal industry should seek to expand the work that it undertakes.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

I appreciate the opportunity to intervene. I have been requesting information from British Coal Enterprise on how many jobs have been created in my constituency or throughout the Wakefield area. No way can I obtain that information. My research shows that, after 14,000 redundancies, if 200 jobs have been created, that is the maximum. Is the hon. Gentleman saying that that is value for money? Is that acceptable? Can he tell me how many jobs have been created by British Coal Enterprise in his constituency?

Photo of Andrew Mitchell Andrew Mitchell Assistant Whip (HM Treasury)

I have placed on the record what I believe to be the figures for what British Coal Enterprise has achieved. My hon. Friend the Minister will have heard what the hon. Gentleman said about the difficulties of accessing full information and I am sure that he will help with that. Clearly, some aspects of British Coal Enterprise are commercially confidential, but I agree with the hon. Gentleman that the figures that he requested should be available. I am sure that my hon. Friend the Minister will ensure that we have them.

One of the most important points that we can make this evening is that privatisation of itself will be a mere detail for the future of the coal industry. The size of the coal industry will be affected most by the size of the contracts awarded by the generators. In terms of the size of the industry, privatisation is at the margins compared with contracts. I believe that privatisation will be in the interests of the coal industry as it goes forward into the future. But I emphasise that the conclusion of those contractual negotiations will determine the size of the coal industry.

My hon. Friend the Minister will have learnt during his visit last week that there is immense anxiety in the coalfield about the future shape and size of the industry. That is not surprising. In Nottinghamshire, the local economy receives £5 million per week in wages from the coal industry. The industry is a huge employer. These days the average age of miners who go down the pit is 34 or 35—about my age. They are highly paid with family commitments and mortgages. They are worried about the future of the industry.

I am the first person to say that the ability of the Government to influence the size of the coal industry is severely limited. The great threats to coal come in many shapes and sizes. There is the huge threat of what has been described as the dash for gas. Gas threatens to replace 20 million tonnes of coal. I have grave reservations about the dash for gas. Gas-fired generation has security of supply implications. The regulator will have to look with great care at the price charged to the consumer for gas-produced electricity commissioned by the regional electricity companies. If he sees that gas-produced electricity is more expensive than that produced by coal, he will wish to act in the interests of the consumer.

Policies on emissions are another threat to coal. Both the Government and Opposition Front-Bench teams have agreed that we should bring forward our target of returning emissions to 1990 levels from 2005 to 2000. That may well represent the environmental priorities of our society, but it is a gloomy factor for the deep-mined coal industry to absorb and negotiate.

There is also the threat of a carbon tax, about which loud noises were made abroad last week. I appreciate that it is conditional on others agreeing to it. That fact alone will delay its implementation significantly, but it is hardly a help to the coal industry in its current difficulties.

Then there is the threat from imports. I should make it clear that I have no objection in principle to imports, but I have some objections on commercial grounds. That is why I voted against the Associated British Ports (No. 2) Bill. Strategically it would be most unwise for the generators to rely intensively on imports of coal. Long-term forecasts of coal prices have been notoriously inaccurate in recent years and invariably wrong. Rather than looking to imports as the great solution to the problems of electricity generation, the generators should look at the progress that has already been made on price and quality by the indigenous producers. In particular, they should look at the amazing achievements in productivity, especially in Nottinghamshire.

First, the coal industry has made progress on price. The figures are staggering. The electricity industry is proud that price increases for the electricity consumer have been less than the rate of inflation. There has been a 44 per cent. money increase over seven years, but that is less than the rate of inflation. Over the same seven years, effectively there has been a complete standstill in the price of coal. The price of coal has increased by approximately 20p per tonne in the past seven years. By any stretch of the imagination, that is an enormously impressive performance.

The Nottinghamshire collieries made a profit last year of £80 million. Every pit is currently in profit. I submit that that is a significant factor. The coal industry has made staggering productivity gains: 479 tonnes per man shift in 1979; 1,357 tonnes per man shift in 1991. The improvement in the quality of service to generators has been immense. During last year, the industry agreed to dispatch 10,000 trainloads of coal to the generators. Every train asked for was delivered. It is against that background that the generating companies are deciding how much coal to contract for. I urge them to think carefully whether there has not already been such a transformation in the coal industry that they should consider how best to structure their contracts and what future they want for British coal.

As you know better than almost all of us, Mr. Deputy Speaker, once closed a colliery cannot be reopened. We have the great advantage of this huge natural national asset. I hope the generators will consider that carefully as they seek to reach a conclusion to their contractual negotiations.

The coal industry is a modernised industry. Further gains on efficiency and productivity can be made. I am sure that the generators will bear that in mind when they decide on the contract size and the nature of those contracts. The current three-year bullet arrangement is not satisfactory. I am sure that they will want to seek a more sensible process which allows for much longer contracts than are currently allowed at present.

Photo of Mr Jack Thompson Mr Jack Thompson , Wansbeck

I have listened carefully to the hon. Gentleman's arguments. Does he not agree that his arguments are probably the best ones for keeping the coal industry in state hands? The benefits that can now accrue from the coal industry should go to the state and should not be handed over to private enterprise.

Photo of Andrew Mitchell Andrew Mitchell Assistant Whip (HM Treasury)

I do not agree. I do not know whether the hon. Gentleman was in the Chamber at the beginning of my speech, but I strongly support the privatisation of British Coal and the Bill, because it will ensure that the Minister and his colleagues are able to arrive at the right shape for privatisation.

Photo of Eric Illsley Eric Illsley , Barnsley Central

The hon. Gentleman said that he agrees that once a colliery is closed it cannot be reopened. How does he square that with the Government's statement, in response to the Energy Select Committee, that they do not accept that principle? The Government believe that once a colliery has been closed, it can be reopened.

Photo of Andrew Mitchell Andrew Mitchell Assistant Whip (HM Treasury)

I do not think that I have said anything with which the Government would disagree. Once a colliery is closed it is extremely difficult to reopen. It would be exceedingly hard for anyone to disagree if they considered the cost and the nature of such reopening.

I am seeking to argue that those contracts determine the size of the industry and not privatisation.

Finally, in Nottinghamshire, we are looking to the Minister for an exceptionally good deal for the Union of Democratic Mineworkers and for the Nottinghamshire coalfield, which comprises 12 operational pits, with 11,000 men working them. I have given details of the tremendous productivity that has been achieved. They are highly paid and highly skilled men, working in a profitable, productive and successful part of the industry.

Would the Minister give a commitment that, when formulating his plans for privatisation, he will consult extensively with the UDM, and will have an open-door policy to its leader and his advisers, who have shown in recent months that they are prepared to accept the principle of privatisation and to work in the best interests of those they represent?

When the Minister formulates his plans, the 1982 privatisation of the National Freight Corporation may be a helpful example to him. There are a number of pointers there. I hope that he will accept the sheer quality of management in Nottinghamshire and of the UDM, which has shown its commitment to the progress that he is seeking to make by appointing the financial advisers I mentioned.

I also hope that the Minister will accept that we should be looking for a mining company based on the Nottinghamshire coalfield, with perhaps the addition of Dawmill colliery for geographical reasons. I hope that he will feel that that option for the privatisation of British Coal is worthy of consideration, and that he will look seriously at it.

I hope that the Minister will be able to give assurances tonight to the many pensioners of the coal industry. A huge number live in the area that I represent. We need such assurances so that some of the more scary stories which have been disseminated can be laid to rest.

Nottinghamshire will do well out of the contracts when they are issued and it will deserve to do well. The country owes a debt of honour to the Nottinghamshire miners. It is now absurd to suggest that miners could hold the country to ransom, but that was the case not so long ago. At that time, the UDM stood firm against a style of union militancy which has thankfully now gone.

The UDM has shown that it is a modern, forward-looking trade union. It has earned a massive share of the privatisation for its members. When the Minister sums up, I hope that he will offer to the men of the UDM, whom I represent, the opportunity to share in the privatisation and, once the contracts have been issued, the opportunity of a stable future for the industry—an industry in which they may be able to grow old, rather than continually looking for alternative employment or for work in another colliery.

Photo of Michael Clapham Michael Clapham , Barnsley West and Penistone 8:03 pm, 18th May 1992

First, I must congratulate you, Madam Speaker, as this is my first opportunity to do so.

Like hon. Members on both sides of the House, I have reservations about the Bill. It is ambiguous and the arguments about its constitutional impact are also correct. The Bill should have been preceded by certain actions, and that applies particularly to the coal industry. For example, it seems that coal contracts should have been dealt with before the Bill came before the House because they will determine the size of the coal industry.

We seem to be in the difficult position of discussing a Bill that paves the way for privatisation of an industry when we do not know what size the industry will be. We should therefore have had information on those coal contracts. I hoped that the Minister would intervene to ensure that the generators took sizeable contracts to secure a high-volume coal industry. At this late stage, as it appears that there has not been intervention, I hope that the Minister will use his influence to make sure that the coal contracts will ensure a high volume deep-coal mining industry.

When discussing coal contracts, one must bear in mind the amount of coal produced by opencast mining. In 1991–92, almost 18 million tonnes were produced from opencast. That takes a sizeable slice from deep-mined output. Therefore, the Minister must consider that seriously when looking to the future of those contracts.

The Minister must also accept that the contracts need to be of a reasonable duration. We are probably talking in terms of five or six-year contracts to ensure that the coal mining industry has the confidence for investment and continuity.

Another action that should have been taken, alongside negotiations for coal contracts, was an immediate moratorium on pit closures. I do not understand how we can talk about a Bill to formulate the size of the coal industry, a Bill which will be introduced some time in the autumn, when there will be many colliery closures in the meantime. One colliery in Yorkshire is already facing closure. It is important for the Minister to consider a moratorium and I hope that it is not too late for him to use his influence to do so.

The Minister should also use his influence to limit imports of coal, bearing in mind that much of the coal coming into Europe is from countries that are dumping coal on the European market at costs below those of production. The Minister must consider that.

The burning of orimulsion is another matter that should have been considered before the Bill came before the House. It is a dirty fuel. The Minister should have taken action and I hope that it is not too late for him to use his influence to ban it.

The Minister should bear in mind the cost of gas-fired power stations. Perhaps he can confirm that 40 combined gas cycle power stations are in the pipeline and are likely to be on stream by 1996–97. I understand that that number of power stations is likely to produce about 15,000 MW, which would displace an enormous amount of coal. One thousand megawatts equals 3 million tonnes of coal and, as a rule of thumb, the mining of 1 million tonnes of coal employs 1,000 miners. If it is true that 15,000 MW of gas-fired electricity will be on stream by 1996–97, we are talking about the displacement of 45 million tonnes of coal, and the loss of 45,000 jobs. The Minister should also bear that in mind. I hope that he will use his influence to ensure that the cost criterion is applied when we consider gas-fired power stations.

