Railways

– in the House of Commons at 4:09 pm on 29th October 1992.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Arbuthnot.]

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

We now come to the debate on the White Paper "New Opportunities for the Railways". I must remind hon. Members that between 7 pm and 9pm this evening speeches must be limited to 10 minutes. Will Members speaking outside that period please exercise voluntary restraint? The interest in this debate is considerable and commendable.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport, Chair, Privileges Committee 5:04 pm, 29th October 1992

I am very pleased that we have this opportunity to debate the White Paper "New Opportunities for the Railways". The White Paper proposals are designed to make further substantial improvements in the way that Britain's railways meet the modern needs of customers, both passenger and freight. They are as significant a turning point as the nationalisation of the railways in 1948.

The Second Reading of the Bill will provide the occasion to start looking at the proposals in detail. Today I think that it would be more useful if I described the background and the thinking behind the policy, set it in the broader context of transport policy, and touched on the details of some of the more important aspects.

First let me say something about the timetable. I discussed this with the Select Committee when I gave evidence to it yesterday, but it would be right to inform the whole House.

I want to make two points clear. First, there has been growing interest among many people inside and outside the House. My hon. Friend the Minister for Public Transport and I have been addressing a number of well-attended conferences. One of the problems is that this can lead to too great an expectation of when things will begin to happen. Because people are interested in franchises they believe that franchises will come about almost immediately and they want to know all the details right now. So it is important to be clear about the timetable.

We will introduce the primary legislation towards the end of next month or thereabouts, depending on the parliamentary timetable. I do not want to be too specific about the date at this stage. Thereafter, the Bill will go through both Houses, and subject to the will of both Houses I hope that we will be able to achieve Royal Assent some time during the summer of 1993.

It will then be necessary to set up the authorities that will be established under the Bill. They are referred to in the White Paper. Then the franchising authority, in the case of passenger franchises, can start the tendering process to obtain responses on franchises. That means that it will be the spring of 1994 before the first operations begin. Those who are trying hard to know everything about every detail at this stage should bear this timetable in mind.

Secondly, I am determined to ensure that we have policies which achieve our objectives but are workable and get the best response from the market place. Anything to do with British Rail, as we know, is complex. We are doing a huge amount of work, but it is important that it be carried out in consultation with British Rail, the private sector and consumer interests. It is important that we get the practical details right, so over the months ahead we will provide a series of consultation documents which will carry forward our thinking and obtain responses from interested parties.

For the benefit of the House, I will list some of these documents. The document on passenger franchising is already published. There will soon, I hope, be a consultation document setting out how we intend to proceed in detail with the British transport police. Next month, I hope, there will be a document on leasing in the new era. Then, before the end of the year, we will release a document on precisely how we intend to proceed on consumer consultation. We have had a number of responses already from bodies interested in that.

At the end of the year, I intend to publish an important document on access and charging. Then, around the turn of the year, there will be a document on pensions. Early in the new year, I hope that we will have a document on safety, based largely on the report of the Health and Safety Executive. In February or March, we intend to have a document on restructuring the freight business. All these documents will inform the debate as the Bill goes through the House.

Photo of Mr Donald Anderson Mr Donald Anderson , Swansea East

Since the White Paper was published, there has been a major change, in that the Government propose to close 31 pits. What advice did the right hon. Gentleman give the Government and the President of the Board of Trade on the likely financial effect on British Rail of the loss of those 31 pits? What will be the effect on manpower and on the prospects for the current proposals generally?

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

At this stage it is not possible to say, because, as the hon. Gentleman knows, a review is being carried out. We must await the outcome of that review which will be examined by British Rail in detail because it has many aspects.

Our proposals for the privatisation and liberalisation of the railways fit well into the developing process of transport policies over the years. As the White Paper makes clear: Our objective is to improve the quality of railway services by creating many new opportunities for private sector involvement. This will mean more competition, greater efficiency and a wider choice of services more closely tailored to what customers want. The proposals are driven by that and not by any consideration of getting receipts for the Exchequer. We have made it clear that there will not be substantial proceeds for the Exchequer. Our proposals can be best understood by standing back and looking at long term trends in transport policy, of which they are a natural and logical outcome.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe and Nantwich

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, because I must make some progress. Many hon. Members wish to speak.

Against the background that I have outlined, the House will see that there is greater common ground than is sometimes suggested. The 1945 Labour Government extended state control and ownership to a peacetime peak. Almost all transport infrastructure—roads, railways, ports, airports and canals—was owned by the state or by local authorities. Apart from private cars, which at that time were still in short supply, most transport operations were also owned by the public sector. That included buses, trains, trams, aircraft, ferries, and even many heavy lorries. There was also extensive state control by regulation and licensing.

The bulk of those restrictions were aimed not at safety but at economic control, including preventing the entry of new operators to the market. State control and central planning of that kind did not work. Its keynote was artificial protection of certain operators, and it put the interests of the incumbent producer above those of the consumer. It could not hold a candle to the market and competition as the best ways of showing what the travelling public and freight customers want, and enabling transport operators to respond accordingly. Over the years, more and more people have come to accept this analysis. However, I am not sure about the hon. Member for Kingston upon Hull, East (Mr. Prescott), whose enthusiasm for central planning sometimes harks back to such a past.

As a result of the acceptance of that analysis, since the early 1950s and especially since 1979, the whole thrust of transport policy has been to dismantle state ownership and control and replace it with a market-led transport system. The move to a market system has been achieved in a variety of ways, principally by privatisation and deregulation. We have transferred to private ownership vital transport infrastructures such as ports and airports and coach stations, and most transport operations including airlines, road haulage, shipping and most buses. We have also removed economic controls. There is a free market in freight. Controls over the quantity of freight which road hauliers may carry have long since been swept away.

The same principles of deregulation have been applied to passenger transport. Bus operators outside London may now provide any service they choose. We lead the way in Community initiatives to liberalise all modes of transport. Our policy is also to extend the involvement of the private sector, even where privatisation is not possible. For example, support services for activities remaining in the public sector should be contracted out to the private sector wherever that offers value for money. Only the market can show where the best value for money lies, so there should be competitive testing of the market. I believe that all Conservative Members subscribe to these principles of transport policy, and I suspect that in their heart of hearts, so do many Opposition Members.

I shall now look in more detail at how these policies for the extension of market disciplines have been applied to railways and deal first with privatisation. The non-core activities of the railway have been gradually sold to the private sector. For example, all BR's ships and hotels were sold in the early 1980s. Various smaller BR support services, including station catering and advertising, have also been sold. I recently authorised BR to go ahead with the early sale of Red Star, its premium parcels business. I take it that no one now argues that the public sector can run ships, hotels or parcels services better than the private sector. If Opposition Members can agree on that, we really shall have established the common ground on which to build agreement on our White Paper proposals.

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

The right hon. Gentleman should look behind him.

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

I am quite sure that my hon. Friends do not think that it makes sense to transfer back to the public sector hotels, ships and so on. I am grateful to the hon. Gentleman, because he has demonstrated my point.

The role of the private sector has been extended in other ways, and a good example is in the freight business. Nearly 40 per cent. of all freight wagons are owned by the private sector, some locomotives have been purchased by freight customers and BR makes extensive use of the private sector in property development. It does not risk its own money, but uses private sector property companies to do this. Thus we are already involving private capital in the railways, and there can be no doubt that it is best for the private sector to take on as many as possible of these activities.

The railways have also been deregulated. As in most countries, railways in the United Kingdom were historically subject to extensive regulation. Now BR has been freed from, for example, common carrier obligations and from the straitjacket of fixed charges. All this is entirely right, because BR is in competition and should have the commercial freedoms which go with that. But BR provides public services which would not survive in a purely commercial environment: hence the continuation of socially necessary lines and considerable subsidies. In the interests of getting better value for money BR has, with the strong support of the Government, provided those services more efficiently by adopting an increasingly commercial approach. Therefore, BR looks to the market for as much of its income as possible, because the willingness of the customer to pay for a service such as that is an excellent indication of its value. The railway should not become overdependent on subsidy.

British Rail has also adopted a more businesslike structure based on the railway's markets. It is split into three passenger businesses, two freight businesses and a parcels business, each of which is responsible for its own assets, including the track of which it is the principal user. Each of these internal businesses is measured by its own profit and loss account.

That means that there has already been some privatisation, some extension of the role of the private sector, deregulation, and an increasingly commercial approach. This more market-led policy has meant an improved BR. It is still a very large transport undertaking, but it has become a more specialised business. BR. has fewer assets, but they are used much more intensively. Its financial performance, by the standards of continental public sector railways, is good. It has concentrated more and more on what it can do best, especially InterCity services, commuting and heavy freight, and no doubt there will be more opportunities to be exploited, especially with the advent of the channel tunnel.

The benefits of this move towards the market have been substantial, and have gone with the grain of the rest of transport policy. That poses the questions: why not complete the process and privatise the railways, and can and should privatisation be accompanied by liberalisation? The benefits of privatisation and liberalisation in other industries have been immense. The key test is whether we believe that turning the clock back would improve efficiency and services for the customer. Does anyone seriously believe that British Airways would perform better as a nationalised industry? One can apply that in other areas. The answers are obvious. Privatisation and liberalisation have brought such benefits elsewhere in transport that the onus of proof should rest with the opponents of railway privatisation.

British Rail passenger and freight businesses have been run as public sector monopolies since 1947. Despite all the improvements, they still have all the hallmarks of such nationalised industries. They are correctly constrained in their investment plans because public borrowing must be controlled, they are producer-led in their planning and are, inevitably, less responsive to the specific needs and demands of their customers, and management and staff have no direct equity ownership incentive to improve their performance.

These disadvantages manifest themselves in uneven performance and in the dissatisfaction of many customers. Many steps have been taken to improve performance, including now the passengers charter, but we need to solve the problems with more radical reforms.

Railways have been at the back of the privatisation queue because of their very weak financial performance. We cannot simply sell BR as a single entity—complete with its social obligations—because at the moment BR as a single entity is not financially viable. For that reason, railway privatisation is less straightforward than other privatisations. Our task has been to find other ways in which to maximise the amount of outright privatisation, and—short of that—to maximise the involvement of the private sector in a competitive framework.

As BR cannot to sold as a single entity, we must first ask which parts can and should be sold—on top of those that have been sold already. The obvious answer is the rail freight and parcels businesses. They operate in truly competitive markets. They have long had commercial remits within BR, but they have not prospered within the confines of BR ownership and public finance. Indeed, the record has been one of relentless decline. The best prospect for them, in an increasingly competitive market, is under the fresh disciplines of the market and private ownership.

In the many discussions that I have had with BR's ex-freight customers, its current freight customers and those who I hope are its potential freight customers, the same point has been made: that rail freight needs to he more commercial in its approach, more customer-oriented and more responsive. In other words, it should act like a private-sector business. Now it will have the chance.

A major study is in hand to recommend the best way in which the rail freight business should be reorganised and offered for sale. The study, and our eventual conclusions, will take full account of what is likely to best meet customer demand. The most likely outcome is competitive trade sales in 1994. It is our intention that BR will withdraw from all involvement in rail freight operations, so there will be no question of a conflict of interest with privately owned freight operations. Freight operators will not have exclusive rights. New entrants will be welcomed and encouraged. I recognise that the key question will be the terms on which freight operators will have access to the track. As I said earlier, we will bring forward proposals for changes probably around the end of the year.

We cannot create an entirely privatised and competitive structure for the passenger railway. Many services do not at present—some, perhaps, cannot ever—stand on their own financial feet, but they have to be provided for wider social reasons. However, franchising gives us a way forward. Its two main attractions are, first, that it allows the private sector to take management and financial responsibility for services—this includes, where necessary, providing the subsidy directly to the private sector operator. Secondly, it creates some competition within the market, including competition for the right to provide the franchised services, both when they are offered initially and then at the point of renewal.

Photo of Clive Betts Clive Betts , Sheffield, Attercliffe

If we are to improve passenger services, we shall presumably need improved levels of investment. According to the Secretary of State's proposals, one body will be responsible for the track, while another body—or a number of bodies—will be responsible for the rolling stock. How, in those circumstances, will we be able to achieve a rational approach to investment decisions?

Let me give an example. The midland main line to Sheffield is in need of improvement: faster trains are needed to travel to Sheffield and other cities along the route. A rational approach would be to compare two options—improving the alignment of the track to enable traditional trains to run more quickly, and introducing on the existing track the tilting trains that are now in operation in Italy and Sweden, and under consideration in Germany.

Some organisation would have to evaluate those two investment alternatives. How can that be done if different bodies are responsible for the track and the rolling stock?

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

I do not want to go into too much detail, because it would take too long. Briefly, investment in the track will be the responsibility of Railtrack. Railtrack's income will basically come from charges, but —as paragraph 43 of the White Paper makes clear—there is a possibility of grants.

There will be a variety of ways in which an operator will be able to acquire rolling stock. My hon. Friend the Minister will describe them in more detail later, but we hope that the creation of a leasing market will help.

The precise relationship between the two bodies will lie in the contracts that Railtrack makes with the franchisee. That will be done through the franchising authority. We shall be happy to spell out the position in much greater detail in due course.

Let me make one thing clear, however. As the hon. Member for Sheffield, Attercliffe (Mr. Betts) knows, although British Rail at present enjoys record levels of investment, there will always inevitably be constraints on investment in the public sector. An important part of our proposals will be to attract increasing levels of private investment over the years to come.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

The White Paper talks of creating a second-hand market, which is very exciting for all of us. There is, however, a problem in connection with new technology. Is my right hon. Friend seriously suggesting that private companies will invest in new technology to try to drag our railways into the 21st century, when the trains are still running on tracks that were built in the 19th? Who will find the huge sums involved?

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

We are finding considerable sums already, as my hon. Friend knows. I have been looking into railways in other countries, and I note that they—knowing the size of the public-sector burden that they currently bear—are increasingly looking to privatisation as a solution. That, of course, is not true of all of them.

The entire structure of the railways must be tailored to customer demand. I know of my hon. Friend's passion for the railways, and of his expertise—his books are excellent —but he must not allow nostalgia about the past to cloud his thinking about the future. Pouring more and more public money into the system will not necessarily provide a railway service that meets modern customer requirements, given the many other competing demands for that money.

A Labour Government would find the same. Before the general election, the hon. Member for Kingston upon Hull, East tried to suggest that Labour would invest a great deal more in the railways, but was rapidly cut down to size by his right hon. and learned Friend the Member for Monklands, East (Mr. Smith), who now leads his party.

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

We kept asking where the increase in funding would occur, but at no point could the hon. Gentleman give us a specific answer. There was a constant conflict between his hints about what a Labour Government would spend and the tax proposals of his right hon. and learned Friend the Member for Monklands, East. It became obvious that large increases in public spending could not be entertained, because Labour had not the tax policies to enable that—and because the tax policies that it had were rejected by the electorate.

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

The Secretary of State lost his way as soon as he began his challenge. The issue, clearly, was whether we could use leasing for a publicly owned industry. I note that the Secretary of State is about to talk about leasing. Many publicly owned European railways have adopted it, and we propose to do the same.

The Secretary of State said that our proposal was rejected by my right hon. and learned Friend the present leader of the Opposition, when he was shadow Chancellor. Will he now tell us exactly what my right hon. and learned Friend said, and when he said it, or else withdraw his remark?

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

We costed the programmes that the Labour party presented, and Labour kept rejecting our figures. It then became very clear that the then shadow Chancellor was sitting on those public expenditure programmes, knowing very well that they could not be entertained.

Moreover, the hon. Gentleman's suggestion of leasing through the private sector for a publicly owned undertaking has one extreme disadvantage. Inevitably, that leasing must be guaranteed by the public sector—by the Government. At that point, it scores as public expenditure. It was clear from the exchanges that took place before the election that Labour had to accept that. It was said very clearly in exchanges on housing. [HON. MEMBERS: "Oh!"]. The hon. Member for Kingston upon Hull, East has never been able to get over that point.

Photo of John McFall John McFall , Dumbarton

To follow up the point made by the hon. Member for Christchurch (Mr. Adley) about funding, I met the director of ScotRail during the summer and put to him the case for the investment of £750 million in the west coast line from London to Glasgow, something that has been demanded by the public in Scotland for many years. I asked him, "What is the future for that line?" He said, "I can't answer, in the light of the White Paper. I have only a one-year horizon."

If British Rail and ScotRail have only a one-year horizon and no plans to upgrade that line, under what mechanism will private investors come along and invest? As for the social desirability of retaining lines north of Glasgow, most of which are unprofitable, what guarantee can the Secretary of State give Scottish commuters that the lines will be retained? That is a burning question in Scotland.

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

I shall deal with the socially necessary lines later in my speech. We have already made our position clear on that issue. We cannot give a guarantee for all time about any particular line. That has never been done. If there is no demand for a service, due to changes in market demand, the service eventually has to close. That has happened frequently since the nationalisation of the railways. However, we have given a clear guarantee that we intend to maintain the national network and to maintain the subsidies for socially necessary lines. The subsidies, through the public service obligation grants, are quite extensive. In the current year they amount to about £1 billion. We intend to continue those subsidies, either through franchisees bidding for them or through British Rail, where there are no franchisees, continuing to receive them.

Another great advantage of franchising is that it will identify the costs of providing individual services or groups of services and direct subsidy accordingly. I make no apology for that. An important advantage—one of the many advantages of our proposals—is that the subsidies going to individual franchisees will become much more transparent. Parliament and the public should know more precisely how their money, as taxpayers, is being spent.

I intend to make a few more points about our franchising proposals, for a great deal of interest has already been expressed in them. As the House will know, I have recently published a consultation document on franchising. It is being reprinted at the moment because of the very heavy demand for it. About 50 companies have already expressed an interest in taking up the franchising opportunity.

The consultation document has two main purposes: first, to give more details of the principles and broad framework of the franchising system and, secondly, to test the market to see what services the private sector would be interested in operating under franchising arrangements and how it thinks the franchising process could best be carried out. Unlike some other countries—for example, Japan and the United States where there are franchised operations—we do not have any private sector passenger operators, apart from a few in very specialised areas. Therefore, we have to build up the private sector supply side and shape franchises and the franchising process so that they take into account market concerns.

We have deliberately not prescribed a universal blueprint for franchises. They can vary considerably in size, length and the amount of risk transferred to the private sector. We intend that as much risk as possible, including revenue risk, should be transferred to the private sector. [Interruption.] I do not know why Opposition Members laugh about that. There is great advantage in having flexibility in the franchises so that they can respond to what the marketplace and customers want. We need to design franchises to match private sector interests in order to generate a proper and competitive response.

Effective competition for franchises will help to ensure that private sector bids reflect value for money. We shall not let franchises if bids do not represent value for money. That is why it is so important for us to consult widely with potential franchisees to ensure that the franchising system is responsive to the demands of the market and that it is sufficiently flexible to embrace the new ideas and fresh thinking that the private sector will bring to the running of passenger train services.

I hope to select the first pilot services—I emphasise the word "pilot"—for franchising early in the new year to enable British Rail to go ahead with all the necessary restructuring, not least of its accounts, so that some services will be ready to let in 1994. Preparations will need to be painstaking and thorough. British Rail will have to restructure its activities so that the franchised services constitute free-standing businesses that can readily be transferred to the private sector. It will also establish a track record. It does not necessarily follow that the selection of those services means that they will be the first franchised services. That will depend upon applications. However, the selection of those services will enable British Rail to start to rearrange the system so that it can respond to franchise requirements.

That is not the end of the consultative process. The franchising of passenger services will be undertaken progressively. The new franchising authority will maintain a dialogue with existing and potential franchisees to ensure that their views are taken into account in subsequent franchise competitions. That will ensure that the franchising system remains responsive to the marketplace.

Most franchisees will require subsidy to operate franchised services. We shall make sufficient funds available to the franchising authority to ensure that quality of service is maintained. The quality of service required will be specified in individual franchise contracts.

The principal way of introducing competition into the passenger market is through competition for franchises. As with freight, we also intend to provide a regime that will allow independent operators—this is an additional way of introducing competition into the passenger market through franchises—on to the system. By independent operators, I mean those who do not require subsidy. Only those going for franchises will be able to bid for subsidy. Potential commercial operators have already identified a number of market opportunities.

Private sector operators are more likely to be responsive in this way to the market. So, especially with economic growth, we can expect independent operators to expand the number of services that can be operated without subsidy and, accordingly, to move the boundary between franchised and independent services.

Photo of Mr Stephen Milligan Mr Stephen Milligan , Eastleigh

There is concern in my constituency today. British Rail Maintenance Ltd., which employs 1,500 people, has announced that because of the reduced work load next year it is seeking voluntary redundancies. There is widespread suspicion that that is associated with plans to privatise BRML. Can the Secretary of State say when he will announce whether BRML will be privatised, and can he give us an assurance that no atempt will be made to run down the work in Eastleigh either before or after privatisation, if that is what is agreed?

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

What has happened today is designed to deal with current market conditions. It is not connected with the franchising process.

Several Hon. Members:

rose

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

I must get on, because many hon. Members want to speak.

The participation of the private sector in the operation of passenger services should also enable a leasing market to develop for rolling stock.

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

Following privatisation. Private sector franchisees will inevitably be interested in spreading the cost of new equipment over its life, in the same way as shipping and airline companies do. With financial risks transferred out of the public sector, new rolling stock investment will be outside the constraints of public expenditure.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe and Nantwich

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, 1 must get on.

There are considerable advantages in the development of such a leasing market and the stimulus that that can provide to investment and the United Kingdom railway manufacturing industry. My hon. Friend the Minister for Public Transport is chairing a working party that includes representatives of potential passenger franchisees, the rail manufacturing industry, financial institutions and, of course, the Government in order to make further progress in this important area. I expect to receive their advice on the development of a rail leasing industry within three months.

These policies for expanding the role of the private sector and for greater competition depend upon getting the structure of the railways right. I have already mentioned the vital role of the access and charging regime. The responsibility for allocating train paths will rest with Railtrack, which will own and operate the infrastructure. It is vital that Railtrack be neutral in that process. It will not therefore itself operate any passenger or freight services. It will also be policed by the new rail regulator who will provide a further guarantee of fair treatment for operators.

There are many other important issues with which I can deal only briefly, such as safeguarding some of the important features of the present system. We are committed to preserving through-ticketing, which the regulator will secure by means of suitable terms and conditions in licences.

