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

Part of the debate – in the House of Commons at 5:48 pm on 18th May 1992.

Alert me about debates like this

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

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.