On the subject of nuclear power stations, Conservative Members have mentioned subsidies and their disadvantages. I hope that the House is aware that we subsidise nuclear power and that each of us pays 11 per cent. more on our electricity bills to subsidise that industry. That annual subsidy runs at between £1·2 billion and £1·6 billion. That is ironic because if that subsidy were paid to the mining industry, it would be able to give its coal free to the generators and still make a profit. However, we are using such a subsidy to support an inefficient source of electricity generation—the nuclear industry.

The coal industry in Britain must be maintained at a reasonable size, a size that will sustain employment in the industry and the mining communities, and ensure that we are able to provide the needs of electricity generation. If we do not take such steps, we will be totally dependent on imported energy sources, which will lead to a considerable increase in the balance of payments deficit—by, perhaps, £3 billion a year. It will also lead to an alarming expansion in opencast mining. In some reports, it has been suggested that opencast mining may expand to account for up to 25 million tonnes of production. That would mean that, every time we turned a corner in our constituencies, we would be likely to see a great opencast mine. In addition, as has been explained, the dash for gas also presents great problems.

We must consider the cost of privatisation. Conservative Members have spoken of the great benefits of privatisation and how it helps to generate wealth. Let us consider the costs of privatising the coal industry. The Government have been closely associated with N. M. Rothschild, which has produced two reports. The first suggested that the liabilities—current and historic—may cost the Government up to £6 billion. At the same time as paying for those liabilities, the Government will be faced with the industry's considerable continuing debt, possibly in excess of £500 million.

That means that we will have to pay out an enormous amount before we even consider what revenue will be generated by the sale of the industry. Again, the Bill is totally ambigious on that point. Without having some idea of the industry's eventual size, we will be unable to evaluate the amount of revenue that may result from its sale. The Rothschild report appears to suggest that the revenue obtained from the sale may be less than £2 billion, yet we will have to pay out more than £6 billion in liabilities. Perhaps the Minister will confirm that, because the costs of privatisation are likely to be enormous.

Other factors that must be considered—they were raised by the hon. Member for Finchley (Mr. Booth)—are safety standards in the industry. It was pleasing to hear him pay a compliment to the mining unions, which have fought tirelessly to ensure that people injured in mining receive reasonable compensation. At the same time, the unions have used their endeavours to ensure that, as a result of section 123 of the Mines and Quarries Act 1954, the workmen's inspectors have done much to reduce greatly the accident levels in the industry.

That work was so good that, between 1970 and 1972, Lord Robens, as a result of his experience in the mining industry, took cognisance of the fact that it had kept the number of accidents low by virtue of the involvement of the men in the mines. His report, in 1972, became the basis for the Health and Safety at Work, etc. Act 1974, which extended to workers in factories and other establishments the same opportunity to help to eliminate hazards from the shop floor.

I hope that the Minister will take note of the way in which the mineworkers unions, with the help of section 123 of the Mines and Quarries Act, have been able to work with their safety inspectors to reduce accidents. I hope that he will ensure that the same standards will apply in a private coal sector, should that come about, so that accident rates do not increase.

It is alarming to compare the current accident rate in the private mining sector—there are roughly 160 private collieries in Britain—with that in the public sector. I hope that the Minister will confirm that the accident rate in the deep-mining private sector is eight times higher than that in the public sector. That statistic causes Labour Members great concern. We hope that the Minister will make a great endeavour to ensure that the legislation is applied in such a way that we are able to maintain high safety standards in the private sector. The recent accident in a private mine in Nova Scotia in Canada showed that any deviation from high standards is likely to result in a horrific accident. Therefore, it is essential that safety in mines is the Minister's paramount objective.

I also hope that the Minister will consider closely an industrial relations formula for application in the future mining industry—by that, I mean a formula which is similar to that in section 46 of the Coal Industry Nationalisation Act 1946. That imposed upon the industry conciliation and negotiation procedures which embraced the whole industry from national to local level. I hope that the Minister will consider similar industrial relations procedures for the future industry, because they ended much of the bitterness that the industry inherited at the end of the war. From 1947 until today, there have been only three national strikes in the coal mining industry, and that shows that the conciliation procedures brought about good industrial relations. I hope that the Minister will consider implementing similar conciliation procedures in whatever private mining sector comes about.

I hope also that the Minister will consider establishing consultation arrangements alongside the conciliation procedures so that we can exploit the great experience of the work force so that their ideas can be used to make the industry more efficient. Since the war, since particularly 1974, £12 billion has been invested in the industry and the consultation procedures were used to harness the ideas of the men to make the industry much more efficient. That shows the great benefit of having consultation procedures which allow the men to participate with management in achieving the objectives of high productivity and harmonious relationships.

I hope that the Minister will consider my points and perhaps confirm whether he will consider such conciliation and consultation procedures for whatever future industry emerges from the future proposals. The industrial relations structure is one of the most important that he must bear in mind.

Photo of Simon Burns Simon Burns , Chelmsford 8:19 pm, 18th May 1992

Thank you for calling me, Madam Deputy Speaker. May I add to those of other hon. Members my congratulations on your appointment, which gives many of us great pleasure?

I know that many of my constituents will be interested in the Bill and particularly in that part that deals with British Rail, because it is the first course before the main Bill that the Government will bring before the House later in the year, and that will be of special interest to my constituents. My constituency has one of the largest commuting populations into London. People travel to Liverpool Street station, from where they go to work both in the west end and in the City.

Unfortunately, all too often, my constituents have suffered because, until 15 years ago, East Anglia was an economic backwater before the improvements and developments in the local economy. That meant that the area was the last in line for investment in, for example, new rolling stock. Until relatively recently, other parts of Network SouthEast passed on old rolling stock, which worked until it collapsed and finished its natural working life. That caused a great deal of resentment and many uncomfortable journeys.

The problems with which my constituents have to cope—they are not necessarily unique to the Chelmsford-Liverpool Street line—include unpunctual services, a lack of information about delays and cancellations of trains and a lack of basic cleanliness. A number of years ago, many of my constituents were never sure whether it was night or day because the windows were so appallingly dirty.

To be fair, in the past two or three years there have been notable improvements and great strides forward in improving services on the line. There has been a great deal of investment, as is manifest by the complete rebuilding of Chelmsford station and the magnificent redevelopment of Liverpool Street station. Only the most churlish of individuals could have anything but high praise for that, although there was a price to pay in that, for a number of years, there was total chaos in rush hours.

There has been new rolling stock on the line, and the beginning of resignalling from Liverpool Street through to Chelmsford and up to Colchester. Thanks to investment by British Rail, this will go to the Shenfield-to-Chelmsford part of the line by 1996. That will improve the ability of the network to meet timetables and be punctual. All that is to be welcomed.

However, all too often, because there was no genuine commercial pressure on Network SouthEast, too many problems have arisen that one would not have expected in the private sector. For example, three years ago, for five days over Easter, the whole of Liverpool Street station was closed, quite justifiably, because British Rail was beginning the resignalling of the line at that narrow entrance into Liverpool Street from which the lines fan out into the station. When the line was reopened on the Tuesday after Easter, there was chaos, because the new points system kept on short-circuiting.

When the system was being developed, nobody had considered the implications of having overhead electric cables, so when the network was started up to deal with the commuter services, the overhead electric cables shorted the new equipment. It took British Rail three days to identify the cause of the problem, and it then had to go to York to get some Marconi equipment, then bring it down and use it to get the system working. That caused the maximum amount of trouble to the commuting population, not only in my constituency but in the rest of south Essex. However, getting compensation from British Rail for the disruption and loss of services was like getting blood out of a stone.

By the bye, my constituents warmly welcome the charter being introduced to help provide commuters and customers of British Rail with help when there is a breakdown in services and they do not reach the expected standards.

The 45-odd years of British Rail as a nationalised industry has led to it becoming almost immune to the demands and wishes of its customers. It has a captive audience for the commuter service it provides in the south-east. There is no genuine competition because, realistically, people cannot travel from Chelmsford by car or bus. There are private bus services that work, but the journey is longer and one has to get up earlier and is longer on the road getting in, so the service is not in genuine competition with British Rail. Therefore, it can provide the standard of service that it wishes to provide without having to pay undue attention to the demands and complaints of its customers.

Photo of Simon Burns Simon Burns , Chelmsford

The hon. Gentleman is probably fortunate in that, for most of his working life, he has not had to be a commuter and travel from Chelmsford or on the Fenchurch Street line from Southend, Billericay or any other parts of south Essex. He is unaware of what commuters there have to put up with day after day. Far too often, it is an unacceptable service.

Photo of Mr Peter Snape Mr Peter Snape , West Bromwich East

I am glad to say I am not and never have been an Essex man. The hon. Gentleman may be interested to know that I spent most of my working life in railway signal boxes. I have never heard so much uninformed drivel about the industry in which I spent all my working life. If it was a private firm—I think it was Marconi, but I am speaking from memory—that installed the signalling system at Liverpool Street that the hon. Gentleman described as having failed because of the problems with immunisation of the overhead electric line, why do not he and his constituents seek compensation from that private company, or is that a bit too simple for him?

Photo of Simon Burns Simon Burns , Chelmsford

I am sorry to say that the hon. Gentleman is falling into a rather large elephant trap. It was not Marconi that installed the equipment, it was Westinghouse. As I said, Marconi's equipment from York, three days later, bailed out the faulty system. If the hon. Gentleman had had the courtesy to listen at the beginning of my speech, he would not have made that mistake. I am sorry that the hon. Gentleman has made a fool of himself by trying to score cheap party political points.

If the view that the hon. Gentleman has just expressed is symptomatic of the Labour party's view of commuters in south Essex, then it is no wonder that, in general election after general election, the Labour party does so abysmally in places such as Chelmsford.

Photo of Mr Peter Snape Mr Peter Snape , West Bromwich East

I have no desire to drag this argument on, but I did say that I was speaking from memory when I said that it was Marconi.

Photo of Simon Burns Simon Burns , Chelmsford

The hon. Gentleman's memory was faulty.

Photo of Mr Peter Snape Mr Peter Snape , West Bromwich East

Of course it was faulty. Occasionally, even the hon. Gentleman gets it wrong, as he is now. If it was Westinghouse that installed the signalling equipment, will the hon. Gentleman accept that that is not in the public sector either?

Photo of Simon Burns Simon Burns , Chelmsford

I accept that it is not in the public sector. I was making the point that it was British Rail, or Network SouthEast, that was placing the contracts for the equipment to upgrade the service. It seems staggering that, before the equipment was installed, it did not pay special attention to ensuring that it would work so that, when the rail network was brought up again on the Tuesday after Easter, it too would work to the full satisfaction of British Rail and commuters. The hon. Gentleman should stop making accusations. He has made an abysmal fool of himself by revealing that he did not know the company that provided the faulty equipment at Liverpool street station. I can understand him trying to save face, but I advise him to stop digging. The more he digs, the deeper the hole becomes.