I expect operators to reach voluntary agreement among themselves about the provision of other network benefits. The regulator will have a duty to promote competition and to protect the interests of users. He will have powers to require operators to participate in other joint arrangements where he considers it desirable to secure co-operation between them, but we do not want to pin down future operators simply to replicating all aspects of BR's present system. New operators will need flexibility to improve and innovate.

Other safeguards will protect the continuity of services. We have made it clear that the statutory closure procedure for passenger services will be no weaker than the present one. We have given a clear commitment, which I am happy to repeat, to continue to provide subsidy where necessary to support loss-making but socially necessary services. The aim of our policy is not to cut services or to fossilise the existing timetable but to achieve greater responsiveness to passengers, improved efficiency and a better railway.

Consideration for the safety of the travelling public and the work force has been of paramount importance to the Government. We are committed to ensuring the safe operation of the railways, and our proposals were drawn up with the expert advice of the Health and Safety Commission, which will continue to have a role in the development of proposals. It has been asked to arrange a thorough study of the safety implications of the proposals in the White Paper and to make detailed recommendations, which will be published.

Primary responsibility for safety will rest with Railtrack, as the track authority, with individual operators being responsible for ensuring the safety of their own operations. Specific standards of safety will have to be met, and the Health and Safety Executive will monitor and enforce those standards across the industry.

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

It is better if I deal with the many points in which people are interested and then allow individual concerns to be raised in the debate. There will be many opportunities to respond to them thereafter.

Rail operators will have to demonstrate their ability to comply with safety regulations before being allowed access, and the powers of Her Majesty's inspectorate will be extended beyond those currently allowed under the Health and Safety at Work etc. Act 1974 to ensure continued safe rail operation.

My hon. Friend the Minister for Public Transport and I are holding meetings with rail unions to address their specific concerns. Some staff will remain with Railtrack. Arrangements will be made for other staff to transfer to successor companies as they are created. Staff transferring to new undertakings under transfer schemes will do so with their existing terms and conditions of employment, including concessionary travel and collective bargaining arrangements, protected under the Transfer of Undertakings Protection of Employment Regulations—or TUPE as they are known—and the European Community's acquired rights directive. Thereafter, any changes to terms and conditions will have to be negotiated in the normal way.

Future employment requirements will be for new employers. In this, as in any other industry, there cannot be guarantees of future levels of employment, but skilled and experienced railway men will be needed as much in the future railway industry as in the present one.

BR staff who transfer to franchised service operators, or who work in part of the railway industry that is sold outright, or who carry out support activities that have been contracted out, will have the opportunity to take part in management-led employee buy-outs. We shall encourage these buy-outs with financial assistance for groups of managers and staff, although they will of course have to bid in competition with other genuinely interested companies. BR will reimburse 85 per cent. of the first £10,000 and 75 per cent. of the remainder up to a maximum of £100,000 for each bid team. Assistance will be repayable only in the event of a bid succeeding.

I know from discussions with unions and BR management that pension rights are very important to existing employees. The pension rights of existing contributors and past employees will be properly safeguarded. BR and the Government are conducting a detailed review of pensions arrangements in the industry in connection with privatisation. The review's highest priority will be to ensure that the security of the rights now enjoyed by members and pensioners of the BR schemes is not undermined. Converting the BR pension scheme into an industry-wide scheme, which has been advocated by a number of people within BR, is one of the options being considered. I have already said that I will publish a further document on the subject.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe and Nantwich

Will the Secretary of State assure us that the pension rights of British Rail employees will not be treated in the same way as those of members of British Rail Engineering Ltd. when it was sold to a private employer?

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

When we publish our document, the hon. Lady will see that we shall be able to meet fully the commitments that I have given today.

We are working closely with Sir Bob Reid and BR senior management to ensure that our proposals are implemented safely, practicably and to a timetable that is suitable and that achieves our objectives. I intend to introduce the primary legislation soon. Subject to the will of Parliament, Royal Assent in 1993 would be followed by vesting of Railtrack in April 1994 and the sale of freight businesses and the first franchises in 1994. On the access and charging regime, we shall implement the requirements of European Community directive 91/440 on 1 January 1993, as we are obliged to do. Regulations will be laid before the House shortly. Liberalisation of domestic access and the associated charging regime will be introduced from April 1994.

There will, of course, be much ground to cover in proceedings on the Bill that will be introduced shortly. Had time allowed, I should have liked to deal with many other subjects, but I believe that we have found the best way, in the particular circumstances of the railways, of introducing the private sector and competition. I have shown that the policies that we are now following are those that have been pursued in other transport sectors so successfully, especially since 1979. That is why I believe that we are opening up new and exciting opportunities for the railways.

Photo of John Prescott John Prescott Shadow Secretary of State, Member, Labour Party National Executive Committee, Shadow Secretary of State for Transport 5:46 pm, 29th October 1992

That was an exciting introduction to new opportunities for the railway industry. It is staggering, as we are dismantling what is supposed to be a bureaucratic system that is owned and run by the state, that it took the Secretary of State three quarters of an hour to tell us of all the bodies that will be set up to ensure that the market does not wreak its vengeance on the system. That, effectively, is what he told us. The free hand of the market and the flair of the entrepreneur will not apply. All the organisations that the right hon. Gentleman mentioned—may I call them quangos?—will ensure that the market does not operate in the way in which most of us fear it will.

I was pleased to hear the Secretary of State describe the timetable for some of the documents that he foresees being produced. I presume that the paving Bill will have completed its parliamentary stages before he introduces the privatisation Bill. The paving Bill authorises considerable expenditure. Indeed, the appointment of the regulator and franchise officer are to be paid for out of those funds. Can the Secretary of State assure us that the paving Bill will have completed its stages before the privatisation Bill is introduced?

I have always had some doubts about whether we shall ever consider the Bill. It is almost like a British Rail timetable: it has had a colourful history and has been a long time coming. In 1988, the then Secretary of State told the Tory party conference that rail privatisation was on the way. We have had it in Queen's speeches and it has been taken out of Queen's speeches, but now we have a White Paper and the promise by the Secretary of State that it will be before us in November. We await the Bill with some interest.

I suspect that the Bill will not contain all the details. It will be an enabling Bill to give powers to bodies outside the control of the House to make decisions affecting the nature of railway services. The first thing that it will do is to remove from the control of the House any responsibility for ensuring the quality of the railway system.

The White Paper "New Opportunities for the Railways" provides few opportunities, but we shall wait and see and listen to the debate. I agree at the outset with much of the White Paper's analysis of what is necessary for a railway system—I do not need to repeat that analysis, in view of the shortness of time—but I fundamentally disagree with the conclusion that a marketplace structure is necessary to produce a better railway system.

One of the strengths of our present system is the city-centre connections. A comparison with other European systems shows us that the population per mile statistics are greatly to the advantage of the British railway system. Our railways are cost-effective. The Opposition have often said that British Rail has done well compared with most railway systems. That conclusion was reached by a Leeds university study in 1979, and the economist intelligence unit confirmed it. Our railway is energy-efficient and causes less environmental damage. The conclusion which I would draw from all that is that we should ensure maximum use of the present railway system

—whereas much of the Government's policy over the past few years has seemed designed to undermine it.

I agree with the White Paper about the key to success, which is that the railway system should be of high quality, reliable and efficient. The House will entirely endorse those objectives for any railway system. I add only that the system should also be safe. That is not stated as one of the objectives, although the White Paper mentions later the idea of a safe railway system. Over the past 10 years, we have been given every reason to believe that safety should be at the top of the list.

The many terrible tragedies that we have witnessed, and the inquiry reports that have followed them, have shown that safety standards have not been high enough. A number of the inquiries have made it clear that there is a connection between that fact and the business culture which has been developed in the railway system over the past few years, together with the lack of adequate funding both for track and for the provision of reliable stock. That has all contributed to the terrible tragedies that have occurred in our railway system.

Safety should be the first object of any railway system, and over the years people in this country have come to expect that from British Rail, although the events of the past 10 years have thrown some doubt on it.

Photo of Mr Stephen Milligan Mr Stephen Milligan , Eastleigh

Is the hon. Gentleman aware of the interesting statement recently made by Mr. Enomoto, the managing director of the East Japan railway company, which used to be part of the state network but has now been privatised? Mr. Enomoto said that the first stage of privatisation in Japan has not only increased employee morale, the standard of the service and the number of passengers using the network, but has produced a sharp increase in investment in safety.

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

We could get involved in an argument about the Japanese, Swedish and German railways, which are all going through various processes involving a mixture of public and private control. But it is clear from all those systems that public subsidy is needed. None of those railways is operating without public money, whether in operating subsidies or by way of assistance with investment. Whether a railway system is publicly owned, privately owned or a mixture, public money is an essential feature.

In reply to the hon. Member for Eastleigh (Mr. Milligan), I would say that the confidence in the Japanese railway system is a function of the level of investment. That is a crucial factor which I shall deal with later. Our railway system is one of the most under-invested in the developed European economies. If people have no confidence in our railway system, that is because they do not feel that there has been sufficient investment in it.

The Government solution for achieving the objectives set out in the White Paper is, of course, to introduce more competition and to end British Rail's monopoly status. They keep referring to BR as a monopoly, although BR itself does not, in the main, feel that it is one. It has to compete with all sorts of other modes of transport, and that has had an effect in terms both of freight and of passengers.

The Government argument is that privatising the industry will introduce private capital and management flair. Such criteria, indeed that very formula, were used in the 1930s. It would be instructive for the Secretary of State to analyse what happened in the 1930s. Then we had a railway system operating just as he describes, even with some of the quangos that he has mentioned. The idea of a clearing house goes back to the 1930s. I understand that the building which was used as a clearing house for co-ordination between all the private companies still exists today, and my hon. Friend the Member for West Bromwich, East (Mr. Snape) tells me that Sealink has bought it.

In the 1930s we had a railway system which was under-invested and begging for the state to come and take it over. No profits were being made, and there were major safety concerns. The railway companies were pleading for a state takeover. That all resulted from policies such as those which the Secretary of State wants to impose on our railway system now.

We have only to examine the history of the 1930s —

Photo of Mr Nick Hawkins Mr Nick Hawkins , Blackpool South

Is the hon. Gentleman seriously asking hon. Members to agree that the privately run railway companies of the 1930s were unsuccessful? I ask him to bear in mind that the private companies of the 1930s—the Great Western, the Southern, the London and North Eastern and the London Midland and Scottish—were the pride of British industry. Their marketing was most successful.

The hon. Gentleman has suggested before that one of the problems with the Government's plans is an intention to bribe with public subsidies, but he also says that the Government will cut rural services. Which does he mean?

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

If the hon. Gentleman would read history instead of making such comments he would discover that none of those companies made a profit or paid a dividend. I thought that profit was one of the symptoms of the success of privatisation. Profit is supposed to be the engine and motive that produces a railway system. There may have been wonderful steam trains in the days that the hon. Member for Blackpool, South (Mr. Hawkins) mentions —and even the Prime Minister has been talking about bringing back the chocolate and cream carriages on the Brighton line, and about new regional railway systems. We shall be back to coal fires and close encounters next— [Interruption.] I mean brief encounters; after all, close encounters and brief encounters are not so different. The basic idea seems to be to return to the romantic age of the railways. That is no way to run a modern railway system.

The truth about the railways in those days is that they did not make a profit. There were under-invested. Outside the network of main lines which the hon. Member for Blackpool, South mentioned, the companies failed to maintain a good railway system. They were the ones begging for compensation and a takeover. They did not want to retain the system and continue to run the railways [Interruption.] That fact is not in doubt; it is a matter of history.

It is absurd to advocate introducing a similar formula —a 19th-century philosopy—to take into the 21st century our railway system, which is so desperately needed both for mobility in a modern economy and to help reduce congestion and the environmental damage being done in this country, as in all modern developed economies.

Photo of Mr Bob Dunn Mr Bob Dunn , Dartford

Will the hon. Gentleman give way?

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

No, I am afraid I must get on. Many other hon. Members want to speak.

There is no justification for the Government's plan. Why do we want change? Let us consider the comparison with Europe. Many studies have been done on productivity, efficiency and the amount of subsidy required, and our railway seems to be one of the best in Europe. The real problem with it is that it has the highest fares, the lowest investment and the oldest stock, and it is declining in quality. That is a matter of fact. Comparisons have been made within the European Community, and a later study by the Economist intelligence unit backed up those findings.

The consequences of inadequate financial support, poor investment and lack of subsidy are that, as in the 1930s, we shall have to provide money for investment. The Secretary of State has now made it clear that even under the new private system he intends to provide money for the railways.

The InterCity network proudly claims that it does not make a loss—although I believe that it makes a small loss at the moment. That claim is the result of an awful lot of creative accountancy, throwing in bits of line to make up InterCity's revenue so as to show it as making a profit. I presume—perhaps the Secretary of State will tell me whether I am right—that under the new principle not all of InterCity's routes will be taken, and when it loses some of them it will be possible that, although InterCity does not now claim a subsidy, it will become a subsidised rail network system. The profitable bits will have been pinched, if Virgin is prepared to go for a little more publicity and take more of the routes. Even the one service that claims not to receive a subsidy is now likely to be subsidised.

The argument is not only about ownership. We must remember all the other railway systems. I do not make an ideological point about whether the railways should be publicly or privately owned. I have my opinion—I 'would put the case for a publicly owned system—but I am prepared to concede that whether the ownership is public or private is not the real issue. We can run a railway provided that we are prepared to find the resources from the taxpayer to fund the network system. The railways could be publicly or privately owned.

One of my arguments against private ownership is that presumably the owners would want a rate of return. If there is a profit to be made from a service, we shall have to encourage people to come in for more than 4 or 5 per cent. rates of return—if we can achieve that in our present railway system. Someone has to pay for that. The money comes either from the fares or from extra subsidies. That is what is involved in running the railway system. The Government are involved through subsidies, as regulators or in encouraging some form of greater investment in the system.

Let us consider all the railways in Europe and in Japan. The main issue is not whether we want private or public. The real issue is how we get a proper level of investment in the railway system. In reality, we have inadequate investment in the railways.

We have often had arguments at the Dispatch Box about who put in more investment. In debate, I have made it clear to the Secretary of State that neither Conservative nor Labour Governments have put sufficient funds into railway investment. In 1979, Peter Parker, then chair of BR, pointed out in a report that we needed twice the amount of investment that British Rail was getting or which was envisaged. He even asked why British Rail could not be allowed to lease trains, just as ships and aeroplanes were leased. He made that point to suggest a way in which to get extra resources outside the public sector borrowing requirement so that the railway system could be financed.

Railways could involve companies which regularly deal with finance, and such financing is used in France and in Germany. It is only we who are prepared to say, "This is the British way of doing it." The British way does not produce sufficient resources for investment. That has affected reliability and the quality of the system, and it is one of the basic faults in our system.

There is no ideological argument about getting into agreement with private ownership. There has been private investment in wagons, in trains, in routes, in the passenger transport authorities, in the management and in the profit centres about which we are talking. That has been going on in British Rail for decades.

In the past few years, there has been concentration, there has been reorganisation and there have been cost centres, but nobody has argued about whether there is a role for a private-public mix in various operations. The Government have endorsed private sector leasing arrangements for European trains and European sleepers. Even British Rail's present stock is a leasing arrangement. It is a public company in a leasing arrangement. No major principle is at stake here. It is an argument about whether the Treasury has one way or another in which to stop the railways getting the resources. Leasing is a way in which the railways could get more money.

Whether in the organisation of capital, or in the management or operation of the facilities, there have been joint public and private operations. That is quite proper and I see nothing wrong with that if it provides a better railway and gives access to funds that may not always be available from the taxpayer.

A report by Steer Davis and Gleave was launched yesterday. I am sure that the House endorses the view that it was an excellent report. It shows various investment projects which we desperately need. Does anyone think that anyone will invest in the north-west line as a franchise service? No one will. Franchisees might want to offer trains on the east coast line, as Virgin is doing, but no one talks about new trains. The company only wants to paint old trains on a leasing arrangement and that is all it is interested in. That has a massive effect on our manufacturing capacity.

Railway manufacturing is on its knees at present and is about to be eliminated unless more orders come in. I hope that the Secretary of State will take on board the point made by the report. In the transitional period, while the legislation goes through the House, there will be a dearth of orders. We cannot keep manufacturing industry hanging on without orders, whether they involve the Jubilee line, the start of the north-west line or replacing and refurbishing in a number of areas. There will be a delay.

The prospect of leasing by private franchise companies will mean that companies might look for old stock rather than new stock, which will mean in turn that there is no possibility of orders in the short term. All the manufacturing capacity in this country may be eliminated, which will mean that we shall have to place our orders in Europe, as we have done in so many areas. That is common with privatisation proposals.

That point leads us directly to one of the justifications given by the Secretary of State. He has not given that justification here, but he has said it often in previous debates. He has often told us to look at the privatisation and deregulation of the bus industry. Yes, let us look at it. If that is given as an example of what will happen, everyone has reason to fear what will happen to our railway system.

There are problems in the privatisation of the bus industry. There are fewer services. It is true that the buses are running more miles, but that is because they tend to be in our city centres. Ministers should go to Sheffield and see what deregulation has done to the bus system there. Fares are higher. Investment in buses has collapsed and most of our bus manufacturers have been put out of business. The congestion and environmental damage in our cities have got so bad that even Sheffield has had to come to the Government to ask about the possibility of regulating the bus system. Many of our cities are beginning to demand that because of the congestion and environmental damage.

Those problems came directly from the deregulation and privatisation of the bus system. There is also a problem about safety. Our buses are older and more are being pulled in because they are not safe to be on the road as public vehicles. If the bus system is an example of what the Secretary of State feels will happen to the railway industry, we have every reason to feel that his proposals are the wrong approach for dealing with public transport and especially with our rail industry.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

The hon. Gentleman is painting a scenario that many of us fear. The hon. Gentleman implied that the worst that might happen was that franchise companies would have to go to European manufacturers to get their equipment because the British companies would no longer be in existence. That is fine. However, is the hon. Gentleman aware that, as a result of the single market, virtually every European railway manufacturer has an order book full for 10 years so that it can escape the rigours of competition which the single market will bring? There will be no possibility of getting equipment even from that source.

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

I very much agree with what the hon. Gentleman says. The evidence is clear.

I worry about what the period of a franchise will be. A company will want at least 10 years in a franchise agreement, as the Secretary of State said. That is interesting, because it means that he will give guaranteed subsidies to a franchise, for 10 years. Under Treasury rules and the Public Expenditure Survey Committee review, they cannot be given for more than three years. Have we begun to change our Treasury rules for the private sector when we are not prepared to change them for the public service obligation? We always discriminate against the public sector and against the quality of the system. I presume that I am right. I am happy to give way to the Secretary of State. Perhaps he can given us some information on this little detail.

Is it the intention that the franchise agreement will give franchises for more than three years? No company would touch a three-year franchise, so the franchises would have to be longer. Does that mean that the subsidies will be guaranteed for longer than the period presently guaranteed under the PESC review for the public service obligation payments?

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

There are many contracts in the public sector which run for more than three years.

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

The Secretary of State always has difficulty in understanding. I will make the point again. The present PSO agreements are given for three years under Treasury rules and the Secretary of State knows that well because he was a Treasury Minister—according to all the recent statements, he may want to go back to the Treasury.

Are we prepared to guarantee to the franchisees the subsidies which the Secretary of State said would have to be given to them for more than three years? Will he change the present Treasury rules to give to the private sector the subsidy guarantee of more than three years?

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

That does not change the rules. There are contracts in the public sector which run for more than three years. Yes, it is likely that franchises will run longer. A franchise may be for five years. All the details will have to be sorted out in relation to much longer franchises, if that is what we decide to do on reflection in view of the responses we get to the consultation document. Clearly—

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

No, let me make it clear. There will have to be consideration of exactly how the longer-term contracts are framed. For shorter franchises—yes, we should intend that the arrangements would be for more than three years. There is nothing especially favourable to the private sector in that which we are not offering in a number of contracts to the public sector.

Photo of David Marshall David Marshall , Glasgow Shettleston

The Secretary of State appeared before the Select Committee on Transport yesterday. When asked the question that my hon. Friend had just asked, he said that the subsidy to franchisees would run for the length of the contract. On further questioning, he admitted that the contracts could run from five to 15 years. That is how long the subsidies will run.

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

It is not only an unprecedented yes, but a welcome one. All that to get yes.

The more important point is how we are prepared to change the rules for the private sector when it takes over rather than for the public sector. That shows bias against the public sector. The rule to which I have referred is not the only rule, but it is an interesting one. It appears that the Treasury will change its own rules. Perhaps it will change its ideas from leasing next so that we can give the public, sector a chance to get more of its resources for investment.

I welcome some of the objectives set out in the White Paper, although it has to be said that the Government have spent 10 years undermining most of them. On safety, the tragedies at Clapham, King's Cross, Belgrave and the Severn tunnel might have been prevented had sufficient resources been available to provide adequate safety equipment. On quality, the Transport Users Consultative Committee has made it clear that the PSO level is far too low. It has been reduced considerably, affecting the quality of service and investment. As regards the essential passenger services, high fares prevail and there is no guarantee in respect of rural services. Systems are inadequate. As regards the desired network benefits, InterCity is already cutting its network to get a better rate of return. There is a conflict between maintaining network services and the desire to maximise revenue and profit, just as there is a conflict between the interests of safety and the business culture.

I welcome some of what the Secretary of State said about opportunities for employees, including the possibility that a paper will be produced on pensions and employee benefits. In reality, however, I am not sure that previous privatisations, such as that of Sealink and British Rail Engineering Ltd. have been good for employees. Pensions, concessionary passes and some of the arrangements that the Secretary of State guaranteed would be forthcoming may remain only until someone new takes over the company concerned. If a franchising company pulls out after three months, as Stagecoach has, and if another company takes over, there is no guarantee that the pensions and concessionary passes will continue. Previous privatisations provide abundant evidence to suggest that they will not.

The Secretary of State said that, on privatisation, we would not be going back to running hotels. I see no reason why British Rail should want to run hotels, although I do not see why it should not make a commercial judgment to make a profit if it wants to. The hotels went because the Government were not prepared to allow British Transport Hotels to reinvest by way of a form of mortgages. The company was underinvested. It was sold for a song; now it is worth hundreds of millions of pounds. Sealink provides a similar example. Its 33 ferries were sold for £60 million. Its buyers went on to sell three of those ferries and Isle of Wight ports for £100 million. That is an example of the Government selling off public assets to their friends in the City.