I was about to say, before being so rudely interrupted by the hon. Member for West Bromwich, East (Mr. Snape), that for over 40 years British Rail faced no competitive forces. It had no competition to ensure that it kept itself in shape and sought to improve the quality of the service that it was providing to its customers. The commuter network provides a service for an almost entirely captive market, and in the absence of competition, it could afford to become soft and not to meet the standards that any decent provider of a service would wish to meet. It did not have the stimulus of competition to ensure that it met the needs, wishes and desires of its customers.

Commuters could not turn to another form of transportation to enable them to get to and from their work each day. As a result, the rail system continued to degenerate. Increasing apathy determined the standard of service that BR was prepared to accept for its customers. In the past few years, however, BR began to realise that the writing was on the wall and that, sooner or later, it would have to face the full force of competition. We have seen Network SouthEast seeking to improve the service that it provides. Anyone who uses the service to Liverpool Street from Chelmsford will accept, I am sure, that there have been many improvements in the past few years.

The process has not, however, gone far enough. It is still not what most people would consider a first-rate service, despite the fact that, since 1983, BR has invested £n throughout the rail network.

The hon. Member for Kingston on Hull, East (Mr. Prescott) talked about subsidy, but to increase a subsidy year in and year out is not the right way to go forward. That approach provides a cushion but not an impetus to improve the service. I believe strongly that investment in the rail network is crucial to give BR the ability to improve its service and meet its customers' demands. The answer does not lie in flabby subsidies that provide a cushion.

I welcome the fact that the Government are prepared to allow the privatisation of British Rail, albeit in stages. I am sure that my right hon. and hon. Friends look forward to the small detail of the Government proposals as they are brought forward. I know that my constituents will welcome any initiative that introduces a dose of competition and the flair of private enterprise, to ensure that the service that is provided by the rail network is brought up to standard so that those who use it get value for money and a clean and punctual service. That will ensure that their use of the system is more enjoyable as they of necessity travel to and from work. I know that, when subsequent legislation is introduced, my constituents will warmly welcome it. They will recognise that it will improve the level and standard of a service that they have had to tolerate for far too long.

Photo of Eric Illsley Eric Illsley , Barnsley Central 8:35 pm, 18th May 1992

I am sure that the hon. Member for Chelmsford (Mr. Burns) will forgive me if I do not take up his remarks about British Rail. I shall confine my remarks to British Coal and the Bill to privatise the coal industry, but I have considerable misgivings about debating a paving Bill which, in effect, will give an enormous number of powers and duties to British Coal, as well as placing upon it liabilities without hon. Members knowing how the industry is to be privatised. We have no idea of what is to be the structure or size of a privatised industry. The Government should have published their proposals before they asked us to debate this paving measure. We are faced with an abuse of the House.

I agree strongly with the remarks of my right hon. Friend the Member for Swansea, West (Mr. Williams) about the provisions that will allow the Secretary of State to bypass Parliament when introducing measures that are necessary to privatise British Coal and British Rail. It is unfortunate that the Select Committees are not yet in place. It is especially regrettable that we do not have a Select Committee to scrutinise energy matters. Sadly, we are to lose the Select Committee on Energy, which in the past produced reports on the coal industry.

My misgivings stem from the fact that I do not believe that the coal industry should be privatised. I do not see privatisation doing any good for the industry. Indeed, I do not see it bringing any benefits. The Secretary of State mentioned some of the benefits that he thought that privatisation would bring to the mining industry, such as increases in revenue, the widening of share ownership and increased capital. How can revenue be increased when, as my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) rightly said, British Coal has billions of pounds worth of liabilities? It has been said already that it is the institutions and other large organisations that purchase shares. Individuals are not buying shares in privatised industries. Ownership is passing more and more to large companies and other large organisations.

We must concentrate on the market that is available to the coal industry and the market that will be available to it in future. Against that background, privatisation is not the appropriate policy for the industry when we consider our energy requirements. It will do no good to put the industry at the mercy of the market. The generators have said that they want gas-fired generation—combined cycle generation—and not British coal. They have said more than once that they want to use imported coal. My right hon. and hon. Friends have said that the generators, beginning with the Central Electricity Generating Board, have stated that they want to import up to about 30 million tonnes of coal. They have said also that they are interested in burning orimulsion. Again, that will take markets from British Coal. We must remember that our stocks of coal are as high as about 42 million tonnes.

What are the prospects for gas-fired generation? We were told last year by the chairman of British Coal that 7 to 7·5 GW of generation was due to come on stream in 1994–95. That generation will displace about 20 million tonnes of British coal. If we take that from the current level of 65 million tonnes in the contracts, that leaves an available market of about 45 million tonnes.

British Coal could compete with combined cycle gas if we took into account the capital costs of building those stations. The only valid argument for burning gas, which is a premium fuel, is that it is cleaner. We must also consider the Government's commitment to flue gas desulphurisation. I remember the former Secretary of State for Energy giving the Select Committee a commitment that flue gas desulphurisation equipment would be fitted to the power stations at Drax and Ferrybridge. We are still waiting for much of that equipment.

Very cheap coal stocks are available on the international market from South Africa and elsewhere and British Coal has difficulty competing with such low-priced imported coal. The generators say they will buy and import coal from whatever sources they want. Both National Power and PowerGen have said that many times. How much coal will be imported? How many tonnes will be taken out of the available market of 45 million tonnes? We need answers to those questions before we can judge any privatisation proposals for the coal industry.

Opencast mining, which produced 18 million tonnes of coal last year, also takes away markets from British Coal. We must think about the environmental aspects. It is no use saying that because opencast mining is cheap, because it is good for profits and because it can be mined easily, we should move towards that system of mining. It is a filthy operation. It produces dust and filth, means many lorries on the road and creates many environmental problems. We should restrict, not increase, opencast mining.

Privatisation will compound the coal industry's problems. The hon. Member for Gedling (Mr. Mitchell) referred to a carbon tax and the problems of emissions. Again, those problems will restrict the coal industry's markets. Before we begin to discuss privatisation, how that is to be achieved, or even the safeguards that Labour Members want, we need answers to many questions. Many of the threats to British Coal should be lifted.

We have spoken many times about the increases in productivity in the mining industry—more than 100 per cent. since 1985. In addition, costs have decreased by up to 25 per cent. and prices by about 28 per cent. since the last time that British Coal increased prices in 1985. If prices can be brought down under public ownership, why do we need to privatise the industry to try to force prices down even further? How far down will prices be forced while we are paying money hand over fist to the nuclear industry? I do not understand how privatisation will improve the coal industry's record.

Coal is competing with gas, but, as I said earlier, it can be cheaper. Coal also competes with nuclear power, yet there is a £1·2 billion fossil fuel levy, equivalent to 11 per cent. of each of our electricity bills. It has been said many times that if coal had that sort of protection, British Coal could give it away. It could even pay the generators £10 a tonne for taking it and still come out with a profit.

British Coal is also competing with coal from South Africa, which pays low wages, and with coal from Colombia, which uses child labour. The competition is unfair. Privatising the industry will not deal with the problems in the market. It will not produce increased competition within the industry that will benefit Britain or its energy market.

By the time we discuss the details of a Bill that will put the flesh on the bones of this measure, it is probable that only a handful of collieries will be left. Already British Coal is embarking on a further pit closure programme. Perhaps there should be a moratorium on pit closures while we decide what size coal industry we want.

Photo of Andrew Mitchell Andrew Mitchell Assistant Whip (HM Treasury)

Does the hon. Gentleman accept that it is not the Government's policy that threatens the industry, but the other aspects to which he referred? Does he further agree that it is not privatisation, of itself, that places the industry under threat, but factors that are outside the Government's remit?

Photo of Eric Illsley Eric Illsley , Barnsley Central

I am sure that the hon. Gentleman will remember that a former Secretary of State for Energy, Cecil Parkinson, told the generators that they could buy coal from wherever they wished. That was Government policy. The coal industry faces many threats, and privatisation is one. It will affect the size of the industry because it will mean further pit closures. Although I agree with the hon. Gentleman that many of the threats to the industry are not the result of the Government's policies, nevertheless the Government have done little to remove those threats, to encourage the industry or to protect it at a certain size. During the time that I served on the Select Committee, I heard little from the Government about safeguarding the industry at a certain size.

I am not sure who would want to buy into the coal industry. The hon. Gentleman referred to the coal contracts that are still being negotiated. Who would want to buy into an industry that has no long-term future? Nobody knows how many collieries will be left this year or next year, what size of market will be available next year, how the contracts are progressing or what tonnage British Coal will be able to produce. Only the companies involved in the energy market, such as the large oil companies and the international coal companies, might be interested in buying into the handful of British collieries that will remain once the industry is privatised.

There is also the question of the £6 billion of liabilities. Who will take on responsibility for that? In particular, I want to know about the liability for concessionary coal to retired members of the industry. Hundreds of thousands of people still receive concessionary fuel because they served in the industry. Will the Government have responsibility for that or will it be hived off to some agency? The Bill contains the power for British Coal to transfer liabilities. Will it transfer the liability for concessionary coal to some agency, to the Government or to someone else? How can we find out about the future for coal concessionaires?

What about the liability for compensation cases, especially industrial deafness? Many cases become apparent only many years into the future. Who will have the responsibility for meeting the compensation claims both of the past and of the future?

Who will be responsible for meeting claims against the privatised industry for coal mining subsidence? Only a year ago the House passed an Act dealing with coal mining subsidence, but there was no provision in it for a privatised industry.

The coal industry pension funds have already been mentioned. British Coal is taking a £450 million pension fund holiday. It is immoral that the workers in the industry are still required to pay into that scheme even though British Coal is taking a holiday and accepting hundreds of millions of pounds towards its profitability. Is the pension scheme to serve as an incentive to anyone buying into the privatised industry? Is the scheme to be hived off, sold or transferred to another agency? What will happen to our members' pensions in future? We do not want a repeat of the Maxwell scenario, with people lobbying Members of Parliament day after day because their pensions have been misused.

Although the Bill is only a technical measure, it raises a number of questions, which have been left unanswered. There is no Select Committee ready to scrutinise the Bill, and we shall have to await the Government's proposals, having already given British Coal power to get on with transferring its liabilities and assets in the move towards privatisation. It is imperative that the Government publish their proposals very quickly.

Photo of Alan Meale Alan Meale , Mansfield 8:50 pm, 18th May 1992

I join right hon. and hon. Members in all parts of the House in congratulating you, Madam Deputy Speaker, on your new post. Your active participation in crime prevention, as a member of the Select Committee on Home Affairs—on which you served admirably for many years—will serve you well in your years in the Chair. I only hope that I will not be one of those whom you regularly slap down for disorderly conduct.

I am greatly concerned about the Bill's deliberately misleading contents, which set out to con the electorate in the coalfield communities of Britain that the Government are in favour of a coal mining industry. It is clear that the Bill will bring to an end the coal mining industry as we have known it for generations.

The Bill implies that only small reductions will be made in the scale of the industry, but no one is fooled by that. Anyone who knows anything about the industry is aware that it has already suffered a series of devastating cutbacks, and the Bill will only serve to erode it substantially further.

The industry's management is employed to protect the industry, produce coal and look after the mining communities. Over the past few years, however, I have seen very weak management, whose only intention is to run down the industry. The present management of British Coal and the Government are acting together deliberately to reduce a sizeable public asset.

I ask the Minister to consider imposing a moratorium on any further cutbacks or closures, until the Bill is enacted. If he does not do so, he will be making an enormous mistake. On the stock exchange, trading in a particular company is usually suspended once an offer for it has been made, and there can be no sense in the Government allowing the coal industry—whose management will be making a bid for it—to be run down by its management to the point where it will then be affordable to them, so that they can make a fast buck out of privatisation. A number of my hon. Friends intimated that the scale of the industry's mismanagement is known throughout the coalfields of Britain.

Most of Nottinghamshire's coal miners are in their early thirties, whereas in the past they would be in their early sixties. Only a few years ago, there were 34,000 coal miners in Nottinghamshire, but today the number is 12,000. Coal mining remains vital to Nottinghamshire, providing £5 million a week, or one quarter of a billion pounds a year, in wages alone. We cannot allow a privatisation that will lead to further pit closures, so that the number of Nottinghamshire mines is reduced to three or four. That would be a tragedy for all concerned.

Although most of Nottinghamshire's miners are young, some of them have previously worked in Yorkshire, Scotland, Lancashire or the north-east. Many of them married young and live in council houses or those that were originally owned by the Coal Board but are now largely in the hands of housing associations. Privatisation will not offer anything of a chance to those miners, as some Conservative Members suggested.

The hon. Member for Chelmsford (Mr. Burns) said that the Bill offers miners a great opportunity to participate in and own part of their industry. The question is not whether the Bill is an exercise in share ownership in a dwindling industry, but whether a coal mining industry will remain in Britain. I suggest to right hon. and hon. Members in all parts of the House that if privatisation proceeds, there will be no industry.

A number of my hon. Friends asked questions about undertakings that must be given before the Government proceed. My hon. Friend the Member for Barnsley, Central (Mr. Illsley) spoke of the problems created by subsidence. They are known to me, because I endeavoured to defeat them during the lifetime of the previous Parliament, together with other hon. Friends—including my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson), who battled valiantly in respect of that issue.

I have still to discover where all the moneys have gone that were deducted by British Coal from every tonne of coal produced, to be set aside for subsidence compensation. Three or four years ago, I asked a former Secretary of State for Energy the total value of those funds, and was told that it was more than £200 million. There is no way that any substantial sums have been paid out, so what will happen to that £200 million or £300 million if the industry is privatised? Does the Treasury guarantee that those moneys will be paid out to future generations? I suspect not. I suspect that, by means of regulation, the Government will stand aside from the problem and leave home owners facing a dilemma.

The question of pensions has rightly been highlighted. I do not trust British Coal's management now, and I trust a privatised coal industry even less. Only a few weeks ago, rather than voting for extra help for coal industry pensioners, the management voted for an extra week's holiday for its senior members. Such action prompts immense distrust in those who must examine the management of public industries.

My hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) mentioned people who rely on the industry for concessionary coal. What will happen to people who live in houses where coal is burned? What about those who have moved out of such houses or have had electric or gas fires installed, and who therefore rely on payments? I know—and the Government know damn well that—the privatised companies will not pay allowances to all those people, or provide guarantees to that effect.

The industry is well aware, as are Members of Parliament who represent mining communities, that British Coal's present management will not say, "Here we have a man who used to work in the industry," or "Here we have the widow of a miner"—perhaps one who was killed while doing his job—"who is in a terrible state, cannot walk properly and cannot attend to the fire, and who therefore wants to switch to a different fuel," and decide to help that person. No leeway will be found.

I ask the Government to stop misleading the British people and to stop trying to repeat the exercise of the early 1980s, when they said to the mining industry, "Trust us: stand with the Conservative party. We will look after you —there is a future for coal." We have seen the "future for coal". It means a total rundown of the industry, the closure of hundreds of pits and the loss of hundreds of thousands of jobs, directly in mining and indirectly in the subsidiary industries.

If the Bill proceeds, there will be no future for the mining industry. It is about time that the Government came clean and started to admit to the malicious damage that they are attempting to inflict on the coalfield communities.

Photo of Sir David Amess Sir David Amess , Basildon 9:01 pm, 18th May 1992

I welcome the opportunity to support the Bill, especially because it allows me to share with the House some thoughts about my constituency, Basildon. I know that the House is particularly keen to hear about my constituency: it is impossible to have too much of a good thing, and Basildon is a very good thing.

During the general election campaign, Opposition Members tried to make transport—and the Fenchurch Street line—an election issue. I am delighted to see the hon. Member for Kingston upon Hull, East (Mr. Prescott) in his place, because he visited Basildon during the campaign; we saw a very nice photograph of him looking out of a carriage window. Let me wish him well in his bid for the deputy leadership of the Labour party. If I had a vote, I should certainly support him: to me he represents the authentic voice of socialism, along with the hon. Members for Bolsover (Mr. Skinner) and for Brent, East (Mr. Livingstone). We do not want any more of this designer socialism!

During the election campaign, the leader of one of the rail unions also came to Basildon, where he addressed a crowd of 200. I think that his advice was as follows: "In a marginal constituency like Basildon, blame the rotten service on the Conservative party. Vote against the hon. Member for Basildon; vote for the Labour candidate." Neither possibility came true as a result of the efforts of Opposition Members.

Photo of Andrew MacKinlay Andrew MacKinlay , Thurrock

Whom does the hon. Gentleman blame for what he and I agree is a clapped-out railway system between Fenchurch street and Southend'? Does he blame British Rail, the Government or the Archangel Gabriel?

Photo of Sir David Amess Sir David Amess , Basildon

I am delighted that two Essex Members are present tonight. Let me make it clear that I blame the disgraceful service on the line.

Just nine months ago, I telephoned the chairman of British Rail after the first disastrous public relations exercise in my constituency. The gentleman who is supposed to manage the line was to meet me at Basildon railway station, but he never turned up. He never turned up because he missed his connecting train. I came to my office in the House of Commons, telephoned the chairman of British Rail and invited him to share the journey with me from Basildon to Fenchurch street. His office told me to meet the chairman of British Rail in time to catch the 8.26 am. train. There was no 8.26 am. train. It should have been 8.36 am. Then we found that two out of the eight carriages were locked. After that, the shambolic journey took place.

When we eventually arrived at Fenchurch Street station, we were met by Sir Bernard Braine, the former Member of Parliament for Castle Point. I am glad to see that my hon. Friend the Member for Castle Point (Dr. Spink), who succeeded Sir Bernard Braine, is in his place. Of course, Sir Bernard exploded when he met the chairman of British Rail. He was unable to participate in the journey because he was given the wrong time for his connecting train at Benfleet.

The hon. Member for Thurrock (Mr. Mackinlay) asked me who I blame. I jolly well do not blame the Government. That is what Opposition Members tried to do during the general election campaign. When I stood with my megaphone during those three weeks outside Pitsea, Laindon and Basildon stations, I found that the good people of Basildon were not blaming the Government. They were not fooled by the Opposition's promises. I see that the hon. Member for Kingston upon Hull, East has disappeared. That is a pity. I know that the general public were not fooled at all. Sadly, the management of the Fenchurch Street line is somewhat lacking.

Photo of Bob Spink Bob Spink , Castle Point

Is my hon. Friend aware that in a parliamentary answer last week, the Minister informed me that British Rail, headed by Sir Bob Reid, who must take final responsibility, had still not come forward with its proposals for rolling stock investment on the Fenchurch Street line? Until British Rail comes forward with those proposals so that the Government can consider them, I do not see how Opposition Members can possibly blame the Government. Does my hon. Friend join me in calling upon British Rail to make its proposals as a matter of urgency?

Photo of Sir David Amess Sir David Amess , Basildon

I am delighted to join my hon. Friend in that call. Everything that he said was absolutely right.

The Fenchurch Street line is very poorly managed. How else can one explain the fact that, when our constituents arrive at Fenchurch Street station, they are given a postcard with eight excuses? There is a box next to each excuse. Each box has to be ticked according to the particular flavour of the day. Employees are expected to hand that postcard to their employers to explain why they were 10, 15 or 20 minutes late. The service is an absolute disgrace.

Photo of Alan Meale Alan Meale , Mansfield

Is the hon. Gentleman aware that I and many of my hon. Friends received a similar postcard through our letter boxes from the vice-chairman and chairman of the Conservative party asking for money in the weeks before the general election?

Photo of Sir David Amess Sir David Amess , Basildon

I think that that is a red herring. However, during the election campaign, I received a letter from the right hon. and learned Member for Monklands, East (Mr. Smith) asking my wife and me to subscribe to the party political activities of the Labour party, so I think that that is 15-all.

The management of the Fenchurch Street line is somewhat lacking. We on these Benches believe in strong leadership. [HON. MEMBERS: "Oh!"] Yes, we do, and we expect strong leadership from the chairman of British Rail. I make no criticism of the women and men who work so hard on our railway stations and who do a very good job. No wonder morale is low. It is the bosses who need to raise their heads above the parapet and take responsibility for rail services.

I know that time is pressing, so I gently say to our excellent ministerial team that we would have liked slightly tougher targets in the citizens charter for the Fenchurch Street line. If British Rail cannot deliver an adequate service, it is about time someone else was given the opportunity to see whether they can do better.

I pay tribute to the Basildon commuter group, led by Mr. Martin Ramms. It does an excellent job, but its members have better things to do with their time than holding committee meetings and doing the job of the management of British Rail. My constituents are fed up with the Fenchurch Street line. They will no longer put up with the shoddy service they get. I believe that this excellent Bill is the answer, and I have no doubt that, as a result, the Fenchurch Street line will improve in the months and years ahead.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Work and Pensions 9:10 pm, 18th May 1992

May I congratulate you, Madam Deputy Speaker—no doubt for the umpteenth time—on your appointment? I hope that you have a happy time in the Chair and keep us in order, as you would like people to keep their dogs in order. I hope that you will treat us better than some people treat their dogs.

We heard five maiden speeches, most of which were made by Conservative Members. The first was made by the new hon. Member for Harwich (Mr. Sproat). He was formerly the Member for Aberdeen, South and he got to Harwich via the circuitous route of an unfortunate brush with the electors of Roxburgh and Berwickshire. That makes him what is called a retread. If the contents of his speech were anything to go by, it sounds as though the retread process has not reduced the friction that he used to induce between himself and Opposition Members.