Environmental benefits are fine, but the Government have been doing everything in their power, through high passenger fares and freight charges, to push people off the railways on to the roads, adding to congestion and environmental damage. BR now faces the loss of all its revenue from coal freight—hitherto a profitable service. Like other freight services, no doubt that service will fold. The Government's policies have worked against the railways, as I said about deregulation. Their policy is all about selling off the profitable bits and leaving the less profitable services for the taxpayer to pick up.

Let us consider the trailblazers for privatisation. Tiger Rail came in, took the Cornish clay up to Scotland and then collapsed. Who had to pick up the pieces? British Rail, as the supplier of last resort. Charterail started a profitable service with Pedigree dog food, went up to Scotland and collapsed because it could not afford the charges and went bankrupt.

What about Stagecoach, the wonderful Aberdeen-London night rail service operation on which the Minister himself travelled? We heard that he had joined that wonderful service, then discovered that he shot into the sleeper as soon as the cameras had gone. The trouble is that, when people booked, they did it thinking that they would get a sleeper with their ticket. What has happened to Stagecoach rail service. It collapsed. What about the leasing agreement? As a tour operator, it now books 20 per cent. of the places on that service. The fact that tour operators can book 20 per cent. of the seats on a service does not make that service a separate privatised service. The fact is that Stagecoach rail service collapsed.

Those are the trailblazers for the entrepreneurial flair and ability that are supposed to be coming into the system. It is just a load of nonsense. The hard reality is that we need a railway system that is regulated and subsidised.

On the question of a regulated railway, where, in all this, is the free invisible hand of the market, which the Government's laissez-faire philosophy says will produce the best for the consumer? What is proposed? We are to have a regulator to control costs and access, a franchising authority to allocate franchises and regulate fares, a rail track authority for the timetable and maintenance, the joint industrial board to co-ordinate ticketing and information, and the railway clearing house for company accounts. On top of that, we shall have the HSC, the Office of Fair Trading, the passenger transport authorities, the Department of Transport and—let us not forget it—the good old Treasury, which will have to ensure that everything fits its requirements.

Those are the bodies that will regulate the new privatised railway system—a system that is supposed to have benefits bestowed on it by the invisible hand of the market. What a load of nonsense. The system will be more regulated under the proposed arrangements than it is at present. At least the Secretary of State is accountable for the railway system under the present arrangements. In future, he will be less so and will argue that the regulator is responsible.

I should have more confidence if the regulator and the franchise officers were likely to have the benefit of knowledge and to do better than the Secretary of State. The one thing that the right hon. Gentleman has never shown in his present job is knowledge of transport. I might add that previous Secretaries of State have set a good precedent in that. Let us look at the notice in The Sunday Times advertising for people to fill the new posts. Among all the qualifications that the regulator needs, I was staggered to read: knowledge of railways/public transport an advantage but not essential. Yet the regulator is the man who will run the railway system.

The Secretary of State does not understand the system himself, and now he is to appoint an adviser who need not have any knowledge of it whatever—on top of all the new regulatory bodies. Will that produce railways in rural areas and inter-city railways? Will that encourage people to get off the roads and on to the railway system? The whole thing is a load of waffle.

What will the new system cost? I wish that the Secretary of State would tell us how much the quangos will cost. How many civil servants will be involved, and what will be the extent of the bureaucracy? Some 17,000 to 20,000 people in the freight and transport services will be made redundant, and the same number of people will be employed in the bureaucracy. People who earn money and make value will be put out of work to make room for civil servants to organise the rail system so as to meet an ideological requirement and prove that it is possible to run a railway system privately—but only 5 or 10 per cent. of it, because the rest of it will have to be maintained by British Rail as the supplier of last resort.

I do not have time to deal with all the problems now. The Government have answered some of our questions and have agreed to provide some reports—particularly one on employee conditions—which we look forward to seeing. As with the buses, I am sure that we shall see a move to part-time instead of full-time labour, the de-staffing of the systems and the loss of pensions.

What will happen to the transport police? The experience of previous privatisations suggest that there will be a move to part-time policing and private security systems. We desperately need security and safety on our railway system. Unless the Secretary of State proposes to make an exception in respect of the British Transport police, their services will be got rid of.

The track authority, the regulator, the franchising body and so on are all matters that give rise to numerous questions that I certainly do not have time to ask today.

It is now accepted that the railway system will be subsidised. It will be more regulated than it is at present. There is little hope of further investment. Let us not be too sure, for example, that leasing arrangements will produce new orders and investment. It will produce old trains, tarted up to run on profitable parts of the system. After five, eight or 10 years, companies will not want to invest. A massive amount of investment is needed to replace trains. A franchisee may want to operate for 10 years without investment and then run the service down and get out having made what money it can. Who will pick up the pieces and run the service? Good old British Rail, in the name of the Government. It will be a cherry-picking system that will work to the disadvantage of the community.

The White Paper has nothing whatever to do with new opportunities for our railways, and everything to do with creating massive profits for the Government's friends in the City. The Government are selling the community's assets, cherry-picking the most profitable routes and leaving the loss-making ones to BR and the taxpayer.

Theirs is a policy designed to impose an ideological 19th century laissez-faire straitjacket on an industry about to enter the 21st century. It will mean fewer services costing more. It will cause thousands of redundancies and reduced employment conditions for the lucky few remaining. It will mean newly painted old trains instead of new rolling stock, adding to the demise of our once great rail manufacturing industry. It will mean greater pressure to maximise costs at the expense of safer railways.

Above all, the policy will cost the taxpayer more, with a needless expensive bureaucracy and quangos. That will lead to higher fares and force passengers off rail and on to roads, causing great congestion and environmental damage. That is why we reject the crazy philosophy behind the White Paper and any Bill based upon it.

Photo of John Stanley John Stanley , Tonbridge and Malling 6:18 pm, 29th October 1992

In contrast to the hon. Member for Kingston upon Hull, East (Mr. Prescott), I found the White Paper imaginative. It introduces some welcome and radical new thinking into the running and financing of railways. Like my right hon. Friend the Secretary of State, I look forward to seeing what further progress can be made in harnessing the private sector to produce better railway services.

However, I have two very deep concerns about the potential practical implications of the proposals, particularly in relation to my constituents. My first concern relates to fares to which my right hon. Friend the Secretary of State did not refer. As far as my constituents are concerned, the bottom line will be the fare implications for them.

As I represent a constituency in Network SouthEast, my right hon. Friend the Secretary of State will be aware of the pressures faced by those who use the commuter rail services on that network. In practical terms, those people have no alternative but to use the rail services to London. They have faced yearly real increases in fares, and another real increase in fares has recently been announced. It costs about £2,000, payable from after-tax income, for an annual season ticket from my constituency to London. That cost for travel to work has become the largest single item of inescapable expenditure in the household budget, with the possible exception of food, for many people.

Fare levels have already reached the limits of many people's capacity to pay. For some people in my constituency, fares have risen beyond their capacity to pay and they have had to resign posts in London and try to find alternative employment elsewhere. The fare dimensions of the proposals are critical.

Considering the history of previous privatisations, will the privatisation of the railways be a rerun of the privatisation of gas? If that is the case, then all well and good. In real terms, gas prices are about 15 per cent. below what they were before privatisation. If that happens with the railways, that will be fine.

On the other hand, will the privatisation of the railways be a rerun of the privatisation of water? Water charges are now 26 per cent. higher in real terms than they were before privatisation. If there were fare increases in real terms of that order, that would be immensely damaging financially for my constituents. I do not know which way it will go, but I have an uncomfortable feeling in my bones that it might go more the water way than the gas way. However, I earnestly hope that I am wrong.

Although I do not agree with the sentiments or philosophy of the hon. Member for Kingston upon Hull, East, it is worth considering that the experiences of Charterail and Stagecoach show that, when the private sector is involved, a higher rate of return may be required, with consequent fare implications for the users of rail services.

Photo of Paul Flynn Paul Flynn , Newport West

Will the hon. Gentleman give way?

Photo of John Stanley John Stanley , Tonbridge and Malling

I will give way, but I am immensely conscious of the number of hon. Members who wish to speak, and I do not want to delay the House longer than I have to.

Photo of Paul Flynn Paul Flynn , Newport West

Perhaps a more telling illustration is what has happened in respect of the deregulation of buses, which have much in common with rail services. The experience in metropolitan areas is that fares have increased by between 25 per cent. and 33 per cent. in real terms.

Photo of John Stanley John Stanley , Tonbridge and Malling

I hear what the hon. Gentleman says, but I take a different view from that of the hon. Member for Kingston upon Hull, East in respect of bus deregulation, which, in my part of the world, has produced a variety, range and flexibility of services which did not exist before deregulation.

The fare implications of the proposals will hang wholly on what happens in two critical areas of policy—the policy on subsidy and the policy on the degree to which fares are controlled.

The subsidy element is critical in Network SouthEast. As the White Paper states, the subsidy paid in the financial year 1991–92 was £345 million, which was approximately 28 per cent. of the network's turnover. If we consider the policy for subsidy in the proposals, the franchising consultation document says—a reference which my right hon. Friend the Secretary of State effectively repeated earlier— The Government has said that it will continue to pay subsidy, where necessary, for as long as it is needed in order to secure the provision of socially necessary services. The statement begs more questions than it answers. Which rail services do the Government consider to be socially necessary and therefore worthy of subsidy? Is the whole of Network SouthEast regarded as socially necessary or only part of it? If the latter is the case, which part?

The statement also begs a question to which my right hon. Friend the Secretary of State did not refer. Perhaps my hon. Friend the Minister for Public Transport will deal with it when he replies to the debate. My right hon. Friend referred to subsidy being maintained. Is the commitment to maintain not merely the level of subsidy, but the level of subsidy at least in real terms? That would be the crucial issue for fares. Those are central questions about subsidy to which we still await answers.

The second issue is whether fares will be controlled by what my right hon. Friend the Secretary of State acknowledges in the White Paper to be monopolies [in other words, by the franchises. The documents make it clear that during the franchising period the franchising body will have the right to exercise fare control. However, it is not necessarily clear whether the franchising body will actually do so.

Paragraph 66 of the White Paper states: As long as London commuter services are franchised, any abuse of monopoly power will be controlled through the contracts between the Franchising Authority and franchisees. There is a clear locus for the franchising authority to deal with the "abuse of monopoly power" and ensure that fares are constrained.

However, the franchising authority is also responsible for getting franchises off the ground and ensuring that franchising takes place. When it does that, it will clearly be interested in showing that the maximum revenue can accrue. In that capacity, it will not have an interest in fare control; its interest will he to make the degree of fare control light.

There is a direct conflict between the position of the franchising authority being responsible for, in the Secretary of State's words, preventing abuse of monopoly power when it is also the body responsible for establishing the franchises with the maximum benefit to the franchisee in revenue terms. That is a fundamental contradiction in the position of the franchising authority.

The consultation document on franchising makes an attempt to resolve that underlying conflict. It appears that the Secretary of State for Transport will act as referee between the two tensions. Paragraph 2.3 of the consultation document states: the Secretary of State for Transport … will provide guidance on:in what circumstances and to what extent fares might be controlled. The House should note that the term is "might be controlled" and not "will be controlled."

There is a guidance role that the Secretary of State will perform. That in principle might be thought to be welcome, but even the involvement of the Secretary of State, based on history, does not guarantee that the level of increase in charges will be kept down to a reasonable amount.

We had exactly the same position with the water privatisation. I have with me the press release that was put out by the then Secretary of State for the Environment on 7 February 1990, in which he announced how he was going to exercise his control of water charges. Charges went up in real terms throughout the country. In my constituency in west Kent, the Secretary of State's controlled increase in year one was 20 per cent. in real terms; in year two, a further increase of 20 per cent. in real terms; in year three, a 4 per cent. increase in real terms; and in year four, a further 4 per cent. increase in real terms. That is not a very happy history for my constituents. It would be very helpful if my hon. Friend the Minister for Public Transport would say how the Secretary of State will exercise his intention to issue guidance on fare control in relation to franchises.

I am sorry to say that my second concern is narrowly based, but it is of the utmost significance to my constituents. It is possible that my constituents will face not merely an increase in fares, possibly of a substantial order, in real terms as a result of the proposals, but a diminishing number of commuter trains at peak periods. That could come about in this way: my constituency is astride the main existing rail link from Cheriton, the channel tunnel portal, to Waterloo, on which the through channel tunnel trains will, I hope, start to run at the end of next year or, possibly, in 1994. As the House will know, that line runs through Ashford, Tonbridge, Sevenoaks and up to the centre of London.

It has always been evident to me that a significant potential risk could occur for my constituents: those on board channel tunnel through passenger trains—for example, the Euro-officials and the Euro-business men from Paris and Brussels—would wish to arrive in London in the morning at exactly the same time as my constituents wish to arrive and would therefore compete for exactly the same train paths.

I pursued that issue at a very early stage. I am glad to say that I have a letter of 25 July 1986 in which I received a most important assurance on that point from the then Minister for Public Transport, my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell). In that letter he gave a commitment that internal services —in other words, domestic commuter services—would not be curtailed on that line in order to make room for through channel tunnel trains. The House will not be surprised to know that I have been clutching that letter to my breast pocket ever since.

The relevance of that letter to the White Paper lies in paragraph 37 of the White Paper, in which the Government make it clear that privatisation is to be extended to European Passenger Services Ltd., which is the British Rail subsidiary which will operate the through passenger services from the channel tunnel as from next year or thereabouts. The White Paper states: The Government is considering how EPS should be transferred to the private sector. I stress that the word used is not "whether" it should be transferred to the private sector but "how". Will my hon. Friend the Minister give a firm and unequivocal assurance that the—

Photo of John Stanley John Stanley , Tonbridge and Malling

Across the Floor of the House will be every bit as good; it will be in Hansard. Will he give a clear and unequivocal assurance that the undertaking that I was given in July 1986 that there would be no curtailment of internal domestic services to accommodate channel tunnel through train services will hold good, even when EPS is apparently to be privatised?

Until I have clear answers to my deep concerns about fares and train paths for channel tunnel trains, my position on the legislation can only be one of very guarded neutrality.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe and Nantwich 6:34 pm, 29th October 1992

I have often wondered what the advantages of a public school education really are. I have decided that it is the ability to congratulate someone in the first instance and then knock hell out of him for the subsequent 10 minutes of one's speech. I congratulate the right hon. Member for Tonbridge and Malling (Sir J. Stanley) on putting his colleague the Secretary of State for Transport firmly on the spot.

The debate has been rather frightening. I have never thought of the Secretary of State as Scarlett O'Hara, but a tremendous amount of the proposed legislation can best be summed up as, "I will think about that tomorrow," pronounced either with a southern accent or with a Scots accent. It amounts to the fact that we are actually proposing major changes in a basic transport system without any clear idea of what it entails.

The Secretary of State, even after the traumatic events of last week, did not say, "As a Department, we have estimated that, if we push through this privatisation, the job loss in manufacturing, in trains and in rolling stock as an industry will be a minimum of 30,000." He did not say, "If we push through this legislation, the job loss for railwaymen and related workers in other industries will be so great that we have not had the courage to specify the number." He said, "We think that it would be a very good idea if we privatised this system. The slight problem is that we don't know how we're going to do it. We don't know who is going to be stupid enough to pick it up, and we're certainly not going to spell out any of the implications, because the House might find them unacceptable."

The Secretary of State should have told us the answers to several basic and important questions. What is the Government's environmental policy in relation to the use of railways? Why has he not given us one indication of his vision of the use of railways on a crowded island in the 21st century? Why has he not been prepared to set out in any detail why we need a railway system, how it will be properly funded and how it will best benefit the people of these crowded islands? None of that appeared anywhere in his speech.

On top of that, the right hon. Gentleman has decided that he will say that privatisation has proved itself in the transport industry. I do not know how anyone who watched what happened to the bus industry can seriously say that we know that privatisation of basic services works. The bus industry was a classic example. The women who are standing around in the wet because the central bus stations in many of our towns have been asset-stripped by the small private companies that took them over have a clear idea of whether privatisation works. The people in rural villages for whom the provision of bus services is difficult have an even clearer view of whether privatisation works.

We are talking about a system which, unlike buses, requires very specific tracks—very specific hardware—to provide a service. Oddly enough, trains do not jump in front of one another when one breaks down. Oddly enough, if individual companies are concerned, it will not be easy for someone to provide alternative services. Who will have the contingency responsibility, if for any reason any of the franchisees do not provide a service of the highest quality, to substitute rolling stock trains or other services? That is not made clear. We are simply told that employment as well as other aspects of transport such as safety will be discussed in the future. Frankly, that is an astonishing attitude for a responsible Government to take. I also find it astonishingly irresponsible.

The report that came out yesterday proved that many private industrial companies will face empty order books from the middle of next week. That shows what can happen when part of the transport industry—railways—is thrown into chaos. Unless there are full order books for new rolling stock, services will not improve. It does not matter who provides services—they will not improve. Unless there is a way of subsidising services which are socially useful, and unless that is a continuing commitment, services will not improve. Unless there are trained railway staff to provide not only safety but facilities and services, services will not improve. I would not have thought that that was a difficult concept for any Government to understand, but it appears to be beyond the understanding of a Conservative Government.

It is a disgrace for the Minister to talk about a major change, which will result in job losses that we cannot fully estimate at present, without spelling out exactly what the Government will do to replace, protect and help those people. Let me make it clear. British Rail Engineering Ltd. was sold off as part of the rage for privatisation. We were told that there would be greater efficiency and much better provision of equipment. We were also told that everyone would benefit.

On a simple matter such as pensions, which we shall discuss in dealing with the forthcoming Bill, BREL is an interesting example. The Government said that British Rail would be responsible for ensuring that its employees were protected until the change of ownership took place. Beyond that point BREL, employees immediately found that they faced a diminution of their pension rights and the loss of many of their privileges, which had been part of the calculation of their wages. Even when they bought shares in BREL, they found it extremely difficult to get any specific benefit from the sale of their own company.

Those who talk about management buy-outs should examine what happened to BREL. Only one of the original directors who fronted that management buy-out has remained with the company. Those who work for BREL have even been told that they cannot sell their existing shares, because the company that took over BREL's assets organised the sale in such a way that the shares could go only to the new company and only at a highly artificial and controlled price.

So much for management buy-outs. They have not protected jobs; we have lost jobs. They have not improved the lot of those who work in the industry, and they certainly have not in any way replaced the conditions that the employees had when the company was a subsidiary of British Rail. That is what would happen to railwaymen and women if privatisation went ahead. There can be no doubt about that. Neither their employment nor the benefits which they currently receive would be protected.

I find the debate totally obnoxious, because we cannot tell our constituents that the House will happily accept the introduction of a paving Bill which is so wide in its terms that almost any amount of taxpayers' money could be used to create a completely new set of organisations without a clear statement at an early stage of what would actually happen.

It is not clear whether the Department of Transport has worked out a method by which a system of transferring lines could take place. It is not clear whether the Department has considered that private operators will be quite happy to take tiny pieces of the lines—for example, the Victoria to Gatwick line—but they will not be happy to run services from Preston to Blackpool or anywhere else. The cost of that in terms of employment and good transport systems is absolutely indescribable.

Tonight, the Minister has presented dogma in its purest and most irresponsible form. It cannot be defended in terms of economics, politics or a commitment to provide a good service for those who use the transport system. As the Minister cannot give us any of those reasons, may we assume that he is suggesting that it would be useful for the Treasury to asset-strip the railways part of the transport system in the way that bus companies asset-stripped the bus system?

Photo of Mr Matthew Banks Mr Matthew Banks , Southport 6:45 pm, 29th October 1992

I am grateful to you, Madam Deputy Speaker, for calling me so early in this important debate today to make my first speech in the House. As you know, I am one of the youngest Members of the House, having been elected earlier this year at the tender age of 30. I am now 31. After the events of the past two weeks, I am not sure whether I am any wiser, hut I certainly feel a great deal older.

I have the honour and privilege to represent a delightful Victorian seaside resort. Southport is a constituency which, after three years of hard work, I managed to wrest from the Liberal Democrats. I should like very much, without further ado, to pay a fulsome tribute to my predecessor, Ronnie Fearn. As hon. Members will know, Mr. Fearn was for some time the Liberal Democrats' transport spokesman in the House. Although the political complexion of my constituency has now changed, I am pleased that Mr. Fearn has been replaced by another Member who is equally interested in transport matters.

Mr. Fearn was first elected as a local councillor in 1963 and has remained a councillor ever since, including his time as a Member of Parliament. He was first elected to Southport county borough council when it was in Lancashire. Sadly, my constituency is now in Merseyside. I should like to lay down a marker today. I make it clear that in the not-too-distant future, during the passage of the Local Government Bill—sadly, my predecessor voted against it—I shall do my utmost to make sure that the Local Government Commission brings my constituency back into Lancashire as a unitary authority.

It is a tribute to my predecessor's standing in my constituency that my task in wresting the seat from him was so difficult, Indeed, I know that it is a great surprise to some hon. Members that I am here at all. My journey here was not courtesy of a first-class InterCity rail ticket; it was something more along the lines of political Network SouthEast or Merseyrail ticket. I hope that the principles behind the White Paper will satisfactorily address something along those lines.

I should also like to place on record my thanks to Sir Ian Percival QC. He represented my constituency between 1959 and his retirement in 1987 and is a former Solicitor-General. I am most grateful to him for the support, advice and the generosity of his time which he gave me in the past few years.

Finally, although it is not possible this evening for me to thank all those who have helped me and my colleagues over the past two to three years, I should like to place on record my thanks to a former Member of Parliament, Mr. Cecil Franks, who was the Member for Barrow and Furness between 1983 and 1992. He is sadly Missed on the Conservative side of the House. I should also like to pay tribute to him tonight for guiding me through some of the difficulties of the past few years.

My constituency does not appear to be on the map at Westminster at present. I seem to have a tremendous task ahead of me. Unfortunately, all too often, right hon. and hon. Members confuse my constituency with Stockport. Stockport is some 50 miles away in land locked Cheshire. With the greatest respect to Stockportonians, there is a considerable difference between the two. No prizes for guessing which one I think is the more delightful.