Everyone would accept that the new hon. Member for Finchley (Mr. Booth) has a hard act to follow, particularly as he is denied the use of the famous handbag. He seemed to subscribe to the policies of his predecessor. Labour Members at least welcome his warning to Ministers about the need to maintain safety in Britain's mines, even if they are to be privatised.

The next maiden speaker was my good and old hon. Friend the Member for Streatham (Mr. Hill). He is a welcome addition to the House, particularly as he is the first non-Tory representative for Streatham since 1912. There must be some lessons there. He made a fluent speech and recited the story of Duncan Sandys' arrogant relationship with the electors of Streatham. I was once told by Nicholas Ridley that Duncan Sandys had a habit of running down the majorities that he inherited from other people.

My hon. Friend the Member for Streatham referred to the outfit called Stagecoach. My view is that much of the railway privatisation will owe rather more to Dick Turpin than to the stagecoach.

I thought that I might have some difficulty with the new hon. Member for Aberdeen, South (Mr. Robertson), because he displaced my good friend and member of my team, Frank Doran. But he paid Frank a most gracious tribute in his fluent speech, and we are all grateful to him for that.

The new hon. Member for Kincardine and Deeside (Mr. Kynoch) made a confident, noteless speech, expounding the virtues of his beautiful constituency. Labour Members who have made hapless visits there in by-elections will at least confirm its beauty. He paid tribute to his short-term predecessor, Nicol Stephen, and, rightly, to his predecessor but one, Alick Buchanan-Smith, who was a genuine, decent Tory gent—a species which, regrettably, is increasingly absent from the Conservative Benches. Nevertheless, his successor is welcome here.

The Bill paves the way for the privatisation of the British Coal Corporation, and before it is drowned in a sea of pro-privatisation propaganda, it is as well to remember the basic facts about British Coal. The 49 colleries run by this publicly owned company are the most efficient in Europe. Britain's 41,000 miners produce coal at a much lower cost than any of their European competitors, but, unlike their competitors, they receive no production subsidy.

Equally, important, Britain's mines are twice as safe as any in the world. No other industry in Britain is twice as efficient and twice as safe as its German counterpart, yet this British industry is in rapid decline and is in danger of being reduced to as few as a dozen pits, not as a result of any shortcomings in the industry but because it is already paying a double price for privatisation—first, as a consequence of the privatisation of its major customer, the electricity industry, and secondly, because of the Government's process of preparation for the privatisation of British Coal itself.

Britain's miners and their families in the coalfield communities know that it is make or break time for the coal industry, but they are not asking for any special favours. They believe that a secure future for what remains of the coal industry would be good not only for them but for Britain, and I am sure that they are right.

If we do not maintain a substantial supply of deep-mined British coal, everyone in Britain will suffer. No serious Government could contemplate the alternatives. Let us consider the inevitable consequences of the alternative ways of making up for the coal that would no longer be produced. First, there is the dash for gas, burning our precious natural gas supplies in power stations. That will prematurely run down our limited gas supplies, drive up the price of gas, add to the trade deficit and, ultimately, make Britain dependent on gas imports from insecure foreign suppliers—all that to generate electricity which will cost more than electricity generated from existing coal-fired power stations.

A second option is to import more coal. Ten years ago, Britain imported only 4 million tonnes, but last year it was 20 million tonnes and rising. If that continues, coal imports alone could add as much as £1·5 billion to Britain's annual trade deficit, a self-inflicted wound which must hamper our economic performance.

Another option is yet more opencast mining, on top of the massive increase of recent years. It is a system under which coal is cheap because the price is paid by the communities bordering the opencast workings.

A major option being pursued by the Government is nuclear power, which is being kept alive by endless injections of public subsidies. Every electricity user pays a surcharge to cover the cost of nuclear power which is used whenever or wherever it is generated, while coal-fired plants which produce cheaper electricity are forced to stand idle and are threatened with closure. All these policies are being pursued now as part of the privatised electricity companies' efforts to drive down their short-term costs, whatever the long-term consequences. Needless to say, those cost reductions have not been passed on in any way to the consumers of electricity.

The coal industry needs long-term, high-take contracts with the generating companies. It needs them now and it needs them whoever owns the coal industry. Such strategic decisions are the stuff of government and the Government should be involved in the negotiations—even Rothschild, the Government's own merchant banker advisers, recommended that. But the previous Secretary of State for Energy, John Wakeham, chose to ignore Rothschild's advice.

Responsibility for the coal industry now rests with el Presidente, the new President of the Board of Trade. That is appropriate in some ways because the energy industry, besides producing almost one fifth of our country's wealth, has a major impact on our trade. The rundown of our coal industry could add to the trade deficit by massive increases in coal and natural gas imports. The British mining equipment industry would lose export orders if it were denied a home market in which products could be demonstrated to potential overseas buyers. British power plant manufacturers will also lose markets if they are held back by a lack of investment in modern clean coal technology. Instead of exporting, we should end up importing to meet our own needs.

The President of the Board of Trade must take the matter seriously. In 1989—I assume that he was referring to the Tory party—he said: I beg our party not to argue that a trade deficit on overseas trade is of incidental importance, self-correcting, easily financed. I don't believe a word of it. He was right then and we are right now. He should act now to avoid these gratuitous additions to the trade deficit.

The new President of the Board of Trade has said that he believes in intervention. He has his chance. He should get on and intervene, and work to achieve the long-term high-take contracts which are the only way in which to provide a secure future for British Coal. The latest reports of the talks between the two generating companies and British Coal suggest that they are miles apart and that the two generators have no intention, unless there is Government intervention, of making offers that would offer a decent future for the coal industry.

The President of the Board of Trade also proclaims his European credentials. He has a chance to do something about that as well. The European Community imports about 120 million tonnes of coal a year and the President of the Board of Trade, if he is serious, should press our partners to give Britain the opportunity to supply some of that market and thus enhance the Community's drive for reduced dependence on fuels imported from outside member states. If he does that, he is likely to get a sympathetic response from the Commission and from our European partners because they cannot believe their eyes when they see the British Government closing down Europe's most efficient coal mines.

The President of the Board of Trade should also work within Europe to get a greater European Community contribution to the development of clean coal technology—which has been neglected under this Government —not only for the sake of the British coal industry. It is important for British plant manufactures as well. Coal-burning power stations will be built around the world. It is vital for everyone to ensure that those power stations use clean coal technology to reduce chimney emissions and to improve efficiency. If Britain does not invest in that newest technology, British plant manufacturers are bound to lose out to their German, Swedish and American competitors. The President of the Board of Trade should act now to help British Coal and British plant manufacturers gain a better future. All those considerations apply whether the coal industry remains publicly owned or whether it is privatised.

I now turn to the question of the sell-off. Coal privatisation, as the new hon. Member for Finchley made clear, is a Thatcherite hangover. Like the poll tax, it is a triumph of Tory prejudice over common sense and the interests of the taxpayer. The Bill paves the way for that privatisation.

The Bill permits British Coal to start spending money on the process of privatisation. That is just the next instalment of Tory outdoor relief for the financial classes in the City. What they lose on Canary Wharf, they will want to make up for in privatisation fees. The merchant bankers, accountants, estate agents, brokers, underwriters and lawyers are all out there, jostling, grunting and squealing, waiting to get their noses back into the privatisation trough. The track record of the Tories and their friends in these matters is appalling: whole industries have been sold off at knockdown prices.

Photo of Malcolm Bruce Malcolm Bruce Shadow Spokesperson (Trade and Industry)

What do the hon. Gentleman and his party have to say to the miners at Monktonhall, who are each prepared to put up £10,000 of their own money to become shareholders in a mine that used to be owned by British Coal but was shut by it? Is the hon. Gentleman in favour of their doing that? Does he support them, or would he ignore them or treat them with contempt?

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Work and Pensions

My own view is that the salvation of Monktonhall lies in an arrangement with the rest of the coal industry in Scotland.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Work and Pensions

The hon. Gentleman asked me a question; perhaps he will do me the favour of listening to my reply. The salvation of the Monktonhall and Frances collieries lies in an all-Scottish arrangement that gives a future to the whole of the Scottish coal industry and not just to some peculiar arrangement at Monktonhall.

Whole nationalised industries have been sold off by the Government at knockdown prices. When Harold Macmillan said that the Tories were selling the family silver, I do not think that he had the full flavour of their failure to get value for money. The Tories have usually obtained the sort of price for the family silver that Bill Sykes used to get from Fagin, and for broadly speaking the same reasons.

With coal privatisation, the robbery of the taxpayer is already under way. Coal is following the three classic stages of privatisation—write-off, sell-off and rip-off. The process began when the Government used their powers under the Coal Industry Act 1990 to write off more than £6,000 million of the industry's debts. The coal industry restructuring fund is set to gobble up a further £3 billion of taxpayers' money to fund redundancy payments. About £8 billion worth of expenditure has happened already or cannot be avoided, but as much as £3 billion of taxpayers' money could still be saved if the coal industry is run down no further. All that money is being spent to make what is left of British Coal sufficiently attractive to foreign mining companies. As usual with Tory privatisations, the taxpayer picks up the bill for the liabilities, while the new owners make off with the assets.

The Tories have some strange ideas about public subsidies. They seem to object to even the smallest public subsidy to maintain coal production, but apparently will pay any price to ensure that production is reduced. The total contribution by the taxpayer to the rundown of the coal industry and its privatisation could well total more than £11 billion—equal to £500 for every family in the land —yet according to Rothchilds' advice to the Government, at any given level of output, an extra 10 million tonnes of coal could be produced at an additional cost of just £30 million.

Most people are upset when taxpayers' money is used to persuade farmers not to grow crops, but the present situation is worse. A farmer who stops growing a crop in a field can cultivate that field again and so produce more crops. But the coal from a colliery that has closed can never be produced; it is lost for ever.

If we want another example of Tory spending priorities —compared with expenditure on giving a decent future to the coal industry—we need look no further than the public sector contributions to the Canary Wharf scandal. Since the President of the Board of Trade first established enterprise zones and docklands development corporations when he was Secretary of State for the Environment, no less than £353 million of taxpayers' money has gone into the Isle of Dogs enterprise zone, and a large proportion of that will have been to the benefit of the developers of Canary Wharf. I find it hard to believe that there is anyone in Britain who thinks that that money has been better spent than it would have been on providing 10 or a dozen years' worth of extra production of 10 million tonnes for the British coal industry.

Aside from the cost, there is also the matter of how the Government will privatise the industry. Coal is very unlikely to be put on sale like the electricity and gas industries. Nothing is certain, but it is likely to be sold as one or more going concerns to other companies, probably international mining companies or conglomerates with mining interests. Will it be sold as a whole or in distinct geographical blocks, such as, for example, two large companies, each covering Yorkshire and the midlands and smaller companies in Scotland, Wales and the north-east?

What will be sold? Do the Government intend to hand over Britain's coal reserves in perpetuity to foreign mining concerns? Or will they keep public ownership of the reserves and license the companies to operate as with oil and gas in the North sea? Will they sell opencast mines with deep mines? If so, will the Government reverse their recent relaxations in planning controls? The environmental record of private opencast companies is far worse than the environmental record of British Coal. When the President of the Board of Trade visited north Warwickshire during the general election, when he was Secretary of State for the Environment, he promised some revision of those planning controls.

Will the Government offer miners free shares in the companies? Will they urge miners to invest their savings in shares? If so, the miners would do well to remember that if they put their savings into their own pit and the pit closes for reasons beyond their influence or control, the miners would be likely to lose their jobs and their savings.

In the end, will coal privatisation be good for Britain? That must be the test and it is the test which a year or two ago the current President of the Board of Trade said should be applied to all takeovers. He said: The bidder would be required to show that the takeover would have positive benefits in a wider national interest. That test should surely apply to the takeover of British Coal.

We believe that the privatisation fails that test and we know that the preparations for privatisation have already hammered the coalfield communities and thrown thousands of miners out of work. That brings me back to the miners. The proudest achievement of the British coal industry is its safety record. That record is already under pressure as a result of new working practices. It is further threatened by the spineless acceptance by the Health and Safety Executive of proposals from British Coal that seem likely to make matters worse. In addition, the previous Parliament repealed the Coal Mines Regulation Act 1908 which limited the hours worked underground.

Despite those setbacks, British Coal's safety record remains second to none. In terms of serious injuries per man shift, over the years it has proved twice as safe as private mines in Britain. It is twice as safe to be employed by British Coal down one of its mines as it is to be employed by a private contractor down the same mine. The level of accidents down German mines is twice as high as in Britain. The record is five times worse in the United States. In South Africa, Russia and China the safety record is anything between 10 and 50 times as bad.

That is the proud record for the British coal industry. It would be shameful for the Government to propose any change that threatens safety. However, privatisation raises that spectre. The most likely purchasers of British Coal are international mining companies which, quite frankly, are used to trading the safety of their work forces in exchange for cheaper output. Every one of those international mining companies has a far worse safety record than British Coal.

Let me give an example of what those international mining companies get up to. Before it was bought by Hanson, Peabody Coal in the United States systematically rigged the dust recorders down its mines. It was prosecuted and settled for a fine of half a million dollars. It is clear that if that company were involved, privatisation of British Coal would put the safety of British miners at risk. The same applies to all the other companies.

I am sure that I speak for all my right hon. and hon. Friends when I say that, much as we object to coal privatisation because of the cost to the taxpayer, the cost to the balance of trade and the cost to our fuel reserves, our deepest objection to coal privatisation springs from our fears for the safety of the miners. Whatever else happens, the cost of privatisation must not be borne by the body and blood of the British miner.

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North 9:35 pm, 18th May 1992

The House accepts that the Bill is a simple and straightforward measure. It confers on British Coal and British Rail powers to do things required to pave the way for privatisation. As was accepted by all the hon. Members on both sides of the House who have spoken today, it is largely a technical Bill. The majority of speakers made the point that it is an important first step towards our manifesto proposals for the coal and rail industries.

It will be important to the success of the privatisation discussions that British Coal and British Rail are able to consider and take advice on our proposals, advise the Government on the proposals that we introduce and draw up plans for implementing the privatisation proposals.

The right hon. Member for Swansea, West (Mr. Williams) made a trenchant criticism of the structure of the Bill. We are simply following the precedent that has been followed in other privatisation measures. I listened carefully to his point about advertising and will look at it in some detail, but he must accept that the precedent has been well established. We shall introduce a Bill to privatise British Coal and a separate Bill to privatise British Rail. Those Bills will be introduced later in the Session.

When the substantive coal and rail Bills are introduced, we shall undoubtedly have a chance to debate, I suspect at some length, many of the issues that hon. Members have raised.

Photo of Alan Williams Alan Williams , Swansea West

Is the Minister aware that the precedent is one ill-conceived Bill in 1988? Does he accept that he is giving the industries the power to do and to spend that which is currently outside their statutory powers in pursuit of his wishes, when he does not even have statutory authority for the things that he requires them to do? That is a constitutional obscenity.

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

I think that the right hon. Gentleman is technically incorrect in terms of when the advertising expenditure was incurred. That expenditure was not incurred until after the main privatisation Bill had gone through the House. On his point about a constitutional outrage, I must remind him that, much as it may irk him, the commitments to coal and rail privatisation were clearly in our manifesto. He must take account of that.

Most of the debate has been about the coal industry. I hope that the House will understand that I therefore wish to concentrate my remarks on coal, as did the hon. Member for Holborn and St. Pancras (Mr. Dobson).

Listening to the hon. Member for Midlothian (Mr. Clarke) drew me back to my first days in the House when I took part in the coal debates in the 1979 Parliament and listened to his predecessor, Alex Eadie, who put much the same sort of gloss on his speeches. I look forward to continuing my discussions with the hon. Gentleman, much as Alex Eadie had his discussions with me.

We have benefited from some effective maiden speeches during the debate. My hon. Friend the Member for Finchley (Mr. Booth) was the first maiden speaker to get to his feet. The hon. Member for Holborn and St. Pancras said that he had a "hard act" to follow. I would go further and say that he has the hardest act to follow, but he started powerfully and, if not explicitly, compared his forthright contribution to the diffidence shown by his predecessor, saying that she waited for about two years to make her maiden speech. He made some powerful remarks about the need to ensure employee ownership in the mining industry and I can assure him that we have that very much in mind.

The hon. Member for Finchley was followed on the Conservative side by the hon. Member for Aberdeen, South (Mr. Robertson). Having listened to him, I share his confidence that it will be a long time before other hon. Members are able to join the exclusive club of ex-Members for Aberdeen, South to which he referred. He made some interesting comments about the read-across from the oil and gas licensing regime to the coal industry, and I shall certainly want to consider them.

The hon. Member for Streatham (Mr. Hill) then made a contribution. I understand that he paid an appropriate tribute to his predecessor, Bill Shelton, who was a well-liked Member of the House. London Members in particular will miss his presence.

The hon. Member for Streatham referred to the record of Lambeth council. I listened to—dare I say it—his pleading for his colleagues in the Labour party who are running Lambeth. Understanding will he given if it is earned. I noticed the importance that he attached to Lambeth's city challenge bid. I am sure that my right hon. and hon. Friends will give that appropriate consideration.

Then my hon. Friend the Member for Kincardine and Deeside (Mr. Kynoch) made his maiden contribution.

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

It is appropriate to pay a tribute to maiden speakers, and I am surprised at the hon. Gentleman's criticism.

My hon. Friend the Member for Kincardine and Deeside referred to his immediate predecessor and to Mr. Alick Buchanan-Smith, who was Minister of State at the Department of Energy for a considerable time. He is quite right; Alick was admired and loved on both sides of the House and was a good representative of his constituency. Like the hon. Member for Holborn and St. Pancras, I admired his fluency, for he apparently spoke without any notes.

We were then able to welcome back my hon. Friend the Member for Harwich (Mr. Sproat), who has lost none of his fire, zest and belief in privatisation. We also heard a contribution from my hon. Friend the Member for Christchurch (Mr. Adley). I am told that no debate on railways could take place without him. He made many thoughtful remarks about the railways. The paving Bill allows British Rail to analyse and get advice on many of the different matters that he raised.

The hon. Member for Linlithgow (Mr. Dalyell), who is not in his place, mentioned Edinburgh Waverley station. He will be able to read tomorrow that no decisions have yet been taken on that. It is still too early to say which stations might be sold and when.

The Government's aim is to secure the largest economic coal industry that the market can support. As many hon. Members, including my hon. Friend the Member for Gedling (Mr. Mitchell) and the hon. Members for Sherwood (Mr. Tipping) and for Wentworth (Mr. Hardy) pointed out, significant contributions have already been made by the coal industry in recent years, in terms of increasing productivity and reducing costs.

British Coal has an impressive record of both technical and professional excellence. That was made clear to me during my double-shift appearance in the Nottinghamshire coalfield when I visited Ollerton and Rufford pits. I got a clear message from everybody that I met during that visit of their total commitment—whatever job they held in British Coal—to the improvements that have taken place in British Coal in recent years and of the way that they were looking forward positively and realistically to the challenges that lie ahead.

It is clear to me that the future of British Coal rests with privatisation. That is the way in which British Coal can best sustain and reinforce the achievements of recent years and, indeed, go on to even greater things. That is the way in which we can really ensure that the deep-coal mines of this country are able to compete and produce coal at competitive world prices.

Photo of Mr Martin Redmond Mr Martin Redmond , Don Valley

I remind the Minister that the Conservative party did not gain an overall majority in the percentage of the vote in the election, so there is no mandate for privatisation from the majority of people in this country. Will he institute prosecutions against British Coal for failing to maintain the required percentage of disabled people employed within the industry? British Coal is not keeping to the letter of the law, so will he seek advice about prosecuting it for failing to maintain that percentage of registered disabled people?

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

I shall certainly consider that point. My memory is that there is an indicative guidance as to the employment of disabled people rather than a legal requirement. None the less, the hon. Gentleman has raised a serious point, which I shall consider and I shall ensure that British Coal's attention is drawn to it.

The hon. Members for Sherwood and for Barnsley, West and Penistone (Mr. Clapham) spoke about the need to consult on the structure and timing of coal privatisation. I can tell the House that, tomorrow, I will write to all the bodies that are directly involved in the coal industry to seek their views on those issues. I shall also welcome views on coal privatisation from any other intrerested parties or individuals by 22 June. That will enable me to consider carefully the points that they make, together with a number of the points expressed during the debate, before decisions on the form and timing of privatisation are taken.

My hon. Friend the Member for Gedling asked for "open doors" for the UDM. I met Roy Lynk at Rutford colliery last Wednesday. I told him that I was available to hear his members' views—I meant it—and I will, of course, listen carefully to what he says.

My visit to Nottinghamshire brought home to me how very much the nation owes to the miners of Nottinghamshire. The Government are aware of the major contribution that they made to the welfare of the country, which is something that we shall not forget.

The hon. Member for Holborn and St. Pancras rightly and understandably ended his speech by concentrating on safety in the mining industry. I shall write tomorrow to the chairman of the Health and Safety Commission, Sir John Cullen, to seek the commission's advice on the safety implications of coal privatisation. The Government are determined that existing high standards of health and safety will be maintained. Those standards should be based on comprehensive regulation, frequent and thorough inspections by the HSE mines inspectors and, as with any industry, the vigilance of the work force and management. These features of a safety regime in a privatised industry will ensure that the health and safety of mine workers remains a constant and paramount objective.