If I am to put my constituency on the map, I must put myself on the map first. One of the difficulties that I have faced is that I am consistently, and irritatingly, confused with my hon. Friend and look-alike the Member for High Peak (Mr. Hendry). He is on the chubby side too, but if hon. Members bear in mind that he is the good-looking one, they will have no problems in future.

I am pleased to report that I have been able to solve one problem. I no longer receive the Refreshment Department bills of my namesake, the hon. Member for Harrogate (Mr. Banks).

On the White Paper, if the objective is to create better quality services through the gradual introduction—I stress the gradual—of private sector competition, it has my 100 per cent. support. Listening to some hon. Members speak in the House and outside it, one would think that the Government were trying to privatise British Rail lock, stock and barrel. That would be a ridiculous and impractical course of action.

I urge my right hon. Friend the Secretary of State to listen carefully to the concerns—I hope that they are constructive concerns—of right hon. and hon. Members in this debate. When a Bill on that subject is tabled and is considered in Committee, I urge him to ensure that important matters such as franchising, access to track, the independent regulatory authority and safety are considered sensibly. I hope that my right hon. Friend will listen carefully and, if necessary, amend his plans to ensure that those important proposals are as practical and workable as possible.

The idea of private sector competition and involvement in the railways is nothing new. About 40 per cent. of rail wagons are privately owned. I have no doubt that, in the years ahead, that percentage will rise considerably.

The White Paper is long overdue. I have been waiting to make my first contribution to debates in the House, and I wish that it had been possible for us to debate it earlier. I hope that it will not be too long before a Bill is introduced so that we can discuss the issue in greater detail. There will be occasions more important than today, especially in Committee, when hon. Members who have constructive suggestions for amendments will be able to table them.

I urge my right hon. Friend the Secretary of State to be clear in his mind that, while there are one or two honourable exceptions on the Conservative Benches who do not believe that the proposals are workable, in principle the Government have my support and they have considerable support among my hon. Friends.

Britain's railways play a vital role in the nation's transport needs. The White Paper offers the opportunity to expand and improve on those services. I emphasise that the White Paper refers to the gradual introduction of private sector competition. It does not concern me that in 1994 only one or two companies may be running franchises. The opportunity to do so should exist, and gradually many companies will take it. I welcome the fact that many companies have expressed an interest in running services on Britain's railways.

In making my first contribution, I am mindful that I do not have the time to deal in detail with some of the matters relating to franchising, access to track, and the indpendent regulator, among others. I do not wish to take up the time of the House. There is no doubt that some genuine concerns exist on both sides of the House, which will need to be dealt with, and I hope that my hon. Friend the Minister will consider them.

The principles in the White Paper are important and wholeheartedly support them. Given the difficulties in Britain's railways, and the enormous pressure on British Rail in the public spending round—not merely this year but any year and under any Government—it is vital that we give the private sector and the consumer the opportunity to benefit from private sector competition. In the months and years ahead, when private sector companies are operating franchises, I hope that their management and work forces will get closer to the travelling public and to the people whom they seek to serve.

Ultimately, the White Paper will provide opportunities to improve the quality of service, it will be good for choice and I sincerely believe that it will be good for my constituents in Southport.

Photo of Nick Harvey Nick Harvey Shadow Spokesperson (Transport) 6:55 pm, 29th October 1992

Before attending to the White Paper, I congratulate the hon. Member for Southport (Mr. Banks) on his accomplished and amusing maiden speech, and I thank him for his kind remarks about my predecessor, the Liberal Democrat transport spokesman, which were appreciated on this Bench. We look forward to more contributions from the hon. Member.

I do not voice my concerns about the White Paper out of any philosophical objection to the principle of private operators on the rail network, but for fear of the practical consequences of fragmenting the network. If the ground rules were right, we could envisage a slowly growing market for private sector operators. Our argument is about the ground rules.

If I have understood the Secretary of State correctly, he has said that he expects the majority of the network to be in the hands of private operators within the lifetime of this Parliament. That is pie in the sky. He was talking about the time scale as if he were holding back a deluge of would-be operators until the spring of 1994. My fear is that, if he goes ahead on anything like the time scale that he has described, there will be mayhem on the railways.

The proposals fail to acknowledge the social and environmental contribution that the railways make to life in Britain; they do not merely reduce congestion but also mean energy savings and a reduction in CO2 emissions. The suggestion that the new track authority, Railtrack, must raise its funds "fundamentally"—I hope that I quote the Secretary of State correctly—by charging operators fails to put any value on the social or environmental contribution made by the railways.

There is no hint in the White Paper of who will pay for the vital investment needed in the rail network. Do the Government honestly believe that the would-be private operators will be able to afford the sort of infrastructure investment that successive Governments have failed to make? The fate of the two pilot operators—Charterail and Stagecoach—the difficulties that they encountered and their failure show that it will not be private operators but the passenger who will end up having to pay.

The hon. Member for Epping Forest (Mr. Norris) told us earlier this week, with commendable clarity: Someone has to pay for the operation of the rail service —and that means either the taxpayer or the user. I am convinced that it is right that users should pay enough to cover at least the majority of the operating costs".—[Official Report, 26 October 1992; Vol. 212, c. 762.] The right hon. Member for Tonbridge and Mailing (Sir J. Stanley) compared plans for the railways with the privatisation of the water industry. The crucial difference is that the customer base in the water industry comprises just about everyone and is more or less the same as the taxpayer base—except for fortunate souls like myself who are able to use a natural spring instead of a connected water supply. In the case of rail investment, the customer base is much narrower.

I submit that the public are fed up with hearing that the Government are making a record investment in the rail industry, when they still find themselves commuting, crammed into carriages every morning like sardines, with their fares continually increasing. They know that that simply does not add up, and if one takes out investment in the channel tunnel project, they are right. Investment is nowhere near adequate.

The Secretary of State referred to Japan and Sweden. He did not mention that, before the first stages of Japanese privatisation, a massive programme of investment was carried out by the Japanese Government and all historic debts were paid off. He also failed to mention that with the Swedish system—perhaps the nearest comparison to what is proposed here—the Swedish Government actively subsidise the track.

There is a clear need for large investment on that scale in this country before there is a market for private train operators. The Secretary of State told us that, towards the end of this year, he will publish a document outlining the access and charging arrangements. We have to hope that, when he does so, he will reconsider his suggestion that the new rail track body raise its income by charging operators. It is essential that there should be some direct investment in the track itself.

I am concerned also about the future of the freight industry. What free-marketeering freight operator will opt for the rail system when he can use the roads at a much reduced cost, subsidised by the Government in a way that they simply decline to do for the railways? If only the Government had addressed that point, this White Paper might have had some use.

We welcome the slight modification on the question of a level playing field in investment in road and rail, but that is not what we are going to get, in any meaningful sense, from the proposals in the White Paper. Once a franchise is up and running, there is little to be gained from an operator carrying out imaginative market research as there were a new product. I submit that the Government plans are plans for stagnation, and they are the reverse of enterprising.

On the question of banning British Rail from bidding for franchises. there is certainly room for British Rail to improve its sense of enterprise; the fact that private operators were involved might be just the incentive that British Rail needed. Why not allow British Rail to bid for franchises? No one in the private sector has ever run any sort of railway system before. Why should private operators not have to beat British Rail in a bid? Will the bids coming from the private sector be realistic, or will we see a repeat of the channel tunnel enterprise, when the bids were phenomenally lower than the true costs? If a franchisee does take on a loss-making service, what will happen when it goes wrong? I suspect that what remains of British Rail will have to take on the service, and in one way or another the taxpayer will pick up the tab.

There is a clear clash between open access and franchising. The European Commission wants to open up rail networks so that operators from other countries can run a rival service. It sounds rather like allocating slots at Heathrow airport and then saying that anyone who wants to do so can fly in or out at any time. The potential winners of those franchises will have to beware of falling into a trap: if they bid at a particular price for a private monopoly service, they will be in for something of a shock if, at some point down the line, a French or German operator comes in and operates a rival service alongside them. Why should the franchising authority be the body that decides on the grouping of services? We have already heard about the contradiction between their role in handing out the franchises and protecting the passengers. Why is there not a passenger body to do that job instead of a Government quango?

Given the performance of the other regulators in other privatisations, what grounds for hope can there be that the rail regulator will protect the passenger from higher and higher fares? The British public want binding guarantees. I accept what the Minister says about no rail line being guaranteed for ever, but the public want stronger reassurances that the level of service will not decline, that fares will not increase unfairly and that there will not be social blight in areas such as mine in north Devon, where many people are entirely dependent on the Barnstaple-Exeter line. The new bodies must be given terms of reference that demand that present services are maintained and improved.

It is disappointing, for example, to know that the Government are planning to transfer responsibility for deciding the fate of the experimental services that were set up following the work by my predecessor in 1981, which enabled some of the old lines to re-open.

The White Paper is a missed opportunity. With a massive injection of capital along the lines which preceded the Japanese privatisation, the commercial skills of the private sector might indeed have been harnessed to run services to everyone's benefit. But the Government's conviction that, by simply decoupling themselves from the railways through privatisation, they will make the trains run on time is over-optimism in the extreme.

As other right hon. and hon. Members have said, the Government should have taken more heed of bus deregulation. By committing themselves to breaking up the British Rail network, rather than allowing a small and gradual introduction of the private sector, the Government risk the destruction of the enterprises that want to operate before those enterprises have even had a chance to get going.

I ask the Secretary of State to consider the time scale seriously. Earlier in the week, the hon. Member for Christchurch (Mr. Adley) called on the Government to await the findings of the Select Committee on Transport before going ahead. There are fears on both sides of the House and among the passengers who are crammed into carriages and stranded on platforms that a time scale of one parliamentary term is too short to force the entire network into the private sector.

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. Before I call the next hon. Member to speak, I remind the House that there is now a 10-minute limit on speeches until 9 o'clock.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch 7:06 pm, 29th October 1992

The hon. Member for North Devon (Mr. Harvey) said that he thought that this White Paper was a missed opportunity. I hope that he and the House will not find that it is a messed opportunity.

The maiden speech of my hon. Friend the Member for Southport (Mr. Banks) was one of the most fluent and splendid I have ever heard. My only advice to him would be to tell the Whips, not ask them, about his views on this matter or on any piece of legislation. Whether this will turn out to be poll tax on wheels, I have no idea, but my hon. Friend should beware of offering Southport as a sacrificial lamb to the first franchisee.

My interest in the railways is a simple one: it is in seeing a strong and successful railway. I shall judge the proposals of my right hon. Friend the Secretary of State by whether they will make a better or a worse railway system. I have never thought that party politics and public transport policy were anything but uneasy bedfellows. I should like to believe everything that my right hon. Friend tells me, but I cannot give blind acceptance to bland assurances. At present, that is all we have and we have rather to take it on trust.

Support for the Government's proposals—I say this modestly—does appear to be in inverse ratio to knowledge of the complexity of running a railway. The White Paper itself is a philosophical ramble. It should have been a Green Paper. As the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) said, we have had no debate about the role of the railway in our society. We should have had that first. What is expected of it, not just who runs it, should have been the debate about the future of the railway.

The background of the White Paper is clear: it has been an enduring commitment to privatisation by Conservative Governments over the past 13 years. Some of them have been good, some have been bad; with some we have not comprehended their eventual side effects. Last week, we lived through the coal tragedy, which was undoubtedly a product of the privatisation of electricity.

The Secretary of State gave us a brief history lesson and talked about the 1930s. Let no one ever forget the Railways Act 1921, brought into effect by a Conservative Government in 1923, which reduced from 112 to four the number of railway companies because of the chaotic state into which excessive competition had brought the railway system.

While my right hon. Friend was speaking, I was jotting down notes about a possible future privatisation of the Ministry of Defence. We would have Army plc, Navy plc and Air Force plc. I was wondering who would build the European fighter aircraft. That is not wholly a stupid analogy to this debate. We talked briefly earlier about new technology, but who will pay for the introduction of new railway technology in Britain? Where will our equivalent to the Shinkhansen lines, the TGV in France and the Inter-City Express in Germany come from? If we do not get that clear, in the next few years we shall be spending an endless amount of time discussing an ever-declining railway system, and that is not something that I want to see.

We have had 13 years of Conservative government and it is clear that the failure of former Secretaries of State, such as Lords Ridley, Moore and Parkinson, to produce any White Paper on railway privatisation was the result not of a lack of enthusiasm but of a lack of ability to find a workable system. The jury is still out on whether this system is workable.

Reference has been made to the Government's remarkable document "The Franchising of Passenger Rail Services". I do not propose to quote from it, but I ask hon. Members to look at the second paragraph under the heading "Important Notice" at the beginning of the document. Anyone who believes that, with those disclaimers, it is possible for prospective franchisees to put forward a business plan or any sort of serious proposal is living in an unreal world, and I say that with some years of business experience.

I refer also to paragraph 5.6 of that document. I want to read one sentence which shows the situation that we face. Let me take a deep breath. It says: The open access regime will continue to apply to infrastructure needed for passenger services that ceases to be operated by Railtrack because it has been sold outright or is being operated under a leasehold arrangement. I could not say all that in one breath. For those who have any concern about the future of our railway system, that is the stuff of which bad dreams are made.

Paragraph 71 of the White Paper puts the onus for closure policy on the franchising authority. That is a proposition at which we need to look carefully. Paragraph 21 talks about the subsidy level of uneconomic services and says: the level will be determined by competition in the private sector. Most of those services are run because of the social need for them. Competitive bidding alone is totally inadequate for people who want to see railway services continue in Cornwall, Scotland, Wales, right across the rural areas of England and on the commuter lines.

What about through-ticketing? My right hon. Friend referred to the commitment to that, yet paragraph 5.8 of the franchising document from which I quoted refers to the possible need for more than one ticket outlet at single stations. There is some incompatibility —to put it no stronger—between the White Paper and the first of the eight subject documents that we are to see.

I share the concern of the hon. Member for North Devon. The only body to be excluded from the bidding to run trains in Britain in future will be the only body with any experience of running trains—British Rail. Even in local authority tendering, public works departments are at least allowed to tender. My right hon. Friend really must look again at that.

Why is there this dissatisfaction with British Rail? We know all about that dissatisfaction. Will my right hon. Friend do one simple thing—look at the drop in the public service obligation grant for the past four years for which figures are available? It has come down from £1,600 million to £575 million. Will he look then at the level of complaints received by the regional transport users consultative committees, which have more than doubled from 3,010 to 8,053? The fact is that the cut in the PSO grant has caused the increase in complaints, the Goverment blame British Rail and we are faced with this legislation.

To many of us interested in railways, it is the familiar pattern of closures in the post-Beeching era. The timetable is disrupted and connections destroyed, then the station is painted and the track renewed and the outcome is reduced income, increased costs and then closure. Many of us are not prepared to see that happen again to our railway system.

If things are so bad on British Rail—we can all find — improvements—is it because of bad management, the reduction in the PSO grant, or the unfair competitive position of rail versus road? None of that is mentioned in the White Paper, and those issues need to be attended to before we come to any conclusions.

There is no mention in the White Paper of taxation policies. My hon. Friend the Member for Eastleigh (Mr. Milligan) talked about Japan. Japan's railways are not privatised. It has six regional monopolies, all state-owned, but the success of the Japanese railways is due not just to the huge investment referred to by the hon. Member for Kingston upon Hull, East (Mr. Prescott) but to the fact that 80 per cent. of travellers on commuter services have their fares paid for them by their employers and the other 20 per cent. have tax allowances on their fares. That is the exact reverse of what happens here.

If we were to use our taxation policy as the Japanese do, our railways could succeed. The Germans use tax policies to offer incentives for the use of rail freight. If we did the same, that would go a long way towards helping our railway system, but nothing like that is proposed anywhere.

My hon. Friend the Minister made a speech, to which I referred briefly in the Select Committee yesterday, about our rolling stock manufacturers. There is a serious problem here. We simply cannot go on debating in the House setting up all these quangos, while giving British Rail no continuity of rolling stock investment and allowing our manufacturers to go to the wall. Not only will our manufacturers go to the wall, but our railway services will go to pot.

There is lack of vision about all this. Before I support the Bill, I shall need to be satisfied that the proposal is not a hangover from Thatcherism but a guaranteed way of increasing investment in and improving the service on our railway system. The White Paper needs a large question mark after its title. Like my right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley), I, too, have grave reservations about this. I give notice that I am not willing to support any legislation unless I have many more answers than I have had so far.

Photo of Ms Audrey Wise Ms Audrey Wise , Preston 7:16 pm, 29th October 1992

What we have in our hands is an incoherent patchwork designed to create maximum uncertainty, and uncertainty is the last thing that we need in our railway system at this time.

The White Paper has bold objectives. It says that it wants a reliable, efficient operation, offering high quality services to users, but its chosen instrument is the introduction of competition through greater involvement of the private sector. Nothing could be less relevant to the present needs of the railway system.

Railway passengers want a reliable service which gets them to where they are going on time with a smooth journey and as economically as possible. That has nothing to do with the introduction of competition through the involvement of the private sector.

Even the White Paper does not intend to move to privatisation of everything. It excludes InterCity from its first plan, except in so far as paragraph 35 says: The first priority is to improve the service to customers by introducing private sector management, culture, disciplines and incentives. What on earth does that mean when it is read alongside paragraph 3, which says: The productivity of the BR workforce is among the highest of any European railway. InterCity services and BR freight operate without direct subsidy"? What do the Government mean when they say that they want to introduce private sector management culture?

The only conclusion that a British Rail worker could draw is that there is an intention to ensure that, despite their high productivity, they will be pushed around more thoroughly in future. That will not improve morale on the railways.

The White Paper forecasts and wants a healthy second-hand market in trains. We saw what happened when buses were deregulated in my area. A healthy second-hand market in buses developed—but healthy for whom? It was certainly not healthy for my area, which had had a very healthy productive capacity for new buses through Leyland. Employment has gone and passengers ride in clapped-out vehicles; that has been healthy only for the short-term profits of a few. The last thing that we need is a healthy second-hand market in trains. Rather we need healthy investment in new trains.

Paragraph 4 contains a glowing account of the record of investment on the railways. From my seat in Preston, it looks rather different. GEC in my constituency has recently invested £5 million in its plant, but that plant is no longer in full use and 50 per cent. of the work force are on short-time working. Out of a work force of some 2,000, there have been 150 redundancies—55 in Trafford Park and 95 in Preston—because, having ordered 43 class 91 trains for InterCity in 1985, which were delivered on time in 1988, instead of proceeding with class 93 for the west coast line, there have been no further orders.

The order for the west coast line would have produced about three years more work, but that has not happened. British Rail wanted a faster train—faster than the track could take. Nevertheless, GEC put in a bid for such a train and was then told that British Rail would not proceed with it, so we have neither a faster train nor the class 93 train. We have nothing and no work, which is good neither for those who travel to the north-west nor for those who work there.

The Networker trains also give work opportunities for the regional railways, but only 50 per cent. of that order has ever been placed. GEC has had orders for 143 sets and British Rail Engineering Ltd. has had orders for 288 sets. That work at GEC is now coming to an end and, from next January, there are no fresh orders.

We want not a Government who mess around producing a patchwork, but a coherent strategy for a railway based on investment in new trains to give good service to passengers. When, ultimately, new orders are placed and new investment is made in rolling stock, will there be a manufacturing sector in this country? I was interested in the remarks made by the hon. Member for Christchurch (Mr. Adley), who told us that the manufacturing companies in Europe have full order books for the next 10 years. When we finally get around to deciding that we need new trains, we may find that foreign and EC companies are too busy and that ours no longer exist. What will happen then to the reliable service for passengers discussed in the White Paper?

The White Paper is a dangerous irrelevancy. While we are considering it, more and more people in the manufacture of trains will find themselves on the dole. We shall have to pay subsidies that will go into private pockets, possibly for an inferior service and certainly for a complicated service, without through ticketing and with doubtful systems. We shall also pay to keep the skilled workers in my constituency on the dole instead of producing the trains that all our passengers need.

I stress the word "passengers". Rail passengers do not benefit from being called "customers". Nor do they benefit from being treated simply as people who will pay out to a multiplicity of companies. They want a strategic service that regards them as passengers whose main desire is to get from here to there in the shortest possible time with the most comfortable possible journey and, in doing so, benefit the environment to a great extent.

Let the Government move in that direction instead of pursuing their dogma. Let us have a coherent strategy instead of the waste and muddle of the White Paper.

Photo of Mr Bob Dunn Mr Bob Dunn , Dartford 7:24 pm, 29th October 1992

I give notice to the House that, unfortunately, I shall be unable to remain for long after I have spoken. I must return to my constituency to honour a commitment that I gave some months ago.

I was delighted to hear the speech of my hon. Friend the Member for Southport (Mr. Banks), who spoke well, confidently and with tremendous lucidity. We look forward to hearing many of his speeches in the years ahead. Indeed, I hope that he will double the record of his predecessor but one and be here for at least 36 years, by which time he will be 66 years old.

I listened to the hon. Member for Preston (Mrs. Wise) with great interest. She has been extremely consistent in the line that she has taken in the House over many years, in the two capacities that she has been an hon. Member. I do not agree with much of what she said but recognise the fervour with which she said it.

Unlike the two hon. Members who spoke immediately before me, I welcome the White Paper. It is long overdue and I hope that my hon. Friend the Minister will adhere to the timetable that he has set to bring forward legislation earlier rather than later.

I listened with respect and admiration to my hon. Friend the Member for Christchurch (Mr. Adley). We are real friends, although in terms of philosophy we are a million miles apart. I listened to what he said about the 1923 legislation, when the then Conservative Government reduced 112 railway companies to four because of the mess that they were in at the time. The early 1920s followed a long and devastating world war and, undoubtedly, investment had not taken place in the railway companies due to a variety of factors. The Conservatives, then as today, were entirely realistic about their approach to the transport infrastructure and to alternatives.

For too long British Rail has been a sad music hall joke. It has been easy at meetings of women's institutes or political parties to make a comment about British Rail and for heads to nod. The poor people who must work there are given not the benefit of the doubt but the benefit of derisory laughter. British Rail is a Titan waiting to be freed from the shackles of the state, which is why I welcome the White Paper.