The future privatised coal industry must continue to be mindful of the health and safety implications of any technical or operational innovations. Innovations designed to improve productivity and reduce costs will be essential for the future of the United Kingdom coal industry. These improvements will be achieved while at the same time maintaining and improving safety standards. During my visit to Rufford pit last week, I was particularly struck by the care that is put into the planning and design of mine development so as to ensure that the most modern and efficient technology can be safely introduced, in a way that is appropriate to the geological conditions of the coal reserve concerned.

The hon. Members for Holborn and St. Pancras and for Barnsley, West and Penistone referred to the accident rate in private licensed mines. That rate has shown a marked improvement and I am told that it is now comparable to British Coal's excellent record.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Work and Pensions

A substantial number of people connected with the mining industry believe that the system of continuous supervision of safety minute to minute by deputies who can stop the job even in the face of the management is crucial to the maintenance of safety. Will the Minister guarantee that that system will continue if the mines are privatised?

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

As the hon. Gentleman knows, under our system that is the responsibility of the Health and Safety Executive. If he had been listening, he would have heard me saying that I shall write to Sir John Cullen asking for his advice on the implications for safety of privatisation of the coal mines. We shall look at that advice carefully. I yield to no one in my concern for the maintenance of the high safety standards of the British coal mining industry. The hon. Member for Sherwood will know of the elaborate precautions taken in the introduction of safety measures in the Rufford colliery as it moves to new techniques in mining. We should all respect that.

My hon. Friend the Member for Gedling and the hon. Members for Sherwood and for Normanton (Mr. O'Brien) all, rightly and understandably, expressed concern about, and drew attention to, the importance of coal contracts, both long term and otherwise, and the negotiations that are going on between the generators and British Coal. The negotiations are a commercial matter between the parties concerned, although, as the House will expect, I have been taking a close interest in them. It is very much in the interests of all concerned that there should be the earliest possible resolution of these negotiations, so that the uncertainties facing the parties can be brought to an end. That was the message that I got firmly from the miners and managers of the Nottinghamshire coalfield during my visit there.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

The Minister referred to our comments about the long-term contracts. However, I also mentioned the dash for gas, concern about which was expressed in messages sent by the chairman of British Coal and by the Tory chairman of the Energy Select Committee. Will the hon. Gentleman say something about that?

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

Hon. Members on both sides of the House commented on that, and clearly it is important that any developments of independent generation of gas are economically competitive. There are many—I am one of them—who believe that coal, especially that produced from a privatised industry that uses modern methods and adopts the right co-operative approach with the work force, will be able effectively to compete with gas and, in many instances, undercut gas prices. We shall ensure that we have a coal market of the critical size and coal that is priced at a level that can undercut gas only if we establish a really productive coal industry.

I wish quickly to deal with other matters raised by several hon. Members on both sides of the House. It is understandable that they should have concentrated their remarks on pensions, an issue that affects hundreds of thousands of pensioners directly and many other people who in various ways rely on the money that is brought into the community by British Coal pensions. Some of the rumours that are being played back to me after running round the coalfield areas would, in different circumstances, give me much cause for concern. In every privatisation, however, the Government have been sensitive to pensioners' concerns. I wish to make it clear that the Government will ensure that the pension entitlements of existing contributors and of past employees of the industry are properly safeguarded.

Several hon. Members, including the hon. Members for Wentworth and for Bassetlaw (Mr. Ashton), talked about concessionary fuel allowances or cash in lieu. We shall ensure that existing entitlement earned as a result of service for British Coal will be safeguarded. Privatisation of the industry will therefore not affect the concessionary fuel benefits of former employees and their eligible dependants.

This has been a thoughtful and instructive debate in which Members on both sides of the House have voiced the concerns of their constituents. They have addressed the issues that affect British Rail and British Coal that are of especial concern to their constituents. The contributions of those who have experience in the mining industry have highlighted the issues for me and brought home the features of the debate that will be of importance over the coming months.

The hon. Member for Sherwood asked me to listen. I can assure him and the House that I shall be doing a great deal of listening over the coming weeks and months. We shall be discussing a difficult issue that will affect the future of miners, of communities near pits and the competitiveness of British industry in terms of the generating costs of electricity, which affects the ability in time of our electricity, gas and coal industries to export and import in a free market with the rest of Europe.

I have been asked about clean coal technology, which is one of the matters to which hon. Members will turn their attention in future. We recognise the importance of the development of clean coal technology and we shall be giving consideration to the future of British Coal's research in the context of privatisation.

I welcome the fact that the House has approached the important issues surrounding the privatisation of two great industries in such a serious fashion. I believe that the debate has helped to identify the key issues that need to be considered for the future of the industries.

Photo of Malcolm Bruce Malcolm Bruce Shadow Spokesperson (Trade and Industry)

The Minister has not said whether the Government are prepared to reconsider the licensing responsibility for British Coal. Does he accept that it should be referred to the Crown?

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

I apologise to the hon. Gentleman. The point that he and a number of my hon. Friends made will be considered. I understand their concern.

This has been a good and constructive debate and it has set the tone for the debate on privatisation. I urge hon. Members to vote for the Bill.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 325, Noes 256.