No hon. Member representing, as I do, a commuter constituency can fail to register with the House his or her concern and anxiety for the continuing deterioration and neglect of the services that our commuter constituents must cope with day after day, week after week—not just for the past year or 10 years but for many years. My hon. Friend the Member for Christchurch and the Minister know that the Dartford loop line is a byword in lore and fable for poor service. Indeed, I would argue with any hon. Member from Essex that the Dartford loop line and not the line that runs from London to Southend—which is almost as bad—is the worst in the country.

Photo of Andrew MacKinlay Andrew MacKinlay , Thurrock

Will the hon. Gentleman give way?

Photo of Mr Bob Dunn Mr Bob Dunn , Dartford

No, because I am speaking under the 10-minute rule. Essex man must wait.

My constituents must put up with old trains. I know that steps have been taken to improve and replace rolling stock. The rolling stock is so old that the graffiti say, "Down with Ramsay MacDonald". The trains are unreliable —

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

That is not what my hon. Friend said last time.

Photo of Mr Bob Dunn Mr Bob Dunn , Dartford

True. Last time I said it was Baldwin, actually, a different character altogether—

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. I remind the hon. Gentleman that he should be addressing me.

Photo of Mr Bob Dunn Mr Bob Dunn , Dartford

I thought that I was—

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

It did not look like it.

Photo of Mr Bob Dunn Mr Bob Dunn , Dartford

The trains are dirty and covered with graffiti and there are many cancellations and delays. That has a tremendous impact on commuters. They are frustrated by the delays in getting to their place of work and it is difficult for my commuters who are late time after time, when jobs are difficult to get and hold on to, to explain themselves to managers who may not live in communities that rely on railway services to get people to work.

Of course there is an alternative in Dartford—the motor car. Unfortunately, the A2 in my constituency is being dug up yet again on both sides of the carriageway, and it has been up for road works for the equivalent of five years out of the past seven. So there is understandable frustration. There is no real choice between alternatives. Two poor alternatives face my constituents and those of other Kentish Members—

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

Perhaps they should get on their bikes.

Photo of Mr Bob Dunn Mr Bob Dunn , Dartford

It is not a question of that. There is no facility for bikes to cycle down the A2—it was dug up by the Department of Transport.

Occasionally we feel that the Department of Transport is conducting a personal vendetta against the people of north-west Kent. No doubt the Minister will take steps to assure me that that is not so.

Now we have a White Paper which I and many colleagues fully support. It contains a coherent strategy and, importantly, it is gradualist. It will enable my colleagues in government to consult the wider interests —not least the Select Committee on Transport, so ably chaired by my hon. Friend the Member for Christchurch. The strategy will enable position papers to be issued from time to time so that we can evaluate the impact of the legislation on freight, on pensions, on employment prospects and on investment.

British Rail will gain in two ways—or rather, those who take over from it will. They will be accountable and in control, and they will be responsible. Dealing with British Rail at the moment is rather like dealing with the Liberal Democrats—like trying to strangle a jelly. One is passed from one person to another and time and again given standard replies. Senior management figures in British Rail have told me in conversation that they are ready and willing to take on the challenge of commercial liberalisation and the privatisation that this legislation and White Paper will offer.

The restraints of the Treasury will also be removed from the railway service. I know from our debates of a few years ago that my hon. Friend the Member for Christchurch shares my firm belief that, if British Rail is to be allowed to make amends for the indifferent service that it offers from time to time, it must be free to operate within the market, and that means access to financial support from the private sector —

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

British Rail has that now.

Photo of Mr Bob Dunn Mr Bob Dunn , Dartford

But not enough. There will probably be greater access to it in future.

The attitude struck by the Government today is wholly commendable, and thousands of commuters will welcome it, because we must put passengers first. It is the Government's responsibility to see that passengers' interests are considered and rewarded.

Many hon. Members have quoted allegedly poor examples of privatisation and of the private sector, but there is one example of private sector work about which I agree with the hon. Member for Thurrock (Mr. Mackinlay)—the Dartford bridge. It was built by private money and private enterprise, and it was built on time. For south Essex and north Kent, the Dartford bridge, as an adjunct to the tunnels which were full to capacity every single day, has made a tremendous difference. That should be stressed as a major example of how the private sector can work, how it will work and how it should work. given accountability, control and responsibility.

The difficulty with British Rail is that it is a monopoly. It is not like going to the supermarket; if people do not like Tesco, they can go to Sainsbury, Marks and Spencer or Gateway. If people cannot afford a car, they have no choice but to travel on the railway. Many of our constituents do not have cars; and even if they have them, they have nowhere to park them, so British Rail is their only choice, and sometimes that is no choice at all.

Hence I welcome and wholly support the White Paper and the legislation that will follow from it.

Photo of Hugh Bayley Hugh Bayley , City of York 7:34 pm, 29th October 1992

I should acknowledge an interest as I am sponsored by the National Union of Rail, Maritime and Transport Workers. Perhaps I should also acknowledge my paramount interest I represent the city of York. Many people claim to have railways in the blood; York has railways in its soul. People think of the minster and the city walls, but the past 150 years of York's history have been dominated by our place in the railway network. The A1 passes us by 20 miles away, but the east coast main line goes directly through York, which is why it is a modern, thriving city today.

Despite the reductions in the number of BR employees, the east coast main line headquarters and the north-east regional railways headquarters employ between them some 3,000 workers. York is the operational centre for more than 500 railway men and women. The carriage works employ 1,500 people; the national railway museum 200. There must be between 4,000 and 5,000 rail pensioners in York. York, more than any other city in the country, depends on the railways for its economic livelihood.

Rail privatisation could therefore devastate our city. I ask the Secretary of State to note this point. Privatisation could hit us harder than any other city. We could end up as a ghost town. There is no point in him claiming that for every BR job lost a private sector job will be created, because for the most part those private sector jobs will not be in York. If, for the sake of example, Richard Branson puts in a successful bid, his operation will be run from Gatwick airport or from wherever his corporate HQ are. He is unlikely to run the operation from York.

If works are contracted out to civil engineering or electrical engineering companies, the chances of York's jobs being replaced by other private sector jobs are minimal or nil.

I am not scaremongering. The railway men and women of York have given me a document written by John Welsby, chief executive of British Rail, and circulated to all managers in my region. It states: The medium term future for support services will lie within the private sector. Mr. Welsby says he is talking about jobs in new works design, project management, infrastructure renewal and maintenance, train maintenance services, station plant and building services, and computer services. So thousands of York jobs are at risk. We would be left without the railway industry forming the core of our local economy.

I have with me a voluntary redundancy notice circulated to all members of staff in regional railways north-east. For those who remain, wages will be at risk. A document sent to his staff by the on-train services manager of British Rail Network SouthEast states: I feel it only fair to advise you that on the basis of past privatisation experiences both your basic and average earnings will reduce when this comes about. This manager goes on to advise his employees not to enter into new credit agreements or mortgages that could get them into difficulty.

Great anxiety has been expressed to me about the security of pensions for railway pensioners. I welcomed the Secretary of State's remarks to the effect that he is considering establishing an independent, stand-alone, industry-wide pension scheme. He said three months ago that he was considering it, and I hope that he will soon confirm that that is the way the Government intend to proceed, because it would reassure thousands of rail pensioners in my constituency. Those people also want to be reassured that they will retain the travel concessions which they earned—they are not a gift—through a lifetime of service to the railways. A petition in my constituency is currently attracting thousands of signatures in favour of the retention of a national system of railcards for the elderly, the disabled, families and young people. The current proposals put railcards at risk.

York has two further special interests, the first of which is investment in new rolling stock. The Steer Davies and Gleave report, which was published on Tuesday, raises serious doubts about the prospect for investment in rail vehicles. Today I received a fax from ABB Transportation Ltd., the company that used to be called British Rail Engineering. The company confirms that the fears in the consultants' report are well founded. Over the past couple of years in York that company has invested heavily in the capacity to build modern aluminium-bodied railway carriages for Network South East. On the basis of discussions with Network SouthEast, it invested to create the capacity to build 400 vehicles a year. It is currently building 200 a year, because of Network SouthEast's cutbacks in ordering new trains". The company's present work load runs out in 1994, and unless there are further orders soon, it will run into difficulties because the company needs a year to order components from its suppliers. It is the only company in the United Kingdom able to make modern aluminium-bodied railway carriages. A gap in production will put at risk the company's future and the future of our country's ability to build modern railway carriages. The ABB fax states: unless the ground rules are clearly defined and are designed to assist positive decision making in a 'rail' future and positive investments decisions, the onset of rail privatisation will at the very least increase the commercial uncertainties faced by ABB Transportation Ltd., and in the worst case lead the company to review its medium term productive capacity. We cannot afford that on our railways or in British industry. Commuters in north Kent and Essex and throughout Network SouthEast cannot afford delays in the production of new carriages. The Secretary of State should give a firm commitment either to allow an increase in British Rail's external financing limit in the period leading up to privatisation to enable new orders to go through, or allow BR to do what he proposes for the private sector—to lease trains so that additional finance becomes available.

Another constituency interest was mentioned to me by the national railway museum, which has rights under section 144 of the Transport Act 1968 to claim redundant equipment from British Rail. It has been discussing with the Department of Transport the continuation of those rights which the Department says will be exercisable over future public rail operators but not over private sector operators. That could damage the rail heritage of which the national railway museum is our guardian and create an unlevel playing field, because it would be a cost for the public sector but not for the private sector competitor. Either the cost to the rail operator is minimal, in which case it can be imposed without fear on the private operator, or it is substantial, in which case the same rules should apply to the public and private sectors.

The acid test for the people of Britain is whether the service will be better or worse. The regulation proposals in the White Paper are to protect the interests of the franchise bidders, the cherry pickers. Will the Secretary of State provide a regulatory body, an "Ofrail", to protect the interests of passengers and the public? Will he look carefully at the franchise document, which I see as a 167-page cherry-pickers' charter because it lists, service by service and vehicle by vehicle, what is up for grabs by competitors? Will the new rail system provide a better or worse service than the one provided by British Rail?

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. I am sorry, but I have to apply the brakes.

Photo of Mr Iain Sproat Mr Iain Sproat , Harwich 7:45 pm, 29th October 1992

I should like to deal with two matters arising from the White Paper. First, I strongly support the Minister's determination to liberalise, privatise, and inject competition into Britain's railways. Privatisation has improved every industry to which it has been applied. The improvements have varied in content and size, but every privatised industry has got better for the customer, and that will be the case with the railways.

Britain does not have the rail system it deserves. Far too often the system, and especially passenger services, is dirty, uncomfortable and unreliable, and does not care about the needs and requirements of passengers. Of course, it also loses a great deal of money which the taxpayer has to cough up. There are exceptions, and in the past few years British Rail has made serious efforts to improve itself and has done so, but it is still not good enough. The country will not get the rail system that it deserves and needs until British Rail's monopoly has been broken and private sector competition has been introduced. That is why I strongly support the White Paper.

The second matter is an uneasiness which was increased when it was mentioned by the hon. Member for Kingston upon Hull, East (Mr. Prescott). It is that the White Paper envisages the undoubted benefits of bringing private sector methods to the railways and bringing in entrepreneurial innovation, but also proposes a vast increase in a new, extensive and complicated bureaucracy. Three new quangos—the franchising authority, the rail regulator and Railtrack—are to be created, and there is also the involvement of British Rail, which is not a private sector company, and the Government. Before the Bill is introduced, will the Minister look carefully to see whether, in our desire to control this, as we must, we do not make it too bureaucratically top-heavy and do not engage in bureaucratic overkill.

One of the quangos, Railtrack, is to be a subsidiary of British Rail. Will the Minister look again at that matter, because there are two strong objections to structuring the track authority in that way? I am not arguing against the establishment of a track authority; I am arguing against the establishment of a track authority that is part of British Rail. I do not see how a private-sector company can feel confident that a British Rail-controlled Railtrack will be able to make an independent decision between, let us say, two services that want to run on the same route at the same time—one of them being British Rail and the other being a private company.

My right hon. Friend will rightly point to the passage in the White Paper which states that the regulator will examine such matters. I have some experience of business, however, and I cannot think that any business man will believe that BR can be neutral when it comes to deciding whether to benefit another part of British Rail or a private competitor, despite the Chinese walls that will have been erected and the fact that a separate British Rail management will be involved.

It is hard to find evidence for my argument, because so far there has not been much attempted participation in British Rail by private-sector companies. None the less, I well remember being told by the chairman of Orient Express of the appalling aggravation, hassle and difficulty that he encountered when dealing with British Rail. He described how much easier it had been to deal with the French and Italian railway authorities.

We cannot expect British Rail to bend over backwards to help its competitors. We have seen a bit of the problem with Orient Express; and I understand that the Central Railways group, which is trying to run a track from Coventry down to the channel ports, is finding it almost impossible to deal with BR, which is making every conceivable difficulty. It is certainly clear—at least from the media, and we could not gain information in any other way—that BR did not bend over backwards to help Richard Branson. All our experience and common sense tells us that a Railtrack that is part of British Rail cannot take a neutral attitude to BR's competitors.

I have another objection to my right hon. Friend's otherwise splendid plans. Railtrack will be at the heart of the new system. It will be responsible for infrastructure maintenance and infrastructure investment; it will also be responsible for signalling and timetabling. That means that the old British Rail will be at the heart of the new system. If that really means the old BR culture—the old sloppy, slack, slovenly ways—I fear for the new system. What we want is a track authority that is independent.

During the summer recess, I had the pleasure of going to Sweden to look at its rail privatisation, or liberalisation, programme. The Swedes have a track authority, but it is completely independent of the Swedish national rail system. It bends over backwards to accommodate new competitors, but does so fairly; its director general came from outside the railways. I ask my right hon. Friend to look again at the idea of an independent Railtrack. I do not think that it would upset his plans—indeed, I believe that it would enhance them by injecting confidence into the private sector. I want the private sector to believe that its bids will be handled fairly and neutrally.

Having said that, I must end my speech by emphasising that—despite my uneasiness about the extension of a complicated bureaucracy, and about the establishment of a Railtrack that is not independent—I strongly support my right hon. Friend's proposals.

Photo of John Heppell John Heppell , Nottingham East 7:54 pm, 29th October 1992

I am grateful for the opportunity to speak—not just because I am sponsored by the RMT, but because I am a former British Rail employee and, in local government, have been responsible for the development of a number of rail-based schemes. I hope that I am a good supporter of public transport, and I feel that I have some understanding of the complexities of a railway's finances and operations. I welcome any proposals that will make the railways more efficient, effective and competitive, and improve their quality; I therefore cannot welcome the White Paper, for I see nothing in it that would do any of those things.

I recognise that I am not a member of a Government, and I know that the present Government are committed to privatisation. They have a right to press for that objective; of course they want to secure the necessary legislation and thus to implement at least one of the promises contained in the Conservative party manifesto. The White Paper suggests, however, that the privatisation objective has now become an obsession. Caution and common sense have been abandoned, and it is privatisation at any cost.

It worries me that we are debating this matter with so little information. The Secretary of State has been unable to give a full answer to any question that he has been asked. We began with a paving Bill that told us absolutely nothing; now we have the White Paper. John Harlow summed it up very well when he wrote in The Times that the White Paper consisted of 21 pages of large headlines, white space and mission statement markedly thin on detail". It is indeed markedly thin on detail, but the Secretary of State was very hurt by that criticism. He replied: It is nonsense to say that the White Paper is presentation rather than substance … Naturally we must have a Bill which will take a considerable amount of time to pass through both Houses, and it will be possible to go into more detail then. We waited for the detail. The first bit of detail came in October—not the 21 pages that we had seen before, but 167 pages. I was relieved, until I read the document and realised that nothing after page 29 had anything to do with privatisation: it was simply a description of British Rail's existing passenger services. Not one of those 138 pages —not a single paragraph or even a single word, such as the word "privatisation"—dealt with the Secretary of State's proposals.

I thought that at least 29 pages were an improvement on the 21 that we had originally had to consider. Then I realised that two of those 29 pages constituted an introduction. When I subtracted the blank sheets and white spaces, I ended up with a total of only 16 pages. The Secretary of State's supposedly more detailed document was actually shorter than the original.

We are left with a number of questions. What on earth has the Secretary of State been doing for the past three months? Does he think that he should be on performance-related pay? That could save the Treasury a considerable sum. If he continues to work on the same basis, I suspect that by the time the Bill is presented it will be short enough to be written on the back of an envelope —or possibly a rail ticket.

I exaggerate. There is another page. It is an important one. It tells us that it is important, right on the front. It says "Important Notice". I thought that I had better read this important notice. It tells us that the information and opinions contained in the document do not purport to be comprehensive. It does not surprise us that they do not pretend to be comprehensive when the document contains only 16 pages.

It was the bit after that that got to me. It says that recipients should not rely on the document's accuracy or completeness and that no responsibility or liability is accepted by the Department of Transport or the British Railways Board, or any of their respective advisers, officials, directors, partners, or employees as to its accuracy or completeness, or the information or opinions contained within it. So the document tells me straight away that it is not worth the paper it is printed on. Nobody seems to want to take responsibility for it—not the Department of Transport, not British Rail, not its employees. I do not blame them one iota. The Secretary of State, however, will have to take responsibility for it.

I suspect that people do not want to take responsibility for that document because the advice behind the scenes is that what is contained in it just cannot work. Half an idea in the Secretary of State's head will not turn into a practical reality. He should take note of the fact that the chief officer of the ambulance service did not listen to advisers who told him something similar about something that did not work. I do not ask for the Secretary of State's resignation. That is unnecessary. I have noticed that Secretaries of State for Transport come and go and that eventually they decide to spend more time with their families. I do not know how many Secretaries of State for Transport my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has seen off, but I am certain that it is a fair number.

The Secretary of State was not sure in July about the proposals that he wanted to make. He certainly is not certain in October. Again we are left with a lot of unanswered questions. What will the size of the franchisees he? We do not know. Will they operate on single lines? We do not know. Will they operate single services? We do not know. Will there be operator networks? We do not know. Who will train the staff? We do not know. When will the leasing markets be introduced? We do not know. How will train times be co-ordinated? We do not know. How will through ticketing be achieved? We do not know. What will be the effect on fares? We do not know. What is really worrying, though, is that the Secretary of State does not know. He did not know in July, He does not know in October.

What, however, the Secretary of State does do is to respond to any question to which he does not know the answer. It is a bit like Ross Perot. I have listened to the presidential debates. Whenever Ross Perot is asked a question that he cannot answer he says, "I'll set up a task force." Whenever the Secretary of State is asked a question that he cannot answer he says, "We'll work that out later. We'll have a quango to work it out." The number of bodies that will be stitched on to this new bureaucracy grows and grows. That new bureaucracy will equal that of the Civil Service.

When it all goes wrong, who will be to blame for a complex system that does not work? Will it be the Secretary of State, the new regulator, the new franchising authority, the passenger transport executives, local authorities, or British Rail's passenger and freight operators? We do not yet know how many there will be. There may be 10, or 100, or 1,000. The Secretary of State does not know. Will the Health and Safety Executive, or Railtrack, or the new joint industry boards be to blame? We do not know who will be to blame. It will be difficult for anybody else to find out who is to blame. The system will be so complicated that it will be a mess.

Many of us with an interest in the railways recognise that the railways were split up a long time before privatisation came on the scene. They were split up long before Sealink, Travellers Fare or British Rail Engineering Ltd. broke away. The railways were broken up into two parts—the railway industry, which included drivers, signalmen, the people who maintained the trains and the track—

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

Order. The hon. Gentleman's 10 minutes have come to an end.

Photo of Jacqui Lait Jacqui Lait , Hastings and Rye 8:04 pm, 29th October 1992

As a new Member of Parliament, it is somewhat dispiriting to have to listen to Opposition arguments that echo arguments that we have heard for the past 12 or 13 years regarding the merits or demerits of privatisation. This privatisation, as with all other privatisations, can only be good for the industry. It will come out of the hands of state bureaucracy and go into the hands of private enterprise which will show much greater consideration towards the people who use the railways and will try to provide the services that they want.

I have to declare an interest. I like travelling by train. I have not yet been completely put off travelling by train by British Rail's antics. During the summer recess I spent several days travelling across the United States by train. I would recommend that holiday to anybody. However, I, like other hon. Members, find that once I have ploughed through the letters that I receive about animals, the third world and many other issues, the majority of them contain complaints about British Rail. I do not intend to go into detail about the anger, frustration and despair that people feel, but the story is always the same: that British Rail's management are not delivering the service that they, as customers, require. People are not nostalgic about the trains of the past, even though they like travelling on steam trains. I used to enjoy travelling on them.

Photo of Mr Bowen Wells Mr Bowen Wells , Hertford and Stortford

My hon. Friend is not old enough to have done so.

Photo of Jacqui Lait Jacqui Lait , Hastings and Rye

I am of that age, I am afraid, but it is very kind of my hon. Friend to suggest that I am not. I always had a sneaking suspicion that the reason I was wearing a navy blue school uniform was so that the dirt from steam trains did not show. Today's trains have not improved significantly. They are still dirty. They are still late. Station staff are no more helpful now than they were then. We need a modern service.

I want to tease out from the Minister what is to happen to my beloved town of Hastings. It would be stuck on to the end of any franchising operation. It takes less time to get to Doncaster from London than it does to get to Hastings, which is only 65 miles from the capital. Until there is investment in the line, I do not believe that many franchisers will wish to include it, unless they are made to do so. I hope that the Minister will be able to reassure me by telling me how he envisages the station at Hastings being included in the franchise.

We know that there are problems about the tunnels in Hastings. They were managed by companies that were not the best run in the world. That is why there are problems; the tunnels were not properly checked and maintained. Hastings is an area of high unemployment. There is more unemployment per head of population in Hastings than there is in Newcastle and Sheffield. Our communications, therefore, desperately need to be improved. One of those communications is the line from Hastings to Ashford, which is crucial to the development of the channel tunnel and our infrastructure. Electrification of the line has been promised for many years.

Can the Minister tell me whether, on the privatisation and franchising of that line, there is any chance that electrification will go ahead before the legislation comes into force and whether Railtrack will accept private investment in a railway line such as the Hastings to Ashford line, by means of which the private sector could deliver the type of service that the people of Hastings, Rye, Ashford and beyond want and need? As with roads, we need a good quality service so that people can travel easily along the south coast and thereby benefit from the channel tunnel.

I welcome the White Paper, which will solve problems with the poor management of British Rail, and look forward to the introduction of the Bill and the help that it will offer my constituents.

Photo of Mr Ieuan Wyn Jones Mr Ieuan Wyn Jones , Ynys Môn 8:10 pm, 29th October 1992

The debate has highlighted the reason why the Government's privatisa-tion programme, and especially the White Paper, has caused so much concern among my constituents, Opposition Members and, rather surprisingly, some Conservative Members. The principal reason for the concern is the way in which the Government seem prepared to proceed with programmes, throwing aside the need for strategic transport planning and failing to recognise the strategic importance of railways.

It is odd that we are debating the White Paper without considering the environmental consequences of our decisions or recognising the strategic importance of railways in a European context.

The hon. Member for Harwich (Mr. Sproat), who is no longer in his place, said that he was extremely disappointed that Richard Branson was not allowed to secure some InterCity 125 sets. My constituents and I were delighted that he was not allowed to do so. The press reports that the hon. Member for Harwich mentioned suggested that Mr. Branson may have been given sets in north Wales, which would have led to the ending of InterCity services along the north Wales coast.

That is the fundamental flaw in the Government's policy. If InterCity services stopped running in north Wales, what would happen to Wales in the run-up to the single market and to our ability to get our goods to Europe? What would have happened to the Irish Republic, because its only rail access to Europe is through north Wales?

I well remember a debate in the House some years ago on the European dimension in transport matters. I recall how disappointed I was that the Government were so negative about the idea of a European integrated transport system. Countries such as Scotland, Wales and Northern Ireland are on the periphery of the European Community and can compete only if the Government understand the need for strategic transport policies.

We are concerned about the future of peripheral services, as described in the new plan for British Rail. InterCity services in Wales and main lines in the north and south of Wales are regarded as peripheral services by British Rail. There is no doubt that the introduction of franchising would place them under considerable threat.

Let us remember the valuable service that is offered by regional railways in Wales. It is a source of regret to my colleagues and me that British Rail runs Wales from Manchester, Swindon and Birmingham. Wales is not regarded as a region by the Government or British. Rail. All decisions affecting our regional railways and rural services are taken from outside our borders. There is a case for considering the future of Welsh railways in a Welsh context. As the Welsh Office is now assuming greater responsibility for administrative affairs and public finance in Wales, the future of our rail services should be considered from a Welsh perspective.

One of the difficulties with developing rail services in rural areas has been the lack of funding. We need major infrastructure investment—especially on the north Wales main line, if I may make a parochial point—if we are to compete effectively. One of the reasons why InterCity can no longer compete with the advances made on the A55 and the road network is the ease of travel. It can no longer compete because rail investment has not matched road investment. We are shifting more and more heavy cargo on to roads. We have an excellent rail service that needs proper investment so that it can shift freight, to our environmental, social and economic benefit. Investment in the north Wales line would be of immense benefit and would be better than trying to find ways of withdrawing InterCity from north Wales altogether.

I should like to put a number of questions to the Minister, the first of which is about the franchising authority. Will the authority make proposals for new passenger services? Will there be a stimulus for new services, and what criteria will it use in determining the need for the publicly supported network? Will the new private passengers service operator be required to meet the requirements of the passengers charter? Since the lack of punctuality and unreliability are the most serious interruptions to service, who will take responsibility if signalling is faulty? Will Railtrack pay compensation?

If a breakdown by another franchisee causes all services to be delayed, will the franchisee be responsible for compensation and or reimbursement of losses to other operators? Will the Government specify the standards that must be met in the Railtrack contract with operators and in the operators' ticketing terms with passengers? Will an Association of British Travel Agents type bonding arrangement be necessary so that compensation claims are met from a central pool? How realistic is it to expect that private operators will be prepared and able to pay from their revenue Railtrack's charges for maintenance, including safety costs and modernisation of the network?

What role—this is an important point—will the European regional development fund and other European Community structural funds, which are particularly important in Wales, play in continuing to support infrastructure renewal and modernisation? Will the transfer of some assets and most operations to the private sector lead to a reduction in ERDF grant aid, both in percentage grant and eligibility for grant? Many of the publicly supported transport services in mainland Europe, particularly rail, receive tremendous support from their own Governments and from the European Community. Even if the Government were to proceed with their privatisation programme, would that eligibility for grant still apply? The Government must answer those questions.

Wales will not benefit from the new proposals. We know that the north Wales line was retained for InterCity services only by the skin of its teeth. It almost went in the past few weeks, and if Richard Branson had been given sets, such services would have disappeared. We know that, in 1994, people such as Richard Branson may be in the market again. We know that they will not run services to north Wales. They will be looking to run the profitable routes or the core services of the network. Services to north, south and mid Wales and our regional railways must be retained as part of an integrated transport network. Unless assurances are given, we shall oppose the proposals in the Lobby.

Photo of Alan Haselhurst Alan Haselhurst , Saffron Walden 8:19 pm, 29th October 1992

I first add my congratulations to those of my colleagues to my hon. Friend the Member for Southport (Mr. Banks) on a most assured maiden speech. We shall all look forward to hearing him again on this and other subjects, and on this subject it will be a pleasure to work with him in the Select Committee on Transport, of which we are both members.

I must declare an interest which is noted on the Register of Members' Interests—although I should add that my interest is closely related to freight, whereas my speech tonight will be largely directed towards passenger services.

Opposition Members have been determined to think the worst of the Government proposals, whereas I am prepared to take a rather more upbeat approach, as they offer a great deal of hope.

Photo of Alan Haselhurst Alan Haselhurst , Saffron Walden

Hope from my point of view.

I approach the proposals with certain objectives in mind. I hope that it may be taken for granted that we expect the highest safety standards to be maintained. One trusts that there will be a coherent national timetable and inter-availability of tickets. Having said that, my principal objectives are to bring about better management of our rail services, and a shift from road to rail of both freight and passengers. I want an increase in investment and an improvement in the quality of service.

I am prepared to welcome the proposals which my right hon. Friend the Secretary of State has put before the House. I see in them the possibility that my objectives may be achieved.

It has been well demonstrated that in every case of privatisation we have been able to bring about dramatic improvements in management standards. Throughout the history of British Rail one cannot help noticing a management culture which is too inbred, which has tolerated lack of innovation, and has shown extraordinary equanimity about low standards of service, as lost revenue seems more acceptable than high costs.

There is an in-house engineering culture in which unit costs are too high, time scales are too long and attitudes too incestuous. There is a work force still affected by restrictive practices, which has a poor interface with customers. There are still byzantine accounting practices, rooted in post-war academic dogma, which discourage sensible cash management and encourage short-termism.

I have not plucked those views out of the air. I can assure hon. Members that they are informed by discussions with people within British Rail. It is recognised that that has been the blight of management over the years —I acknowledge the fact that, in recent years, with the establishment of profit centres, there has been some improvement. However, there is still enormous scope for an altogether improved management culture in our railways, which could be brought about by my right hon. Friend's proposals.

It is natural that one should hope that an improved railway system will attract more freight and passengers. I hope that, as more detail becomes available, our discussions will reach the point of maturity at which we may be able to persuade my right hon. Friend that we should have built-in targets for achieving a shift from road to rail. I should like there to be a clearly defined purpose in the legislation, not simply the hope and expectation that we may achieve an improvement. I should like that consideration to influence the charging regime for freight as well as the design of the franchises for passenger services.

It seems that the vehicle for investment will inevitably be Railtrack, and that the key to future investment in infrastructure will lie with the rules which govern Railtrack's ability to raise money, and the level of public contribution which will accompany that. The more assurances that we have that a more liberal regime will exist for the new track authority the more confident the House and the country will be.

We also want to know more about the charging system. There are so many queries for potential freight operators and franchisees of the passenger services. They want to know what sort of burdens and restrictions will apply to them. Another key factor to which much more thought needs to be given is the development potential of the stations and the land. It is proposed at present that stations and land may be sold or leased, but the wording of the White Paper undoubtedly implies that the Government are prepared to welcome suggestions.

If those assets are capable of producing considerable sums, I shall be anxious to try to find a way of ensuring that those moneys are fed back into the improvement either of the infrastructure or of services to passengers. I hope that that will be the guiding thought in determining how those assets should be handled.

The passenger franchise idea is quite ingenious in terms of achieving a better quality of service and, certainly at the outset, I rather prefer that approach to simply believing in open access and the existence of competing train services on the same set of lines. The franchise idea seems the only realistic way of getting regional railways, Network SouthEast especially, into a better state. I welcome that aspect of the proposals.

I also welcome the fact that the Secretary of State says that there will be flexibility. That is good. Again, as ideas are fleshed out through the extra information which my right hon. Friend has promised the House, I hope that we shall give more specific guidelines to the franchising authority about how we expect it to determine the final shape and content of the franchises.

The analogy that comes to mind is the way in which we franchised out the television stations. We should have a distinct quality threshold which goes beyond mere reliability, safety and so on, and offers passengers the prospect of a better ride on the railway. The conditions in which many people have to commute are appalling, and even some of the more recently designed rolling stock is also the most uncomfortable. It may be cleaner but it is uncomfortable. I hope that such considerations will become a material factor. Surely they will be the key to determining the nature of future rolling stock, which, whether it is new or refurbished, should be better designed.

I see a potential conflict in allowing two operators on the same track. The question of engineering works may arise. One operator might be content with a speed restriction, whereas another might insist that a bridge be rebuilt or redesigned so that his trains can go faster. If the engineering work is carried out, would the first operator have to bear the burden of increased costs, willy-nilly?

Other practical problems will arise. How will the dividing line be drawn between operators at stations such as Stevenage and Reading, where InterCity expresses now interchange with Network SouthEast? Commuters could have the opportunity to step on to an express train run by one operator over track which is also part of the franchise.

I hope that consideration will be given to out-of-area operations, too, as part of the franchise. A franchisee may say, "I can use my capital equipment to offer a cheap, low-cost service to destinations outside my area." That would help to provide extra services for passengers and valuable revenue for franchisees. All those ideas will help to ensure that the franchisees deliver high quality.

My right hon. Friend the Secretary of State must of course expect questions, even from Conservative Members, on the proposals. We are bound to reflect our constituents' queries on such matters. We are dealing with an industry in which expectations have been so low for too long. We all recognise that the proposals relate to a highly complex operation. The approach of the Secretary of State is innovative, so it begs questions. It is inevitable that those doubts will have to be resolved. It is time that we tackled the subject. My right hon. Friend is right to put this challenge before us.

Photo of Keith Hill Keith Hill , Streatham 8:29 pm, 29th October 1992

I first declare two interests —as a member of the Select Committee on Transport and as an officer for 16 years, until the general election, of the National Union of Railwaymen, now the National Union of Rail, Maritime and Transport Workers. I am sponsored by that union.

On the basis of that long connection with the railway industry, I turn immediately to a fundamental difficulty in the White Paper proposals. The Government plan to separate infrastructure from operations as their preferred method of privatisation. The separation of managerial responsibility for track and train operations strikes at the heart of the profession of railway management. It will jeopardise the planning of investment and the operational integrity of the system.

The greatest benefits in terms of financial returns and customer satisfaction arise when the whole of the equipment on the line—track, signalling and rolling stock —is renewed at one time. That policy, known as total route modernisation, has been pursued on the east coast main line and on the Chiltern line where passenger numbers and revenue are growing. Such modernisation schemes depend on close co-ordination between track and rolling stock at the stages of specification and implementation. If responsibilities for track and for rolling stock are separated, as the Government propose, we will face the problem of one party wishing to proceed with modernisation while the other may not be ready to do so.

Even worse. if there are several different operators on a route and one is unable or unwilling to provide improved rolling stock, will the pace of modernisation be determined by the speed of the least innovative operator? The separation of the responsibility for track and the responsibility for operations has the potential to create even more trouble on a day-to-day basis when breakdowns and failures inevitably occur.

There will be disputes about who is to take the lead in sorting matters out, and about the right of an operator to use rolling stock and train crews to minimise passenger inconvenience rather than to do what suits individual operators. Determining who is responsible for shortcomings in services will be time-consuming, bureaucratic and often inconclusive. The scope for buck-passing at the expense of the passenger will be endless.

At present, we at least know whom to blame when something goes wrong, and we often do. It is British Rail. No intensively used passenger railway system in the world separates the management of track and operations in the way proposed by the Government. I invite the Secretary of State, through the Minister, to name any respected professional railway operator or engineer who believes that such a division represents a satisfactory basis on which to run a railway.

The Government have a history of ignoring the advice of professionals and running into trouble. They did so over the poll tax. If they had listened to professional advice on electricity privatisation, they would have avoided the fiasco of the pit closure programme. Will the Minister given an undertaking to take serious heed of those with professional operational experience on the railways? Will he give a commitment that he will think again about the separation proposals in the light of advice he receives?

We have heard a great deal from various speakers in the debate about the extraordinary bureaucratic structure being proposed in the White Paper to replace the single structure of British Rail. Not only will new operators and franchisees face a multiplicity of new bureaucratic structures, each with a finger in the pie, but the chief player in the game will still be the Government in their least encouraging guise, as the Treasury.

The consultation document on passenger franchises makes it perfectly clear that Most passenger services would at present not be viable as stand-alone businesses. In other words, most passenger franchisees will rely on subsidy from the Government doled out by the franchising authority.

The critical issues here will be the length of franchises and the reliability of the subsidies. I know that the Secretary of State is well aware of the significance of those matters, because we discussed them yesterday during his appearance before the Transport Committee. He made a number of important commitments on that occasion. I will spell them out and I hope that they will receive confirmation before the whole House.

As the Secretary of State and the Minister know well, the normal time scale for most railway investment is a minimum of 25 years and often 30 or 40 years. The White Paper speaks of franchises of variable duration. Until yesterday, it was generally believed that the franchises were likely to be on offer for periods of five to 10 years. Yesterday, the Secretary of State referred to franchises of five, 10 or 15 years—and possibly longer.

That point is vital. A fundamental question mark hanging over the Government's proposals in relation to investment is whether franchisees would be willing to engage in the required scale of asset renewal and improvement when they are unlikely to be in business long enough to derive the rewards of their investment. The Secretary of State seemed yesterday to have answered that question, although his answer gives rise to further questions relating to competition when franchisees and/or operators will enjoy such long franchises.

There is an additional and equally important question which arises from the reliability of the level of subsidy initially agreed between the franchisee and the franchising authority. The Secretary of State yesterday appeared to give an important answer to that question. In undertaking a franchise, the private operator will be asking for long-term financing from the banking system. Unless there are firm guarantees about the level of subsidy, there is no way in which the banks can have confidence in such investment.

The subsidy will come ultimately from the Treasury, which operates on the three-year cycle of the public expenditure survey round. In practice, the Treasury often parts with money no more than one year in advance. That is the dilemma between the long-term needs of the railway and the short-term decision-making of the Treasury with which British Rail has long had to wrestle.

The potential problem for the franchisee is how to conclude successful negotiations for the leasing of assets over five, 10 or 15 years when it would appear that his guarantee of subsidy is for three years at the most. The consultation document maintains that the Government intend that the subsidy will be determined in advance for the whole period of the franchise, but it adds the ominous words: both grant and the service specification may be subject to periodic review. Yesterday, the Secretary of State was reasonably emphatic that subsidy would be at a guaranteed level for the duration of the franchises. He was less than explicit on the issue this evening. We seek again from the Minister an explicit guarantee that the subsidy will be at a guaranteed level for the duration of the franchise.

The White Paper raises many more questions than it answers. The Government are embarking on an elaborate process of consultation to try to find the answers to some of the questions. It might have been more sensible to delay the commitment to privatisation until they had sorted out those questions. It would certainly have been more sensible to delay publication and proceedings on a Bill until the Transport Select Committee had completed its work.

The bottom-line question is whether privatisation will lead to the growth of investment which is so desperately needed in railways. Could that objective have been better served by a better-funded British Rail? I am bound to say that, so far, the balance of evidence does not favour the Government's proposals.

Photo of Mr Nick Hawkins Mr Nick Hawkins , Blackpool South 8:38 pm, 29th October 1992

I add my congratulations to those of other hon. Members on the excellent maiden speech by my hon. Friend the Member for Southport (Mr. Banks). I know that we will hear him many more times in the Chamber speaking adeptly on this issue and on many others.

I am delighted, first, to take up some of the points made by the hon. Member for Nottingham, East (Mr. Heppell). The hon. Gentleman spoke wittily on the subject of the latest consultation document, but what would Opposition Members have said if the document had not been a consultation document or if it had not contained a full description of the current system? They would have criticised my right hon. Friend the Secretary of State for not including such a description.

Photo of Mr Nick Hawkins Mr Nick Hawkins , Blackpool South

I am sorry, but we are all caught by the 10-minute trap—and I did not intervene in the hon. Gentleman's speech.

It is abundantly clear that the document is a consultation document inviting views. That is one of its great merits. I appreciated the wit of the hon. Gentleman's speech, but I should point out that the section at which he most poked fun—that headed "Important Notice"—could not have been omitted. For a number of years in the early 1980s, I was the secretary of the Railway Lawyers Group, a national organisation, and I feel that the hon. Gentleman should understand that those words have enormous legal significance in relation to the investment for which hon. Members on both sides of the House argue.

If those words were not contained in a document inviting views on franchises, which are legal and financial matters, the document would not be appropriate. When poking fun at them, the hon. Gentleman should bear in mind that it lies ill in his mouth and in the mouths of his hon. Friends then to say that we need more investment from the private sector. Only if such matters are carefully addressed can we expect private sector investment to he forthcoming, and it is in attracting such investment that the significance of the document, the White Paper and, eventually, the Bill, lies.

The most important aspect of the White Paper is that it states that passenger safety is paramount. Hon Members on both sides of the House will acknowledge that that is stated time and again in the White Paper and the consultation document, and I am sure that the concept will have all-party support.

I regret to say, however, that many Opposition Members seem far more concerned about the morale of the staff—which, I may add, I do not discount as an important factor—than about passengers who are the customers of the railways. The railways are there to serve the people. The hon. Member for Kingston upon Hull, East (Mr. Prescott) ought to bear it in mind that, if Opposition Members go to public meetings—not party or union meetings—and suggest that there has been nothing wrong with British Rail since the industry was nationalised in 1947–48, they will be laughed out of court.

The White Paper and the Bill seek to improve the service that is given to passengers. The hon. Member for Preston (Mrs. Wise)—who is not in her place—complained that we should be talking not about customers but about passengers. She is missing the point. Passengers want to be treated as customers and they want better service than the service that they have had to put up with for years.

The acid test of the Government's proposals is that, with the involvement of private sector franchisees, there should be a better service for passengers. I welcome the Government's policy because I recognise that the private sector operators who will be brought into the industry will be similar to those who run airlines, whose staff take care of their customers.

I am the first to recognise that British Rail has many dedicated staff who believe in customer care. The problem lies with the minority who do not. They are at the sharp end. I am lucky: I use the north-west main line twice a week, and its staff have very high standards. Many other British Rail staff also have high standards but—no doubt like Opposition Members—I am nevertheless besieged by complaints. As the hon. Member for Streatham (Mr. Hill) said, we know who to complain to at the moment—and we often do complain—about the British Rail staff who let the side down, who are seen leaning on brooms instead of doing their work and who cannot answer passengers' complaints. [HON. MEMBERS: "Come off it."] Opposition Members may make scornful remarks but I am sure that they have to answer the same complaints in their surgeries as I do.

When I was in the United States with a number of Opposition Members, including the hon. Members for Thurrock (Mr. Mackinlay) and for York (Mr. Bayley), we saw a shining example of the benefits of the private sector in rail transport. [HON. MEMBERS: "Where?"] At the Union station in Washington DC, which is the showpiece.

Anyone who has been to a British Rail station in recent years should recognise that one of the best things that has happened to customer service is the involvement of the private sector. One can now get a far wider choice of meals, and, under the new proposals, we look forward to still wider consumer choice. Opposition Members will have to answer to their constituents for the fact that they pour scorn on such improvements and defend an outmoded socialist bureaucracy that does not provide an adequate service to customers.

I believe that the monopoly must be broken, not least because BR as it is now has withdrawn the direct InterCity service on which my constituents have relied for many years. The hon. Member for Ynys Môn (Mr. Jones) talked about the dangers of the private sector and what might happen to services in his constituency. He is lucky because his constituents still have a service, whereas British Rail has withdrawn the service to my constituents. The hon. Member for Preston should realise that the customers who now have to transfer from the InterCity service in her constituency—many of them disabled customers who have to negotiate a footbridge or steep ramps—are not getting a proper service.

We want to open up opportunities to people who can run a through service to the biggest tourist resort in the country, which has always had a service. Opposition Members saw that service withdrawn on the Monday of their party conference in Blackpool and ought to have been aware of the complaints.

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

The hon. Gentleman was not there.

Photo of Mr Nick Hawkins Mr Nick Hawkins , Blackpool South

I was there. I travelled on the last through service to my constituency, and I can tell Opposition Members that I have always been a regular rail traveller. It was Opposition Members who arrived at their party conference by car and who were not aware of the complaints of their constituents and their party members.

Opposition Members are very unwise if they pour scorn on the welcome involvement of private sector capital. They claim, in a mealy-mouthed way, that they are not against some private sector involvement, but everything that they have done and proposed is intended to deter the involvement and investment that they claim to support. The hon. Member for Kingston upon Hull, East has already threatened publicly that a Labour Government would immediately withdraw the franchises. What do such threats do to encourage the private sector to bring in the investment that he claims he supports?

The Government are committed to bring in as much capital as is needed, and our proposals represent the only way to do that. I am not an ideologue. I believe in the injunction, "If it ain't broke, don't fix it." The problem with British Rail is that it is broke, both financially and because it does not provide an adequate service to customers.

I accept that Opposition Members with real experience of the industry have made some valid points. I accept the need to ensure through-ticketing in the revised system and that safety is the paramount consideration in the revised system. I also feel, however, that our principal duty is to look after the passenger and the customer.

I strongly agree with the hon. Member for York that the country's rail heritage should be looked after.

Photo of Jane Kennedy Jane Kennedy , Liverpool Broadgreen 8:48 pm, 29th October 1992

I make no apologies for being about to pour scorn on the proposed privatisation of British Rail. However, before I do that I have a confession to make. In this debate on the new opportunities for the railways, I speak as a confirmed motorist, albeit as a motorist with a very uneasy conscience; one who uses her car knowing full well what damage that causes to the environment and the congestion that it causes in cities. I do so also as a motorist who knows that by using her car as regularly as I do I increase the likelihood of my having an accident. I deliberately choose a form of transport that is less safe than the railway service.

I am the kind of motorist who is looking for an intitiative by the Government that would persuade me to travel by rail. However, I see nothing in the White Paper to persuade me to do that. I am an occasional rail traveller whose tolerance level sinks low where rail travel is concerned. In comparative terms, I can tolerate a hold-up at junction 14 on the M62 with equanimity. However, I fuss and fume over the smallest delay or inconvenience when I travel on InterCity.

Unlike the hon. Member for Hastings and Rye (Mrs. Lait), I tend to get off a train infinitely more stressed than when I got on. I rage at the three classes of rail passenger when first class passengers travel in spacious luxury; when second class—sorry, standard class—passengers receive a free cup of tea or coffee; and third class [sorry, saver ticket holders—are lucky to get a seat on some trains.

If my ticket costs as much as £30 for a third class return trip, why cannot I be guaranteed a seat? Why is the food so expensive? Motorway services and BR rip off travellers quite shamelessly. Therefore, I fret and grumble about unexplained stops. Why can one never quite hear what the guard is saying just when you really want to hear? I sit in my stationary car just north of Birmingham and persuade myself that at least I have some control over my journey.

Those may be somewhat petty examples of the frustrations felt by rail passengers, but they are nevertheless genuine and deeply felt. However, it is irrational for me to rail at BR over its pricing policy when the Government's failure to subsidise BR forces it to raise revenues in the only way it can. It is irrational for me to grumble about unscheduled stops and to imagine that no such delay would have occurred had I gone by car. However irrational that may be, I cannot deny those feelings, and I thought that it was important that I should explain them to the House.

Conservatives take that experience and the real frustrations of rail passengers and they exploit them for the pursuit of their own privatisation dogma just as they have done whenever they pushed our national assets and public services into the private sector. The Government told the public that things would be better when the gas or electricity supply was run by the private sector. However, over the past few weeks we have seen the chaos that has been created in our coalfields by the privatisation of our energy industry.

The Conservative party believes that people will have more control and accountability as customers than as passengers of a public service. In the past, the Conservatives have said, "Your child will enjoy his or her school meal more if it is prepared by a private company rather than by school dinner ladies." They have said and continue to say, "Your hospital will be cleaner if it is cleaned by a private company rather than by your ward domestic who keeps stopping work to chat to you, ask how you are, make you laugh and then warn you not to burst your stitches."

In paragraph 5, the White Paper plays upon the frustrations of rail passengers and it makes the right analysis of the problems facing passengers, but it prescribes the wrong treatment. It states: BR's staff and management work hard to improve services. But they are limited by the structure of the industry in the public sector. That is the wrong diagnosis and the wrong treatment for the problems facing BR. That is the Conservatives' privatisation con trick all over again. They cuddle close to rail travellers and say, "Don't worry. We know how you feel. We can assure you that your rail journey will be less frustrating if Mr. Branson runs the train than if BR runs it." However, the Secretary of State was tonight unable to reassure hon. Members when he was asked specific questions about the lack of detail in the White Paper.

When passengers complain about BR, they are told that it is all BR's fault; if only it was privatised, there would be no more unscheduled stops. It is claimed that prices will come down because there will be more competition. That is just not true, as our experience of other privatised monopolies has shown. Privatisation is not a panacea for the problems facing BR.

I want briefly to illustrate the point by describing the problems that have faced water customers in my constituency. Residents in a road in Old Swan complained to the water authority that there were bits in their drinking water and were told that they were imagining it. They were told that they were the only people in the area complaining about it. They were told that their domestic pipes were the problem. One elderly woman bought a new washing machine, although she could ill afford it, when there was nothing wrong with the old one.

A survey of residents carried out by the Labour party showed that four out of five residents had experienced problems and a number of them had reported those problems. That is an example of how privatisations have not worked in many of the areas when the Government have forced them on the people of this country. I am happy to say that the water authority has undertaken to renew the mains supply, but there is no compensation for those who were persuaded that the remedy lay in their own hands.

What remedy will be available to rail travellers after privatisation? I do not know the answer to that and I have seen no remedies that will work. However, the Government will be able to say, "It's nothing to do with us now. Don't complain to us; we are no longer responsible. Go and see the franchising authority." People will be told to go to the operators and Railtrack.

The Secretary of State will no longer be ultimately responsible for passenger safety. Paragraph 79 of the White Paper states: The primary duty for guaranteeing the safe operation of the railway will rest with Railtrack and individual operators of trains, terminals, depots etc … Railtrack and operators will be responsible for undertaking the necessary investment which will sustain safe operation". That is different from the present situation where the Secretary of State is responsible. Who should be providing failsafe doors to prevent further tragedies in which people fall to their deaths from trains?

For those who rely on it, the rail network is vital to their ability to get to work or for the delivery of freight essential to their work. It is a key element in the management of our economy. That reason alone is good enough for me to believe that political accountability for the operation of the rail service is essential.

I do not believe that privatised rail operators will pay sufficient heed to long-term regional planning that is so necessary, if not essential, for areas such as Merseyside and my constituency. Unless it is Government-led, how are we to see investment in a cross-Pennine rail link which would create a land bridge across Britain from Humberside to Merseyside and encourage the flow of freight and passengers to and from Scandinavia and northern Europe through Hull to Liverpool and on to Ireland?

With respect to greater choice, all I can see after privatisation for rail passengers is that the choice will be as it is now. Many of those passengers will do what I do now because the White Paper offers no hope to motorists like me who would rather travel by rail.

Photo of Peter Luff Peter Luff , Worcester 8:57 pm, 29th October 1992

We have always known that Blackpool is famous for fresh air and fun. Clearly, something in that air lends a passion for railways among hon. Members from that part of England. I congratulate my hon. Friend the Member for Blackpool, South (Mr. Hawkins) on his vigorous defence of the railways and, in particular, my hon. Friend the Member for Southport (Mr. Banks) on his vigorous and entertaining maiden speech. He talked of his problem of being mistaken for our hon. Friend the Member for High Peak (Mr. Hendry). I fear that I suffer a worse fate; I am regularly mistaken for my hon. Friend the Member for City of Chester (Mr. Brandreth).

It is probably right that I declare two modest shareholdings, for I am a shareholder in two of Britain's highly successful private railways. I am a modest shareholder in the Severn Valley Railway. Therefore, I attach great importance to the comments of the hon. Member for York (Mr. Bayley) about the possible impact of the legislation on the national railway museum. I hope that the Minister will carefully consider that matter.

In response to the hon. Member for Liverpool, Broadgreen (Mrs. Kennedy), I am also a shareholder in Eurotunnel. Last week, I had the privilege of being on the first passenger train to go into the channel tunnel. Of course, the channel tunnel is a railway system rather than a tunnel. It is a very vigorous example of what the private sector can bring to transport in this country, and I congratulate all those involved in it. I unreservedly welcome the private sector's involvement in railways. Why should British Rail uniquely be disqualified from the advantages that privatisation has brought to other privatised industries—the private sector flair and capital?

Many hon. Members heard the comments of my hon. Friend the Member for Christchurch (Mr. Adley), but his views are not widely shared on Conservative Benches. However, Conservative Members share his view that the Government's objective should be a better railway, and we are convinced that the Government's proposals will provide precisely that.

I pay tribute to the present railways. I am a regular user of InterCity, of regional railways and Network SouthEast. Again, in response to the motoring hon. Member for Broadgreen, I wish that I could arrive as reliably at my destination by car as I can count on arriving by train.

I thoroughly endorse the comments of my right hon. Friend the Secretary of State about the radical change in British Rail's approach and performance in the past 10 years. On most measures of business performance, BR outperforms its European competitors. InterCity remains the only main line railway in Europe to operate profitably. It also runs more trains at more than 100 mph than any other European railway. We can look with confidence to the railway staff, many of whom will move to the new private sector operators to rise to the challenge of the private sector.

However, there are problems with the network. There is poor marketing at local level, and limited access to private capital. Investment policy is determined by the Treasury, not by need and, very worryingly in some recent developments in the railways, there is no transparency of charge which enables private operators to enter the market.

In my constituency of Worcester, I see stations not fully exploited and their potential not fully explored. I see confusion, not clarity, about where to address complaints. I see timetables that are not consolidated for the benefit of the travelling public in the way that they are for bus services. It is difficult to work out how to get to London or understand the range of destinations that are served from my constituency. I see a destination—one could call it in-fighting—between the three passenger sectors of the railways to provide through services to London, and that has significantly delayed the development of a good service. I am delighted that those problems will be resolved and that we will have the new turbo trains in next May's timetable. The success of those new through services will lead to enormous pressure on Railtrack for re-dualling of the Cotswold line between Worcester and Oxford

The success or failure of the Bill will depend crucially on its detail. I am sure that the principle of franchising is absolutely right, but we must make it work in practice. In that context, I welcome the Government's clear commitment which Opposition Members have sought to criticise on many occasions and have sought to deny that we will subsidise those socially necessary services.

However, I should like to raise several details with the Minister. I realise that he will not have an opportunity to reply to all of them, but I hope that he will be able to reassure me on them in due course. I am aware of the Secretary of State's comments about not pushing detail too far at this stage. We must let the consultation process and the various detailed documents that have been promised receive their due consideration. I congratulate the Government on their approach in that regard.

The hon. Member for Streatham (Mr. Hill) has stolen some of my thunder about the apparent conflict between the length of franchises and the need for major capital investment by operators. The new class 91 locomotives which are operating successfully on the east coast main line cost about £8 million each and have a 30-year design life. The west coast main line urgently needs new trains, which will cost between £12 million and £15 million. The InterCity 125 units which serve my constituency and many other constituencies certainly will not last indefinitely, either.

We need to be sure that the franchise periods will be sufficiently long to encourage operators to make new investments. Those new investments are important not only for the manufacturers of that rolling stock and its locomotives but for the quality of service that the new private operators will provide. I also share the view that we must be sure that the Treasury will be prepared to commit subsidy over a long time. Indeed, the public expenditure survey must not be the limit of the franchise period.

Many hon. Members share the concern that more freight should be attracted on to the railways. I am confident that private-sector practices enhance that process. I am encouraged by Ministers' frequent assertions of the importance which they attach to that process.

It has been suggested to me most forcefully that more transparency of cost might increase the costs to freight operators and lead to disputes, for example, about the level of track maintenance required, which differs wildly between the high-quality run required for the 225 km per hour passenger trains and that required for heavy freight trains. I hope that the Minister will reassure me that the charging regime that is introduced will encourage the use of railways for freight transport.

I am similarly encouraged that, although it is planned that the infrastructure and the rail track will remain in public ownership, paragraph 18 of the White Paper envisages possible private sector ownership in the long term. Will the Minister reassure me that, if a proposal comes from the private sector, earlier private ownership will be possible?

I am sure that every hon. Member attaches importance to network benefits for timetabling, through-ticketing and the national discount structure operated through the railcard system. I am convinced that the application of information technology could solve the timetabling and through-ticketing problems but what about the discounts, which are so appreciated by such a wide range of groups in my constituency?

My final detailed point is on how regulation will work. Will it be overseen by people steeped in the existing British Rail management style, techniques and practices or by new brooms from other sectors? In the privatisation of the telecommunications industry we saw the crucial importance of the effectiveness of Oftel. The qualities of Professor Bryan Carsberg will be called for in the regulator of the railways. I hope that we shall also have an assurance from the Minister that we will not follow the example of previous privatisations and call the office of the regulator "Ofrail".

The principle of the forthcoming Bill is right. I look forward to its earliest possible introduction and the benefits that it will bring to all the passengers who will experience the services that will flow from it.

Photo of Andrew MacKinlay Andrew MacKinlay , Thurrock 9:06 pm, 29th October 1992

There are many comments that I should like to make, but time, and the fact that I am a member of the Select Committee, dictate that I should reduce my remarks to several headings. I shall endeavour to do that.

Before doing so, I invite you, Mr. Deputy Speaker, when you read your Hansard over cornflakes tomorrow morning, to reflect on the content of the speeches of Conservative Members. After the ritual congratulations to the Secretary of State on publishing with an innovative White Paper, there followed a catalogue of questions, followed by a litany of hope, as we heard in the speeches of the hon. Members for Worcester (Mr. Luff), for Hastings and Rye (Mrs. Lait), for Saffron Walden (Mr. Haselhurst) and for Blackpool, South (Mr. Hawkins). Time after time they asked questions that are not answered in the two documents pumped out by the Secretary of State in recent weeks.

One must ask why there are so many unanswered questions. We must come back to the fact that the genesis of the documents before us today is not the present Secretary of State or Minister of State but the premiership of Margaret Thatcher, who dictated, along with her political colleagues, that British Rail should be privatised. The two Ministers inherited this chalice and have had to try to put something together. I know that they deny it, but I do not believe them.

The Secretary of State and the Minister of State are decent people who have fallen among sinners. Effectively, they have had to cobble together something to present to Parliament because they inherited the policy from their predecessors. I do not believe that their hearts are in it. Nor have they been able to complete the job of presenting meaningful legislation. Consequently, we have been presented with an opaque White Paper. The Bill will be purely enabling legislation, and if it is passed and receives Royal Assent it will be a total abdication by Parliament of its capacity to control and shape the future of an important part of our transport system.

What is happening with British Rail is similar to what happened with the poll tax. We were told that the rating system was unwelcome and we needed to find alternatives. However, when it was examined, generation after generation of people realised that it could not be done easily and painlessly. Similarly, rail privatisation has a superficial attraction, but on examination one finds it cannot be done while maintaining a national service and network and ensuring swift mobility, at low cost, in our cities.

If the legislation receives Royal Assent, Parliament will have ensured that parts of our rail network will be privatised without further debate in the House. I predict that Conservative Members and their successors will greatly regret a decision taken now which means that they were unable to influence, temper or reject the privatisation of key areas of our rail network. It shall have been a profound mistake. We would be abdicating the capacity to decide the shape of our rail network and who should control it to the franchising authority, and that is unprecedented, even in terms of this Government's privatisation programmes.

I know that the Minister of State will consider that I have repeatedly probed him on the issue of the British Transport police. I continue to do so because we never get a reply. I probed the matter in the Committee of the British Coal and British Rail (Transfer Proposals) Bill, in the Select Committee on Transport yesterday, and I shall do so again tonight. Why are the Government unable to tell the House what they intend to do about the much-respected and appreciated British Transport police who are vulnerable, especially if the Government succeed in their objective of privatising, as distinct from franchising, some of our rail network? If I am wrong, I cannot for the life of me understand why we must wait for another paper from the Minister of State. Why is he not able to reassure us, the public and the police at the Dispatch Box tonight?

The hon. Member for Dartford (Mr. Dunn) claimed to have the worst railway line in Britain within his constituency and dismissed my claim. I do not want to get into an auction with the hon. Member—I accept that we both have the worst railway lines within our constituencies.

The proposals before us are irrelevant to the needs of passengers and of customers, who have to try to tolerate the line from Dartford or the line which goes through my constituency, through Tilbury, Grays and Purfleet. If the proposals receive Royal Assent, these services are likely to be diminished still further. There is no prospect of either line being an attractive purchase or franchise for any sensible or prudent financial institution or individual.

I fear that there will be a temptation to give away the real estate and the service to the present managers of such lines. I underline the word "managers" as distinct from employees. Much has been unfairly said about the bulk of British Rail employees, who have to endure the irritation of many passengers who must tolerate the appalling travelling conditions on the Dartford and Tilbury lines and elsewhere. However, it is not within the employees' capacity to improve those services. The Government, the management of British Rail and the line managers are to blame. I fear that the line managers are already making dispositions to enable them to get the franchise on those lines.

I have no confidence in the line managers of the Tilbury and Southend line and nor have passengers, customers or employees. I hope that there will be no nonsense whereby the managers will be given the almost exclusive opportunity to place a cosmetic bid for those lines. That would be unacceptable and would compound the irritation of passengers and the bulk of employees.

I find it breathtaking to listen to the hon. Member for Blackpool, South bleating about the loss of his InterCity service. He is in part to blame, and I hope that his constituents will note that. He has acquiesced in a situation in which InterCity is viewed as a profit centre. It is clearly being pruned to make it attractive for privatisation. Presumably he will support that in the Lobby. I hope that he will pay dearly for it at the next general election.

Photo of Mr Hartley Booth Mr Hartley Booth , Finchley 9:14 pm, 29th October 1992

The debate has been long and informed and—as Conservative Members always do—I have welcomed the depth of information and experience that we have heard about from Opposition Members. That is why I have been so surprised that, despite their experience of British Rail, they do not understand, as Conservative Members do, that British Rail's network was built by private money; that for two thirds of the life of that system it was run by the private sector; and that some of the great exports through this country have been railway exports under the private sector. Yet there has been no ghost of a hint by the Opposition of the fact that during that period—100 years of private sector management—there was enormous initiative.

In 1902, stenographers were provided on the railway to Broad street. Hon. Members, had they have been travelling on the trains, could have had their letters written. Such was the imagination and initiative under the private sector. None of that was heard from Opposition Members.

So what is the prospect for the future? The hon. Member for Streatham (Mr. Hill) told us that he had never heard of proposals by management that the two sides of the railway, the track and the running operations, be separated. In 1947, a book was written by the management of the London and North-eastern Railway called "An Alternative to Nationalisation". They were fighting the Labour party in those days. They proposed then that the track should be separated from the operating part of the railway. It was a good idea and it is part, perhaps, of what we have seen in the White Paper today.

I have only a few minutes and all of us have an agenda of questions, so I shall ask only three main questions. First, I see a danger with this privatisation at which many of us on the Conservative Benches have hinted. I hope that my right hon. Friend the Secretary of State is hearing these points about which we are very anxious as well as our welcome for the White Paper. The question is: if a number of different operators are bidding for a particular good service, such as the 8 o'clock on the east coast route, who will decide who gets it?

Are we to fill the pockets of more lawyers? Do we have to have an arbitration system? We have heard of "Ofrail". I hope we shall not be derailed in all this. We need to have a private sector body, a private independent body, that commands the respect of the public, to decide those matters quickly and effectively.

We also need—I refer to page 2 and paragraph 8 of the White Paper, "New Opportunities for Railways"—a reference to interchanges. In all our transport training and practice, transport has been dealt with in boxes, such as air, water, rail and road. It needs to be dealt with in interchanges. I want to see opportunities for interchanges between stations and car parks surrounding the stations and I want the airspace over railways to be used for urban regeneration and not used for the wrong purposes. I do not want the question of interchanges or airspace to be forgotten in what is proposed.

I welcome this proposal and the Government's initiative. It shows the Government's typical courage to deal with complex issues. I also welcome the Government's desire to sweep away the cobwebs of the past and their determination to enter the next century by harnessing the ideas, the money and the initiative of the private sector for the passenger—a concept that the Labour party will never understand.

Photo of Mr Peter Snape Mr Peter Snape , West Bromwich East 9:19 pm, 29th October 1992

I have seldom, in almost 20 years in the House, known a Bill to be welcomed with so many qualifications. Some of the earlier enthusiasm for the Bill expressed by Conservative Members was rapidly qualified as it dawned on them that, just in their constituencies, it was perhaps not such a good thing; a case of capitalism red in tooth and claw—but not too much of it these days in Finchley, I notice, listening to the hon. Member for Finchley (Mr. Booth), and not at all in Blackpool.

We had a tirade from the hon. Member for Blackpool, South (Mr. Hawkings) about idle and slothful railway-men. Then suddenly realisation dawned that, with a majority of 1,640, or whatever it is, that was rather a risky strategy, so the idle railwaymen were not present in Blackpool any more.

The whole tenor of today's debate has been a welcome for the forthcoming Bill from those with ambitions on the Conservative Benches, albeit hedged with all sorts of qualifications in the light of the fact that their ambitions might not be realised if the Bill, as envisaged by the Secretary of State and his faithful acolyte, were implemented in the way that we think it might be. I say "think" because if ever there was an imprecise White Paper before the House, it is this one.

I do not want to harp for too long on the speech of the hon. Member for Blackpool, South because, to be honest, I do not think that it is worth it, but he talked about a consultative document. I am no great procedural expert, but I always thought that a White Paper was an indication of what the Government intended to do—a precursor to legislation. Yet any detailed questions from either side of the Chamber today were greeted earlier by the Secretary of State saying, "Wait and see." A positive myriad of documents are to be produced early next year.

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

It is too early yet. The hon. Gentleman must contain himself.

Her Majesty's Stationery Office is already geared up. It will be working overtime all next year producing documents to explain the legislation that we here today are supposed to be discussing.

The Secretary of State and the Conservative party will have to forgive me some puzzlement about exactly in which direction this train is heading, or, looking at the two characters opposite, who is the driver and who is the fireman.

First, and in a non-partisan way, I congratulate the hon. Member for Southport (Mr. Banks) on a maiden speech which was fluent and concise. I hope that I do not blight his promotion prospects by so doing. I do not know why we have had to wait so long for a speech that was so assured. I noted with some interest that he was receiving Refreshment Department bills for his namesake, the hon. Member for Harrogate (Mr. Banks). He is lucky that he is not receiving them for his other namesake, my hon. Friend the Member for Newham, North-West (Mr. Banks). Hon. Members on both sides of the House will join me in saying that we hope to hear the hon. Gentleman often in the future.

The concept of railway privatisation is based on a myth. Ministers continually talk about a railway monopoly, as if the only way to get from A to B in Britain were to take the train. But competition in transport exists here as elsewhere. Given the British devotion to the company car and the well-founded view within the Department of Transport that the heavy goods vehicle is a good thing, greater competition probably faces the railway industry in Britain more than anywhere else in western Europe.

The Government continually peddle another myth about the railway industry. They portray the industry as an inefficient uncaring outfit which, if it only enjoyed the bracing effect of private sector involvement, would be miraculously transformed.

As recently as yesterday, while he was giving evidence to the Select Committee, I understand that the Secretary of State referred to British Rail as a monolithic monopoly. The prospect of an intelligent dialogue with a Secretary of State as capable of self-delusion as that makes those hon. Members on both sides of the House who care about the future of the railway industry despair.

Where is the monopoly for travellers between, for example, Birmingham and London? After all, having just spent millions of pounds on the M40 motorway, presumably to allow car drivers to avoid the monopoly of the Ml, and given that British Midland airways runs an occasional—albeit somewhat expensive—service between Birmingham International and London Heathrow, where is the monolithic monopoly referred to by the Secretary of State? The fact is that it does not exist, and nothing that Conservative Members have said justifies that assertion.

The problem about any rational discussion with Ministers about the future of the railway industry is that they appear to be motivated entirely by an ideology and dogma that would have seemed quaint and unrealistic even to the much-vaunted Victorians who built our railway system in the first place. The danger of the whole nonsensical exercise in the White Paper is the damage that is being done, and will be done, to a railway system already rotting away after 13 years of hostility and indifference by Secretaries of State who have come and gone faster than the Gatwick express.

The most obvious danger in the Government's proposals is their effect on the overall operation of the railway system. Despite the popular view that anyone can run a railway—a view that is obviously shared by the Thomas the Tank Engine personalities who inhabit the Department of Transport—it is an enormously complex system which operates on a 24-hour, seven-day a week basis. Many thousands of people, in a myriad different grades within the overall structure, co-operate together with the objective of providing a service to both passenger and freight for the public and the country. That system works as well as it does only because all those people share that goal and are pulling in the same direction.

It may be hard for the Conservative party to appreciate, in these cynical days, the fact that most of the people involved in our railway industry share a sense of achievement at the end of a successful working day. Those who clean the trains, often very early in the morning or late at night; those responsible for planning and the safe passage of the journey; drivers and signalmen who shepherd a train safely along its route; and those responsible for planning that and the turns of duty—all share a sense of pride in the railway industry which not even 13 years of attack by successive Secretaries of State in the present Administration has reduced.

As a former railwayman who worked on the railway until the trumpet sounded for the 1974 general election, and as the son of a railwayman, may I say with personal pride that the non-stop denigration of those who work in that great industry is extremely dispiriting. Many of them, underpaid as they are, feel strongly about the services that they want to provide and have genuine fears. They have fears not only for their jobs—such fears are human—but genuine fears which many of them express to me about the future of the railway industry if those barmy proposals are implemented.

Photo of Mr Nick Hawkins Mr Nick Hawkins , Blackpool South

The hon. Gentleman has drawn attention to the fact that several Conservative Members have referred to a minority of rail employees who let the side down. I am sure that he would not wish to defend those who let the side down. We have all paid tribute to the high standards of the majority and I wish to do so again, but the hon. Member for Kingston upon Hull, East (Mr. Prescott)—

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

Order. The hon. Gentleman may make a brief intervention, not a speech.

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

The hon. Gentleman has made that point before and we all know why—he must look over his shoulder. I shall go to Blackpool again shortly and when I meet the local branch of the National Union of Rail, Maritime and Transport Workers—the RMT—I shall say that the hon. Gentleman expressed concern about its members' welfare and job prospects. I have no doubt that they will give him the same support as they have given him in the past—[HON. MEMBERS: "He got elected."] Aye, but only just. He might be a Member of Parliament in Blackpool temporarily, but I remember Blackpool when it was one of the safest Tory seats in the country. I confidently prophesy that the hon. Gentleman's constituency will be back in the Labour camp by the next general election. He will end up leaning on his broomstick on Blackpool North platform.

The core of the Government's philosophy hinges on the right of access to the railway network for private sector operators, both passenger and freight. If I can take the Conservative party no further, its members will at least agree with me about that. Whether they will seek such access depends on the price charged by publicly owned Railtrack, operating as it does under the direct control of the regulator, whose qualifications, as my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) said, do not include a working knowledge of railways.

We believe that the most likely outcome of these proposals for freight transport will be that they will bring even more joy to the Road Haulage Association, despite the fond hopes expressed by Conservative Members. It will be more expensive to carry freight by rail under the new regime, when subsidies to rail freight will be forbidden, just as they are now. Rail freight is not subsidised, although in the opinion of many of us, given railways' enormous environmental benefits, it should be. At the moment, however, freight enjoys a favourable charging regime on the railway network, although nowhere near as favourable as that granted to road operators. Where freight trains share track with passenger trains, by and large they bear only the marginal costs of the track and signalling along the route.

It is impossible to imagine that such a system will continue when a multiplicity of private operators are seeking to operate freight trains in the way the Secretary of State fondly imagines they will.

I am intrigued when I listen to Conservatives and Ministers talking about the need to attract freight from road to rail. Let us not worry about what is in the White Paper or about what may happen in future—although worry we will. Let us look at what has happened over the past year while Ministers have been telling us that freight will be transferred from road to rail—or at least, that that is their objective.

In the past 12 months, we have witnessed the collapse and withdrawal of the Speedlink wagon-load network from British Rail. The lines between Cambridge and Fendrayton, Yate and Tytherington, and Alves and Burghead in Scotland have all closed. We expect the line from Northallerton to Redmire to close later this year, and under review are no fewer than five freight lines in various parts of the country. Among the terminals closed in the past year, while the much-vaunted policy of the transfer from road to rail has been in action, have been Hawkhead in Paisley, Ridham Dock near Sheerness, the Bristol Freightliner terminal, Roseisle in Grampian, South Lyan in Norfolk, and Eccles Road in Norfolk, in the constituency of the Secretary of State himself. If that is the experience of rail freight under the current regime, how much worse matters will be once, and if, this nonsense is implemented.

The whole track charging regime to which I have referred is shrouded in mist even denser than that which surrounds the Government's economic strategy. Earlier this year, the Minister of State gave a keynote address to a rail privatisation seminar entitled "Deregulation and open access", held under the auspices of the Institution of Civil Engineers. I am sorry that I was not there; I was invited, but I had another engagement. Nevertheless, I did read the Minister's speech, in which he said that Britain had played an active role in framing an EC directive on the development of European Railways". I am always fascinated to hear Ministers telling us how we lead Europe and are at the heart of Europe.

The Minister went on to talk about access rights for rail freight customers under the new proposals and he asked a number of questions about how they would work. Unsurprisingly, as he could not answer his own questions —the Secretary of State still cannot answer them—he played safe. Instead of adopting a former Prime Minister's view, that one should set up a royal commission that took minutes to set up and years to report, this Government engage consultants to present these reports.

In January the previous Secretary of State appointed Coopers and Lybrand and told it to report in June. Perhaps it could not find any answers because it never reported. But that did not faze the Minister who, if nothing else, is a resourceful chap, and he appointed Mercers to carry out the same exercise. This is the Government who lecture us about the need for careful stewardship of public money. I hope that both reports will be placed in the Library. I am sure that the Minister has received the first report and that it does not match his conclusions. We can compare the two and discover what public money was spent on and the expensive conclusions.

The Government's proposals have no friends. Conservative Members have given them a muted welcome. The hon. Member for Dartford (Mr. Dunn), who is not in his place, is presumably waiting to catch a train on the Dartford loop. I can hardly wait to see all the Richard Branson imitators waiting to buy the Dartford loop when the proposals are implemented. The hon. Member for Hastings and Rye (Mrs. Lait) spoke about being at the end of a branch line and about how wonderful it would be for private enterprise. Obviously she does not know much about the history of the Hastings line. Private enterprise made such a good job of building it that the tunnels were defective and British Rail had to install signals at them. Before that the much attacked publicly owned British Rail had to build special trains to fit the tunnels. The hon. Lady appears to be digging up a few Victorians. Does she think that there will be many buyers for the Hastings line or that a comprehensive network service would operate on it?

The hon. Member for Saffron Walden (Mr. Haselhurst) also gave the proposals a muted welcome and posed some preceptive questions to which the Minister had no answer. In his winding-up speech the Minister of State will tell the hon. Gentleman, as he told the rest of us, that next year a series of documents will be produced. The House is being treated with utter contempt. The Government want to do something about the railways but they are not sure what, so they dress up dogma to look like policy and place it before the House. They have not been able to answer a single question on the vital matters that must be discussed before any legislation is presented.

What about railway safety? Which of the would-be railway kings will pay for the signal protection system on which millions of pounds of public money is currently being spent? Who will pay for the safety training of railway employees? About 5,000 people per year are killed on the roads, while in three of the past 10 years no passengers were killed in a moving train accident on British Rail. Such a glittering record is expensive. Who will pay for it in future? The Secretary of State will not tell us but says that he will produce a consultative document next year. That is not much use in the context of legislation that is to appear in November.

Of course not just the working railway costs a great deal of public money. Who will pay for the maintenance of bridges and viaducts and the other structures on closed branch lines that are still owned by British Rail? We shall pay, and while we are doing so the profitable segments of British Rail will be parcelled up and sold to the private sector. Is that how the profit motive is to be demonstrated in the legislation?

No fewer than 60 rail user groups, the customers who Conservatives say they are concerned about, came together as recently as last week to attack the White Paper and the philosophy behind it. The statutory Transport Users Consultative Committee was appointed by the Government. The former leader of the Conservative party said that her first question about any appointee was, "Is he one of us?" Presumably, many of the committee's members are "one of us" in the Conservative party's terms; yet they too have condemned the proposals in the White Paper, and the likely legislation.

Let me end on a non-controversial note—I do not like controversy when it is not necessary. Let me pray in aid an organisation that rarely finds itself on the same side as the Labour party—although the more it sees of the activities of the present Government, the further it moves in our direction. I refer, of course, to the CBI, which published a press release last Wednesday headed "BR privatisation: CBI signals at amber". The CBI feared that the proposals lacked "clarity and detail"—in spades, one might add. It went on to say that they ought to be seen within the context of a more coherent transport strategy. I do not want to baffle the Secretary of State by using such jargon as "transport strategy", because I know that that is a philosophy that he has long eschewed: indeed, he and his Minister of State are very anxious to avoid it.

The CBI added: if further reflection needed by the Government causes them to delay the timetable, so be it … the overriding concern of CBI members is not primarily one of ownership but one of how the quality and level of railway services can be improved. I am sorry if all this bores the Secretary of State, who is yawning. If he had listened to more of the debate, he might be a bit livelier. He has probably been travelling on Stagecoach, which I understand is a pretty unsuccessful way of travelling between England and Scotland. [Interruption.] I must remind the hon. Member for Harrow, West (Mr. Hughes) that Whips are traditionally silent. I am not surprised that he is making sedentary interventions: he is wasting his own party's time by provoking me in this way.

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. I think that questions of order can safely be left to me.

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

As long as you are in the Chamber, Madam Deputy Speaker, I will not trust them with anyone else.

The CBI concluded: As the proposals currently stand, there will be a daunting array of regulators involved in the running of the railways. Far from encouraging private sector interest, there is a real danger that privatisation will be a blueprint for bureaucracy. We urge the Government to think hard before moving ahead with the legislation. So do we—and, in their heart of hearts, so do many

Conservative Members.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering 9:41 pm, 29th October 1992

The argument advanced by the hon. Member for West Bromwich, East (Mr. Snape)—that the Government are consulting on the detail of their proposals and should not be doing so—is unconvincing. The whole purpose of the exercise—the whole purpose of producing a White Paper and then debating it, in advance of legislation—is to enable the views of the House to be understood and, indeed, to consult widely. That is exactly what we are doing. If we had presented a cut and dried policy down to the last detail, the hon. Gentleman would have been the first to criticise us for doing so.

We have set out our principles clearly. We have not sought to set out the implications in detail, and I think that that is right. The details can be discussed in the Committee stage of a Bill that will receive overwhelming Conservative support on Second Reading. If the hon. Member for West Bromwich, East thinks that he can build a case for the defeat of the legislation on the speeches of two hon. Members and one right hon. Member—whom I greatly respect, and I shall deal with the points that they made —he has another think coming.

Let me correct what the hon. Gentleman said about the use of consultants. He has confused two tasks. Coopers and Lybrand was appointed to propose the new basis of track charging by Railtrack. It has not completed its work; when it has done so, my right hon. Friend the Secretary of State will publish its conclusions and deposit them in the Library of the House. Mercers is examining the structure of the freight industry, which has nothing to do with track charging. As my right hon. Friend said, when we receive its report in the new year, we will bring its recommendations for sale of the assets to the attention of the House.

The hon. Member for Kingston upon Hull, East (Mr. Prescott) said that the railways can be privately owned, that he had no great argument about whether the railways should be public or private and that the issue was taxpayer support. We have made it plain that revenue support will continue. About £1 billion is going to Network SouthEast and Regional Railways. The Secretary of State said clearly that that regime will continue. We have also said, regarding the infrastructure, which will be Railtrack's responsibility, that Railtrack's revenue costs will be recovered by charges to passenger and freight trains but that the public sector will support Railtrack in the way that it supports any nationalised industry—through Railtrack's ability to borrow.

We have gone further than that. In answer to the hon. Member for North Devon (Mr. Harvey), we said that we had announced a change in the appraisal rules. Everybody will broadly welcome that change. When Railtrack appraises new infrastructure investment, non-user benefits will be taken into account. The appraisal of new electrification schemes will become much more like that for road investment appraisal. That is a step forward. A grant would be provided by the Government—it would be non-repayable and non-interest bearing—for non-user benefits.

The hon. Member for Kingston upon Hull, East spoke at great length about finance and leasing. He said that it was one way of getting more money. I shall be brief about leasing; we can go into the matter in detail in Committee. British Rail already writes leases. They are called financing leases. They are for channel tunnel night stock and for deep sea container freight wagons. Those are long-term, financial leases that, rightly, are signed with the Government's approval.

British Rail, as the only operator of railways in this country, cannot at present write an operating lease for railway rolling stock because there is no other operator. If British Rail could find a financial institution that could write a lease for seven years, who would operate the trains when British Rail had concluded the lease? Without our proposals, the hon. Gentleman's leasing proposals would amount to the public sector underwriting the full amount of the commitment.

The previous Secretary of State wrote to the hon. Gentleman and asked him to clarify how he thought that the public sector would account for his operating lease suggestions for British Rail. The hon. Gentleman never replied to that letter. He could not reply to it. He knows that the shadow Chancellor would require the operating leases written by British Rail to be capitalised, shown in the balance sheet and treated as long-term debt. It is only because the Government are introducing privatisation proposals to let the private sector come in and run rail passenger franchises that we have the opportunity to develop a leasing market, which I very much welcome as it will bring more private sector capital into the railways.

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

If the hon. Gentleman looks into British Rail's history and into the work of the Select Committee on the nationalised industries, he will find that British Rail, even under public ownership, operated leasing arrangements in the past. That is not new. The Treasury, however, rejected them. British Rail was doing deals with bankers; there was a taxing arrangement. The Treasury did not like it, but leasing arrangements are not new.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

The hon. Gentleman is misinformed. If he looks at the practice of the private sector, whether it be ICI or Marks and Spencer, he will find out how it treats financing leases. He knows that a public sector state monopoly that wrote a lease without there being any other operators on the railway lines would have to treat that operating lease as long-term debt.

My right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) raised important issues. If I cannot answer all the points raised in the debate, I shall write to hon. Members and answer their questions in more detail. My right hon. Friend asked me how the Government will ensure that train paths are controlled. A commitment has been given that commuter services in Kent will not be dislodged by European passenger trains, after they have been franchised, going through the channel tunnel. I give him the assurance, which I hope he will accept, that under the franchising mechanism my right hon. Friend the Secretary of State will be able to ensure that companies operating franchises in Kent and south-east London will provide for the allocation of those train paths. A mechanism for doing so is available simply through the regulator's power and the franchising authority's power. They will both be public sector bodies and responsible to the Secretary of State.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

Will my right hon. Friend forgive me? I have only 11 minutes, in which I should like to answer some other points.

My right hon. Friend asked about fares. The conflict, to which he correctly referred, between seeking to control fares and to reduce subsidy exists already. It has always existed and it will exist in the future. The Government have said that, for all monopoly services, which include Network SouthEast rail services, we will ensure that there is control over fare levels, unlike bus services. Ultimately, a political judgment must be made about the level of fares and subsidy. I cannot give a categorical assurance about the regime that will apply to fare increases on Network SouthEast, but in due course we will, and I will write further to my right hon. Friend about that.

The hon. Member for Crewe and Nantwich made a number of points. She mentioned pensions and travel concessions for British Rail employees. I shall look again at the history of the arrangements that were made by BREL and Sealink, but the information currently available to me is that they have honoured their arrangements for pensions and travel concessions.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

The hon. Lady contradicts me. I give her the undertaking that I shall look carefully at what has happened in those two companies and write to her. If she tables a written question, I shall answer it.

I congratulate my hon. Friend the Member for Southport (Mr. Banks) on his rousing, self-assured speech. We welcomed his contribution and look forward to him serving on the Standing Committee and making an even more valuable contribution upstairs.

The hon. Member for North Devon made a number of points. I remind him that we have introduced systems similar to cost-benefit analysis for appraising rail infrastructure schemes—something that his party has called for—and I hope that he welcomes that. From reading the proceedings of his party conference, I am not clear about the Liberal Democrats' policy on the private sector and competition. His party conference overturned the leadership's recommendation about welcoming the introduction of the private sector.

My hon. Friend the Member for Christchurch (Mr. Adley) made an important speech. I shall briefly give him the information that he requested about the public service obligation grant—perhaps he can be brought up to date. For 1988–89, the PSO grant was £473 million, for 1989–90 it was £501 million, for 1990–91 it was £602 million, for 1991–92 it was £892 million and this year, 1992–93, it is more than £1,000 million. That is a substantial —

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

The Government, like-—I hope—the Opposition, live in the real world. In the past five years, the PSO grant has increased substantially. I think that my hon. Friend the Member for Christchurch was quoting facts that are a little out of date.

I wish I had the certainty of my hon. Friend the Member for Christchurch. He is doubtful, he says, that the railways will improve. I find it hard to understand how one could argue against the privatisation of rail freight services. We have the evidence of the National Freight Corporation, and we know that every other mode of transport carrying freight is in the private sector. I am not sure that the House will be persuaded by his scepticism.

We have said that the infrastructure will remain an integrated public sector obligation and responsibility. [Interruption.] On railway operations, we are simply saying to the private sector, "Can you run a service on certain lines?" The approach will be gradualist. We shall not franchise all rail services overnight. That is impossible; we do not have a private sector. We shall respond as fast as the private sector wants and introduce new franchised services. That seems a cautious, sensible and pragmatic approach.

I know that my hon. Friend the Member for Christchurch is interested in the Japanese railway system. I recently visited Japan for a week—[Interruption]—and I was much encouraged by the experience. The railway companies may be different, but I assure my hon. Friend that there has always been a private sector in Japan, despite the fact that about 70 per cent. of rail services were nationalised some years ago. The Japanese Government will move to privatise the services fully when the stock market permits, but there is nothing in the experience of Japan— [Interrupt ion.]

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. I have a view about seated interventions, but what is going on seems more like a seated commentary throughout the Minister's speech.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

That is not an unusual occurrence, Madam Deputy Speaker, but I welcome your protection.

My hon. Friend the Member for Dartford (Mr. Dunn) —[HON. MEMBERS: "Where is he?"] My hon. Friend apologised earlier to the House for the fact that he would not be here now. He welcomed the White Paper, and he will be pleased to hear that my right hon. Friend the Secretary of State and myself—his faithful acolyte—will travel on the new Kent link service when it is inaugurated next month. An investment programme of £700 million has been financed. We hear little about rolling stock which has already been ordered and is now being manufactured by BREL and GEC Alsthom. I can understand hon. Members' worries about 1995 and 1996, but let us give credit for the volume of investment now being undertaken. That £700 million investment has produced train services which will greatly improve the service in Kent.

The hon. Member for York (Mr. Bayley) and several of my hon. Friends talked about the railway heritage museum in York. I shall visit the museum soon with my hon. Friend the Member for Christchurch, and I shall see the hon. Member for York when I get there. He is mistaken—the Government have not said that we have ruled out the contribution of private sector exhibits to the museum. We are still consulting about the best way to ensure that the museum has contributions from both the public and the private sectors.

My hon. Friend the Member for Harwich (Mr. Sproat), who is a former Transport Minister, wanted to ensure that Railtrack dealt fairly with all railway operators. He was worried that the playing field might be slightly tilted in favour of the public sector—British Rail's residual services. My right hon. Friend and I will consider further my hon. Friend's valuable contribution. We want to ensure that Railtrack operates wholly independently, and we are determined not to introduce unnecessarily bureaucratic controls to the new railway industry of the next decade or so. That would be a retrograde step.

I thank my hon. Friend the Member for Hastings and Rye (Ms. Lait), who welcomed the proposals, for her contribution. Electrification of the Ashford-Hastings line will continue to be the responsibility of the public sector, in the form of Railtrack. I am well aware of the advantages of electrification. Indeed, with the lesser burdens upon the public purse which will inevitably result when the private sector plays a bigger role in investing in and ordering new rolling stock, I dare say that that valuable project, on which British Rail is so keen, will proceed. I cannot give my hon. Friend a date, but clearly the project is attractive.

The hon. Member for Ynys Môn (Mr. Jones) raised a number of points, and I shall write to him about the others, but one concerned the passengers charter. He asked who was to blame for leaves on the line. When the customer, the passenger, blames the operator, does the operator turn round and blame the track authority for allowing the leaves to stay on the line? The answer to that question is clear. As my right hon. Friend the Secretary of State said the other day to the Select Committee, initially the passenger will complain to the operator, but the operator will have an arrangement with the track authority, because he will be paying for the use of the railway lines. Therefore, responsibility will fall correctly.

My hon. Friend the Member for Saffron Walden (Mr. Haselhurst) asked about the track charging regime. We shall publish our conclusions as soon as we can, and I hope that that will be towards the end of the year. We are determined that the freight industry will not be priced off the rails. If we want to expand the freight industry, we must have a user-friendly system. We must have a non-discriminatory system of charging for the use of rails. However, we shall ensure that we do not prejudice the rail freight industry.

My hon. Friend the Member for Blackpool, South (Mr. Hawkins) was right. He talked about the need for a demand-led industry. That is a crucial point. British Rail has been essentially a producer-led industry managed as a state monopoly for more than 45 years. The problems have been compounded by it being cash limited. We want to move to a demand-led, user-friendly railway system—

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.