Division No. 15][9.59 pm
AYES
Adley, RobertBiffen, Rt Hon John
Ainsworth, Peter (East Surrey)Blackburn, Dr John G.
Aitken, JonathanBody, Sir Richard
Alexander, RichardBonsor, Sir Nicholas
Alison, Rt Hon Michael (Selby)Booth, Hartley
Allason, Rupert (Torbay)Boswell, Tim
Alton, DavidBottomley, Peter
Amess, DavidBottomley, Rt Hon Virginia
Ancram, MichaelBowden, Andrew
Arbuthnot, JamesBowis, John
Arnold, Jacques (Gravesham)Boyson, Rt Hon Sir Rhodes
Arnold, Sir Thomas (Hazel Grv)Brandreth, Gyles
Ashby, DavidBrazier, Julian
Ashdown, Rt Hon PaddyBright, Graham
Aspinwall, JackBrooke, Rt Hon Peter
Atkins, RobertBrown, M. (Brigg & Cl'thorpes)
Atkinson, Peter (Hexham)Browning, Mrs. Angela
Baker, Nicholas (Dorset North)Bruce, Ian (S Dorset)
Baldry, TonyBruce, Malcolm (Gordon)
Banks, Matthew (Southport)Budgen, Nicholas
Bates, MichaelBurns, Simon
Batiste, SpencerButcher, John
Beith, A. J.Butler, Peter
Bellingham, HenryButterfill, John
Bendall, VivianCarlile, Alexander (Montgomry)
Beresford, Sir PaulCarlisle, John (Luton North)
Carlisle, Kenneth (Lincoln)Hargreaves, Andrew
Carrington, MatthewHarris, David
Carttiss, MichaelHarvey, Nick
Cash, WilliamHaselhurst, Alan
Channon, Rt Hon PaulHawkins, Nicholas
Chaplin, Mrs JudithHawksley, Warren
Churchill, MrHayes, Jerry
Clappison, JamesHeald, Oliver
Clark, Dr Michael (Rochford)Heath, Rt Hon Sir Edward
Clarke, Rt Hon Kenneth (Ruclif)Heathcoat-Amory, David
Clifton-Brown, GeoffreyHendry, Charles
Coe, SebastianHeseltine, Rt Hon Michael
Colvin, MichaelHicks, Robert
Congdon, DavidHiggins, Rt Hon Terence L.
Conway, DerekHill, James (Southampton Test)
Coombs, Simon (Swindon)Horam, John
Cope, Rt Hon Sir JohnHordern, Sir Peter
Cormack, PatrickHoward, Rt Hon Michael
Couchman, JamesHowarth, Alan (Strat'rd-on-A)
Cran, JamesHowell, Rt Hon David (G'dford)
Currie, Mrs Edwina (S D'by'ire)Howell, Ralph (North Norfolk)
Davies, Quentin (Stamford)Hughes Robert G. (Harrow W)
Davis, David (Boothferry)Hughes, Simon (Southwark)
Day, StephenHunt, Rt Hon David (Wirral W)
Deva, NiranjanHunt, Sir John (Ravensbourne)
Devlin, TimHunter, Andrew
Dickens, GeoffreyHurd, Rt Hon Douglas
Dicks, TerryJack, Michael
Dorrell, StephenJackson, Robert (Wantage)
Douglas-Hamilton, Lord JamesJenkin, Bernard
Dover, DenJessel, Toby
Duncan, AlanJones, Gwilym (Cardiff N)
Duncan-Smith, IainJones, Robert B. (W H'f'rdshire)
Dunn, BobKellett-Bowman, Dame Elaine
Durant, Sir AnthonyKey, Robert
Dykes, HughKilfedder, James
Eggar, TimKing, Rt Hon Tom
Elletson, HaroldKirkhope, Timothy
Evans, David (Welwyn Hatfield)Kirkwood, Archy
Evans, Jonathan (Brecon)Knapman, Roger
Evans, Nigel (Ribble Valley)Knight, Mrs Angela (Erewash)
Evans, Roger (Monmouth)Knight, Greg (Derby N)
Evennett, DavidKnight, Dame Jill (Bir'm E'st'n)
Faber, DavidKnox, David
Fabricant, MichaelKynoch, George (Kincardine)
Fairbairn, Sir NicholasLait, Ms Jacqui
Fenner, Dame PeggyLamont, Rt Hon Norman
Field, Barry (lsle of Wight)Lang, Rt Hon Ian
Fishburn, John DudleyLawrence, Ivan
Forman, NigelLegg, Barry
Forsyth, Michael (Stirling)Leigh, Edward
Forth, EricLennox-Boyd, Hon Mark
Foster, Donald (Bath)Lester, Jim (Broxtowe)
Fowler, Rt Hon Sir NormanLidington, David
Fox, Dr Liam (Woodspring)Lilley, Rt Hon Peter
Fox, Sir Marcus (Shipley)Lloyd, Peter (Fareham)
Freeman, RogerLord, Michael
French, DouglasLuff, Peter
Fry, PeterLynne, Ms Liz
Gale, RogerMacGregor, Rt Hon John
Gallie, PhilipMacKay, Andrew
Gardiner, Sir GeorgeMaclean, David
Garel-Jones, Rt Hon TristanMcLoughlin, Patrick
Garnier, EdwardMcNair-Wilson, Sir Patrick
Gill, ChristopherMadel, David
Gillan, Ms CherylMaitland, Lady Olga
Goodlad, Rt Hon AlastairMalone, Gerald
Goodson-Wickes, Dr CharlesMans, Keith
Gorman, Mrs TeresaMarland, Paul
Gorst, JohnMarlow, Tony
Grant, Sir Anthony (Cambs SW)Marshall, John (Hendon S)
Greenway, Harry (Ealing N)Marshall, Sir Michael (Arundel)
Greenway, John (Ryedale)Martin, David (Portsmouth S)
Griffiths, Peter (Portsmouth, N)Mates, Michael
Grylls, Sir MichaelMawhinney, Dr Brian
Hague, WilliamMellor, Rt Hon David
Hamilton, Rt Hon ArchieMerchant, Piers
Hamilton, Neil (Tatton)Milligan, Stephen
Hampson, Dr KeithMills, Iain
Hannam, Sir JohnMitchell, Andrew (Gedling)
Mitchell, Sir David (Hants NW)Spring, Richard
Moate, RogerSproat, Iain
Monro, Sir HectorSquire, Robin (Hornchurch)
Montgomery, Sir FergusStanley, Rt Hon Sir John
Moss, MalcolmSteen, Anthony
Nelson, AnthonyStephen, Michael
Neubert, Sir MichaelStern, Michael
Newton, Rt Hon TonyStewart, Allan
Nicholls, PatrickStreeter, Gary
Nicholson, David (Taunton)Sumberg, David
Nicholson, Emma (Devon West)Sweeney, Walter
Norris, SteveSykes, John
Onslow, Rt Hon CranleyTapsell, Sir Peter
Oppenheim, PhillipTaylor, Ian (Esher)
Ottaway, RichardTaylor, Rt Hon D. (Strangford)
Page, RichardTaylor, Matthew (Truro)
Paice, JamesTaylor, Sir Teddy (Southend, E)
Patnick, IrvineTemple-Morris, Peter
Patten, Rt Hon JohnThomason, Roy
Pattie, Rt Hon Sir GeoffreyThompson, Sir Donald (C'er V)
Pawsey, JamesThompson, Patrick (Norwich N)
Peacock, Mrs ElizabethThornton, Malcolm
Pickles, EricThurnham, Peter
Porter, Barry (Wirral S)Townend, John (Bridlington)
Porter, David (Waveney)Townsend, Cyril D. (Bexl'yh'th)
Portillo, Rt Hon MichaelTracey, Richard
Powell, William (Corby)Tredinnick, David
Rathbone, TimTrend, Michael
Redwood, JohnTrotter, Neville
Renton, Rt Hon TimTwinn, Dr Ian
Richards, RodTyler, Paul
Riddick, GrahamVaughan, Sir Gerard
Rifkind, Rt Hon. MalcolmViggers, Peter
Robathan, AndrewWaldegrave, Rt Hon William
Roberts, Rt Hon Sir WynWalden, George
Robertson, Raymond (Ab'd'n S)Waller, Gary
Robinson, Mark (Somerton)Ward, John
Roe, Mrs Marion (Broxbourne)Wardle, Charles (Bexhill)
Rowe, Andrew (Mid Kent)Waterson, Nigel
Rumbold, Rt Hon Dame AngelaWatts, John
Ryder, Rt Hon RichardWells, Bowen
Sackville, TomWheeler, Sir John
Sainsbury, Rt Hon TimWhitney, Ray
Scott, Rt Hon NicholasWhittingdale, John
Shaw, David (Dover)Widdecombe, Ann
Shaw, Sir Giles (Pudsey)Wilkinson, John
Shephard, Rt Hon GillianWilletts, David
Shepherd, Colin (Hereford)Wilshire, David
Shepherd, Richard (Aldridge)Winterton, Mrs Ann (Congleton)
Sims, RogerWinterton, Nicholas (Macc'f'ld)
Skeet, Sir TrevorWolfson, Mark
Smith, Tim (Beaconsfield)Wood, Timothy
Soames, NicholasYeo, Tim
Speed, KeithYoung, Sir George (Acton)
Spencer, Sir Derek
Spicer, Sir James (W Dorset)Tellers for the Ayes:
Spicer, Michael (S Worcs)Mr. David Lightbown and
Spink, Dr RobertMr. Sydney Chapman.
NOES
Abbott, Ms DianeBetts, Clive
Adams, Mrs IreneBlair, Tony
Ainger, NicholasBlunkett, David
Ainsworth, Robert (Cov'try NE)Boateng, Paul
Allen, GrahamBoyce, Jimmy
Anderson, Donald (Swansea E)Boyes, Roland
Anderson, Ms Janet (Ros'dale)Bradley, Keith
Armstrong, HilaryBray, Dr Jeremy
Ashton, JoeBrown, Gordon (Dunfermline E)
Austin-Walker, JohnBrown, N. (N'c'tle upon Tyne E)
Banks, Tony (Newham NW)Burden, Richard
Barnes, HarryByers, Stephen
Battle, JohnCaborn, Richard
Bayley, HughCallaghan, Jim
Bell, StuartCampbell, Ms Anne (C'bridge)
Benn, Rt Hon TonyCampbell, Ronald (Blyth V)
Bennett, Andrew F.Campbell-Savours, D. N.
Benton, JoeCanavan, Dennis
Bermingham, GeraldCann, James
Berry, RogerChisholm, Malcolm
Clapham, MichaelHughes, Kevin (Doncaster N)
Clark, Dr David (South Shields)Hughes, Robert (Aberdeen N)
Clarke, Eric (Midlothian)Hughes, Roy (Newport E)
Clarke, Tom (Monklands W)Hutton, John
Clelland, DavidIllsley, Eric
Clwyd, Mrs AnnIngram, Adam
Coffey, Ms AnnJackson, Ms Glenda (H'stead)
Cohen, HarryJackson, Ms Helen (Shef'ld, H)
Connarty, MichaelJamieson, David
Cook, Robin (Livingston)Janner, Greville
Corbett, RobinJones, Barry (Alyn and D'side)
Corbyn, JeremyJones, Jon Owen (Cardiff C)
Corston, Ms JeanJones, Ms Lynne (B'ham S O)
Cousins, JimJones, Martyn (Clwyd, SW)
Cox, TomJowell, Ms Tessa
Cryer, BobKaufman, Rt Hon Gerald
Cummings, JohnKeen, Alan
Cunliffe, LawrenceKennedy, Ms Jane (L'p'l Br'g'n)
Cunningham, Jim (Covy SE)Khabra, Piara
Cunningham, Dr John (C'p'l'nd)Kilfoyle, Peter
Dafis, CynogKinnock, Rt Hon Neil (Islwyn)
Dalyell, TamLeighton, Ron
Darling, AlistairLestor, Joan (Eccles)
Davidson, IanLewis, Terry
Davies, Bryan (Oldham C'tral)Litherland, Robert
Davies, Rt Hon Denzil (Llanelli)Livingstone, Ken
Davies, Ron (Caerphilly)Lloyd, Tony (Stretford)
Davis, Terry (B'ham, H'dge H'l)Loyden, Eddie
Denham, JohnMcAllion, John
Dewar, DonaldMcAvoy, Thomas
Dixon, DonMcCartney, Ian
Dobson, FrankMacDonald, Calum
Donohoe, BrianMcKelvey, William
Dowd, JimMackinlay, Andrew
Dunwoody, Mrs GwynethMcLeish, Henry
Eagle, Ms AngelaMcMaster, Gordon
Enright, DerekMcNamara, Kevin
Etherington, WilliamMcWilliam, John
Evans, John (St Helens N)Madden, Max
Ewing, Mrs MargaretMahon, Alice
Fatchett, DerekMandelson, Peter
Faulds, AndrewMarek, Dr John
Field, Frank (Birkenhead)Marshall, David (Shettleston)
Fisher, MarkMarshall, Jim (Leicester, S)
Flynn, PaulMartin, Michael J. (Springburn)
Foster, Derek (B'p Auckland)Martlew, Eric
Foulkes, GeorgeMaxton, John
Fraser, JohnMeacher, Michael
Fyfe, MariaMeale, Alan
Galbraith, SamMichael, Alun
Galloway, GeorgeMichie, Bill (Sheffield Heeley)
Gapes, MichaelMilburn, Alan
Garrett, JohnMiller, Andrew
Gerrard, NeilMitchell, Austin (Gt Grimsby)
Godsitf, RogerMoonie, Dr Lewis
Golding, Mrs LlinMorgan, Rhodri
Gordon, MildredMorley, Elliot
Gould, BryanMorris, Rt Hon A. (Wy'nshawe)
Graham, ThomasMorris, Estelle (B'ham Yardley)
Grant, Bernie (Tottenham)Morris, Rt Hon J. (Aberavon)
Griffiths, Nigel (Edinburgh S)Mowlam, Marjorie
Griffiths, Win (Bridgend)Mudie, George
Gunnell, JohnMullin, Chris
Hain, PeterMurphy, Paul
Hall, MikeOakes, Rt Hon Gordon
Hanson, DavidO'Brien, Michael (N W'kshire)
Hardy, PeterO'Brien, William (Normanton)
Harman, Ms HarrietO'Hara, Edward
Henderson, DougOlner, Bill
Hepple, JohnO'Neill, Martin
Hill, Keith (Streatham)Orme, Rt Hon Stanley
Hinchliffe, DavidParry, Robert
Hoey, KatePatchett, Terry
Hogg, Norman (Cumbernauld)Pendry, Tom
Home Robertson, JohnPickthall, Colin
Hood, JimmyPike, Peter L.
Hoon, GeoffPope, Greg
Howarth, George (Knowsley N)Powell, Ray (Ogmore)
Howells, Dr. Kim (Pontypridd)Prentice, Ms Bridget (Lew'm E)
Hoyle, DougPrentice, Gordon (Pendle)
Prescott, JohnSpellar, John
Purchase, KenSquire, Rachel (Dunfermline W)
Quin, Ms JoyceSteinberg, Gerry
Radice, GilesStevenson, George
Randall, StuartStott, Roger
Raynsford, NickStraw, Jack
Redmond, MartinTaylor, Mrs Ann (Dewsbury)
Richardson, JoTaylor, Rt Hon D. (Strangford)
Robertson, George (Hamilton)Thompson, Jack (Wansbeck)
Robinson, Geoffrey (Co'try NW)Tipping, Paddy
Roche, Ms BarbaraTurner, Dennis
Rogers, AllanVaz, Keith
Rooker, JeffWalker, Rt Hon Harold (Don' C)
Rooney, TerryWalley, Joan
Ross, Ernie (Dundee W)Wardell, Gareth (Gower)
Rowlands, TedWareing, Robert N
Ruddock, JoanWatson, Mike
Sedgemore, BrianWicks, Malcolm
Sheerman, BarryWilliams, Rt Hon Alan (Sw'n W)
Sheldon, Rt Hon RobertWilliams, Alan W (Carmarthen)
Shore, Rt Hon PeterWilson, Brian
Short, ClareWinnick, David
Simpson, AlanWorthington, Tony
Skinner, DennisWray, Jimmy
Smith, Andrew (Oxford E)Wright, Tony
Smith, C. (Isl'ton S & F'sbury)Young, David (Bolton SE)
Smith, Rt Hon John (M'kl'ds E)
Smith, Llew (Blaenau Gwent)Tellers for the Noes
Snape, PeterMr. Jimmy Dunnachie and
Spearing, NigelMr. Ken Eastham.

Question accordingly agreed to.

Bill committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills)