Orders of the Day — Railways Bill

– in the House of Commons at 4:01 pm on 2nd February 1993.

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Order for Second Reading read.

[Relevant documents: The First Report from the Transport Committee, The Future of the Railways in the Light of the Government's White Paper Proposals: Interim Report, HC (1992–93) 375, and the Minutes of Evidence taken before the Transport Committee, HC ( 1992–93 ) 246 i-xxi.]

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

Before I call the Secretary of State, I should tell the House that I have had to impose a 10-minute limit on speeches between the hours of 6 pm and 8 pm. I should be much obliged if those hon. Members who speak outside those times exercised voluntary restraint—as I appreciate they have in recent times—so that other hon. Members may be called.

Photo of Mr John MacGregor Mr John MacGregor Chair, Privileges Committee, The Secretary of State for Transport 4:10 pm, 2nd February 1993

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

British Rail has improved considerably in recent years in many of its services. But most people agree that there is still much room for further improvement. The Bill will make possible an historic change for the better in Britain's railway system. In moving its Second Reading, I propose to reaffirm the objectives of our policy; to announce further major decisions affecting the railways; to explain how the Bill will enable the necessary changes to take place; and to deal with some of the key issues that have been raised since we launched the White Paper last July.

We begin with a railways regime not fundamentally changed since nationalisation in 1948. It is not in the interests of customers—or of management and staff—to persist with that regime. As an organisation, BR combines the classic shortcomings of the traditional nationalised industry. It is an entrenched monopoly. That means too little responsiveness to customers' needs, whether passenger or freight; no real competition; and too little diversity and innovation. Inevitably, it also has the culture of a nationalised industry: a heavily bureaucratic structure; an insufficiently sharp awareness on the part of employees that their success depends on satisfying the customer—indeed, on attracting more customers; and an instinctive tendency to ask for more taxpayers' subsidy and to feel that public subsidy will always be there as a crutch whenever things look difficult. Inevitably public ownership also brings with it the constraints of public finance, not least given the many competing demands on the public purse.

Photo of Mr Barry Jones Mr Barry Jones , Alyn and Deeside

Will the right hon. Gentleman give way?

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

I have hardly begun; I shall give way in due course.

All this shows up in public dissatisfaction with the railways. As I said, there have been many improvements in BR in recent years. The organisational changes that the present chairman, Sir Bob Reid, and his board have been bringing in are major steps forward. Many employees do a splendid job within the confines of a monopolistic nationalised industry, showing much dedication and skill. A recent example was the way in which those in ScotRail kept the trains running during appalling weather in recent weeks. I should like to pay a particular tribute to Tommy Robertson who, in the foulest of weathers, and after already very long hours, discovered in the middle of the night that the bridge at Forteviot had been badly damaged. His vigilance and dedication deserve the highest praise.

I repeat, however, that those who work in BR and the system have been constrained by the nationalised industry form of organisation, which has now been found wanting for all the other industries that we have privatised. The railways and their customers will benefit as much as other industries from a change in the culture and the system under which they have to operate.

We therefore aim to create a new regime for the railways. Our objective is to improve services for passengers and freight customers, while maintaining high safety standards and other necessary safeguards, including a commitment to the provision of subsidy to maintain loss-making but socially necessary passenger services, such as commuter lines and rural services.

I see at least three advantages in getting as much private-sector involvement, attitudes, objectives and management into our railway system as we possibly can. First, there is the big issue of the change of culture. I have been struck by the reaction I keep getting from those who worked in former nationalised industries and who now operate, in a range of industries, in the private sector. Time and again, it is the galvanising effect on their attitudes that they highlight—the transformation in work practices and approaches that occurs when they realise that their success depends on always putting customer requirements first.

This is a fundamentally important point, which is stressed by many people. Always putting customer requirements first is a change that we need in British Rail. I was struck by the fact that, just after we published the Bill, no fewer than five of the many newspaper editorials that support our proposals highlighted this aspect. Secondly, what we are doing will help to create more competition and choice. Thirdly, it will enable private-sector capital to supplement the existing sources of British Rail finance.

Photo of Mr Barry Jones Mr Barry Jones , Alyn and Deeside

Has the Secretary of State had representations from former employees of British Rail about concessionary travel? Can he give the House a commitment in respect of this matter?

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

We have often made it clear that concessionary travel arrangements will continue. Indeed, hundreds and hundreds of letters on that very point have been sent out. The same applies to pensions, with which I shall deal later.

Several hon. Members:


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

I have a great deal to say, so I must get on.

We shall achieve our objectives by a structure with the following key elements. They were first set out in the White Paper, but it is worth restating them today.

First, British Rail's freight and parcels services will be sold to the private sector, and there will be open access for new operators. I have noticed that there has not been quite the same concentration on freight services as on passenger services. They are very important, so I want to deal with them. Freight services will be provided competitively, with no monopoly for any operator. I am in no doubt that this is what freight customers and potential operators want, and that breaking British Rail's monopoly is crucial if we are to succeed in getting more freight back on to the rails. We should be quite clear about the fact that this is a challenging target.

However, I have talked to many existing and potential customers, as well as operators—for example, at a conference a few weeks ago attended by well over 300 people—and they all sing the same tune. They are saying, in print and, everywhere they go, verbally, that this is the right way to reverse the decline in rail freight, to attract more freight from the roads.

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

How can the Secretary of State say that he has not heard us talk about freight?

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

Order. The Secretary of State was giving way to the hon. Member for Carshalton and Wallington (Mr. Forman).

Photo of Mr Nigel Forman Mr Nigel Forman , Carshalton and Wallington

Many Conservative Members warmly support the broad arguments that my right hon. Friend is adducing in favour of the Bill, and wish him well in his long-term project, but I have to ask him whether he is aware that the majority of my rail-travelling constituents and, I suspect, many of those of my hon. Friends will apply three tests to this legislation.

They will ask, first, whether it will make the trains more reliable; secondly, whether it will improve the infrastructure of tracks, rolling stock and signals; and thirdly, whether it will deal with the problem, which is very acute in the short-haul commuter services, of the non-availability, at critical times, of drivers and guards. If my right hon. Friend can satisfy us on those points, we shall be very pleased.

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

The answer to all three questions is yes—[Interruption.]—and I pick up the final point, in view of some comments that have been made in the press. Because of previous practices in British Rail in the way in which people were eligible to become drivers, BR currently has a considerable proportion of drivers over the age of 55, so there is quite a long retirement queue coming up shortly. That is a problem because of previous employee relations practices, with BR not recruiting enough drivers. Our proposals, by encouraging franchisees to come on to line, will undoubtedly help with that problem.

Several hon. Members:


Several hon. Members:


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

Order. The Secretary of State is clearly not giving way, at any rate for the moment.

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

Secondly, existing passenger services will be franchised to the private sector. Franchising allows subsidy to be paid if subsidy is needed. So it solves the dilemma of how to introduce private sector management and private sector capital into loss-making services provided for social reasons. Franchising also allows the public interest in particular passenger services to be protected through contract conditions imposed by the franchising director.

Several hon. Members:


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

I warn the House that, were I to give way to all hon. Members who wish to intervene, I would make an extremely long speech, and I am mindful of what Madam Speaker said. In any event, I must finish the passage which I have begun.

We envisage that the franchising director will begin his specification of services from the basis of the present timetable—[Interruption.] I am making some important points, which I am anxious to get over. He will also be able in appropriate circumstances to impose conditions on fares and services as part of the franchise contract. Such safeguards are made possible by, and are one of the major advantages of, the system that we are proposing.

The third key element of the new structure is that responsibility for track will generally be split from responsibility for operating trains. A new public sector organisation called Railtrack will be responsible for track. That split has a number of advantages, on which I will expand later. Railtrack will be required to contract out as many of its services as it reasonably can. That, too, is a vital point and is laid down in the Bill. It will be vital in improving its efficiency and thus keeping its prices down.

The fourth element in our proposals is new arrangements to allow access to the track for passenger and freight operators. That will be supervised by the independent rail regulator, who has among his responsibilities that of promoting competition and ensuring fair play, and of promoting the interests of consumers and ensuring that network benefits are maintained. I have announced that, subject to Parliament approving the enabling legislation, I intend to appoint John Swift QC as the regulator.

Photo of Mr David Harris Mr David Harris , St Ives

I am grateful to my right hon. Friend for the assurances that he has given me in writing about safeguarding existing passenger services, and obviously I have a particular interest in the line from Plymouth to Penzance and the maintenance of through services. Will my right hon. Friend make it clear that he as Secretary of State and his successors will have a power of direction over the director of franchising to consider in certain circumstances putting out the whole of an existing service for franchising, rather than allowing people to pick off just the bits of a service that they want to franchise?

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

I have made that clear to my hon. Friend and, as I said, we expect the franchises—indeed, it will be the case—to be on the basis of the present timetable. I hope that gives my hon. Friend the assurance for the future that he seeks.

So the fundamentals of the policy are exactly as set out in the White Paper of last July. We believe that that is the best way to get as full private sector involvement and approaches as possible. A conventional flotation, with the railways as a whole in the public sector one day and in the private sector the next, is not possible. [HON. MEMBERS: "Why?"] I will explain why. Outright privatisation of all the railway is not on the agenda for the foreseeable future, not least because subsidy from the taxpayer is needed, and we have made it clear that we shall continue to provide that. So the principles and main structure of the Bill are entirely consistent—

Several hon. Members:


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

I must make more progress.

The principles and main structure of the Bill are entirely consistent with the White Paper, because we believe it to have struck the right balance. Nothing I have seen in the comments since it was published has convinced me otherwise, but on the detailed development of the policy we have been consulting carefully and taking seriously the representations we have received.

We have issued a range of important consultation and other documents, as we have developed the details of the proposals. Documents on franchising, on safety, on pensions, on rolling stock procurement, on the British Transport police, and on consumer representations have all been published.

I shall shortly be issuing a detailed technical document on the access and charging regime, and today I will annouce the general principles on which it will be based. I aim to issue by the end of March a document on the restructuring of the freight business for privatisation. There will also be a number of detailed documents put before the Standing Committee to deal with the various issues in the Bill. We shall continue to take account of the representations which we receive on these detailed elements of the policy.

Photo of Mr Robert Hughes Mr Robert Hughes , Aberdeen North

I have almost forgotten my point, but the Secretary of State began by extolling the virtues of the change of climate in which the railways will become private. If that is so, why will the change of culture affect only those who are franchisees and not those who still run track?

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

I am inclined to think that the hon. Member could not have thought it was a very good point, since he seems to have forgotten what it was. It was not a particularly good point. The change in culture will come about, not only by private sector companies coming in, not only from the fact that a considerable number of British Rail managers are keen to engage in management buy-outs and are well aware of the change in culture that that could bring about, but also through the proposals we have for RailTrack. The main design and objective is to achieve that, in the interests of passengers.

Several hon. Members:


Photo of Mr David Howell Mr David Howell , Guildford

I am wholly in favour of my right hon. Friend's aims to change the culture and to harness private enterprise, with all its vigour, to public purposes. He must be right in the way forward he is going, but when it comes to the commuter services—I think particularly of Network SouthEast—he must recognise that we are looking not merely for improved services but for an entirely new and modernised infrastructure for the 21st century to provide a wholly new, enhanced and dedicated transport service for the area. This will require vast investment funds. Will my right hon. Friend assure us that his new plans will open the way for mobilising those funds on a far bigger scale than anything we have been able to achieve under the present regime?

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

I was intending to come on to that later, but I am grateful to my right hon. Friend for his support and his understanding of what we are doing. We have record levels of investment going into British Rail at present, certainly the highest—[Interruption.] I am replying to my right hon. Friend—levels are the highest since 30 years ago. I believe, and I shall be elaborating this later if I have time, that our proposals also offer, in addition to present methods of Government support and the possibilities of investment through revenue, more private capital to come in and supplement the revenue coming in for the first time. Although inevitably it will take some time, I believe that. over the period, we shall see a considerable increase in the investment going into the railway system.

As so many people wish to speak, I think I should now get on, as I have some important announcements to make and I have given way a great deal. Some of the points that have been raised I am dealing with.

We have very deliberately proceeded in this way. First, we set out the main policy in the White Paper six months ago, subsequently filling out the detail as we went along. That will continue. It would have been wrong to inflexibly pin down every element in advance of parliamentary scrutiny of the Bill and in advance of implementation by BR, the franchising director and the independent regulator, who need and will have important elements of discretion.

I turn now to a number of announcements that I wish to make today. First, on Railtrack, in the White Paper, we said:

… The Government believes that track and train operations should be separated at an early stage and that a new track authority—Railtrack—should be established initially within BR with responsibility only for track and associated infrastructure". The separation of track from operations is a key element in our policy. Since the White Paper, we have been reflecting on this further, taking into account a wide range of comments—I am mindful, for example, of the speech of my hon. Friend the Member for Harwich (Mr. Sproat) in the debate on the White Paper in October. We have now decided that BR ownership of Railtrack is no longer necessary or desirable.

It is important for all passenger franchisees and freight operators to know from the outset that Railtrack will be a truly independent, commercially driven body, and that there will not be any possibility of a conflict of interest involved in its remaining in the ownership of a body which also operates trains. That means that it must be fully independent of BR. I intend therefore that Railtrack will be separated from BR and made a Government-owned company in April 1994, and that preparations should begin now.

The chairman-designate of Railtrack will be Mr. Robert Horton, whom I recently appointed as vice chairman of the British Railways Board. Mr. Horton will have principal responsibility for taking forward the creation of Railtrack as a Government-owned company. He will work closely with the chairman and board of BR. BR will retain full operational responsibility until April 1994.

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

On a point of order, Mr. Deputy Speaker. The Secretary of State said that preparations are beginning now. He and his Department are undertaking actions now in anticipation of the Bill being enacted. We are debating the Bill on Second Reading. It is important that you make it clear to the House exactly what the position is in relation to the Secretary of State and his Department taking actions which anticipate the Bill.

We have far too much of that from this arrogant Government. It is about time that they had some respect for Parliament and waited until Parliament had scrutinised the Bill and until it became an Act of Parliament before carrying it out. Will you give a ruling that the Secretary of State must not undertake the expenditure of money or take action until the Bill becomes law?

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

The hon. Gentleman has made his point forcefully, but it is a matter for the Government, and the Government know the rules.

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

The hon. Gentleman made his point at great length, and I shall reply to him very briefly. Of course I have respect for Parliament, which is precisely why I did not introduce the Railways Bill until the paving Bill had achieved Royal Assent from both Houses. The hon. Gentleman is asleep. That Bill enables British Rail to spend money in preparation for privatisation. We waited until we had parliamentary authority before we did it.

I wish to announce the first groups of services which I am asking British Rail to reorganise and prepare for transfer to private sector operators under our franchising proposals, and I could not do that without the paving Bill. My right hon. Friends the Secretaries of State for Scotland and for Wales have been consulted throughout.

The groups of services will be: the InterCity east coast main line; the InterCity Great Western main line to south Wales and the south-west; ScotRail; the London, Tilbury and Southend line; the south-west division of Network SouthEast; the Victoria-Gatwick express; and the Isle of Wight line.

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

That is exactly the kind of sedentary intervention I like to hear.

We cannot establish the real franchises—

Photo of Alex Salmond Alex Salmond Leader, Scottish National Party

On a point of order, Mr. Deputy Speaker. There is a lot of noise in the Chamber. I thought that I heard the Secretary of State say that the east coast main line has been franchised, but I did not hear him clarify whether that franchise extends to Aberdeen or stops at Edinburgh. Can you, through your good offices, ask him to repeat that?

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

No doubt so that the hon. Gentleman can intervene, and if the Secretary of State gives way, all well and good.

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

That is a cunning way of asking a question, but I shall answer it briefly. Of course it extends to Aberdeen.

We cannot establish the real franchises until we have the parliamentary authority and have set up the franchising director, who will be responsible for negotiating the contracts. The precise nature of those will be dependent on the response to the tenders— [Interruption.] The hon. Member for Banff and Buchan (Mr. Salmond) complained about noise, but he is making more noise in the Chamber than anyone else. I should be grateful if he would allow my hon. Friends to hear me.

It is important to organise potential franchises in an operational form now so that we can gain experience of the restructuring, management and accountancy issues and have the broad structure of some franchises ready for an early start.

It is the intention that all British Rail's passenger services will be franchised in time.

Several hon. Members:


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

The time for hon. Members to raise matters is during their speeches. My hon. Friend the Minister will reply in his winding-up speech.

Selecting the franchises and determining the pace of franchising must—

Photo of Mr George Walden Mr George Walden , Buckingham

Will my right hon. Friend give way?

Photo of Mr George Walden Mr George Walden , Buckingham

I am grateful to my right hon. Friend. Is he aware that people who are not normally opposed to privatisation are sceptical about this privatisation? They are saying that anyone can run a line, but that what we need is someone to run the railway.

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

Yes, and I envisage that, by having a number of people operating the railways and getting the private sector in, the railways will be better run. I notice that more and more people are saying the same thing. Indeed, the vast majority of editorials that have commented on the Bill have said precisely the same thing.

Selecting the franchises and determining the pace of franchising must take account of the further views of the private sector. That is important, because we want to ensure that there will be competition for the franchise units to achieve value for money. We shall also continue to take account of users' representations and the views of others, including Members of this House.

In the light of those views, I shall publish a complete map of franchises within the next few months, although even then it will be desirable to preserve flexibility for the franchising director, when he undertakes the real process of negotiating franchise applications in response to tenders after Royal Assent.

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

I have made it clear that I shall not give way, as I have already done so a great deal for Opposition Members and I have made my position clear.

Photo of Margaret Ewing Margaret Ewing , Moray

On a point of order, Mr. Deputy Speaker. The Secretary of State has said that he expects Members to mention detailed matters in their speeches, but given that our speeches will be set against the background of his announcements, we seek clarification. For example, it would be helpful if the Secretary of State, when referring to the east coast line, could say whether he includes Inverness in that line.

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

There will be many months in which to go through the further details of all the issues in my announcement today before they become operational. There must be limits to what I give way on this speech—[Hon. Members: "Answer the question."] The answer to the hon. Lady's question is yes.

In the light of those views, I shall publish a complete map of franchises within the next few months.

Photo of John Home Robertson John Home Robertson , East Lothian

On a point of order, Mr. Deputy Speaker—as that seems to be the only way to be heard.

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. That is not a point of order.

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

It is perfectly clear what the hon. Member for East Lothian (Mr. Home Robertson) was up to. I certainly would not wish to answer his point of order.

Several hon. Members:

On a point of order, Mr. Deputy Speaker.

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. It is no good hon. Members saying that they have points of order when they are not genuine points for me. The rules of debate are clear.

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. I hope that it is a genuine point of order.

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

Yes, it relates to my earlier point of order. The Secretary of State for Transport has said that there will be some months to discuss the details, yet in reply to my earlier point of order he said that he can make irrevocable decisions because of the paving Bill. The decisions will therefore have been made and implemented, and the House will not have had an opportunity to discuss them fully.

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

That is not a point of order; it is a point of argument.

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

Not only is it not a point of order, Mr. Deputy Speaker, but it is wrong again, because the hon. Gentleman has not listened to what I said—that there would be no real franchise until we had got the Bill through Parliament. So there cannot be a real franchise based on any of these until the Bill has gone through Parliament.

If there are any more of these points of order, Mr. Deputy Speaker, it will make my speech a very long one. I do not think that it is in the interests of others who wish to speak.

I was saying that I would put forward in the next few months a complete map of franchises, although even then it will be desirable to preserve flexibility for the franchising director when he comes to undertake the real process of negotiating franchise applications in response to tenders after Royal Assent. Private sector bidders, however, will wish to see some operational running in shadow form before making bids, and my announcement today enables that process to start.

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

No, I would like to get on. I have given way to my hon. Friend a very great deal, and I want to complete this speech. [Interruption.] I will give way, but I must make it clear that this is the last time.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

My right hon. Friend has announced six franchises. Can he say whether it will be within his policy to agree that these six, or seven, franchises can be operable as vertical franchises, if that is what the private sector wants?

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

I am coming to that point now. I was about to say that one issue which has surfaced in public debate is that of vertical integration—the management and control of both track and trains by the same body—as against horizontal integration—separating the track authority from the operators. We concluded, and we made it clear in our election manifesto, that full vertical integration was neither practical nor desirable across the great bulk of the railway network. That is why we propose Railtrack as the national infrastructure authority. I want to deal with this because it is a very important point—I agree with my hon. Friend on that—and it is important to set out the arguments.

We decided not to pursue the alternative of a complete system of vertically integrated franchises, for a number of reasons. First, operators who run both the track and the trains would inevitably face a conflict of interest when others applied to run services on their line. We want to give everyone, including freight operators, a fair crack of the whip—they regard this as very important—but we could do it on vertically integrated lines only if we adopted intrusive regulation to ensure fair treatment for all.

Secondly, one of our key priorities is to secure suitable levels of investment in rail infrastructure. Investment on that scale requires a strategic view of the kind that only Railtrack can provide. Railtrack will focus infrastructure investment on the parts of the network where it is most needed. It would be unrealistic to expect individual franchisees to do the same. There could be a problem for individual franchisees in meeting the capital investment requirements in particular franchise areas.

Thirdly, Railtrack will have the key role in ensuring the safety aspects of track and signalling. The existence of a national track authority will ensure that safety standards and procedures are co-ordinated across the track in a clear and systematic way—a point that was of particular importance to the Health and Safety Commission in its consideration of our proposals. It would be much more difficult to achieve that if track responsibilities were spread across a large number of local operators.

Fourthly, we need a national track authority to ensure that operational timetabling is co-ordinated efficiently across the whole of the network.

Those are compelling reasons which led us to decide not to hand the whole railway, lock, stock and barrel, to local franchise operators. However, in a limited number of cases, particular features may suggest that it is right to make an exception and to allow a degree of vertical integration. I have decided, for example, that the Isle of Wight can be offered as a vertically integrated franchise —[HON. MEMBERS: "Hear, hear."l—as it is completely separate from the rest of the network.

I recently announced that, subject to parliamentary approval of the enabling legislation, I intended to appoint Mr. Roger Salmon as the first franchising director. Meanwhile, Mr. Salmon will act as my special adviser on franchising and will therefore play an important part in the development of our approach to franchising in this transitional period.

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

No, I will not give way again. I have made that clear.

My third major announcement today concerns rail freight. Everyone agrees that carrying freight by rail usually offers environmental advantages as compared with using lorries. But translating that sentiment into practice is another matter. Rail freight has suffered from reductions in demand for the type of traffic for which it is best suited—heavy freight: aggregates, steel, oil and coal. In the fast-growing areas of consumer goods, new distribution and retailing patterns—just-in-time concepts, for example—are right for the consumer and for the marketplace but they are not easy for a monolithic industry to respond to. Under BR ownership, rail freight has not been as efficient or as responsive to that market as it should have been.

I am convinced that our policies offer the best prospects for halting the decline in freight by rail and seeing more freight switched from road to rail. By privatising existing freight operations, ending BR's monopoly and opening up the rail network to as many private sector operators as wish to make use of it, I intend to assist this process by introducing three new measures.

First, we will enhance the existing freight facilities grants scheme. The scheme provides targeted financial assistance to capital projects which demonstrably help the environment by switching traffic from road to rail or to inland waterways. I propose to expand the scheme in three ways. Grants will be made available to private rail freight operators as well as customers and consignors; grant will cover all forms of capital expenditure and equipment, including locomotives and track and structures specifically needed for freight; and grant assessments will now include traffic taken off inter-urban main roads and motorways. [HON. MEMBERS: "Nice little handout."] It is very significant, that derisory comment from hon. Opposition Members. The fact of the matter is that these enhancements will broaden the scope of this successful scheme and, I believe, will be widely welcomed by the industry and by all those concerned about the environment.

Secondly, I propose to issue a consultation document containing proposals to encourage combined transport movements, and to help keep down the number of lorries on our roads, but allowing lorries carrying goods in containers or swapbodies, to and from railheads only, to operate at up to 44 tonnes gross weight on six axles, provided they are specially equipped with road-friendly suspension and axle layout. That will give rail a competitive edge. It will be particularly important for the development of channel tunnel freight services.

My third proposal involves a new principle. I remind the House that all forms of subsidy to the freight railway ceased under the last Labour Government in 1977. That was based on the belief that rail freight should operate as a commercial business, and fundamentally that is right. But financial support can be justified where there are unambiguous wider benefits.

I therefore propose to introduce a new grant, up to 100 per cent. of the track charges if necessary, to contribute towards track charges for freight traffic which can be demonstrably proven otherwise to move from rail to road, or could not be attracted to rail without it. This even means that, where the environmental and other benefits can clearly justify it, access to the network can be made free at the point of use for freight operators.

I must stress that the Government will expect to see clear returns for their money by way of these environmental benefits, and that the grant will be available only up to the limit of the track charges levied by Railtrack.

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

The combination of our proposals for privatising rail freight, the introduction of open access to the network, the opening of the channel tunnel and the measures that I have announced today amounts to a major new opportunity for freight on rail. It demonstrates our determination to get the freight railway back on its feet.

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

It demonstrates our determination to get the freight railway back on its feet.

I give way to my hon. Friend.

Photo of Mr David Mitchell Mr David Mitchell , North West Hampshire

I am most grateful to my right hon. Friend for giving way. Can he say whether he will take steps to ensure that open access to freight is brought in under his existing powers before the Bill becomes law?

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

I fear that I do not have the powers to do exactly what my hon. Friend suggests, nor can we introduce these measures until we have the Royal Assent. So I very much hope that we will get the Royal Assent as quickly as possible.

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

I want to turn to a very important point now, which I know concerns a lot of hon. Members and which has already been raised—the access regime for rail operators. I will be publishing a separate detailed document on this before the relevant debates during the Committee stage of the Bill. Access arrangements are central to the private sector operation of trains. There are two key issues: how operators will be able to get paths, and the basis of the charges they will pay. We also need a system which is simple for operators, which facilitates franchising and encourages rail freight, and which gives the right economic signals. This includes generating revenue for Railtrack sufficient to cover its costs and enable it to invest.

The independent regulator will be responsible for approving access agreements, and under the Bill he will have duties to protect users and encourage competition. All access arrangements will be subject to Community law. Within this framework, the Government see the system operating as follows.

Freight operators should agree paths and prices with Railtrack on a commercial, freely negotiated basis. It is particularly important for Railtrack to be able to charge market-based prices to freight operators, because it needs income to cover the common costs of the track—those which cannot be attributed to individual operators. Operators can afford to make different contributions to those common costs. If prices were based on average costs, marginal freight operators would be driven away. Conversely, if all prices covered only marginal costs, Railtrack would never cover its common costs.

The system we propose offers the best chance of keeping marginal freight traffic on the railway, and of allowing Railtrack to cover its costs. The alternative of posted prices, whether average or marginal, fails on those counts. The new scheme that I have announced today for assisting rail freight operators with track costs will also help the most marginal flows. The regulator will supervise the system to ensure that Railtrack does not abuse any monopoly power or unfairly discriminate.

A different regime is needed for franchised passenger services. Our longer-term aim is to adopt a market-based system of access for those services too, with increasing competition as the market develops. But for the first generation of franchises, the necessary trainpaths for franchises will be secured from Railtrack by the franchising director, acting under the guidance of the Secretary of State. Those trainpaths will then be offered to potential franchisees as part and parcel of the invitation to tender for franchises.

The price that Railtrack will receive for franchise train paths will be agreed with the franchising director according to economic principles developed by our advisers, Coopers and Lybrand. Those will be set out in the detailed document that we shall be publishing. [HON. MEMBERS: "When?"] I have already said that it will be published soon—in advance of discussion in Committee—I hope, early next week.

The prices for franchised trainpaths will be guaranteed by the franchising director—[Interruption.] I am covering an important part of the proposals, which I am sure many people will wish to study.

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

We are discussing an important issue. Many people have demanded information on the criteria to be used for track costs. Am I to understand from what the Secretary of State is saying that the report is ready, in his hands, and will be published before the Committee meets, which is likely to be next Tuesday—within days of today's debate? Why could not the Secretary of State produce the report in time for today's debate?

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

We have produced a great deal for today's debate—[HON. MEMBERS: "Answer the question."] I am outlining the principles in my speech now. We shall have the detailed document ready. We are moving as fast as we can, and hope to have it published and ready next week.

The task of bidders will be greatly simplified, as they will have only one bid to make, for the franchise. Therefore, if bidders cannot afford the access price, it will be subsidised by the franchising director.

The proposals give priority at the outset to franchises. I make no apology for that. If we are to change the culture, which I have stressed throughout is vital, it will be through introducing private sector disciplines or attitudes into as many passenger services as possible. That means not just a few indvidual services on particular lines—although I do not wish to underestimate the importance of such competition where possible—but introducing disciplines into whole franchised sectors. If competition has to be moderated in the early stages to achieve the successful launch of franchising, some exclusivity may be necessary. On some crowded lines, there may also be technical reasons for doing so initially.

Finally, I should explain the significance of Railtrack's financial objectives for the access arrangements.

Photo of John McAllion John McAllion , Dundee East

On a point of order, Mr. Deputy Speaker. The Secretary of State has made a number of important announcements this afternoon that would normally form the basis of a ministerial statement, which would have allowed many Opposition Members to ask questions. He has effectively hidden his announcement in his speech on Second Reading and refused to give way to Opposition Members who have tried to raise important constituency issues. Is that not an abuse of the orders and procedures of the House designed to protect Back Benchers?

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

This is a Second Reading debate, in which the Secretary of State chooses what he wishes to speak about.

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

The hon. Member for Dundee, East (Mr. McAllion) made a ludicrous charge. I have been—

Photo of John McFall John McFall , Dumbarton

On a point of order, Mr. Deputy Speaker. I have been present since the beginning of the debate, and have been trying to intervene. The Secretary of State has three times said that he was taking his last intervention. I wish to pose questions on the issue of ScotRail. Do we have to occupy Conservative Benches before the Secretary of State will give way to us?

Photo of Mr Barry Field Mr Barry Field , Isle of Wight

On a point of order, Mr. Deputy Speaker. Did not the Secretary of State mention my constituency not once but three times in the debate? I am the only representative of that constituency in the House, and I am not complaining at all about the fact that my right hon. Friend did not give way to me.

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

That was not a point of order—I heard some cheers earlier on.

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

This is unlike a statement: we have made announcements in several debates and documents of our policy on this important issue, and shall continue to do so. We are today debating the Bill's Second Reading. The Bill will go into Committee and there will be many months in which to consider all the aspects. I am mindful of the need to get on so that other hon. Members may speak.

I should explain the significance of Railtrack's financial objectives for the access arrangements. We have deliberately chosen to provide subsidy to operators, not to Railtrack. That is because subsidy is best directed at its intended purpose—the continued provision of socially necessary passenger services which might otherwise disappear.

Therefore, Railtrack will operate on commercial lines, making an appropriate rate of return, which the Government will fix nearer the time that Railtrack goes live. But franchisees will have to pay only the track charges that they can afford. The proposals for charges for freight operators are specifically designed to maintain flexibility to protect marginal operators while charging more to those who can afford it.

Many people talk about level playing fields—it is a big debate. The House will recall that, last autumn, I announced that later this year I would produce a Green Paper on road user charging. The principle of that is that the costs of infrastructure should be covered by users. Therefore, one other element of the policy will be the Green Paper on road user charging.

Before I turn to the Bill's main provisions, I shall say a word about the ticketing and other facilities that will be available to rail passengers under our proposals. We believe that the injection of private sector marketing skills will increase the range of flexibility of the benefits on offer. Private operators will have the freedom and incentive to get more customers on to the railway, which will mean giving passengers convenient and flexible ticketing arrangements. It will also mean offering discounts to boost patronage on certain services and ensuring that all relevant information about services is available to the public. With the private sector in the lead, we expect that most network benefits will be promoted, either individually or collectively, by the operators, but fallbacks will be available.

The Bill will give general powers to the regulator and the franchising director to ensure that key network benefits are maintained. For example, we shall require through ticketing to be provided at all major ticket offices.

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

Through ticketing is not provided at all ticket offices at present, which shows how ignorant the hon. Gentleman is.

We shall guarantee the publication of a national timetable. No less important, we shall require franchisees, as part of their contract, to provide common discount facilities for the disabled. I am sure that that commitment will be welcomed on both sides of the House.

Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North

I am grateful to the Secretary of State for giving way, and I am sure that his answer to my question will be listened to with great interest by people both inside and outside the House. Will the right hon. Gentleman take this opportunity to guarantee the continuation of a national network railcard for the elderly and for young people?

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

I have made the position clear on the disabled. There is no statutory obligation on British Rail to provide the railcard at present, and we do not propose to change the system. However, I have made it clear that I believe that it will be in the interests of franchisees to offer such facilities.

I shall turn now to the Bill's main provisions. Part I covers the provision of railway services under the new regime. It deals broadly with licensing, franchising and access, and the organisations to be set up to make those possible and effective.

Clause 1 and schedule 1 empower the Secretary of State to appoint the regulator and the franchising director. Other clauses impose duties on those office holders. The present consumer organisations need to be updated to play a similar role in the new railway. Clauses 2 and 3 achieve that, and various other aspects of clause 1—which I shall not go into in detail now, due to the pressure of time—cover licensing, franchising and access aspects.

Clauses 35 to 44 cover the important closure procedures. The existing procedures have to be amended to fit the new circumstances of the railway. They have not been weakened.

The remainder of part I contains a wide range of other measures needed to underpin the provision of railway services in the new regime.

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

Part II provides for the restructuring of BR. There is a crucial point here, because immediate and uninformed comment—including, typically, from the Opposition—suggested that we were taking covert powers to privatise London Underground among the transport undertakings. That is wholly wrong. It is this part of the Bill which covers privatisation as such. It does not apply to London Transport or any undertaking other than BR. The Bill gives no power to privatise London Underground.

Part II makes it possible for companies to be formed out of BR. Those companies will form the basis of key players in the future railway. Thus the freight businesses to be sold to the private sector will first be formed as companies, as will the passenger franchise units. Railtrack will also be created as such a company and transferred to the direct ownership of the Government under those powers.

Clause 82 contains a particularly important provision. It confirms, for the avoidance of doubt, that the Transfer of Undertakings (Protection of Employment) Regulations 1981 apply to transfer schemes under clause 75. That will make employees' rights clear in respect of every transfer.

Part III contains a number of miscellaneous, general and supplemental provisions, some of which are of great importance. Clause 107 applies part I of the Health and Safety at Work etc. Act 1974 to the railways. That will allow the new system for railway safety proposed by the Health and Safety Commission, endorsed by the chairman of BR and accepted by the Government, to be implemented by regulations under that Act.

Other clauses cover board pension schemes, the British Transport police, concessionary travel facilities for employees, and clauses 118 to 123 cover financial provisions to allow the continued provision of subsidies and grants in the new railway, including the improved arrangements for freight facilities grants to which I referred earlier.

I come now to some of the points that have been raised, including those raised in earlier debates, which enables me to deal with them briefly. I start with the interim report of the Select Committee on Transport. There is much common ground between us. For example, we are agreed that there should be a regulator. We have included provisions in the Bill for independent consumer committees. We agree that freight should be privatised. We are committed to continuing subsidy for passenger services. We have already clarified, as I have again today, other issues about which the Committee was concerned, including network benefits, pensions and access charges.

One concern that was raised in the early months in particular was safety. I spoke about that in the House the other day when I announced the publication of the Health and Safety Commission's report on safety. The safety concerns have now been fully dealt with. It is noticeable that they are not now being commented on. The Government accepted in full the 38 recommendations, and the chairman of British Rail agreed that the safety aspects of the new regime were fully satisfactory.

Pensions is the second area to be raised, naturally and understandably, with me, and in many other ways, by the railway unions. I fully understand their concerns about pensions for existing employees and for retired British Rail pensioners. We have produced a consultative document on that which makes it clear that we shall make available an industrywide pension scheme for which the unions particularly asked. I believe that that deals with all the key questions on pensions.

There will be controls on railway operators' freedom to increase fares where they might otherwise be able to take advantage of having significant market power to exploit passengers—for example, on London commuter services. Those will be exercised by the franchising authority for franchise services and by the regulator for fully privatised services.

Photo of Mr Timothy Renton Mr Timothy Renton , Mid Sussex

Will my right hon. Friend give way?

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

I must get on—I hope that my right hon. Friend will forgive me.

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

My hon. friend and I have already corresponded on fares.

Photo of Mr Timothy Renton Mr Timothy Renton , Mid Sussex

I appreciate my right hon. Friend giving way.

I agree with much that he has said this afternoon, but it would be helpful if, before he finishes, he would explain why he is so confident that the combination of regulator and franchising director will solve the conundrum that we have had for so long on the commuting lines out of London. As my right hon. Friend the Member for Guildford (Mr. Howell) said, how can there be substantial investment in the infrastructure without excessive increases in fares? My right hon. Friend must realise that thousands of my constituents depend on his answer. They have to get to work every day in London, Crawley, Gatwick or Brighton—punctually, and at a price that they can reasonably afford.

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

I have already corresponded with my right hon. Friend on that. I see no reason why fares should increase faster under the new system then they do under the present nationalised industry structure. In many cases, they will be more flexible and will be reduced. I have already described how, through the franchising authority or the regulator, controls will continue on commuter lines.

There has been substantial investment in many areas of BR in recent years. For example, I know that it does not help my right hon. Friend, but, as I have mentioned, the Networker line has just received an investment of £800 million. That has been possible as a result of the increase in subsidies to British Rail despite the problem of declining revenue. Such support will continue. [Interruption.] It will be for Railtrack to decide its priorities. In addition, franchisees will be able to take advantage of the leasing market and of private capital. [Interruption.] My right hon. Friend will know that we now have a £150 million facility scheme.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe and Nantwich

On a point of order, Mr. Deputy Speaker. This is a vital debate, and it is almost impossible to hear the Secretary of State. If the Minister does not intend to give way, will you at least encourage him to address the Chair?

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

I am happy to repeat what I have just said, because I know that it is important to the hon. Lady.

We shall be enabling and encouraging private sector capital. The £150 million leasing arrangement, introduced in anticipation of privatisation, is part of that. The prospects for increased investment are undoubtedly greater under the proposed system than under the present system.

Several Hon. Members:


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

I come briefly to closures, which is a matter of great concern to many hon. Members. I see no reason why privatisation should lead to a reduction in passenger services. I have made it clear that we shall continue to pay subsidies to support socially necessary railway operations on unprofitable lines. The availability of public subsidy will mean that the private sector can earn a reasonable return on services that currently make a loss.

In return for public subsidy, franchisees will sign legally binding contracts with the franchising director which will specify the quality and frequency of the services that they will be running. Franchisees will not be able to close down loss making lines. Where proposals for closures come in the future as they have in the past, the Bill makes it clear that we shall continue with the current strict statutory procedures.

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

Finally, a point that has frequently been raised concerns what is described as the bureaucracy under the system. When the new system is up and running, it will be more streamlined and less bureaucratic than the present system. The reason for that is straightforward. The new system will have an independent safety authority. We have an independent safety authority now, and no one is suggesting otherwise. It will have consumer committees—the rail users committees. We have them now, and no one is suggesting otherwise.

It will have the franchising authority, which will carry out a function of the distribution of subsidy which at present is carried out between my Department and British Rail and so already exists. However, in future it will be more transparent and open for everyone to see, whereas now it is sometimes difficult to know where the subsidy goes. Therefore, that function basically exists at present. We shall have Railtrack, whose function exists now. The only new element is the regulator, which the Select Committee has said is necessary.

Therefore, there is no increase in bureaucracy. At the moment, British Rail has a heavily structured bureaucracy, and the new arrangements will move in the opposite direction. It is rich for Opposition Members to talk about bureaucracy when they are now proposing a new independent railway commission.

That brings me to the Labour party. Yesterday morning, I heard that Labour was launching that afternoon its 10-point plan for the railways. What an impact it had. I had to scour this morning's newspapers with a magnifying glass for even a mention. Then, courtesy of The Guardian, I found seven of the 10 points. No wonder the plan was ignored: apart from the usual more staff, more costs, and more subsidies to run the present system, only two points said anything new. I say this for the benefit of my right hon. and hon. Friends, because I am sure that they did not spot that report in The Guardian this morning.

The two points were a new independent railways commission with wide-ranging powers to oversee British Rail—who is talking about bureaucracy?—and powers for British Rail, still wholly in the public sector, to borrow from private funds free of all Treasury constraints, just as the French railways do.

What is the consequence in France? It is a total debt of £14 billion, compared to British Rail's £2 billion; an annual interest payment of £1.3 billion—[Interruption.] No wonder the Opposition do not like to hear this. That annual interest payment of £1.3 billion—a colossal burden on French taxpayers and rail users—compares with British Rail's £80 million. The result is that 20 per cent. of SNCF's annual costs are debt interest payments, compared with British Rail's 1.5 per cent.

If that is Labour Members' prescription for British taxpayers and rail users, I tell them to beware—it would be a total disaster. That would be the consequence of Labour's proposals—just throw more taxpayers' money at it; run the railways for the railwaymen; ignore completely the lessons of other privatisations and the benefit that they can bring to customers by better systems, greater motivation, innovation, and enterprise.

There are benefits to the customer. British Telecom's prices are down 27 per cent. in real terms since privatisation, with much better services, more choice, and further innovation. British Gas prices are down by 20 per cent. in real terms. There are the benefits of investment: in all the major industries, there was greater investment after privatisation than before. And there are the benefits to the taxpayer.

Each and every time that we embarked on the privatisation of an industry, the Labour party opposed it. Time and again on Second Reading, it said that it would reverse our proposals—as the hon. Member for Kingston upon Hull, East (Mr. Prescott) will no doubt do today. Each and every time the Labour party predicted disaster, and each and every time we proved it wrong.

We proved—by the success of the British Airports Authority, British Airways, National Freight Corporation, National Express, British Telecom, the regional electricity companies, and British Gas—that the involvement of the private sector works, and works well, for the customer.

Each and every time, the Labour party had to admit that it was wrong—because one does not hear it say today that it will renationalise any of those ventures. So it will be for British Rail. The hon. Member for Kingston upon Hull, East or his successor will be forced to admit that our proposals, as outlined in the Bill, are the right way forward for our railways of the future in the interests of passengers, freight, and employees alike. That is why I commend the Bill to the House for a Second Reading.

Photo of John Prescott John Prescott Shadow Secretary of State, Member, Labour Party National Executive Committee, Shadow Secretary of State for Transport 5:12 pm, 2nd February 1993

The Secretary of State said a considerable amount, much of which was of interest, and gave information and facts that we have wanted for a long time. However, it is extremely difficult to make a proper judgment on the right hon. Gentleman's statements without the documentation relating to complicated aspects—as I am sure he would be the first to concede.

The right hon. Gentleman followed exactly the same procedure in respect of the health and safety document, which he introduced in his speech but which was already in the Vote Office, ready to be distributed. The right hon. Gentleman could have paid the House the courtesy of distributing that document, so that we could have formed some judgment on his later claim that the railway system will be much safer.

We shall find the same with track charges. The Secretary of State has the track costs document printed and ready—is that not right? I ask the Secretary of State: is that document ready now? It is ready, printed, and available—we all know that. The right hon. Gentleman could have produced that document on an issue that is essential—as was pointed out by the Select Committee and by all who criticise the privatisation proposals. The right hon. Gentleman introduced it in his speech, which makes it difficult for us to reach a proper judgment. No doubt that document will be produced before the Committee meets, which will probably be on Tuesday. We could have had it in time for this debate. That shows the contemptible way in which the Secretary of State introduces material to the House.

The right hon. Gentleman could have been a little more sympathetic in respect of his new proposals on franchising and allowed hon. Members representing Scottish constituencies to intervene, particularly as he is subjecting Scotland's entire railway system to this experiment. That is one reason why the House is angry about statements in the Secretary of State's speech.

Photo of John McFall John McFall , Dumbarton

I thank my hon. Friend very much for allowing me to intervene. Last week, I spoke to commuters and concerned individuals in Inverness. They pointed out that the Ness bridge in Inverness was dismantled in 1989 but, because of floods, had to be rebuilt last year at a cost of £3 million. Scotland has 2,200 bridges. We saw the damage done by the Perth floods, which cost British Rail £1 million. The Secretary of State said that with the introduction of the private sector there will be private sector discipline. What guarantees can be given about those bridges and Scotland's social subsidy? It seems that the Secretary of State has no guarantees. That is no comfort to the people of Scotland.

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

Clearly, we shall want to question the Secretary of State on that essential point in Committee. It is important to know where the money for the rail track costs and the necessary safety investment that he mentioned is to come from. I shall return to that point later.

The Secretary of State began his remarks by speaking of a historical change, and one is certainly being made. The right hon. Gentleman suggested that it will be for the better, but that is not proven—certainly not by the right hon. Gentleman's speech. The Bill's provisions seem to change from day to day. It has changed tremendously, from privatisation to commercialisation, due to one or two cherry-picking ventures. The Secretary of State stated today where they will be: they are the profitable routes—not a railway system. As was said by a Conservative Member, the Government should be more concerned about who is to run the railways than who is to run one or two lines.

The Secretary of State said that privatisation had produced better results, whether it be in respect of gas, electricity, or water. That is disputable, but we can have that argument on another occasion. I cannot use the hour that the Secretary of State has taken, because that would deny a number of Back Benchers an opportunity to speak.

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

No, I will not give way.

A comparison has been made between British Rail and the privatisation and deregulation of buses, which it was said would provide better services, lower fares, and investment. Instead, there is clear evidence that passengers pay a lot more, fewer services are available, buses run only on profitable routes, and there are no service cross-subsidies. The bus manufacturing industry has collapsed from 7,000 orders per year to none. It is plain that deregulation and privatisation destroyed our effective, modern bus industry.

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 not giving way to Tories.

At last we have the Second Reading. Never has a Bill changed so many times. Never has a Bill been so universally condemned. Never has a Bill lost its essential justification—that private competition and privatisation would provide the means by which to change the service. All that the Secretary of State seemed to claim was that there will be a change in the culture. That was his essential point. He is to replace public management with private management, and there will be fundamental changes. Of course there will—one of them will be the pay inceases for the bosses at the top who will be running the system. That will happen straight away.

We shall have to wait to find out whether privatisation will lead to improvements, but I do not believe that it will. Essentially, the Bill is an enabling measure—

Photo of Mr Stephen Milligan Mr Stephen Milligan , Eastleigh

I am grateful to the hon. Gentleman for giving way at last. He mentioned the gas, water and electricity industries. In the last Parliament, he said that if the Labour party took power they would renationalise those industries. Is that still his view?

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

The hon. Gentleman should be more concerned about the state of the Eastleigh and Southampton railway services. He should be intervening on that subject.

I firmly believe that a publicly owned railway system can provide a better service than one that is privately owned. According to the Secretary of State, this is not privatisation but commercialisation. It will lead not to competition in the provision of services, but to competition for the taxpayer's money for the payment of subsidies. That is the only competition that there will be. Instead of the public monopoly about which the Government are so concerned, we shall have what the Secretary of State called "exclusive services"—in other words, a private monopoly. We shall be replacing a public monopoly with a private one.

The process will not, however, be completed under the present Government. According to the Secretary of State, it will not be completed until the next century. Nor will it reduce bureaucracy. As the Secretary of State has been forced to admit, there will be more quangos. I note that he drew a distinction between the present employment of civil servants by British Rail and their future employment by quangos. One of the Tory party's essential arguments has concerned the growth and proliferation of quangos in the civil service, and in bureaucratic organisations. Now the Secretary of State is establishing quangos and claiming that they will not increase bureaucracy. The evidence is against the right hon. Gentleman. I do not believe him, and neither did the Tory party at the beginning of the decade, which spent all its time abolishing quangos, for the very reasons that I have cited.

The Bill offers no guarantee that the existing network of 11,000 miles will continue. That was the justification for the public service obligation payments made by the European Community. Despite what the Secretary of State said, there is no guarantee of protection from closures, especially in rural areas. Let us consider the reasons currently given for such closures. Perhaps British Rail wants to run a train from Yarmouth, in the Secretary of State's area, to Peterborough; it wants to speed up the journey, so it begins to cut the number of rural stops.

I must emphasise the importance of network services, whether in rural or urban areas. Often people who live in rural areas want to drive to the station and then travel into town by rail to avoid the congestion on the roads. The Secretary of State has an answer to that: the introduction of road pricing. That is another proposal that he has slipped in. Clearly, huge charges for road freight and passengers will be needed to subsidise the policy, and they will apply not to taxpayers but to road users. That is what the Secretary of State has told us.

There is no guarantee, either, that we can sustain the £1 billion investment which, according to the chairman of British Rail and everyone else concerned, is the minimum that will be necessary. The Secretary of State has talked of a record level of investment; what he means, of course, is the actual amount put into the channel tunnel. The chairman of British Rail has told the Select Committee that, after two years, investment in the tunnel will fall to an average of £600 million a year. That is less than the average in the late 1980s, and it is not enough to maintain the support that Network SouthEast requires.

The Secretary of State plainly has not convinced Conservative Members with seats in Network SouthEast areas about the source of the money or indeed whether it will arrive. Obviously it will not arrive, although a £1 billion annual investment is needed.

Photo of Mr Jacques Arnold Mr Jacques Arnold , Gravesham

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

I certainly will not give way to you.

Furthermore, the Secretary of State has not guaranteed the maintenance of a proper standard of safety. He has not guaranteed that the railways will retain freight, rather than more of it being transported by road. It is interesting to hear the right hon. Gentleman say that he is now convinced of what needs to be done to transfer the traffic from road to rail. He may not know it, but a lot of the ideas that he has announced have been pinched from Labour. The leasing proposals are one example, but three more of his ideas can be found in Labour's transport document, produced at the time of the general election. We suggested that heavy lorries could be taken from certain sites to the railheads, and that subsidies could be made available to relieve motorway congestion.

All the ideas offered by the Secretary of State were published years ago: he is merely trawling our documents and adding our policies to his. I agree that those proposals will help to transfer traffic from road to rail, and I am in favour of that, but the Secretary of State has just announced that there must be an 8 per cent. rate of return on freight. His present policy is driving a number of private companies to transfer the equivalent of 100,000 lorryloads from rail to road in the south-east. He need not wait for legislation to change the position; he could change it now. Select Committees have recommended such action. It is arrant nonsense to talk of the need to wait for legislative change. The present Secretary of State seems unaware that he has the powers to introduce change; his predecessor suggested that he would introduce it, but never did.

I welcome the proposals. I have advocated transferring more traffic from road to rail, and they will help us to do that. My only difference with the Secretary of State lies in the fact that it is unnecessary to wait 18 months for legislation before effecting the policy. There is a specific reason why it is now so important to reverse the policy of driving traffic from rail to road. British Rail has increased its prices to some freight operators by as much as 150 per cent. It is not possible to operate a service on such terms. Is the right hon. Gentleman telling us that he will allow hundreds of lorryloads of freight to travel by road when he could stop it? Will he reverse that stupid policy, which has arisen directly from the track charges required to meet the 8 per cent. rate of return that he has imposed on British Rail? I am happy to give way to the right hon. Gentleman because a good many people would like to hear the answer.

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

In fact, the rate of return which British Rail is being asked to achieve, and which it is not achieving, is a good deal less than 8 per cent. Some services are making substantial losses; those losses must be addressed, in view of the heavy losses currently being incurred in rail freight.

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

I cannot understand the right hon. Gentleman's logic. Has he not announced that he is prepared to subsidise those companies to deal with the track charges because of the difficulties of marginal costing? Legislative change is not needed for that; as I have said, these are just Treasury rules, which are absurd. The Secretary of State clearly does not understand what he is doing with the railway system. He could reverse the policy if he wished, but he appears not to know what powers he has. He is not competent to understand what is involved in transferring freight from road to rail.

The Secretary of State spoke of passengers' rights, and protection through the passenger transport consultative committee. The committee has issued a report saying that the Bill will not improve the position, and that it will reduce the committee's powers. I do not know whether the Secretary of State reads the documents that are sent to every Member of Parliament, but that is what the committee says.

Certainly, the Secretary of State has not inspired us with any confidence about concessionary travel. He said that it was guaranteed, but according to clause 117 such travel "may" be provided. As every hon. Member knows, "may" is not the same as "shall". Anyone who doubts what I am saying should consider what happened when the bus service industry was deregulated. Concessionary travel was one of the first things that went, along with through ticketing, the fare structure and the timetables. The evidence is clear.

Photo of Mr Keith Mans Mr Keith Mans , Wyre

On a point of order, Mr. Deputy Speaker. I seek your guidance on a specific point. Is it right for the hon. Member for Kingston upon Hull, East (Mr. Prescott), as Opposition transport spokesman, not to declare his interest as a member of a railway union?

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

That is not a matter for the Chair.

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

I think that it is acceptable to record such an interest in the Register of Members' Interests. So far, no one has doubted my union connections. Let me add that I do not receive a penny in sponsorship—unlike Conservative Members with banking and other interests.

The overwhelming criticism of the Bill, especially on Second Reading, relates to the fact that it is rejected overwhelmingly by people outside the House. The Secretary of State constantly tells us about the people who support it. The evidence is clear—

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

Yes, I shall give way in a moment to the Chairman of the Select Committee.

The Independent on Sunday reports quotations from people who know, people who have a lot of experience—Tories, of course. Lord Ridley said: I do not believe it is possible to privatise the railways". He was supported enthusiastically by Lord Young and Lord Whitelaw. In its editorial, the Daily Express said that the Government … would be wise to rethink this risky undertaking.

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

Let me complete the list, and then the right hon. Gentleman can give a full answer for once.

The National Opinion Poll found that the system would get worse if it was privatised. The Central Transport Consultative Committee, the statutory watchdog for the industry, said that it would be the passengers who pay the price as operators seek to maximise profits. Let us consider what the experts said. The Select Committee made it absolutely clear that few of the people who gave evidence to it have endorsed the Government's specific proposals. Jane's World Railways says that the proposal cannot be viewed as better than a dogma-driven exercise, utterly irrelevent to national need. The banker who advises on the privatisation said: The economics of railways may not attract private-sector investment". He should know. A lawyer who dealt with the Clapham crash said that the difficulty—[Interruption.] Yes, it is speeding up a bit because of the amount of time involved, but it is a serious point. A lawyer involved in suing on behalf of a number of people involved in the Clapham tragedy said that it would be impossible … for the traveller to know whether to sue the train operator, Railtrack, who run the signals, or the owner of a sold-off Clapham station. That is a serious point.

Many others have pursued the issue, including rail bosses. The chairman of British Rail has made his views clear. He said: My view is that a railway should meet the social needs of the country as well as the economic needs. Lord Marsh, who I think was one of yours and one of ours at some stage, but who was also the chairman of British Rail, said: Logic has been abandoned a long time ago … Why are we doing this? The Swedish rail chairman, who I should have thought would know about this, said: I don't see any commitment in your Government's proposal to modernising the rail network. Howard Davies, the Director General of the Confederation of British Industry, said that there is a real danger that privatisation will be a blueprint for bureaucracy. He should know. The list goes on and on.

Across the country, all groups in the community, including the industrialists, are telling the Secretary of State that the privatisation of the railway cannot work in the way he suggests and that it would be disastrous for the railway industry.

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

The hon. Gentleman has engaged in some selective quotations. I must put him right on one so as to put the record straight. My noble Friend Lord Young said clearly: I have no doubt that rail privatisation will add to the long line of services successfully enhanced by the addition of private sector skills and made it clear that he was backing the proposals. [Interruption.] I shall be happy to read the whole letter because it is entirely supportive of what we are doing. Many industrialists also support us. I have letters from industrialists saying that it would undoubtedly offer the best service. The hon. Gentleman has quoted from various leader articles on the day the Bill was published. I shall not weary the House by reading a long selective quotation, but the hon. Gentleman might also have seen a list of eight leaders which supported what we are doing.

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 is not denying what Lord Young said in January. Clearly, Lord Young has been nobbled since then so that the Secretary of State can quote him. Lord Young is confused, but what I read was exactly what he said. That is a kind of nobbling job. No doubt the Secretary of State has gone to a few more saying, "Can you please say you support this system?" In reality, they do not.

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

In one debate last year, I understand that the hon. Gentleman said that he did not necessarily believe that British Rail needed to be wholly publicly or wholly privately owned. In another debate he said that it needed to be publicly owned for very good reasons. Which does he believe?

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

I see nothing inconsistent in a publicly owned railway having access to private capital and access for private operators to work on some of the lines. [HON. MEMBERS: "Oh."] That is how it was done with some of the freight systems. It is not new for British Rail. It might shock some Conservative Members but British Rail management, largely because of the freight operations, did not have sufficient resources to put the necessary investment into the track, trains and engines. It basically told private companies that if they would pay for the engines and the rolling stock, it would allow them to operate on the lines. They operate under British Rail's conditions of operation and that is acceptable to them.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

On the question of freight and my right hon. Friend's powers to act immediately to implement what he has announced, my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell) and I share the hon. Gentleman's view that the Secretary of State has the power and we would urge him to use it immediately.

Does the hon. Gentleman understand what I understood my right hon. Friend to be saying about freight costing? At present freight has access to marginal costs, but under the new simplified system the Government will give funds to Railtrack, which will have to make commercially driven revenue. That will put up the prices and a rebate will be available from Railtrack for operators which will apply for subsidy, presumably to Railtrack. Instead of one management decision, five quangos will be involved. Is that the hon. Gentleman's understanding?

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

Precisely—that is absolutely right. Even worse, it means that the costs of Railtrack will be passed on to all operators. When we separate Railtrack from British Rail, as the Secretary of State now proposes, British Rail will presumably operate 95 per cent. or 90 per cent. of the service. Only a minority will be pinched by the private operators, so the 90 per cent. will be operated largely by British Rail. Because the cost of the track will now have to involve a profit element, it will mean a major hike in the cost for British Rail which has to fund it from the public service obligation, which means through subsidy from us. All we shall do is increase subsidies. Anyone who knows anything about the operation of railway services knows that to be true.

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

No, I have given way for the last time.

The central thrust of the Government's case, therefore, is that it would change the culture. By introducing private management and entrepreneurial flair, they intend to achieve a change of culture. They believe that we shall then get the change of culture that will bring about all that the Secretary of State claims will be improvements. There is no doubt that he has a dream and a vision, but I wonder whether he is not merely dreaming and not looking at the practical realities.

Where is the historical evidence that changing the management brings those improvements? In Britain, pre-1921, there were 120 private railways all begging to be taken over. They were clapped out, so when the first world war came we had to make them into four big rail operators and therefore reduce the idea of competition. Of course, they were still private management led.

Let us consider the record of that period. I am grateful to my right hon. Friend the Member for Chesterfield (Mr. Benn) for giving me a copy of a speech that he made in 1960. He referred to the record of the Great Western railway, to which I referred in an earlier speech, and which was the only one to make a profit. My right hon. Friend said that in 1929 the GWR was paying 7.5 per cent. on its dividends. A year later, the dividend fell to 5 per cent., the following year to 3 per cent. and, in order to pay the 3 per cent. next year, it dipped into its reserves. It then asked for a 10 per cent. wage cut and said that in order to pay the 3 per cent., it would have to pay out of its reserves. My right hon. Friend said: In 1937, it managed to raise it to 4 per cent. by postponing modernisation. It cut £3 million out of its capital requirement programme".—[Official Report, 13 April 1960; Vol 621, c. 1389.] It did that in order to pay 4 per cent.

The railways were saved by the war. Nobody doubted that what happened was necessary in the national interest. As most of the investment had not been carried out, it was an inadequate system, but it all took place under a private system and, interestingly enough, with the type of quangos that the Secretary of State now proposes. He is talking about regulators and clearing houses, which all existed in the 1930s. Private ownership of the industry did not mean that the investment was made. It did not produce good entrepreneurial flair, so we know that is not true.

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. The hon. Gentleman is clearly not giving way.

Photo of Mr Philip Oppenheim Mr Philip Oppenheim , Amber Valley

On a point of order, Mr. Deputy Speaker. Is it in order for me to point out that the Opposition spokesman has given way only three times?

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

No. That is not in order.

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

I would not give way to the hon. Gentleman's mother.

The Secretary of State lacks an awful lot of knowledge about the railway system. His central case is that private entrepreneurial flair was needed and that we must privatise the industry. He should consider British Rail's record. I have been critical of British Rail—make no mistake about that—but it produced some of the best hotels in the world. People know about Gleneagles. Why did they fail or not have investment? The Treasury would not allow them to mortgage their property to continue the investment in the development. It was a Treasury rule; it was nothing to do with private managerial flair.

The first development of containerisation in any maritime base was done by sealing in the United Kingdom. That development began to fail primarily because the Government were not prepared to invest in more ships and the industry was starved of capital. The tilt mechanism and the advanced passenger train system was first developed in the United Kingdom. It was not completed, but it was done in other countries.

The fast 125 diesels and the 225 electrics were ahead of their time in technology. It is a credit to the management of that industry that they led the way in the development of technology using conventional track. The evidence is there. Clearly, they were good. The real problem was that, although they produced a safe railway, the lack of resources began to undermine the system. The industry had the best productivity of any railway system in Europe. It was the same in the 1970s and the 1980s. Essentially, the industry was starved of financial resources.

Who was responsible for the resources of British Rail? It is clear that one cannot take all of the financing from fares. Resources must come in from some form of subsidy. Therefore, Governments must be involved. The Secretary of State may have said that the European railway system had already borrowed a lot. If the British people had the opportunity to choose between the French or German railway systems and our system, I have no doubt that they would pick the system with a higher quality and high technology, which is what everybody in the United Kingdom wants. They appreciate that such a system must be financed, and that resources cannot come out of the fare box. That is the real problem of the railway system.

The real problem with the British Rail system is that it has not had sufficient resources. The Government believe that a railway system can be run on a financial framework. That means that one begins to cut back the public subsidies, as the Government did during that period.

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

No. I have given way quite a lot. [HON. MEMBERS: "No."] Yes, I have. I cannot take the hour that the Secretary of State's speech took.

Investment has not taken place. The Government have tried to put a financial framework on our railway system. Clearly, the railway system needs £1 billion a year. On the projections from the Treasury and his Department, the Secretary of State must accept that investment will be cut back in the next two years to £600 million. That is reality, and that is what the Secretary of State must recognise. Therefore, he must get resources from the private sector.

The Secretary of State knows that I have advocated leasing and bond ideas. Those ideas are used by the publicly-owned railways in Europe. The Secretary of State need look only at those ideas as a way of financing railways. Every railway system does it, and the Government cannot afford not to do it. It is true that one does not have to maintain the level of subsidies at the level to which the Secretary of State referred.

It is readily recognised that British Rail has been effective in its productivity. Even with the projections which included private finance, experience has shown that the tunnel link collapsed not because the public sector and private sector could not get together—management had good ideas—but because the Government were not prepared to find the financial resources for the public sector.

It is the same with the Heathrow-Paddington line. All we had to provide was 20 per cent. public money—80 per cent. was to come from a private company, BAA. Why were we not able to endorse that? It was nothing to do with managerial ability; it was a decision by the Government. We wait to see what will happen with the Jubilee line fiasco. Experience of private management in British Rail shows that Tiger Rail, Charterail and Stagecoach collapsed. They had private management and problems with track costs. The Secretary of State is addressing that problem at present.

On the rail side, the Secretary of State has answered the problem by saying, "I will provide more subsidies." That is what he said in the House today. I am not against it. However, when he charges us with wanting to throw money at freight, it is a bit much when his own proposals relate to subsidising freight. It is not acceptable for him to accuse us of throwing subsidies at freight and then to come here with his own proposals to do exactly the same thing.

Our argument with the Government's approach to the matter is that they are purely ideological. They hate publicly-owned industries. It is not that they do not believe that public sector management cannot do it. They are not prepared to give it the same terms as the private sector had to achieve it. They discriminate against British Rail. In the circumstances, they deny British Rail the opportunity to produce a good railway system.

One of the Secretary of State's main claims was that it would be a safer railway. On the Health and Safety Executive, he said that they would make it clear that it would be a safer railway. The Health and Safety Executive made an important qualification which hon. Members must learn: Companies with little or no previous experience of operating on the railway, and managers with limited experience of railway safety issues, will enter the railway industry as the BR monopoly is broken. Unless considerable care is taken to set up systems to ensure that new operators are properly equipped and organised, there can be no confidence that risk will be effectively controlled right from the start, and that important matters do not fall between the safety arrangements of various parties. The Secretary of State said that he had adopted the 31 recommendations. I wait to see whether that will be the case.

I refer the Secretary of State to the Hidden report on the inquiry into the December 1988 Clapham rail disaster in which 35 people were killed. The report made an important point about private sector operations: A further concern is that there are signs that the past high safety standards at local level achieved by giving a high priority to a 'safe railway' above other issues are starting to be eroded by the change in railway culture. If continued, this will strike at the root of our structure. I would not like a major disaster with loss of life to be the reason that forced British Rail to invest in modern safety aids. The report included a recommendation of the improvements which needed to be made in order to move against the development of a culture which could undermine safety. One of the report's recommendations was to introduce the automatic train protection system. It was felt that the introduction of that system was important to stop trains colliding with each other. The report recommended that the system should be introduced in five years. British Rail have made it clear that it cannot be done in 10 years. Yet it is an important safety provision.

I note that in the publicity in the press today the hon. Member for Havant (Mr. Willetts) proposed that it is no longer necessary to introduce the automatic train protection system. He said: The cost of installation throughout British Rail is likely to be some £600 million. It is not clear that this amount of expenditure can be justified …There are now welcome signs that this absurd project is being abandoned. That was said at a conference today with the Prime Minister to discuss red tape. One of the essential recommendations of the Hidden report on the Clapham disaster and Network SouthEast that there should be automatic train protection systems is about to be abolished because the Government cannot afford it. The Government have never told us whether the money will be provided. We know that the system will cost £600 million. The Prime Minister is attending a conference not far from Clapham station to discuss, in effect, how to reduce safety on the railway system. That is our main concern.

We received the Health and Safety inspector's report this week. I was pleased to receive the report, as someone who is always looking for it. Normally, it takes 10 months to come out, but this one has come out in 10 weeks. It is interesting that the report says that railway safety has improved: Serious incidents and fatalities declined from 161 in 1990 to 131 in 1991–92. Any improvement in safety is to be welcomed, but that is a snapshot. How can one judge anything if one merely compares one year with another? Why are we not looking to see the reality of the first half of the 1980s compared with the second half? The inspector's report contains a graph for all to see. It is misleading to suggest that there is an improvement in railway safety on those grounds. I looked closely at the graph. When one looks at the figures, it is clear that safety on the railway has deteriorated between the first five years of the 1980s and the second five years. The number of fatalities has increased by more than 22 per cent. Those fatalities were largely due to technical effects brought about following inadequate investment in our track and signalling system.

What is significant about the increase between the first five years of the 1980s and the second five years is that during that period the Government reduced the amount of subsidies, support and investment levels in British Rail, which had an effect on safety. The emphasis during that period was on reducing costs. Instead of the Secretary of State telling the House that everything on the railways is fine, I suggest that he look at the figures in more detail or get his staff to analyse them. Will he still be convinced? Will the money for the automatic train protection system still be available? Can the Secretary of State tell us that? That is one major decision on safety that he could announce if he wanted to convince us of the truth of what he has said about the future safety of the system. Will he guarantee that that money will be available?

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

British Rail spends some £230 million per annum. The Hidden recommendation in relation to automatic train protection was that it should be applied five years after the development and trialling had been concluded. That has not yet happened.

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

Is the money to be provided for the system as soon as it is developed? That is the question that I asked. The remarks of the hon. Member for Havant suggest that it has been decided that the money will not be provided and that the Government are about to drop the automatic train protection system.

If what the Minister says is true, the decision whether the money should be invested will lie not with the Secretary of State but with the track authority, which will be divorced from British Rail. Will the track authority have to make such decisions? If it does, will not its mind be exercised by the consideration that if it spends £600 million on improving safety, track costs will increase for all the franchise and freight operations whose ability to provide a profitable service will have to be judged? Can we not now see the beginnings of the conflict between the commercial culture and what is needed to maintain a safe railway system?

I note that the Secretary of State and the Minister are not saying that the money will be available to implement that recommendation of the inquiry into the safety of the railways. I can only say that safety is bound to be affected and that that fact will be noted.

The Government's judgment about the separation of Railtrack will undoubtedly make it much more difficult to operate services. What of the lines that the Secretary of State has made available for the cherry pickers? And it is certainly cherry picking, is it not? No one doubts that it will be possible to make money on the east coast line. Any silly fool, whether in public or private management, can make money on that line; it is making money now. Some £420 million worth of taxpayers' money has been invested to maintain that line. How much will the entrepreneurs now pay for the track? Mr. Sherwood of Overseas Containers has made it clear that, if he has to pay the full price for tracks, he will not be able to operate a commercial service. He is one of the 50 on the list of applicants that the Government keep on about.

The Tories have always rejected the idea of cross-subsidisation in transport. The French realised the value of the concept years ago, when they were developing the TGV. When the first TGV was built, all sorts of people wanted it to be run privately. Chirac—the mayor of Paris at the time and not a socialist, as the House will be aware—favoured privatisation. People explained to him that, following privatisation, all the profits from the first, profitable route would go to the shareholders, whereas if the profits were allowed to be reinvested in the second stage, a network could be developed as the profitable routes began to finance the less profitable ones.

Cross-subsidisation is relevant to the future of the east coast line. What will happen with that line is that the branch lines will go first—that means Hull, my own area, and Harrogate. At present 125s have to be used as that part of the line is not electrified and no doubt the Railtrack people will not go ahead with that project. Will the Aberdeen route be retained and electrified to give a through service or will people have to change trains at Edinburgh? Those are the decisions that commercial operators will face. Under a British Rail system, the profit from the east coast network could be reinvested to subsidise the west coast line. Such investment is desperately needed: no entrepreneur is offering to pay £1 billion for the west coast line.

Will not the entrepreneurs on the east coast line say, "Why maintain a railway up the west coast? We'll take people up the east coast to Glasgow and Edinburgh." The west coast network will then begin to close. It will be maintained as far as Manchester, but no one will undertake the necessary investment thereafter. Then we shall begin to see a reduction in investment in new trains and wagons, which will further undermine the manufacturers. In a few years' time, no doubt the Secretary of State will come to the House and say that the Government are having to close down rail manufacturing because no orders are forthcoming from within this country—exactly what has happened with Leyland DAF, as we heard in the earlier announcement. The Government simply do not understand how heavily our manufacturing industries depend on the railways. That is a crucial part of our analysis.

The Secretary of State referred to the Great Western line to Paddington. Will that line go only as far as Plymouth, or will it be guaranteed to go as far as Penzance? From talks that are already taking place, we are led to believe that it will go only as far as Plymouth. Can the Secretary of State tell us whether it will in fact go further? Who will undertake the necessary investment in the 30-year-old stock of 125s on the Great Western line? We are talking about hundreds of millions of pounds; no private entrepreneur will be prepared to invest that amount.

Why is the Gatwick line to be kept with InterCity? The books were fiddled to allow the resourses to be given to InterCity and to improve InterCity's accounts so that the Government could sell it to the private sector—although, in fact, they have not been able to do so. Why cannot the profits of the Gatwick line, which is a premium service, be reinvested in Network SouthEast instead of going to a few shareholders who happen to have pinched that particular jewel?

The Southend line is also on the list. For the record, let me say that the Secretary of State has pinched another of my ideas here. [HON. MEMBERS: "Oh".] It is a matter of record. I sold my pamphlet to the Secretary of State for 25 quid; he got it very cheap and pinched most of the ideas. There is no reason why an industry in the public sector cannot use private money. Why cannot private industry be asked to finance the project, as happens with road bridges, with the new stock being returned at the end of the period so that it can still be run by British Rail? There is no reason why the public sector cannot do that. It is ideological nonsense to suggest that it has to be the private sector.

We believe that there is an alternative. There is no time to go into it now, but our suggestions have been published in pamphlets before today. As the Secretary of State knows, they were embodied in an instruction that I would have given to the chairman of British Rail to implement what I believe to be a far better railway system. We have made clear our view on all those things.

The Bill will make the railways less safe. It will be a cherry pickers' charter, as we have established from what the Secretary of State said today. Profits will be put before service needs. It will be a reduced network service. Fares will be higher. Investment will be less. More traffic will be chased off rail on to the roads, adding to the congestion and the environmental damage.

Above all, we shall have a different railway industry, driven solely by the desire to make profit. We shall be going in the opposite direction from the rest of Europe. What we want in Britain is modernisation, not privatisation. What we are getting is the Secretary of State's ideological obsession, which is rejected by every part of the community. I can only hope that the House will join the Opposition in rejecting the Bill.

Photo of John Stanley John Stanley , Tonbridge and Malling 5:57 pm, 2nd February 1993

This is my second speech on the current legislative proposals. When I spoke in the debate on the White Paper on 29 October 1992, I said that I supported the Government's intention to try to bring the private sector into the railway system but expressed grave concern about the fare implications of the proposals, particularly for middle-distance and long-distance commuters using Network SouthEast, who include a large proportion of my constituents.

The potential financial implications of rail privatisation for the household budgets of that group of people are of a quite different order of magnitude from those of other privatisations, such as the privatisations of the telephone system, electricity, gas and water. Those items may cost households hundreds of pounds, whereas on this occasion we may be talking about thousands of pounds. That is a critical consideration for those living in the belt around London.

What the fare implications will be is a matter of judgment. My right hon. Friend the Secretary of State has already set out figures for various privatisations whose effect has been to bring about a reduction in charges. My right hon. Friend was right to do that. Equally, however, other privatisations—for example, water privatisation—have been followed by a sharp increase in charges in real terms.

I suggest that one can discern a general pattern. Where privatisation has taken place following a substantial period of investment in the previously nationalised industry, it has usually been possible for the new regime to bring about a real-terms reduction in charges. By contrast, when a public sector body, following years of under-investment, as in the case of water and, I suggest, in the case of British Rail, has been taken into the private sector, prices have invariably gone sharply upwards.

I believe that, in the case of this privatisation, the underlying pressures are very firmly in the upward category—a judgment to which I come for one reason only, quite apart from the long history of under-investment in the railway system. The existing nationalised industry requires a rate of return on capital of about 8 per cent. I think that I heard my right hon. Friend say that the industry was not achieving that. One certainty is that when this industry is privatised its owners will require a significantly higher rate of return—probably about double the figure I have mentioned. That in itself will put immediate pressure on fares.

What happens will be determined critically by two factors. The first is the future of subsidies. In saying that, I am referring in particular to Network SouthEast. The second factor is the type of fare-control regime.

Those of us who represent constituencies in the Network SouthEast area are very well aware of the critical and direct relationship between the level of subsidy and the affordability of fares. In an attempt to bring home just how critical that relationship is, I put a question to the chairman of British Rail, Sir Bob Reid. I asked him by how much fares in Network SouthEast would have to rise if the current Government subsidy were removed entirely and if Network SouthEast were to continue to achieve the rate of return that British Rail expected of it. Sir Bob Reid's reply was very instructive in that it brought out the key relationship between subsidy and fare levels. It said: The immediate achievement of the scenario you describe would, we estimate, require a fare increase of about 190 per cent. on 'peak' prices. This would principally reflect the high level of assets inevitably required for use only in 'peak' periods: two-thirds of Network SouthEast rolling stock is used only during the morning and evening rush hours. There would not be an equivalent 'off peak' increase as this would be self-defeating in business terms. Let me emphasise, lest anyone be tempted to misrepresent what I have said, that I am not suggesting that one implication of these proposals is a fare increase of 190 per cent. Nor, as is quite clear from the extract that I have just quoted, is Sir Bob Reid. My purpose is to point up very sharply the fact that unless the subsidy level is maintained at its present level, in real terms, the fares implications for mid-distance and long-distance commuters are likely to be very serious indeed.

The Government's policy—repeated twice today by my right hon. Friend—is that subsidies will continue in respect of those lines that are socially necessary. But that comment omits the key piece of information. [Interruption.] Someone asks, "How long?". That is one of the key questions, but even more critical is the level of continued subsidy. There is no point in saying simply that subsidy will be continued. It might be continued, but reduced by 95 per cent. More instructive than what my right hon. Friend said was the answer that I received a few weeks ago from his hon. Friend the Minister of State. I asked the Secretary of State: if he will maintain the subsidy paid to Network SouthEast at its current level in real terms, and if he will make a statement. The Minister of State replied: The specific allocation of the planned external financing limits for British Railways between 1993–94 and 1995–96 between grant and borrowing has yet to be agreed and will be announced, as usual, in due course—[Official Report, 11 December 1992; Vol. 215, c. 824.] The implication is that there is no certainty about what the level of subsidy in respect of the Network SouthEast area will be if these privatisation proposals go ahead.

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. I should like to remind the House that application of the 10-minute rule started at 6'clock. In the case of the right hon. Gentleman, I shall not count the 20 seconds that I have just taken up.

Photo of John Stanley John Stanley , Tonbridge and Malling

The second critical issue concerns the lines that will be deemed to be socially necessary for the purposes of the continuation of subsidy. Having put that question to the Secretary of State formally. I received the following reply: It will be for the new franchising authority to decide on the appropriate level of passenger services to procure through franchises in line with the overall guidance provided for him by the Secretary of State. Any subsidy required and its level will be determined by competitive bidding."—[Official Report, 14 December 1992; Vol. 216, c. 32.] Thus, we have no information as to which lines will be deemed to be socially necessary and will, therefore, attract subsidy. Indeed, we have no more information now than we had when the White Paper was debated.

On the question of the fare-control regime, I regard this privatisation Bill as conspicuously the weakest piece of legislation in respect of the charges aspect of consumer protection. There are three consumer-protection bodies—the regulator, the consultative committee and the regional body. I do not have time to go into detail, but hon. Members will see that, by the provisions of clause 4, clause 66, and clause 67, these bodies are specifically excluded from involvement in fares on franchised routes.

So where is the element of consumer protection? Does it lie with the franchising authority? People may look to the franchising authority, but I think that they will do so in vain. The job of the franchising authority is to get franchises off the ground. It is concerned with attracting franchisees, not with protecting the interests of the consumer. Therefore, we are left with one person to whom consumers may look for protection in respect of charges —my right hon. Friend the Secretary of State. He has a key role, as was foreshadowed in the consultation document on the franchising of passenger rail services, which says that the Secretary of State can—indeed, will—provide the franchising authority with guidance on a number of matters, including in what circumstances and to what extent fares might be controlled. That guidance is centrally important, and this document should be before hon. Members today. Only when it is available will hon. Members be able to make an assessment of the fare implications of these proposals. I tried to persuade Ministers to make it available for this debate, but, as has already been said, they decided that we should receive it only at the beginning of the Committee stage. I greatly regret that decision. Such an important document should be before the House at this time.

The issue of subsidy from the point of view of quantity is wholly unknown. There has been no information about which socially necessary lines in Network South East will be eligible for subsidy. According to the Bill, all three bodies that are supposed to be responsible for consumer protection are excluded from having any role over the fares that will be charged on the lines that will be the subject of franchises. The key document from the Secretary of State about his fare control policy has been withheld from the House and will not be available until the Committee stage. I am, in effect, being asked to sign a blank cheque on my constituents' cheque book. I am not prepared to do that, and while I shall not be voting tonight with the Opposition, I cannot support the Bill at this stage.

Photo of Nick Harvey Nick Harvey Shadow Spokesperson (Transport) 6:10 pm, 2nd February 1993

I shuddered as I listened to the Secretary of State today commending the Bill to the House as the right way forward for the future of the railways. At the equivalent stage of what became the Transport Act 1985, the then Secretary of State said that its purpose was to halt the decline that had afflicted the bus industry for more than 20 years, that it was not about reducing subsidy but about putting life back into the industry and that the effect of competition would be to reduce costs dramatically so that fares would be reduced.

The then Secretary of State claimed that there was more to the Bill than deregulation and far more than privatisation. It was, he told the House, a full-scale rescue plan for the industry. Given that since the introduction of that measure passenger use of buses has declined by 28 per cent. in metropolitan areas and 16 per cent. in shire areas, may we be assured by the present Secretary of State that this is not to be a full-scale rescue plan for the railways?

The Bill comprises 132 clauses and 11 schedules and gives massive powers to the Secretary of State and the new regulator. It might have been preferable to have had a Bill of one clause which simply said, "The Secretary of State can do what he likes, how he likes, when he likes, and where he likes." It would have had more or less the same effect.

It is ironic that it should be clause 4 which gives a Tory Secretary of State enormously sweeping powers of centralised bureaucracy. He can rule by decree from Marsham street, with freedom to set out the parameters within which the new rail network will operate. Under that provision he is given guidance on taking into account economic considerations—

Photo of Nick Harvey Nick Harvey Shadow Spokesperson (Transport)

With the 10-minute rule operating, I will not give way.

He is told to consider economic considerations, but there is no suggestion that social or environmental factors should fashion the decisions he takes with his new powers. As well as being unworkable, the Bill contains no form of vision. It is a system set up to run today's, not tomorrow's, railways. As the rest of Europe is integrating and improving its rail networks, we shall be left behind, with an increasingly antiquated hotch-potch of disintegrated services. Whatever the Minister may say to the contrary, the Bill depends on a myriad of legal agreements at every interface in the new structure.

What will the hypothetical new private sector whizzkid do to rescue the railways? He comes in wanting a franchise, but before he can get started he will have to make at least 10 separate agreements, first with the franchising authority for the allocation of routes; if he requires subsidy, then intrinsically the Department of Transport and the Treasury will become involved; he will have to make an arrangement with Railtrack over charges; if that does not result in an easy conclusion, the matter will probably finally go to the regulator, and it is possible, at least in the early days, that the Secretary of State will become involved at that point. He will already have had discussions with the Health and Safety Executive, with the leasing company over rolling stock and possibly also with two different passenger groups.

He will then have to make separate arrangements for every station and maintenance depot that he wants to use and that is not under his control. If another operator wants to use any of his track, he will have to negotiate with him. That might end up in the hands of the joint industry body. It may even come back to the regulator or the Secretary of State for decision. Only after he has been through all that appalling rigmarole—and has apparently been told by the franchising authority what the fares and frequency of service must be—he will bring his private sector skills to bear. The whole thing is absolutely mad and will collapse under the weight of its dreadful bureaucracy.

Photo of Mr Barry Field Mr Barry Field , Isle of Wight

On a point of order, Mr. Deputy Speaker. As the Isle of Wight county council is the only Liberal-controlled county council in the country, is it in order for the Liberal Front-Bench spokesman to try to mislead the House by pretending that his party is against this privatisation measure when the Isle of Wight county council has agreed to it, and in a recent press release—

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. That is a matter of argument, not a point of order.

Photo of Nick Harvey Nick Harvey Shadow Spokesperson (Transport)

The Bill is a lawyer's paradise but will prove to be a passenger's hell.

Photo of Mr Barry Field Mr Barry Field , Isle of Wight

What about the Isle of Wight?

Photo of Nick Harvey Nick Harvey Shadow Spokesperson (Transport)

The Isle of Wight county group is entitled to follow its own policies.

The franchising director under the proposed agreement will end up making the key marketing decisions. Those decisions will not be made by the private sector operators who will be brought in. Despite all we are told about competition and private sector disciplines, there is no guarantee that there will be competition in the bidding for the franchises. If only one bidder comes forward for a franchise, it will try to dictate the terms and seek an inflated subsidy.

According to the Bill as drafted, British Rail is prevented from bidding. In other examples of competitive tendering—in local government and in the production of television programmes and so on—it has always been permissible for the existing in-house operator to bid. In this case, only managers in their own right, who will have to resign their jobs, find capital and leave the rest of their colleagues to sink or swim, will be invited to join in the process. At least if BR as a corporate entity had been allowed to take part in the process, there would have been a guarantee of some competitive bidding.

It is interesting, if not worrying, to note that the Bill spends the most time—all of 10 clauses—dealing with the subject of closure. I hope that that is not an omen for the way in which it will operate in practice. Clause 43 envisages the bus replacement of failed franchises. What will happen when the franchising director runs out of money if, for example, bids for subsidy exceed his budget? Will he become the arbiter of the levels of service to be provided? What democratic accountability will there be over his decisions?

According to clause 111, the remains of BR will be excluded from the responsibility of picking up any failed franchise operations. So what guarantees are there that passengers will continue to receive services?

Photo of Matthew Taylor Matthew Taylor , Truro

Does my hon. Friend agree that, in areas such as Cornwall and Devon, it, will not be a matter of failed franchisees because it is clear that branch lines will become bus routes—that is what the only local potential bidder has said—and that inter-city lines are likely to become branch lines? That is hardly the maintenance of services for local people.

Photo of Nick Harvey Nick Harvey Shadow Spokesperson (Transport)

That is indeed a worry. Bus replacement is envisaged and, of course, once rail lines have gone it will be impossible to use them in the future for conveying freight. It is also clear that other network benefits will go. Despite the fact that railcards for the disabled have been guaranteed, there has been no such guarantee for pensioners' or students' cards. It is hoped that the new private operators will consider it in their interests to continue those, but that has not been the lesson of the bus experience.

It is said that a national timetable will be published. It will be handy to have such a timetable, but we want it to be nationally planned. It is no good having a national timetable which simply informs one that one is missing one's connections by five minutes. The timetable must be co-ordinated.

We have many other concerns with the Bill as drafted, not least the fact that there is still no sign of the Government having a strategic plan for the railways, unlike every other European country. I note that 44-tonne lorries will have permission to go all the way to the railhead by road. Will that include the channel tunnel? If so, we shall see many more such vehicles on the roads.

Among our other concerns is the issue of passenger groups not being free to comment on fares, charges or standards of performance required under franchise agreements. There is also the question of the bypassing of metropolitan and shire authorities and their having no formal relationship with the franchising authority. There is little to encourage me to believe that the system will produce any significant new investment. It is all rather like giving someone suffering from hypothermia a cold shower to spruce him up. I hope that those and other points will be addressed in Committee.

This Bill is fraught with dangers, but there are no convincing benefits to passengers. Rarely can a Bill have had such widespread opposition. Even a former Government Chief Whip has been reported as saying that he would not fancy taking it through the House. No one would condemn the Secretary of State if he were to change his mind at this stage and turn back on the very verge or the brink of disaster. We understand that they have to look over their right shoulders and convince everyone that the Thatcherite march goes on, but surely once Lord Ridley of Liddesdale had said that it was impossible, that rather got them off the hook. Surely the Secretary of State could walk away from this experience, if he were to abandon it, with his reputation as a pragmatist intact and the brief period of sanity that he was supposed to have brought to the Education Department between the reforming zeal of the right hon. Member for Mole Valley (Mr. Baker) and the right hon. and learned Member for Rushcliffe (Mr. Clarke) soundly underlined, but if he ploughs on, despite all the ill omens, his name will go down alongside that of Beeching and he will be regarded as the harbinger of ghost trains on a skeleton service.

Photo of John Horam John Horam , Orpington 6:20 pm, 2nd February 1993

There are two things, amid the disharmony, that we could agree on in this House—that a good railway service depends on an appropriate level of investment and on good management. On the question of investment, my right hon. Friend and his colleagues have begun, in the past two years, to hit the right note. The current levels of investment are higher in real terms than they have been, I think, since the late 1950s and early 1960s. I commend my right hon. and hon. Friend on that. In addition, they have now begun to relax the rather narrow Treasury rules governing the financing of public sector infrastructure, and that is all to their credit.

However, as we know, good investment is totally wasted if it is not accompanied by good management. Eastern Europe is a monument to the follies of huge quantities of investment that have been totally ruined by ludicrously bad management. The problem with British Rail management has been rightly diagnosed by my right hon. Friends—that the culture has been wrong. I do not think that there is a lack of good managers and good staff in British Rail but simply that the framework in which they are forced to operate does not encourage innovation and rigorously high standards.

They are therefore right to privatise British Rail and right to do it by the method of franchising because that breaks down the system into more manageable units and gives tenderers and frachisees a specific period in which to prove their competence or they, too, will be out on their ears. It is sensible from the size point of view and sensible to introduce that kind of competition.

I therefore support the basic strategy, and I support the Bill. If that was all there was in the Bill, I would be 100 per cent. behind it, and probably would not even be bothering the House by speaking today, but would just be voting in the Lobbies. Unfortunately, that is not all that is in the Bill. In addition to the fundamental change of franchising, the Government have also thought it right to bring in a second major revolution in railway thinking—to separate the operation of the track from the operation of the trains.

Even if that were a good idea, it would have been unwise to introduce two ideas of that enormous size at once. Governments have habitually underestimated the difficulties they cause to people who manage the systems by bringing in huge amounts of change which they can scarcely cope with.

We have had that problem in electricity, for example, where the law of unintended consequences has operated with massive effect and we have also had it in other areas in the public sector such as education. The Government should have been wary of that.

Is separating the track from operating the trains a good idea? I heard what my right hon. Friend the Secretary of State said today and I must say to him that it is the first considered justification of separating the track from the trains that I have heard from him. There was not very much in the White Paper, but I will listen and I shall study what he has said.

My problem is that, for the past 10 years or so, I have not been in the House but have been managing companies. I know from that experience that one of the first requirements of getting a sensible management system is that people should be able to control all their costs. They must have as much as possible of the environment in which they operate within their own sphere of control so that they know what they are doing. That is the right way to release what Keynes called the "animal spirits" of the entrepreneur. He must have confidence that he can control his costs.

The fact is that, under my right hon. Friend's proposals, because Railtrack exists and will have its own costing regime, about 40 to 45 per cent. of an ordinary operator's costs will be determined by Railtrack—indeed by Mr. Bob Horton, who is a refugee from the private sector, with a reputation as a very hard man. That is not a regime I would be very happy with if I were a franchisee.

Imagine what would happen if, under these new proposals, there was a drop of revenue of the kind there has been on Network SouthEast over the past two years—of 9 per cent. The franchisee will not then be in a position to defer a bit of investment on a new line, or to defer maintenance, and thereby keep the running of the trains roughly consistent with what they are today. He will not have that option. Therefore, train services will be slashed, customers will be deterred and we shall get into a vicious circle of spiralling decline in services. That is the sort of thing I am concerned about.

One thing one must do as a good manager is to try and install a "no excuses" regime. By that I mean that one gives a manager responsibility for delivering a service and no excuse for not delivering one.

Sixty per cent. of the faults or failures in a normal railway system are a product of track and signalling and not a product of the operating of the trains. The first thing that will happen when things go wrong is that they will blame Railtrack. In addition, they have to meet the citizens charter, and are under a legal obligation to do so.

The second event, therefore, after blaming Railtrack will be to issue a writ against Railtrack for not delivering a proper infrastructure service. So we are in to a whole area of legal wrangling. A huge number of legal contracts will have to be introduced as a result of this separation of powers and the number of franchisees. I have been told that there are likely to be 14,000 separate legal contracts as a consequence. That is huge and unnecessary complexity.

In addition, there is the bureaucracy. My right hon. Friend always makes the point in speeches that the sort of bureaucracy he is proposing to set up is already mirrored inside British Rail, and we cannot see it because it is inside that large organisation. That is not a good argument; it is one thing to reach agreement with somebody in another division of the same company but a wholly different matter to reach agreement over dividing revenue with a totally separate company which is legally separate and when there will be huge competition between the two.

Photo of Mr Stephen Milligan Mr Stephen Milligan , Eastleigh

My hon. Friend makes an interesting point about the problem, but has he studied the experience of Sweden, where they have done exactly this? The latest issue of the Railway Gazette says that productivity on Swedish railways is three times higher than on British Rail.

Photo of John Horam John Horam , Orpington

I do not think that Sweden is a sensible comparator. It is a huge country, with a small amount of rail track. This is a very complex system we are dealing with, and it is the complexity that concerns me. I am concerned not with the theory but with the practicalities. There are theoretical arguments for separating train and track—I fully accept that. In fact, when I was a Transport Minister from 1976 to 1979, we considered separating track and trains but rejected it for those reasons—on the grounds that it would not work.

Finally, the other danger is sheer uncertainty. Uncertainty will deter finance, and that will have a bad effect on investment. We are already seeing the consequences of that on the railway equipment industry. It is all very well for the Government to say that they are right behind manufacturing industry and are trying to help, but in other parts of their huge empire they are having a dreadful effect.

Photo of John Horam John Horam , Orpington

No, I have already given way once.

I should like my hon. Friend to consider these matters most carefully. He is already beginning to do that. It is quite clear that many final decisions have not been taken involving the most important parts of the Bill, and one can see that he intends to treat it as a flexible framework rather than something which is cast in stone.

I also noted what he said about the limitations of open access and the possibility of vertical franchising, but I should like him to go further in that direction. It is right that there should be some franchising, and I have no quarrel with the announcements today, but I should like more to be in the control of the franchisees. I should like my right hon. Friend to give them time—three or four years—to see how it works in practice before making further concessions on franchising. I should also like to see guarantees on investment, so that the railway equipment industry can be assured of a future.

Photo of Dr John Marek Dr John Marek , Wrexham 6:30 pm, 2nd February 1993

If the hon. Member for Orpington (Mr. Horam) really means what he is saying, he should have the courage of his convictions and vote against the Bill. It requires only 12 hon. Members—and I can tell that more than 12 Conservative Members have doubts about the Bill—to put the Secretary of State out of his misery.

I am afraid that the Secretary of State was gabbling when yet again he talked about the Networker and five-abreast seating instead of four-abreast seating, which is what used to exist on the north Kent line. He talked about investment being at its highest ever level, but he conveniently neglected to say that half of it was for the channel tunnel, that much of it was already committed and that the extra was extremely small.

The Secretary of State must know that the chairman of British Rail does not agree with privatisation. Before the hon. Member for Fylde (Mr. Jack) takes me to task, I must say that I am sponsored by the RMT, the National Union of Rail, Maritime and Transport Workers. The workers in the industry do not agree with what is proposed in the Bill and nor do the experts. The Secretary of State mentioned leaders of industry such as Mr. Sherwood, but I do not think that the real experts agree with what is proposed.

Photo of Dr John Marek Dr John Marek , Wrexham

I will not give way, as I have only 10 minutes. It is one of the problems of limiting speeches to 10 minutes, and I apologise to the hon. Gentleman.

The public certainly do not agree with privatisation, and the civil servants in the Department of Transport do not know much about it, as the Department is heavily road-oriented. As an example of that, the document entitled, "Railway Privatisation:—A Voice for the Passenger" has on its back cover a map of the railway system which has completely forgotten the Wrexham to Chester railway. The Shrewsbury to Wrexham part is there, but not the rest. That is typical of what we get, simply because the Government do not rate very highly the railways and railway investment.

The only ones in favour of privatisation are the Secretary of State, the cheap and cheerful Minister sitting next to him and some right-wing Members who agree with the proposals. So why will the Bill go through? Basically, Conservative Members, with a few notable exceptions, do not use the railway system. They are more interested in claiming 68p a mile and using their 2000 cc cars to get to London. I would be quite happy if the Fees Office published a list of those who claim 68p a mile to get to this place. The country would like to know; then people would be able to judge those who support the Bill. By and large, the people who will vote the measure through this evening are hon. Members who do not use the railway system.

Let me say what I think will happen. First, it is clear that railcards will disappear. The Secretary of State has as good as said so this afternoon. The hon. Member for North Devon (Mr. Harvey) is quite right to say that we need a national timetable with good connections, but I fail to see how we will get that if the demands on making a profit mean that a connection will be missed. Will there be a regulator to say that a train will have to run five or 10 minutes late in the interests of a national timetable with good connections? I do not believe that will be the case. We may have a national timetable, but good connections will depend on luck.

We will have through ticketing, but will that, be at discounted fares? Again, the Secretary of State has as good as said that through ticketing will not be possible at major ticket offices. If a travelling guard can issue tickets, will that guard be able to issue through tickets as at present? I very much doubt it. That is another potential loss to the public resulting from the Bill.

Will there be a common set of conditions of carriage, or will the Secretary of State vary it for any particular franchisee encountering special difficulties, and apply special conditions? Will train service frequencies be retained, and will we still have evening and Sunday services so that any member of the public can travel anywhere in the United Kingdom, knowing that there will be a reasonable train frequency so that, although it may take a little longer than normal, they can reach their destination? I very much doubt that. I believe that evening and weekend trains will disappear.

Will there be national information and seat reservation systems? I very much doubt that, if there are to be different franchisees, all varying their timetables without notice, just as occurs in the present deregulated bus system.

What about access for disabled people? Will the Bill applying to rolling stock include a set of conditions which will guarantee and preserve the advances that have been made in access for disabled people to the railway system?

What will happen if a franchisee goes bust? If I turn up at the railway system and the franchisee has gone bust, or if that franchisee has only a few wagons or engines, or if the driver has not turned up because he had an accident on the way to work, or if there is a fault with the engine so that my train cannot run, will it be a case of: "Hard luck, mate—come back in three or four hours and we will try to get it repaired"?

I know that British Rail is not perfect, but, by and large, if I turn up at a railway station, I know that the train will run, or, if it does not, if the delay will be more than an hour or so, British Rail will put on alternative bus services. I do not believe that will happen under the Bill. There will be fewer staff on station platforms securing people's safety, especially at night. Staff cost money, and that eats into profit.

If the Government privatise rolling stock, will the quality of build be maintained? As we all know, there will be no build in Britain, as the manufacturing industry here is about to go bust, but will the orders and specifications placed for that rolling stock be up to the quality and strength of that which we have today?

My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) was far too kind to the Government when he spoke about safety. Between 1980 and 1985, the Government made conditions applying to level crossings easier, so that British Rail could spend less. The effect was to allow car drivers to kill themselves, until the disaster near Hull when the Government finally saw common sense. The Government deliberately loosened conditions at level crossings to save money.

As British Rail has been forced into privatisation, there are bound to be arguments about platform space and about whether the platforms are owned by Regional Railways, a franchisee or by InterCity. If there is a delay or something goes wrong, and a train has to use a platform that is not part of the franchisee's domain, extra charges will have to be paid, as happens now between Regional Railways and InterCity. The franchisee may say that, as passengers have to wait only 12 minutes or thereabouts, they can wait outside the station to avoid the extra cost. That is what bringing accountants into the service would do.

Unfortunately, we have the worst Government this century; there is no doubt about that—[Laughter.] Conservative Members are laughing, but only one or two of them. We have the worst balance of payments crisis that I can remember, and the worst public sector borrowing requirement. Indeed, the PSBR is worse than it was in 1976, when we suffered an oil price rise, and now we have the benefit of North sea oil.

According to the official figures, 3 million people are unemployed, but really it is more like 4 million. We also have a clapped out railway system; time and time again, I am amazed at how it manages to run. We spend 0.14 per cent. of GDP on rail, whereas Germany spends 0.57 per cent. and France 0.61 per cent. The Government are in no position to put it right, and the Bill does nothing to put it right. I appeal to 12 Conservative Members to put the Government and the Secretary of State out of their misery at 10 o'clock tonight.

Photo of Henry Bellingham Henry Bellingham , North West Norfolk 6:40 pm, 2nd February 1993

The hon. Member for Wrexham (Dr. Marek) mentioned that there were few Members on the Conservative Benches, but 18 Conservative Members are taking an interest in the debate, and only eight Members of the official Opposition are in the Chamber, so perhaps he can learn to count.

I intend to ask why we should privatise British Rail, comment on how we should do so and on some aspects of the Bill, and refer briefly to freight services to King's Lynn.

I was taught to subscribe to the dictum "If it ain't broke, don't try and fix it." However, it is broke—the whole culture is anti-consumer and we are talking about attitudes that look back to the 1960s, rather than forwards. That is why the Government could not stand still and do nothing, but had to move forward with the Bill.

I shall not dwell on the reasons, as they are self-evident. I like the Government scheme and its structure, because it is evolutionary, imaginative and highly flexible. However, I have one or two small nagging doubts, which I shall express briefly. First, the offices of director of franchising and regulator are to be set up. I have studied the Bill carefully, and listened with care to my right hon. Friend the Secretary of State. I do not understand why those two offices could not be combined. Surely that would be a pragmatic and sensible step forward, and I urge the Secretary of State to consider it.

My second doubt relates to InterCity. British Rail was told to be more responsive to the public's requirements, to be more aware of what the punter wants, and to run a service for the benefit of passengers and not for the benefit of staff. To a certain extent, InterCity has achieved those aims. It has a successful brand name, and I would be sad if it disappeared. I understand the Government's argument, that they do not want to sell a vertically integrated company, but surely we could keep the brand name.

I would have preferred the option of privatising InterCity outright. My hon. Friend the Member for Orpington (Mr. Horam) mentioned the advantages of the operator controlling costs, and I think that that has additional advantages. Also, the attractions of vertical integration are obvious if we want to get private sector capital into the infrastructure.

For example, it is apparent that delays can take place during electrification—the line to King's Lynn was electrified—and a close interface between the track infrastructure and rolling stock is required. If too many factors were outside the control of the operator, there could be disincentives and disadvantages to electrification. We must bear in mind that InterCity has to compete with other modes of transport. An operation that has 8 per cent. of journeys of more than 50 miles has only a very small segment of the market, and we want that share built up.

So far, we have been talking about two franchises being offered for InterCity. If the same organisation were to bid for both, I should like the Minister to keep open the option of a vertically integrated company, which would also own the infrastructure. It would be sad if that option were not kept open. I see that my hon. Friend the Minister is nodding, and I should like him to comment on that. The most important thing is to allow the very successful InterCity brand name to remain in existence.

Although I have been critical, I welcome the proposals, and I think that franchising will work. It has been carefully thought out. People say that it has not been given enough thought, but the Department has been considering the proposal for two and a half years, has consulted every possible organisation, has studied the matter carefully and has come up with proposals. Few Bills have had more work put into them. That is why the proposals can and will work, especially for the loss-making lines in Network SouthEast and Regional Railways.

Photo of Henry Bellingham Henry Bellingham , North West Norfolk

I cannot give way, because of the 10-minute rule.

Those lines need an injection of private entrepreneurial flair and private investment, and my goodness we will get it.

Yesterday, I learned—much to my dismay—that British Rail has terminated the link to Boston docks. I do not know the details, but King's Lynn docks uses the railways to shift roughly 150,000 tonnes of coal and 50,000 tonnes of urea a year. Also, Dow Chemicals uses rail freight distribution to shift about three or four wagonloads of hazardous goods each month.

British Rail and Associated British Ports are in negotiations on the future of train freight haulage of coal from King's Lynn docks, and I understand that the negotiations are not going very well. The manager of the docks has told me that he has come up against a thoroughly negative attitude on the part of British Rail, which has insisted on a 15 to 16 per cent. increase in tariff. The dock operators have said that they will run the shunting loco and take on ancillary operations, but British Rail has a negative attitude.

If I brought the manager of Associated British Ports in King's Lynn to see the Minister, would he be prepared to discuss the matter with him and explain the impact of today's announcement on freight and how it could present opportunities for King's Lynn?

I welcome the package of four measures that the Secretary of State announced, because it could save the link to Boston.

Photo of Henry Bellingham Henry Bellingham , North West Norfolk

I cannot give way, but perhaps we can talk in the Lobby afterwards—[Laughter.]—if the hon. Gentleman comes to our Lobby.

We must try to ensure that the eight or nine wagonloads of butadiene—a potentially hazardous commodity—that are transported each month remain on the railway. British Rail told Dow Chemicals on 25 January that the service would be terminated. If the negotiations between ABP and British Rail on trainload freight for haulage of coal collapse, the rail freight distribution service to King's Lynn and the link to the docks could be put in jeopardy. Given British Rail's thoroughly negative attitude, I hope that the Minister will agree to meet that delegation, and that the four proposals announced today will have some impact. I am sure they will.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

I hope that I shall be in the same Lobby as my hon. Friend tonight. In case I do not have the chance to talk to him, I assure him that I look forward to meeting his constituents from the docks. Also, I can assure him that I shall shortly be meeting the director of InterCity to talk about the retention and development of the brand name, even within the franchising regime, and to confirm that we have taken no long-term decisions about the future of InterCity.

Photo of Henry Bellingham Henry Bellingham , North West Norfolk

I am extremely reassured by that.

If the Minister thought that I was being critical, I hope that he deemed it constructive criticism, because what I particularly welcomed in the Secretary of State's speech was his description of the proposals as evolutionary and imaginative. The Secretary of State also said that, if changes were proposed in Committee, he would consider them and listen carefully and, above all, that he would try to ensure consensus throughout the industry to bring these difficult, imaginative and challenging plans forward.

If the Minister has perhaps sensed today that there is some opposition on the Government's side—my hon. Friend the Member for Orpington made it clear that there were parts of the Bill which he did not like, as did my right hon. Friend the Member for Tonbridge and Malling (Sir J. Stanley)—I would urge him to stand firm. I am reminded of a quotation that I think came from Lord Jenkin back in the 1960s: "The time when people start to doubt your policy is the very time when you should strengthen your nerve and see it through."

Photo of Alan Williams Alan Williams , Swansea West 6:50 pm, 2nd February 1993

I thank you, Madam Deputy Speaker, for giving me, as an hon. Member sponsored by the Transport and Salaried Staffs Association, an opportunity to take part in the debate.

Sadly, history is not on the Minister's side in the case that he is trying to argue. The private owners could not believe their luck when, in the first world war, the Government took the industry off their hands; and there was an outbreak of mass panic when, after the war, the Government suggested that they should take it back again. The Government had to introduce an Act to set up the old LMS, LNER and GWR to take on the industry, which then tottered through the inter-war period and was on the verge of collapse when it was again taken over at the start of the second world war. It is not generally realised that some of the old GWR shareholders are still deriving dividends under the arrangements made for the takeover at that time.

The Secretary of State asserted that the proposal is in the interests of both the consumer and the taxpayer. He went on to quote precedents from other privatisation measures which he felt proved his case. I point out to the House that in each privatisation measure the Government have used rather different initiatives to ensure that any advantage goes not to the consumer or to the taxpayer but always to the new shareholders.

In the gas industry prices were put up 10 per cent. a year above the rate of inflation for three years to give a 33 per cent. cushion to guarantee profitability for the industry and higher prices for the consumer. Jaguar was allowed to remain in public ownership by this Administration until the taxpayers' investment programme was completed, and then the profits were privatised. Sadly, it then gradually slipped into its old ways and had to be taken over by Ford.

In the case of the electricity industry, although the Government claim that they got £8 billion from the sale of the electricity industry, as the hon. Member for Orpington (Mr. Horam), who served on the Public Accounts Committee will know from the report that we undertook, only £5 billion of that came from the shareholders; the other £3 billion came from an artificially created debt which was imposed on the industry and then taken from the industry which had had prices set at a level that would recoup the debt. So we had the anomalous situation that the customers who had previously owned the industry now had to pay £3 billion by means of their prices to help someone else acquire the ownership of the industry.

The most outrageous example, however, was the water industry. It demonstrates the sheer nonsense of what the Government are willing to consider in order to favour the shareholder and private enterprise. In this case, £35 billion of public assets were sold for £3.5 billion. Ten companies were sold for the price of one. The Government wrote off £5 billion worth of debt on which the taxpayer was obtaining interest, gave £1.5 billion of public money—which cost the taxpayer interest—as a donation to the industry, and then gave it £7 billion worth of tax write-offs to ensure that it would not have to pay any tax for most of this century.

The cumulative result of this package—the lost interest on the write-off, the lost interest on the cash injection and the exemption from taxation—is that within about five years all that the Treasury gained from the sell-off will have been given back, and the industry will have been given away for absolutely nothing to people who will go on creaming profits from the public. So while the idea that privatisation is some great initiative on behalf of the consumer is fine on the political platform, it does not bear close scrutiny.

I wish that the Secretary of State were still here. I have sparred with him for many years and I have a great regard for him, but this is the first time that I have heard him venture into nonsense arguments. It is a new departure for him but one that he undertook with his customary charm and giving the impression of greater experience than we all know he has had in that respect. The thought that worried me towards the end of his remarks was that he might be beginning to believe some of the arguments that he was putting forward. But I know him better than that, and I am sure that if he comes to the Committee our old confidence in him will return, because he knows as well as we all do that the railways were always cross-subsidised, even in his good old days of private ownership. The trunk line subsidised the feeder lines. As far back as Beeching, under public ownership, the branch lines cost 40 times as much per passenger mile as the trunk lines. There has always been cross-subsidy.

I urge hon. Members to consider this matter from their constituents' point of view, particularly those who represent commuter areas. If, instead of that cross-subsidy going into the rest of industry, it goes in dividends, it means that we need not just the same subsidy; we need more subsidy, more taxpayers' money, in order to sustain the present level of services. Yet all we have had is an assurance that subsidies will continue. There has been no indication of the level at which they will continue. It is no good their staying constant because we all know that, with the inevitability of inflation—I am not making a political point; inflation has been a feature of any society for most of the century—if the subsidies were continued but frozen at one level, they would wither in real terms. So either the burden would pass to the farepayer—and it is doubtful whether the market could bear it—or there would be cuts in services or lines.

All this is ominous for those of us in south Wales who depend on our valley rail services for commuting and those who depend on the central Wales line, the mid-Wales line, the north Wales coast line and so on. Even on the 125 line to my constituency there are doubts about what will happen to the service between Cardiff and Swansea if the proposal put forward by the Minister goes ahead. We are fearful that there may be cuts in that service.

Safety is of crucial importance to the public. I was pleased that the Minister said that he regarded it as a high priority. The trouble is that Ministers do not last long in the Department of Transport, and one Minister's reassurance might not even be valid by the time the Bill finished its journey through the Committee. They tend to be rather high-speed travellers as they reach the Cabinet via that Department.

I was somewhat horrified to read in The Independent yesterday the headline: Major urged to halt spending on rail safety". A former director of the Thatcherite Centre for Policy Studies, now the hon. Member for Havant (Mr. Willetts), was quoted as asking, How can you spend over £200 million a year on rail safety and increase transport deaths? He was reported as saying that by forcing higher spending on rail safety, passengers were being driven on to the roads by higher fares, where the risk of death was almost five times greater. He also said that the Prime Minister might also call for a moratorium on implementation of all further rail safety requirements". That is horrific nonsense. Instead of the train taking the strain, the train will take the risk if the hon. Member for Havant has his way.

It used to be an axiom of economics that, if one had two competing services, one tried to invest to the point where the marginal rate of return on each was equal, which resulted in optimum investment. Now a right-wing Conservative Member says that we should disinvest to the point where the marginal rate of accident is equal—a peculiar proposition to make. Why did he not suggest that we should invest more in road safety? Why did he support the deregulation of the bus services? If the railways are that much safer, why does not the hon. Gentleman come into the Lobby with us tonight? I hope that he will.

7 pm

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

I pay tribute to the memory of the late Sir Peter Allen, who will have been known to some of my colleagues in the House. I read in his obituary in The Times that, like me, he was a railway and steam train enthusiast. Like me, he would be described by my colleagues on the Front Bench as eccentric. Unlike me, he was chairman of ICI. Quite a few people are concerned about the Government's proposals—Sir Peter Allen certainly was.

Where should we start? Why not start at the point that we have reached today. The damage caused by the very threat of the Government's proposals is already evident. Rail freight is haemorrhaging away. My hon. Friend the Member for Norfolk, North-West (Mr. Bellingham) should ask British Rail why it has vastly increased its prices. He might find that its answer provides the answer to many of his questions. Private sector manufacturers of rolling stock are in crisis because British Rail is unable to place orders. My hon. Friends insist that that has nothing to do with the Government's proposals, but everyone in the private sector knows that it is directly related to them.

Who is in favour of the proposals? The Centre for Policy Studies is, of course, and the Adam Smith Institute would claim that it invented them. My right hon. Friend the Secretary of State is in favour of them and some of my colleagues, particularly new Members of Parliament, have already expressed their enthusiasm. They would probably want to privatise everything—it will probably be the Army next. The prime architect of the Bill, Sir Christopher Foster, has not figured much in our deliberations. He was the director-general of economic planning under Barbara Castle in the Ministry of Transport between 1966 and 1970, and this is largely his Bill. He was the inventor of the freight integration council, among other things. If that does not frighten my hon. Friends, it certainly should.

Who is opposed to the Bill? We know that millions of our fellow citizens are. Those who use the railways, such as the Confederation of British Industry and its commercial members, oppose it. The transport users consultative committees, appointed by the Government to look after passenger interests, oppose the Bill, as do those who run the railways, those who work on them and those who build the rolling stock for them—to name but five groups.

In 14 years of Conservative Government we have seen fluctuating investment on the railways, reductions in the public service obligation grant and consequently numerous customer complaints. The Bill has been introduced as a means of alleviating those complaints. There has been a total lack of any coherent transport policy during the past 14 years, which has caused the problem. The hostility of the Government under Lady Thatcher to anything in the public sector forms the background to today's Bill.

We have had no discussion—nor is there anything in the Bill—about the road versus rail argument. When the CBI appeared before the Select Committee, it gave interesting figures. My hon. Friends who intervened in the speech of my right hon. Friend the Secretary of State might read the statistics in Hansard. On a dollar-per-head basis for the latest years for which figures are available, rail investment is as follows: in the United Kingdom, under $7; in Germany, $24; in France, $37; and in Italy, $50. Is it any wonder that complaints are made here about railway services while there are comparatively few complaints among the customers of our continental partners in Europe?

From where is the investment to come for Railtrack? Who is to finance the new railway? There is no mention of any investment regime in the Bill. Investment is fundamental to the success of a railway. My hon. Friend the Minister of State has already confirmed that there is a direct correlation between new investment and satisfied customers on the Chiltern line. That is how to build a successful railway.

Some of the similarities between the Railways Bill and the Bill to privatise electricity should provide a warning to some of my right hon. and hon. Friends. The problems of the coal industry today are the direct result of the way in which the electricity industry was privatised. If one looks at the phraseology of both Bills, one can understand why some of us are concerned about the Railways Bill.

The Bill contains a fundamental flaw which has been touched on by all those who have spoken so far. It separates responsibility for track and signalling from the operation of trains—a recipe for endless conflict. What would have happened in the recent crash at Borough Market junction if the two trains involved had been operated by two different companies? Each would blame the other for everything—and both would blame Railtrack. Some of my constituents were killed in the Clapham junction rail crash. Within hours, British Rail accepted responsibility. Would a private sector company immediately have accepted responsibility for a crash involving one of its trains? Of course not.

Vertical franchising is the demand of the private sector and of almost all the companies which came before the Select Committee. My hon. Friend the Minister of State nodded as he listened to the suggestions of some of my colleagues who stated that complete vertical franchising should be considered. It is clear that the creation of a track authority and the surrounding paraphernalia is at the heart of the Bill's proposals. There is no point in pretending that vertical franchising—other than in the Isle of Wight—is for the Secretary of State anything other than a dream.

Who will provide the long-term funding for all the franchisees? They are being encouraged to invest money for 15-year franchises. Has my hon. Friend the Minister received permission from my right hon. Friend the Chancellor to provide guaranteed funding at constant levels for 15 years? Will the Chancellor be in place for 15 years? Will there be a Conservative Government in 15 years' time? Relying on a public sector rail track for infrastructure and the vagaries of the Treasury to provide guaranteed subsidised funding for private sector operators for all those years forms an unlikely scenario—[Interruption.] My hon. Friends must make their own speeches.

I have heard too much about breaking up. I am not in politics to break things up—I am in politics to build. We are breaking up the national railway system and replacing it with a vacuum. It will be a lawyer's paradise. We are legislating not for deregulation but for reregulation.

Safety has been mentioned. The more people who are involved in safety, the more safety is jeopardised. The proposals contained in the Bill are a recipe for muddle, indecision and conflict. Like everyone else in the House, I want a better railway, but the Bill is a clear illustration of the muddled thinking in the Department of Transport. It illustrates the conflict of private sector ambition versus public sector obligation. To satisfy the former, it will be necessary to diminish the latter.

Where do my right hon. Friends stand on the conflict between the ambition of the private sector to make profits and the obligation on the public sector to run a full railway system efficiently? The Bill is a laboratory experiment conducted by civil servants in Marsham street with a vital piece of our national transport infrastructure.

My hon. Friend the Member for Eastleigh (Mr. Milligan) talked about Sweden, where the Government are making 45 per cent. additional infrastructure investment a year for 10 years and Sveriges Järnvägen—the state railway—has gained 99 per cent. of the contracts to run trains. Here British Rail is forbidden to enter the competition and there is absolutely no investment regime in the Bill.

I shall finish with a quotation from an unusual source—the new ambassador from Saudi Arabia, Ghazi Algosaibi, formerly the director of railways in his country. He wrote to me yesterday and mentioned the theory of privatisation. He said: Any service that is deemed so essential that it requires subsidy is, by definition, not suitable for privatisation. Railroads belong in this category. Railroads were in my time, and remain today, heavily subsidised by the government. Under these circumstances privatisation makes no sense. If you stop the subsidy, the service will deteriorate and might terminate. If you continue with the subsidy, the whole thing becomes an exercise in futility! That, I fear, is where the Bill will lead us.

We all know that BR is far from perfect and there are many ways of improving it. I want to see the private sector brought in, initially by ending the freight monopoly, but it seems that my right hon. Friend has rejected that proposition.

I just say this to my hon. Friends. If the size of their majorities is bigger than the number of rail users in their constituencies, they should not have too much to worry about. We are here at Second Reading. It is glad confident morning today. The Bill is born of dogma, conceived in theory and adjusted in the Whips Office. I am sad to say that, like my right hon. Friend the Member for Tonbridge and Malling (Sir J. Stanley), I cannot support the Bill on Second Reading.

Photo of Keith Hill Keith Hill , Streatham 7:10 pm, 2nd February 1993

It is a privilege to follow the hon. Member for Christchurch (Mr. Adley), who has spoken for every informed observer of the Government's proposals. Can any Government have launched a major piece of legislation amidst more general criticism and more misgivings from the professionals who are supposed to make it work than the Government in their rail privatisation proposals? Even the poll tax had its enthusiasts. This poll tax on wheels has no enthusiasts whatever.

Let us be charitable to the Government in their embarrassment. Let us assume that rail privatisation is not merely, as seems likely, the last confused spasm of a worn-out Thatcherite ideology. What then was the problem that the Government set themselves to resolve in evolving their present proposals? Was it the creation of a less bureaucratic railway? Hardly that. The Government are planning a positive quagmire of quangos to run the railways. It will be a bureaucrat's fantasy and an operator's nightmare.

Was it the creation of a more efficient railway? Not that either. On top of the quangos, the Government are proposing a split between infrastructure and rail operation with cuts across every principle of modern railway practice. It will prove a minefield of day-to-day conflicts between operators and the track authority and a prescription for endless litigation.

Was it the creation of a cheaper railway? Hardly that either. What hopes for lower fares with no guarantees on subsidy, with Railtrack under instruction to secure a commercial rate of return for every line that it runs and with operators seeking to maximise their profits also?

Was it the creation of a sharper, more entrepreneurial style? Where would that come from? Would it come from the bus operators who have managed to lose 13 million passenger journeys a year since bus privatisation in 1985? Would it come from Mr. Branson, who wants to spruce up old diesel locomotives to run at lower speeds on a newly electrified east coast main line?

The deep irony is that the Government's best hopes for a new management appear to lie in buy-outs by the old managers of British Rail—the very last group, I should have thought, that Conversative Members would want to see running the railway for them.

But, lo and behold, where are the profits to be made by the new thrusting entrepreneurial style? The Secretary of State has confirmed it today—by privatising the very services where profits are already being made. I shall believe the privatisation of the London-Tilbury-Southend line when I see it.

Was the Government's aim the creation of an expanding railway, better equipped to play a larger part in meeting the environmental, social and economic needs of the nation? Certainly not that. Scour the pages of the multitude of consultation documents flowing from the Department of Transport; listen to the words of the Secretary of State; examine the Bill. Where is the strategy? Where is the thinking about the future role of railways in the nation's transport system? Vision is the last thing that we have heard from the Government in relation to rail privatisation.

The truth is that the Government's proposals are the wrong answers to the wrong question. The fundamental question is that of investment—investment which is already too low and is in danger of becoming yet lower under the Government's proposals.

We have become used over the years—we have heard it again today—to a constant barrage of complaint and criticism about British Rail's performance. Yet the most singular aspect of British Rail is not that it all too often performs badly, but that it manages to perform at all. It is about time that Conservative Members recognised just what British Rail has achieved in sustaining the network and in maintaining a service when it has been so grossly underfunded for so many years in comparison with similar railways elsewhere.

Britain spends a third of the cash spent by France on its railways and a quarter of that spent by Germany on its railways. In subsidy by head of population, we spend one fifth in comparison with France or Germany. No wonder we have higher fares and less reliable services. Yet in all international comparisons of railway productivity, BR appears high in the rankings. That is a remarkable achievement, given the low levels of investment in the system.

The Secretary of State never tires of telling us that investment is currently at record levels, and, of course, he is correct. What he omits to point out is that in the early 1980s under this Government we had the lowest continuous levels of investment in the railways in any period since the 1920s.

Photo of Mr Michael Stephen Mr Michael Stephen , Shoreham

Will the hon. Gentleman give way?

Photo of Keith Hill Keith Hill , Streatham

I will not give way in view of the strict time limit. I should love to do so in normal circumstances.

Without the significant increases in the past two or three years, we would not have had a railway in any recognisable form. However, it was too little too late. For all the Secretary of State's protestations, that investment will not be sustained. Next year, investment in the existing railway will fall to half this year's level. It will remain below this year's level to the end of the current programme in 1996.

Already, InterCity has no rolling stock investment plans or refurbishment plans for the next five years. Already Network SouthEast is operating with an estimated infrastructure budget shortfall of £200 million. The railway supply industry has no orders on its books beyond 1995. Its representatives told the Transport Select Committee that the industry, responsible for 50,000 jobs, faces annihilation. Only last week, Lord Prior, on behalf of GEC Alsthom, a major railway supplier, told the Select Committee that unless more orders are forthcoming no industry will be left in three years' time.

I say this to the Government in all seriousness: there is an immediate crisis of underinvestment in the railway industry. Even if their privatisation plans succeed in creating new investment demands, which I doubt, they are unlikely to come on stream for several years. Therefore, the Government should urgently undertake to provide at least steady levels of state finance for the first five years of privatisation in order to protect the quality of service and to maintain a rail manufacturing base.

Of course the Opposition accept that there is a role for the private sector in rail investment. We have looked at the experience of the nationalised French railways where all new major investment since 1990 has been funded by borrowing on the private market, including the City of London. We have looked at the experience of Japan where new capital projects are jointly funded by central and local government and by private finance raised by the still nationalised railways.

My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has repeatedly put forward proposals for leasing and joint ventures along those lines. The Government have rejected those proposals on grounds of dogma and, as we now learn, a totally antiquated set of Treasury rules. By contrast, the Government's proposals threaten to impede, not favour, the vital need for new investment in the railways. They will create an excessive and costly bureaucracy which can only serve to increase costs for operators and track authority alike.

The separation of track from operation will create a tangle of operational difficulties. Sensible railways investment requires an integrated approach to infrastructure and operation, but that is absent from the Government's proposals. Those same arrangements mean that half the cost of running services—that arising from the infrastructure—will be outside the control of the private sector businesses. Railtrack itself—half the railway system—will anyway remain in the public sector and be subject to the current severe Treasury spending constraints.

That is not a hopeful scenario for generating new investment in rail. A railway renaissance is taking place throughout Europe. The Government will bear a heavy responsibility if, because of their current policies, this country does not share fully in that rebirth of rail.

Photo of Mr Timothy Devlin Mr Timothy Devlin , Stockton South 7:20 pm, 2nd February 1993

I must first declare two interests. I regularly use the national railway system a minimum of five hours a week in travelling to and from my constituency. Sometimes, I use it much more than that. The present InterCity service, combined with a laptop computer, is one of the most congenial working environments available to a Member of Parliament. Also, if 14,000 new contracts are to be signed at the conclusion of our consideration of the Bill, there are several reasons why I, as a lawyer, may be tempted to be the first in the Lobby enthusiastically to support it.

More realistically, I address the House as the Member of Parliament for the constituency which was the birthplace of the railways and which ran the first successful privately owned railway ever laid down. To this day, one of the largest railway workshops in the country is to be found in my constituency. Furthermore, a regular complaint in my postbag concerns the coal that falls from viaducts in my constituency as it is transported from Durham to the south.

In his introductory remarks, my right hon. Friend the Secretary of State said that the east coast main line will be one of the first services to be franchised. It is instructive to look back at what was said about not only the east coast main line but the fortunes of the London and North-Eastern railway in the nationalisation debate in 1946. The LNER had emerged from the war having been extensively bombed—connecting as it did most of the airfields and industrial areas of Britain—and suffering from a long period of under-investment between the wars due to the recession that set in then. At the end of the war, there were extensive plans to renew the network and to develop new services and branch lines. With that in mind, the then Opposition voted against nationalisation because they anticipated, rightly, that instead of private companies competing for capital on the markets and applying it to worthwhile schemes, the national conglomerate—known as the British Transport Commission—would direct investment in a way that reflected its perception of national priorities, and often not do as good a job as the private sector.

In reviewing the history of the railways, I believe that I am right in thinking that British Rail has never constructed a new line.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

I remind my hon. Friend of those serving Stansted and Manchester airports.

Photo of Mr Timothy Devlin Mr Timothy Devlin , Stockton South

I stand corrected. Those apart, British Rail has never laid a long line. It has, however, just completed electrification of the north-east coast main line, and I would remind the hon. Member for Wrexham (Dr. Marek)—who is not in his place—that that is one service that gives the lie to the claim that it is apparently clapped out. I fundamentally disagree. The InterCity service is extremely good. That large-scale investment is an important factor in our consideration of the future, after the Bill is passed.

At the end of that process, the Government will have to demonstrate to the public throughout the country that there has been a significant improvement in the service that they receive. I do not believe that the public care one or two hoots about railway ownership. They care about being provided with a good, punctual service; clean carriages that are kept in reasonable condition; the operation of train services to proper timetables; and the ability to purchase tickets at different prices for various destinations.

Since the privatisation of the gas and electricity generating industries, both have attracted huge investment. If we want the same for the railways, we must make them as attractive as possible to private sector investors. The fact remains that there is not a railway in the world where competition operates on the same line. There are many places where there is competition between two lines. The history of LNER and of the London, Midland and Scottish railway shows that they competed with each other for passengers travelling to Scotland.

Today, British Rail competes with the car and, in the case of long-haul journeys, with air travel. The would-be franchise holder will be looking for a service that it can run economically, at a profit, and in competition either with cars or airlines.

I understand the argument of my hon. Friend the Member for Orpington (Mr. Horam), that the business man naturally wants as much control of the resources as possible. In that respect, I urge the Government not to pull back on privatisation but to go further. If we want to attract large-scale investment to the railways, we must offer the commercial opportunities that people want. At the beginning of the debate, my hon. Friend the Member for Christchurch (Mr. Adley) asked my right hon. Friend the Secretary of State whether an operator who wanted to buy and to operate a whole line on a vertical basis would be allowed to do so. So far, significantly, no answer has been forthcoming. That is an important aspect.

What would happen if an operator came to the marketplace and identified the potential for a new line, better market opportunities if it were to introduce new rolling stock, or more potential if the line were to be electrified? In each case, the operator would have to refer to Railtrack, and that new body—to provide the service that the operator wanted—would have to refer to the Government. That would mean a call on the Government's resources.

In that way, British Rail is different from previous privatisations, which went straight to the market. The whole rationale for privatising them was to take them out of the Government's expenditure queue. If the Government said no to such an application, or Railtrack had other priorities, a dispute would arise between the operator and Railtrack that presumably would have to be sorted out by the regulator.

That difficulty could be simply resolved. If the franchise holder that operated, say, the east coast line from London to Scotland decided that it could run the whole track much better than Railtrack, why should it not be allowed to buy it? In the history of the railways, we can find a perfect model of private sector investment. When the Darlington and Stockton railway was first engendered in a pub in Yarm in my constituency and an agreement was drawn up, no one had to refer to another authority. Planning permission was granted, the line was built, and all aspects of the line came under the control of the Darlington and Stockton railway company.

A modern example is provided by British Airways—a loss-making operation that was turned into a profit-making company. It does not have to lease its aircraft from an aircraft authority. British Airways buys the planes that it wants, flies them to the destination it chooses and, apart from air traffic control, has total operational ability to do as it wishes.

I welcome my right hon. Friend's announcement that rail freight companies will receive up to 100 per cent. of track costs if there is a good environmental case for switching goods from road to rail. A good example of that can be seen in the Yorkshire dales. Until recently, a loss-making local railway line transported limestone from the dales to British Steel's plant on Teesside. That line—the Redmire line—was a distinct little entity which could have operated all by itself. I do not see why a Railtrack authority should be involved in such circumstances. Why cannot the operator buy the whole line and run it himself if he wishes?

Madam Deputy Speaker:

Order. I call Mr. John D. Taylor.

Photo of John Taylor John Taylor , Strangford 7:30 pm, 2nd February 1993

Although this complicated Bill refers mainly to Great Britain, it is a United Kingdom Bill, some of whose clauses refer specifically to Northern Ireland.

I do not object to privatisation; I speak on that issue with an open mind. I judge the Bill mainly on the way in which it will affect people and public transport, and the way in which it will affect those of us who live on the periphery of the nation—especially those living in Northern Ireland and western Scotland.

Listening to the Secretary of State's speech, I could not but conclude that the best routes were being privatised and the worst were being left with British Rail. That is surely a dangerous step. I consider the railway system an important part of the United Kingdom's integrated transport structure, and I think it vital for us to maintain an efficient railway system throughout the nation. That will be particularly important to Scotland and Northern Ireland when the Eurotunnel opens at the end of the year. If we give away, or sell, the better lines—such as the Gatwick express line—British Rail, deprived of the profits, will have less money to invest in the poorer lines that it will retain. That will damage our overall railway structure. We are endangering the country by converting a public monopoly into a private one.

I am also worried by the Bill's possible implications for major railway projects which are important not only to London and its environs, but to the nation as a whole. What, for example, will be the implications for the new express rail link to Heathrow, or for the new link from the Eurotunnel to London—or, indeed, for the underground Jubilee line link with docklands? Will any of those three capital projects, which were important to us all, be affected by the Bill? Will the Minister also bring us up to date with the timing of the three proposals? So many different thoughts are being thrown around by the press that we are now totally confused about whether any of them will proceed.

When we talk about railway systems in the United Kingdom we must not forget that we are now part of the European Community, which has its own overall transport proposals for the 12 nations. There is a limit to what we in the United Kingdom can do with our railways without the approval and support of the Community. Some of us may not like that, but it is the position; indeed, some investment in railway projects cannot proceed without the approval of the Community, and its investment of European funds.

The Secretary of State said that he had consulted the Secretaries of State for Scotland and for Wales. I noted that he had not consulted the Secretary of State for Northern Ireland: to our shame, the Northern Ireland Office had nothing to contribute, and we in Northern Ireland resent that very much.

Let me conclude by examining the Bill's implications for Northern Ireland and the west of Scotland. As the Minister will know, the European Community has a new combined transport network. A map illustrating the proposals for Europe shows the route to Liverpool, because the intermodal channel tunnel terminal will be at Seaforth. That will have important implications for us in the north-west and Northern Ireland.

What is the Government's stance on the ferry route between Liverpool and Belfast? British Rail selected it as the main route from Liverpool serving the whole island of Ireland, not just Northern Ireland; yet we now find that the route from Liverpool to Belfast is no longer shown on the map illustrating the European Community's proposals. Have the Government made any representations on the subject, and do they support British Rail's decision to recommend the Belfast-Liverpool route rather than the Dublin-Liverpool route as the main route to the island of Ireland?

Finally, let me deal with a subject well known to the Minister—the other major rail route serving Northern Ireland: the one that goes up to the west of Scotland, into Stranraer, across to Larne and down through Northern Ireland and the Republic. The route from Larne to Stranraer is the busiest between the whole island of Ireland and Great Britain: one third of freight from the Republic now comes up through Northern Ireland and Larne. That position will improve, because we are investing a good deal of capital in the route from Dublin to Larne. The European Community is helping us to modernise the line from Dublin to Belfast, and the Northern Ireland Office is investing massively in an inter-city link so that it will be possible to travel by train all the way from Dublin to Larne. The ferry system—and the ScotRail system, which is now to be privatised—will have more traffic as a result.

Back in 1991, we were told that a European Community committee recommended that the Dublin-Holyhead route should become the main route between Ireland and Great Britain, although the Larne-Stranraer route is the most popular with those involved in business and tourism. That was a most unusual decision. The vice-president of the Community, Sir Leon Brittan, confirmed that in a letter on 9 January 1992. Later that month, the Minister for Public Transport stated in another letter: the EC working group did not in fact present a further report on the high speed train network by the end of last year"— that is, by the end of 1991, as had been intended. The Minister went on: A number of studies have yet to be completed and …the aim is now to produce the report by the end of 1992. Have the Government now received that report from the European Community?

In July 1992, Lord Caithness, Minister for Aviation and Shipping, wrote a letter referring to the interim report produced in December 1990 by the European Commission …that has been considering the development of a European high speed train network". He went on to say: The Government would expect that any railway network maps proposed for the new group would show the Larne-Stranraer route as a link between the railway networks of Great Britain and Ireland"— that is, the island of Ireland.

At the end of the year, the director of roads and transportation for Dumfries and Galloway regional council, Mr. Guy, said in a report that there was a reluctance by ScotRail to improve the rail network in South West Scotland. The report also highlighted the fact that the West coast rail line within England and Scotland carried more freight than the East coast line, yet the latter had been earmarked by British Rail to receive greater funding to improve the route and to decrease travel times. Although the west was busier, it was not getting the funding—that applied right up the west of England and into the west of Scotland. Mr. Guy reminded members of the Committee that the shortest crossing from the island of Ireland to Great Britain was via the North Channel and that the majority of traffic used that route. We ask the Government to clarify the confusing situation. Has the European Community working group made its final recommendations, and have the Government made firm proposals to Brussels that the Larne-Stranraer crossing and the railway system in the west of Scotland be preserved?

Photo of Mrs Judith Chaplin Mrs Judith Chaplin , Newbury 7:40 pm, 2nd February 1993

There is one matter on which the whole Chamber seems to be agreed, and that is the need for additional investment in the railways. What is not agreed is how that additional investment can be obtained.

In my constituency of Newbury, new rolling stock has recently improved the service. There are now also additional stops by InterCity on its way from the south-west to London and back. That has improved the line, but not nearly enough. We all agree that there must be far more investment in the railways. I accept that the Government have recently made a huge investment, and we all know that investment is the highest it has been for 30 years.

I very much welcome the commitment given by the Secretary of State in his letter to the Chairman of the Select Committee on Transport, my hon. Friend the Member for Christchurch (Mr. Adley). The Secretary of State said: We agree on a need for continuing investment in the railway and a role of strategic investment. The question, however, is how to get even more investment than the public sector can supply.

Some has already been supplied. For example, British Rail has been privatising its non-core activities for a considerable time, including British Transport hotels. It has also allowed private ownership of part of the railway—for example, by allowing people to run their freight wagons or locomotives on the railway or allowing private operators to run their own trains on the track. British Rail has also introduced private sector money by working in joint ventures, for example, using the many railway sites which became surplus to requirements.

The Opposition's method is always to demand additional borrowing. When the hon. Member for Kingston upon Hull, East (Mr. Prescott) was speaking, I was not able to intervene to ask what level the additional borrowing would reach. I should like to know what he thinks he could possibly rise to, given that we already have substantial public sector borrowing and debt that should not be increased. Also, we should certainly not increase the interest burden on the debt.

As always, the problem would have to be considered in conjunction with other priorities but, as always, the Opposition say that there must be more spending in every area for which public sector borrowing provides.

Photo of Mrs Judith Chaplin Mrs Judith Chaplin , Newbury

No, not in the 10 minutes available.

What is vital for an improvement of the railway system is the direct introduction of private sector money. Of course, that is not possible at present because British Rail's borrowing ability is limited by the external financing limit.

Prior to the autumn statement, British Rail had the theoretical ability to obtain certain fixed assets under leasing agreements. However, under the rules that then applied, it was a theoretical rather than a real possibility because British Rail had to achieve at least good value for money in the public sector as if the assets had been purchased outright. The Government can always borrow more cheaply than the private sector, so that is very difficult to do. Furthermore, the full value of any asset leased before the autumn statement had to be set against British Rail's external financing limit. Therefore, the ability to seek private sector funds was extremely limited, which is why the changes in the autumn statement are so important for investment in British Rail.

One of the changes is that any privately financed project which can be operated profitably will be allowed to proceed. I see no reason why that should not encompass new lines. If an operator believes that he can provide a new profitable line, I understand that, under the rules announced in the autumn statement, he will be allowed to do so.

Another announcement made in the autumn statement was that the Government would actively encourage joint ventures with the private sector. Indeed, much of the Bill is in essence a joint venture between the public and the private sectors to improve the railways.

The third change was that the Government would allow much greater use of leasing with only the leasing payments counting as expenditure. Naturally, that will increase the amount of private sector funding which can take place. That is especially important in the context of more investment.

Madam Deputy Speaker:

Order. There are too many sedentary interruptions from members of the Front Bench, who have already had 61 minutes.

Photo of Mrs Judith Chaplin Mrs Judith Chaplin , Newbury

Leasing will be especially important for the development of a private market in rolling stock. Eventually, I hope that the private operators will buy direct from the manufacturers or on the second-hand market or that they will lease, but it will take time. The private sector needs to do that because in doing so it will bear the risk, seek innovation and compete. It will do all the things that we want to see introduced to improve the standard of the rolling stock.

However, there are legitimate questions to be asked not only about the long-term issues but about the transition. At the moment, British Rail has been told that it can lease rolling stock, but the lessor will clearly have much greater security when leasing to British Rail, which is backed, as it were, by the Government, than when a franchisee is running a track. I hope that the Minister can say how the risk adjustment will be dealt with during the transition. Otherwise, there will not be an agreement between the manufacturers of the rolling stock and the current British Rail, and franchisees will not as yet want to purchase rolling stock until they are sure that they have secured their franchise.

A further risk is a longer-term risk which has been dealt with to some extent in the consultation document. It is that the period of the franchise is shorter than the lifetime of the rolling stock. It has been suggested that there could be longer leases, the use of new rolling stock over two or more periods and some risk-sharing.

On the issue of private capital coming into the public sector, the Financial Secretary said that private financiers cannot expect conventional, commercial terms and gilt-edged security. Everyone accepts that anyone getting involved in franchising parts of the railway knows that he will be taking on substantial risks. It is important, however, that the risks will not be over-burdensome. I hope that the Minister will restate the fact that he will fight back if the Treasury insists too heavily on a very high degree of risk; otherwise people will not provide the rolling stock in the private sector, which is so important.

The involvement of the private sector will bring innovation, make effective use of funds and improve management. Benefits will come from the improvements which can be made to the rolling stock. Such improvements will be to the benefit of all our constituents, especially the commuters. It is important for us to examine carefully the genuine risk that is shared between the public sector and the private sector so that we encourage people to invest in a way which will improve the railways.

Photo of John Heppell John Heppell , Nottingham East 7:50 pm, 2nd February 1993

I start by examining the political consequences of the Bill. I should thank the Secretary of State because the political consequences of the Bill will mean that I am already elected at the next general election. The Bill has consequences for us all, but it will have serious consequences for the Government and their supporters.

Effectively, the Bill is destined to fail. It may not fail on Second Reading, in Committee or on Third Reading—it may pass through the House. However, its proposals will definitely fail on implementation. I can think of 132 reasons why it will fail. The real reason why it will fail is that the Government have started by asking the wrong question. They ask: how can we privatise the railways? The Bill is the answer to that question.

The Government could have asked a number of different questions. They should have asked; how do we improve the railways? If they had asked that question, we would have had a different Bill altogether. They should have asked: how can we extend the present network? How can we get more freight on to the rail and off the road? That is the Government's policy. Time and again they have said that they want more freight on the rail rather than on the roads. The figures show that less freight is being carried by rail.

The Government should have asked: can we attract more passengers away from their cars? That would provide benefits to the environment and our health. There would be fewer accidents on the road, and we would save £15 billion in the cost of congestion on our roads. The Government should have asked those sorts of question. They should have asked: can we make the railways safer? The Prime Minister and others may not have recognised that there is a price to safety. People in the United Kingdom accept that they must pay a price for travelling on safe railways. The Government should have asked: can we increase investment? I am not bothered whether it is public or private investment.

The Government should have asked such questions because they are sensible and relevant. The question of how we privatise the railways is not relevant to the problems that the railways face.

I am a former employee of British Rail, so I know a little about the railways. I am probably a rarity in the House because I am a former blue-collar employee of British Rail. I do not claim to be a railways enthusiast. I do not suppose that I had any more enthusiasm than anyone else when I went to work. I know a little about the culture which a few hon. Members have derided today. The Government want to destroy that culture with the Bill.

Anyone who has worked for, or had any significant involvement in, the railways will know that the concept of fail safe is literally drilled into employees. Every day, fail safe is heard everywhere on the railways. Effectively, if a driver collapses on the train the "dead man" takes over and the brakes are applied automatically. If a driver goes through a red signal without stopping, the advance warning system takes over, the engine is cut and the brakes are applied automatically. If the brake device is cut, an emergency reservoir takes over and applies the brakes automatically.

It is a shame that the Secretary of State is not aware of the concept of fail safe. If he was aware of it, the brakes might have been applied to the Bill. Throughout the Bill there is nothing about fail safe. I do not mean simply the safety aspect. Everything in the Bill, including finances, the network and the timetable, is not fail safe.

Railways do not run on "if, "maybe", "possibly", or even "probably"; they run on certainties. Railways run on guarantees. Unfortunately, there is no guarantee in the Bill. The Secretary of State did not give a guarantee to the hon. Members for Tonbridge and Malling (Sir J. Stanley) and for Christchurch (Mr. Adley) and my hon. Friend the Member for Streatham (Mr. Hill) because there are no guarantees.

I am not reassured by what were supposed to be the Secretary of State's reassuring remarks. When he was asked on the BBC programme "On the Record" whether loss-making services would continue to be subsidised, he said: I cannot give a guarantee for all time because, obviously, if no one is actually wanting to go on a particular line, then that would be a candidate for closure. I am even less reassured by the fact that in the same interview the Secretary of State tried to play down the fears about the fare increases by saying: I see no reason why, as a result of our proposals, prices should rise any more than they have risen recently. I may have been reassured if he had not made that statement in the same month, January, as the headline in the local newspaper which read "BR fare shocks: Passengers reeling". The fares on some routes in my area increased by 140 per cent., from £1 for return journeys to £2.40. In another area the fare increased from £1 to £2.20. If that is the Secretary of State's assurance on fares, I am not reassured.

During the election campaign I predicted that fares would double in the run-up to privatisation. At that time I was told that I was scaremongering. I was wrong. I predicted that the fares would double; they more than doubled.

I am not reassured by the Secretary of State's efforts to placate some Back-Bench Members with small majorities by saying that there is no problem because the Government are phasing in privatisation. I think that an hon. Member said that he likes the proposals because they are evolutionary. There is nothing evolutionary about the proposals. Evolution gives the idea that, if something is going wrong with the first seven proposals, the process can be stopped. There is no way that the process outlined in the Bill can be stopped. I do not believe it, the Secretary of State does not believe it, and no one on the railways believes it.

By the time we get to the point at which something is proved wrong, the railways will be fragmented and broken up. If one does not believe me, one should look at the experiments that have already been carried out. Have any of those failed experiments stopped the drive for privatisation? Everyone recognises that Stagecoach was a failure, but we still have the drive for privatisation.

On the freight side, Charterail was a failure. It was insolvent. It could not survive and went into liquidation. British Rail owned 22 per cent. of that company. It should have been able to negotiate a better price for the track. That is what will happen with many operators. In the end, they will not be willing to pay the money that Railtrack asks to allow them to run on the track. If one wants an example of that, one need look no further than the present problems with the Heathrow-Paddington link. We are talking about a piece of track which is 11 miles long. The whole network has a track which is 11,000 miles long.

There is a joint venture between British Rail and BAA which includes negotiations about the charge for use of the track. The project has stopped because British Rail and BAA cannot agree how much should be paid for the track. British Rail is saying £6 million and BAA is saying £2 million. The problem has not been solved locally. The chairs of both those industries have had discussions about the matter, but could not resolve it. The matter went further than that. The Secretary of State met both chairs on two occasions recently to try to resolve the problem. No solution has been found. If a problem affecting 11 miles of track cannot be solved, how can we expect to solve problems affecting a network of 11,000 miles of track? The only way is to offer operators a cut-price track. The railway will not run any more by people like me greasing the axles; it will run—

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. Before I call the next speaker, I remind the House that we have reached the end of the period during which the 10-minute limit applied. Nevertheless, I ask hon. Members to make short speeches, bearing in mind the fact that many right hon. and hon. Members wish to catch my eye.

8 pm

Photo of Mr Neville Trotter Mr Neville Trotter , Tynemouth

I am sorry that my hon. Friend the Member for Stockton, South (Mr. Devlin) has left the Chamber. I would have been happy to remind him that, a few years ago, I had the honour to open a new main line—the east coast bypass at Selby. I still have the spanner with which I tightened the last bolt.

I am one of those who have a very high regard for British Rail. Things inevitably go wrong at times, but I am aware of the enthusiasm that many members of the management feel and I think that they have succeeded in improving the motivation of their work force. Can the railways be improved? Yes, they can, and the aim of the Bill is definitely a good one. There is room for a better service.

It seems to me, however, that opportunities for competition on individual passenger routes are limited. The main competition will come from roads. I warmly welcome the fact that, in his opening remarks, my right hon. Friend the Secretary of State was able to announce the new freight grant. Vast quantities of freight have recently moved away from the railways on to over-crowded roads, and that must be wrong. It is certainly in the public interest to prevent that from happening in the future. I am sure that the Bill will seek to ensure that that happens.

Much could be done to improve the freight side of British Rail. The board member responsible for finance was recently reported as saying at a conference that Trainload Freight ran 500 trains a day with 13,000 staff. He was apparently stunned when a member of the audience pointed out that that meant that there were 24 people to run every train. There is certainly room for improvement there.

At the same conference, the managing director of Felixstowe port described the rail freight business as lacking any imagination and any understanding of how to create a market. That, too, justifies the suggestion that much could be done to improve the way in which freight is carried on the rail system. This afternoon, I had a meeting with the chairman of British Coal, who, I believe, was not aware that this debate was taking place and who volunteered information about the problems that British Coal suffers because of the very high costs that it now has to pay to carry coal a few miles from the pit to the pier on the Tyne from which it goes south.

My right hon. Friend the Secretary of State has reassured us on a number of the most important worries in people's minds. First, he gave an assurance that socially necessary services would continue and that there will be no wholesale closures. I believed that that would be the case, but I welcome the fact that it is now on record. Many passengers on regional railways do not fully appreciate the way in which the services that they use are financed. If the fare for a journey on Regional Railways is £2.20, the cost of providing that journey is on average £10—the remaining £7.80 comes in one form or another from the taxpayer. I believe that it is essential that we should retain a regional network, and I welcome my right hon. Friend's assurance that we shall. I also welcome my right hon. Friend's assurances that the benefits of networking will continue because I am sure that that is an essential feature of our railway system, as will be self-evident to those operating the rail system in future.

The Government have sensibly accepted all the proposals of the Health and Safety Commission with regard to the future safe operating of the railway. I should like to raise one issue, which I regard as related to safety—the role of the British Transport police, a force with which I am happy and proud to be connected. The police are responsible for security on the railway and for enforcing law and order throughout the network. They have a well-deserved reputation for dedicated efficiency. At a time of organised terrorist threats, constant security scares and an explosion of vandalism, it is most important that the British Transport police should remain a unified national force specialising in the problems of policing people in the operating environment of a railway. My hon. Friend the Minister has already assured us that the force will continue to play that role in the policing of the rail network.

The detailed parts of the Bill relating to the British Transport police can perhaps best be dealt with at a meeting with my hon. Friend, and I am sure that, with his customary courtesy and in his customary spirit of co-operation, he will agree to such a meeting. For the time being, however, I seek two specific assurances: first, that franchise operators will not be able to opt out of using the British Transport police, and, secondly, that the future funding of the force will be assured and the costs of the force recovered by one means or another—I suggest through the track authority. I hope that my hon. Friend can give me those assurances.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

I can give my hon. Friend those assurances. I should be happy to meet representatives of the British Transport police with my hon. Friend, as I have done on a number of occasions. In the consultation document, we made it clear that we envisaged a national, independent British Transport police force, and that means funding—one of the options is through Railtrack—which will automatically cover the contributions of all operators, both franchised and open access. I hope that, given the tone of that document, my hon. Friend will feel reassured.

Photo of Mr Neville Trotter Mr Neville Trotter , Tynemouth

I am grateful to my hon. Friend for that assurance.

A great deal of thought has been given to the Bill. It is a very complicated exercise and it is most important that we should get it right. In the years ahead, this bold move will be judged according to whether or not it achieves its aims of improving the service and of attracting more customers—both passenger and freight—on to the railways. I believe that, freed of the traditional monolithic structure of a nationalised industry, and making the maximum advantage of the skills and expertise of their staff, the railways can and must achieve that aim, and that they will remain an essential part of our society.

Photo of Hugh Bayley Hugh Bayley , City of York 8:07 pm, 2nd February 1993

Let me say at the outset that I am sponsored by the rail union, the National Union of Rail, Maritime and Transport Workers, but I speak in the interests of my constituents in York. A number of towns around the country are great rail centres but few, if any, are as vulnerable to the proposals in the Bill as my constituency: 5,000 of the 50,000 people in the local economy work for the railways. That represents one in 10 of the work force—and, on the whole, they are more highly skilled, higher-paid professional workers. If they lose their jobs in York, not only will they and their families suffer, but the city will suffer a hammer blow which will intensify the problems that the recession is causing. It is all very well for the Minister of State to say that there will be plenty of new jobs in the private sector, but they will not be in York. Some of the individuals may go to work for firms of consulting engineers in Croydon, Bournemouth or elsewhere, but they will not be contributing to the economy of the city that I represent.

The manifesto on the basis of which the Government were elected less than a year ago contained the following promise: Our plans for the railways are designed to bring better services for all passengers as rapidly as possible. I do not agree with much in the manifesto, but that is an aim to which I would subscribe. That pledge should be the test of the proposals in the Bill. Will the privatisation proposals mean lower fares for passengers, more frequent and convenient services, greater comfort and reliability? Will they improve safety on the railways? Will they mean better terms and conditions of employment for railway staff? Those are the tests on which the Bill should be judged.

On 30 Novemberr, I presented a petition to the House urging the Government to introduce legislation to safeguard railcards for pensioners, young people, families and disabled people. This afternoon, the Secretary of State stated that there would be a guarantee to retain the disabled person's railcard. But if we are to have a better service to the public, will the Minister extend that guarantee to the other groups who have benefited from railcards? Why is it wrong to stand up and ask for guarantees that the interests of passengers will be protected? Or have the Government just ripped up the passengers charter and put a privatisers charter in its place?

What about convenience? At present, 26 trains per day run from London to York on the east coast main line—one of the services that the Government are keenest to franchise off to the private sector—and 27 trains per day run from York to London. Will the service frequency increase or decrease as a result of privatisation? What guarantee can the Minister give me that the people who get private franchises to run from Edinburgh to London will stop their trains in York? Will York end up with a better service or a worse service? We rely on the railway for business and commerce, for social life and for tourism. It is a vital link to our city—more important than the roads.

As many hon. Members have said, comfort and reliability depend ultimately on the level of investment in trains, signals and track. Yet, as the Railway Industry Association tells us, railway investment is collapsing, blighted by the uncertainty of the privatisation proposals. The Independent of 20 January carried a report from my constituency by Christian Wolmar. It said: In May 1994, the last Network 465 train for Network SouthEast's Kent line will roll off the production line at ABB's modern York works. Barring some unexpected development little short of divine intervention, the plant will then close. And this after a £50 million modernisation was completed last month. That modernisation was completed in the expectation of further orders for badly needed trains for London's commuters on Network SouthEast.

The White Paper refers to a market for second-hand trains. It is not second-hand trains, but new trains, that London commuters need. People from Essex tell us repeatedly that the London-Tilbury line, the Southend line, needs new trains. Why are they not being provided? The report on the Cannon Street crash blamed the level of casualties on the fact that 30 year-old, clapped-out, rotten. "Annie and Clarabel" carriages were being used, and said that they must be replaced. The replacement would be the class 465 carriages, which are currently being built at York. Fulfilling the recommendations of the report on the Cannon Street crash will require 100 of those. When will that order be placed? The Minister has promised two of his hon. Friends that he will visit their constituencies to speak to important local railway interests. Will he come to York to meet the managing director of ABB to discuss the crisis facing the carriage works there?

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

The hon. Gentleman has misquoted me.

I gave an undertaking that I would meet, in my offices in London, representatives of the port of King's Lynn and of the British Transport Police Federation. Likewise, I give the hon. Gentleman an assurance that I shall meet—for the seventh time, I think—representatives of ABB. I am in frequent touch with them, but through the hon. Gentleman I extend to them an invitation to meet me yet again. We want the manufacturing industry—especially ABB—to take a very active part in the development of the leasing market.

Photo of Hugh Bayley Hugh Bayley , City of York

I thank the Minister sincerely for that undertaking. At a weekend meeting with the managing director, I was told that the problem will start not in May next year, but that he will have to start laying people off in six months' time. If the orders do not come through now, it will be too late to keep the factory going and the work force together to build the trains that are needed. And if they are not built in York, they will be built abroad. Perhaps ABB, which is a multinational company with German and Swedish manufacturing bases, will shift abroad as much of the £50 million worth of equipment as can be moved. Buying from abroad would add to our balance of payments problems. Prices would go up, as the labour component of the cost of building trains in Germany is twice as high as it is in Britain, which itself says a great deal about wage rates in manufacturing industry in this country. We need jobs, and our transport system needs the trains. Again, I thank the Minister for his undertaking.

The Government say that they have approved leasing as a lifeline to the rail manufacturing industry, but British Rail cannot place orders; the banks will not lend it money, because no one knows whether it will be running trains in the future. I hope that the Minister, in his winding-up speech, will tell us that the £150 million for leasing that was announced in the autumn statement will be committed to rolling stock. The Minister nods—I thank him for the undertaking that that seems to imply. But we need a further undertaking.

If the leasing goes ahead, and British Rail subsequently loses the franchise for the services on which the rolling stock is to be used, will the Government either undertake to underwrite the leasing costs until such time as the carriages can be sold on the second-hand market—that is what the Minister believes will be created as a result of this Bill—or make it a condition of tenders from people bidding for the franchise that they must take over the rolling stock and the leasing costs? If that does not happen, the promise that leasing finance will be allowed will turn out to be a will-ó-the wisp, and the benefits that the Government expect will not come through.

During the rail debate in January on an Opposition motion, I referred to the United States Hours of Service Act, which stipulates maximum working hours for every grade of railway staff. I am told by senior managers and directors of Amtrack that, in a regime with a mix of public sector and private sector railroads, the statutory regulation of working hours is a vital safety requirement. In the case of a single provider which does not face competition, such as British Rail, it is fine, without statutory backing, to expect the railway management to impose safety limitations of this type. The report on the Clapham crash called for the abolition of excessive overtime, and British Rail has responded. But when British Rail is competing against others, however, will it be able to respond in this way? Will its competitors respond without legislation? The American experience suggests that they will not. I am not thinking just of drivers' hours. The Health and Safety Executive says that the Government will consult about a statutory limit in the case of drivers' hours, but it was the excessive overtime of an electrician which caused the fatal mistake at Clapham.

Rail privatisation will trigger a haemorrhage of jobs from railway towns like York, Crewe, Swindon, Manchester and Birmingham to private sector firms. It would devastate these towns. I hope that this Bill will not be given a Second Reading, but if it is, it will create a number of quangos, such as the track authority, the franchising authority and the regulator. London is already awash with quangos. Will the Government give a commitment that these new bodies will be based in established railway towns outside London? If they do not have faith in the transport system that the railways will provide, if they do not have faith that an office in Swindon or York or Crewe would be accessible to the centre, they do not have faith in these railway proposals.

Photo of John Whittingdale John Whittingdale , Colchester South and Maldon 8:17 pm, 2nd February 1993

I have listened carefully to everything that has been said in this debate so far. So that my hon. Friend the Member for Christchurch (Mr. Adley), who is no longer in his place, will not be disappointed, I should say that, as a new Member, I am a strong supporter of this Bill, for whose proposals the Secretary of State has made a powerful and persuasive case.

The hon. Member for Kingston upon Hull, East (Mr. Prescott) and the other Opposition Members who have criticised the Government's proposals give the impression that British Rail is the jewel in the public sector crown, flawed only as a result of insufficient public money handed over by a willing taxpayer. Such a description bears no relation to the facts. As several of my hon. Friends have said, far from being starved of money in recent years, British Rail has seen record levels of investment. This year, the expenditure is some £1.4 billion—a figure that has not been reached since 1960, when we had a far more extensive network. In recent years, the service provided by British Rail has undoubtedly improved, but in many areas it is still extremely poor, with frequent and unpredictable cancellations, scruffy trains, poor service, persistent lateness and lack of recognition of, let alone responsiveness to, the needs of the consumer.

Those failings are the inevitable result of public sector ownership. They were mirrored in all the nationalised industries that the Conservatives inherited before those industries were banished as the result of privatisation. British Rail suffers from all the classic problems of monopoly public sector industry. Until recently, it has had too little investment, as it has lost out to other public sector demands in the annual spending round. Year after year, it has lost money, making little attempt to reduce those losses and relying on the taxpayer to bail it out. It has shown too little interest in improving its service to the customer, as it knows that the customer has nowhere else to go.

The passengers charter has been a valiant attempt to address those failings, and has led to some improvements. But it is the infusion not just of private sector capital but of the private sector ethos which is the remedy to those problems. In all, 46 businesses have been privatised in the last 14 years. Instead of costing the taxpayer £50 million a week, they are now profitable and contribute about £2 billion a year in tax.

More important, they are profitable because they are now giving their customers the service they require. They have an incentive to increase efficiency, to stay competitive and to improve the service they offer. That is the discipline which business men in the private sector take for granted but which has been sadly lacking in British Rail.

Every privatisation is different. British Rail is not a profitable enterprise which can simply be transferred as a whole from the public to the private sector. Some parts will never be profitable and will always require subsidy. On that I disagree with my hon. Friend the Member for Christchurch, for it does not mean they cannot be made attractive to the private sector. It just means that the Government will have to continue to provide a grant to the operator in recognition of the social need for such a service.

For some groups, there will be immediate interest and a number of bidders for the franchise. For others, there may be no interest initially, and we shall have to see how the first private sector pioneers get on. I welcome my right hon. Friend's announcement of the routes which he sees as the first that are likely to be franchised. I am disappointed that the great eastern division, which serves my constituency and his, is not among them. In recent years, the service in that division has improved, but there is still a long way to go.

The recent reduction in the number of trains stopping at Colchester is an example of British Rail failing to listen to what its customers want, while at the other end of my constituency the line to Burnham and Southminster seems always to be the first from which services are withdrawn, so that British Rail frequently appears to be running a bus rather than a train service. I hope that my right hon. Friend will consider inviting bids for that franchise soon, as I am sure that it would be of great interest to the private sector.

My right hon. Friend has in general rightly resisted those calling for track and infrastructure on those routes to be franchised also and be transferred to the franchisee. While I understand why bidders might want it, to do so would make it more difficult to have fair competition on those routes, if the possibility should arise. Initially at least, it is essential that there should be a neutral umpire overseeing the signalling and prioritising of all trains on the network. I was therefore pleased to hear his announcement this afternoon that Railtrack will be an independent operator from the residual rump of British Rail.

I hope that my right hon. Friend will continue to consider ways by which the private sector culture which he described can also be introduced into Railtrack. Most of the problems that have occurred in the great eastern division, to which I referred—I suspect that they occur elsewhere throughout the network—have resulted from points failures, signalling problems, overhead power lines down and the ubiquitous leaves on the line. I assume that those will still be the responsibility of Railtrack, and I am sure that that body could benefit enormously from the disciplines of the private sector.

A number of expressions of interest have already come from potential private sector franchisees, not least from within British Rail. That is an encouraging sign, and I hope that every assistance will be given to management teams from within BR who wish to come together to bid for a franchise. I also hope that private sector operators will eventually be attracted not just to bid for existing services but to introduce new ones.

I spoke of the great eastern lines which serve Colchester in the north and Burnham in the south of my constituency. In the days before Dr. Beeching, my constituents in Maldon also had the benefit of a rail line. That line was scrapped and despite the rapid growth in population in recent years, many of whom commute, the chairman of British Rail has told me that there are no plans to reintroduce a rail link and that the financial parameters within which BR is obliged to operate mean that the investment finance that would be involved is not available. That is a pity, as I believe that there would be demand for such a service, and I look forward to the day when a private sector operator may make it available.

There are many details of the Bill still to be worked out. For example, there will need to be complex agreements between the franchisees to allow ticketing, discount schemes and railcards. There may need to be some sort of clearing house operation, as operated by the clearing banks. There will need to be regulations governing the payment of compensation by one company to another in the event of breakdowns or delays to the train of one operator causing a failure and further delay to that of another.

All those matters will be difficult to resolve. This privatisation will not be straightforward, simple or quick. In many ways, it will once again be breaking new ground. But I am convinced that it is the right way forward and that the overwhelming view of my hon. Friends is that it is the way we should be going. I give it my wholehearted support.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe and Nantwich 8:26 pm, 2nd February 1993

The House will be relieved to hear that I have no intention of reading a central office policy studies pamphlet.

As we debate the Bill, we should make it clear at the outset that it is sadly lacking in any sense of where the transport policy of Britain should be going in the coming decade. Indeed, it is not clear from the measure where the policy is going in the next 10 months. That is a highly dangerous aspect of today's debate, not least because the Minister produced a large and complex Bill and proceeded to say that one of its basic tenets, the concept of Railtrack, could if necessary be overturned during the passage of the measure and supplemented by a totally different system.

Much has been said about the customers. Let us be clear that they care about the quality of service that they are given. I am proud to represent a railway constituency, and even prouder to be a member of a rail union. The Government constantly boast about the large sums of money that they are investing in the rail system. If we remove from that calculation the amount of money that is going into the channel tunnel, it becomes clear that British Rail is being squeezed tighter every year.

Hon. Members who have taken part in the proceedings of the Select Committee on Transport have witnessed that deteriorating position over the years. It was obvious when we discussed the line of the channel tunnel route, the need for electrification and the desperate need for new rolling stock. It was clear from the evidence of witnesses whom we have examined in relation to privatisation.

Our interim report was a classic example of the best of a Select Committee inquiry. Despite the efforts of some Conservative Members, it did not seek to give a biased view. It took evidence from a wide section of people interested in privatising BR, and we soon discovered that there were some basic problems with the Bill. People do not know what the charging regime will be and they cannot calculate to what extent, if at all, there should be interest in privatisation, because they cannot be sure what is being said. Who will buy a service if they do not know what they are going to be charged or what they in turn will have to charge someone else?

It is also clear that there has grown up in the Tory party such an obsession about what they call the culture of British Rail that they are not even capable of acknowledging the job that has been done by management whom they themselves appointed. British Rail has modernised over the past five years, has changed the way it operates, and has set up what it calls an organisation for quality. Those are precisely the problems that the Minister and his colleagues pretend that they are interested in.

That system has not even had a chance to work. It has been in place for less than 12 months and yet now, without any consultation with the people most concerned, a Bill has been introduced which will yet again throw the entire industry into chaos. The result is a loss of morale, a loss of commitment and a very deep unease about the future of the railways in general. That does not end just with the railway system.

As soon as British Rail Engineering Ltd. was privatised, we were told that it was going to be able to provide rolling stock, to be much more efficient and was going to respond to the culture of private enterprise and bring forward much higher quality service to the customer.

What has happened is something different. The railway rolling stock industry, all privately-owned, all entrepreneurial, mostly with foreign entrepreneurial money because it was handed over not to British companies but to people from outside Britain, has given detailed evidence to this Government about its lack of orders and its lack of ability to get anyone to invest in new rolling stock or new orders beyond the end of the next year. It has done so in such detail that the Government have no conceivable excuse for ignoring the fact that, very soon, this entire industry, like the bus industry before it, will be unable to continue because it has no work on its books.

Indeed, in my constituency a major company, which is now called ABB, is tendering for many jobs overseas, and has asked the Government for support in financing a supply of rolling stock for a scheme in Chile, only to be told that, while it is in competition with the French, who are offering soft loans and long commitments, the British industry will not get any assistance.

It is told, as a civil servant said to me yesterday on the phone, that, after all, one has only to look at the size of the deficit of the public sector in France to understand why they have a different scheme from ours. Of course they have, because the French know that, without a transport system that works and carries goods and people around the country, they cannot compete in their internal market, let alone in external markets.

That is a basic economic lesson which this Government seem totally unable to understand. The reality is that this Bill should be voted down, not by Labour Members but by Conservatives. The reason is simple. Within a short time, their constituents, who do not understand about investment in new rails, but understand that all the trains are getting slower, who do not understand why there is de-staffing of stations or why there have to be fewer and fewer people to provide a service, do understand that it is a direct result of what the Government are doing.

These people will soon have to have their say, and they will make their views known very directly to all MPs in the south-east, and to MPs in the commuter belt—not just in London, but in Manchester—and even, I suspect, to those rather royal personages from elsewhere outside the great conurbations who have been honouring us today with the extent of their knowledge of British Rail.

I think that the Government will then find themselves in a very uncomfortable and difficult position, and I look forward to the day when it is the Conservative Members who firmly and definitely and with no compunction vote this Bill into the oblivion that it deserves.

Photo of Mr Matthew Banks Mr Matthew Banks , Southport 8:33 pm, 2nd February 1993

It is a pleasure to follow the hon. Member for Crewe and Nantwich (Mrs. Dunwoody). I concur wholeheartedly with what she said about the Select Committee's interim report. There is no doubt that there was a heated discussion within that Committee, but those of us who were involved—a number of vacancies had not been filled at that time on the Committee—in the writing of that report were happy to put their names to it.

The hon. Lady is right to say that it was in the highest traditions of the Select Committee system. That report appeared ultimately in a more constructive tone and asked a number of questions. The answers to some of the questions have already been heard. One or two questions discussed by my hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale) have not been discussed, and I look forward to hearing my hon. Friend the Minister for Public Transport commenting on them later.

I know that the 10-minute rule no longer applies, but I notice that a number of hon. Members wish to speak, so I shall follow your advice, Mr. Deputy Speaker, and be brief.

I welcome the variety of the franchises announced today by my right hon. Friend. They represent a cross-section of the railways in Britain at present—what my hon. Friend the Member for Norfolk, North West (Mr. Bellingham) described as InterCity routes, and also those in urban conurbations in the south-east in particular.

Now that the Bill has been published and the Government have made it clear that they intend to press ahead with these proposals to introduce new opportunities, the public are rightly asking mundane but nevertheless important questions about whether networking benefits will be continued, about whether the price of tickets will remain the same or go up or down, whether investment will continue and increase and whether the proposals will ultimately lead to a better railway.

Those are questions which the public rightly ask—and which we also ask. If the railways were working well, there would be no need to change, but unfortunately, as some of my hon. Friends have said already, they are not working as well as they might be. That is why I believe that the sensible, gradual approach by the Government, starting with this Bill, with a step-by-step introduction of new opportunities and new operators, not to mention the opportunities for rail freight, is an approach with which the Government should press ahead quickly and with vigour.

I should like to pick up two points mentioned in the debate so far. I am delighted that Railtrack will be independent. When I spoke in the supply day debate some time ago, I urged the Minister to look at this, and I know that it is something that my hon. Friend the Member for Harwich (Mr. Sproat) feels is very important. I see that he is in his place, and I join him in welcoming an independent Railtrack.

I hope that privatisation will lead to greater efficiency and to greater transparency of the cost of running the railways. Therein lies a problem, but it is one that we can overcome. I hope that the Minister will once again take the opportunity to make it clear in his reply that there will be continued and sustained investment by the Government in the infrastructure of the railways in future. That is vital if the proposals are to succeed.

I have no doubt that there will be some broad smiles in the private rail freight industries tonight. I was particularly delighted to hear my right hon. Friend the Secretary of State refer to the freight facilities grant scheme. I am particularly pleased that he has also announced that, in many instances, 100 per cent. grants will be available for freight charges, because, if we are to encourage freight off the roads and on to the railways and to encourage the freight that is already on rail to stay there, it is vital to address these issues, and I warmly welcome what the Minister has announced in this debate.

I cannot hide my personal concern at the fact that British Rail in one case has increased by 180 per cent. the charges levied on some rail freight users. However, I balance that comment by welcoming the fact that Trainload Freight has taken on an extra 2 million tonnes of freight. That shows that, although some freight is leaving the railways, it is being replaced by new business.

The Government and the regulator must take action to promote the rights and priorities of rail operators. Private operators are very much behind the Government and want privatisation to succeed, particularly in rail freight. When the Government do set up regulatory and consultative bodies, those who are involved in running rail freight in the private sector must have the opportunity to have their views represented on those bodies.

I cannot emphasise enough the importance which I—and, I know, hon. Members on both sides of the House—attach to achieving a more competitive pricing regime with road haulage. I agree with my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell)—I know that it is something dear to his heart—that we need open competition in rail freight as soon as possible.

Mention has been made of investment. I ask my hon. Friend the Minister once again to make it clear that, in the next two or three financial years, substantial investment will be made available for the track, signalling and infrastructure schemes which are pending. My hon. Friend knows my particular concern about the west coast main line, but it is important not only to my constituents but to those of other hon. Members on both sides of the House representing constituencies on routes to the north-west, the west midlands, north Wales and, of course, Scotland.

I am concerned that there has been some distortion of the investment figures in the debtate. In the evidence that he gave to the Transport Select Committee, my right hon. Friend the Secretary of State mentioned that some £1 billion would be spent in each of the next three financial years. One or two hon. Members have sought to suggest that the investment in infrastructure—I am not talking about the other £1 billion to be spent on running the railways—is already committed.

In 1993–94, some £450 million of that £1 billion will be required for the channel tunnel; in 1994–95, some £270 million will be required and, in 1995–96, as the channel tunnel nears completion, some £80 million at 1992 prices will be required for it, including deferred interest and payments in advance. While I accept that, in 1995–96, we may have constraints on public sector spending equally as difficult as those we have now—no doubt it will be the same in years to come—I look to my hon. Friend the Minister to make it quite clear that, when we take away the amount required for the channel tunnel, which will decrease over the next three years, some of the investment that my right hon. Friend described to the Transport Select Committee will be spent on the schemes for improving the track and infrastructure of Britain's railways, and particularly the west coast line.

I believe that the answer will be affirmative, but I hope that my hon. Friend will make it quite clear that, although he intends to press ahead with these proposals for new opportunities, he will always recognise the requirement for important Government investment in the infrastructure of our railways.

My hon. Friend knows that I wholeheartedly support the Government's proposals for bringing in new pilot shadow franchises, and I am pleased that they have announced extra money for British Rail to ensure that they run smoothly. It is vital that we press ahead as soon as possible and do not allow the grass to grow under our feet.

With one or two honourable exceptions, there is widespread support for the Bill among Conservative Members. No matter what the difficulties—there are always difficulties involved in privatisation—they will be overcome. It is a gradual, step-by-step approach, and I urge my hon. Friend to see the proposals through for the benefit of the consumer, and to do so quickly and with the utmost vigour.

Photo of Mr Ieuan Wyn Jones Mr Ieuan Wyn Jones , Ynys Môn 8:45 pm, 2nd February 1993

I am pleased to have the opportunity to participate in the debate. As with so many other hon. Members, there is a great rail interest in my constituency, particularly in Holyhead, which has a great tradition on the Irish traffic route and an historical involvement with the Irish mail.

I should like to make two points about the Secretary of State's speech. It would have been useful if hon. Members could have had copies of the plans for the proposed franchises. It was difficult for many of us to understand what he was saying, and I have never before heard policy made on points of order.

Perhaps, in his reply to the debate, the Minister could clarify the exact position regarding the proposed franchise for Scotland. Will it go to Inverness? Will it be an InterCity service? Where will the service go in south Wales? Will it stop at Cardiff, or will it go through to Fishguard? We have a right to know whether those services will be InterCity services and whether the franchisees will have an obligation to offer those services.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

The House will wish to know that, in the Vote Office, there are maps which clearly show the precise geographical limitations of the first franchises. The answer is that it will go to Inverness and that it will go to Fishguard as an InterCity service.

Photo of Mr Ieuan Wyn Jones Mr Ieuan Wyn Jones , Ynys Môn

I am obliged to the Minister for clarifying that.

I am sure that he will also have heard the representations made by the right hon. Member for Strangford (Mr. Taylor) about the European fast train network. I am sure that it will come as no surprise to the Minister that I disagree with those representations, because I agree with the first draft prepared by the European Commission, stating that the proper route for Irish traffic is along the central corridor between Holyhead and Dublin bay.

I urge the Minister to support the European Commission in that view. We have many advantages, particularly in terms of geography, as 50 per cent. of all freight in the Irish Republic comes within a 50-mile radius of Dublin. Therefore, it is clearly more convenient and practical for the freight to go along the central corridor.

We will be waiting to hear from the Minister about the improvements to be made to the north Wales coast main line as a result of that European network.

In the Europe of the 21st century, if the single market is to mean anything and if we are to give the business community and the leisure traveller more travel opportunities, people must be able to travel quickly, efficiently and easily. In the 21st century, we are also forced to consider the environmental impact of greater travelling opportunities. It is little wonder that, in the Netherlands, Germany, France and other European countries, investment in railways is seen as a way of transferring traffic from road to rail for environmental and social reasons.

In the Netherlands, there is a clear policy to reverse the spending balance, which is currently in favour of road building, to rail. As a result, rail travel in the Netherlands has increased by 25 per cent., and the equivalent of £1.5 billion in strategic mainline spending is under way. That would be equivalent to investing about £300 million in Wales.

We know about the considerable investment that the French are making in their rail services. In no European country with which we trade is there any talk of privatisation or fragmentation of railway services. Indeed, it is the opposite. All our major competitors think that it is vital to have a coherent transport policy and that rail services should be properly planned and resourced. In the drive to ensure a properly integrated European high-speed train network, pan-European planning and co-ordination is essential. Failure to take part in that exercise will have disastrous consequences for our economy.

A strategic European railway network must be based on through ticketing and integrated services. The present plans for services from the United Kingdom to European destinations have required detailed linking of train operations in Britain, France, Germany, Belgium and the Netherlands on a through-service or direct-connection basis. Any attempt to operate international services on any other basis is fundamentally flawed.

The high-speed rail link on mainland Europe will transform the economies of the European core area, and those of us on the periphery will effectively be cut off from participating in that transformation. That means that countries such as Wales, which is already fragmented within British Rail's operational structure and outside most of its current core service areas, will be at a double disadvantage.

The high-speed rail network proposed by the Commission, which includes services to north and south Wales, will be jeopardised by the Bill. In the European context, the philosophy behind it shows that the Government are tackling yesterday's agenda and jettisoning today's requirements. The policy agenda of privatisation is misplaced, misconceived and will harm our long-term economic interests.

Within British Rail's current operational structure, Wales suffers from fragmentation and the lack of a coherent framework. Under the profit centre approach to franchise allocations, Wales—a small country of 3 million people—will have five operators. The section from Paddington to Cardiff on the Great Western line is regarded as a core service, while all destinations west of Cardiff are regarded as peripheral.

On the west coast main line, all services west of Crewe are regarded as peripheral. In terms of Regional Railways, services west of Cardiff, Wolverhampton and Chester are regarded as peripheral. It is little wonder that we feel under threat as a result of the policies.

We are told that Railtrack is expected to act in a commercial manner and that it will not be subsidised. It must make an adequate return on assets, but will it be able to secure adequate funding for long-term investment—for example, in the upgrading and electrification of the west coast main line and the Great Western?

I understand that the Minister has been speaking to local authorities in north Wales and the north-east about the possibility of electrification. I wonder whether he can tell the House the latest state of play on that application.

Will Railtrack be able to secure adequate funding for long-term investment? Will it be expected to produce a reasonable return on investment? Because Railtrack will have to operate on commercial lines, there will have to be subsidies for the franchisees and other operators. We must be told to what extent and for how long those subsidies will operate.

Apart from the franchise that the Secretary of State announced, what interest has there been in securing franchise services for the routes in Wales? Will there be any attempt to secure a coherent strategy for the development of the rail network in Wales, or will we for ever remain on the periphery of the United Kingdom rail network, which in turn will be on the periphery of a high speed network on mainland Europe?

The Government's obsession with privatisation, which is mirrored in the Bill, will have a catastrophic effect on rail services. It will produce fragmentation when what we need is coherence. I fear that, in many parts of the United Kingdom, it will lead to reduced investment when more is urgently needed. It will drive us into a European backwater, while our major competitors are forging ahead with a modern European transport system. For those and many other reasons, I and my colleagues will be in the No Lobby tonight.

Photo of Mr Raymond Robertson Mr Raymond Robertson , Aberdeen South 8:53 pm, 2nd February 1993

I intend to take a few minutes of the House's time to put the record straight on how rail privatisation will affect Aberdeen. I make no apologies for being so parochial. Given Aberdeen's geographical position, I am sure that the House will realise how vital our communications network is.

On the last occasion that the House debated this subject, on 12 January, the hon. Member for Cunninghame, North (Mr. Wilson) showed his usual dislike of the truth and displayed his uncanny knack of ignoring the facts if they do not quite fit his argument. He said:

the expectation and reality must be the substantial closure of railway lines throughout the country and in particular rural lines which exist for a social as well as a communications purpose.Nobody need be in any doubt about this … One has only to read about what Grampian Transport wants to do. It wants to concrete over the rails and create busways."—[Official Report, 12 January 1993; Vol. 216, c. 853.] I shall focus on the last part of that quote. If, as the hon. Gentleman said, Grampian Transport is interested in rail privatisation because it wants to concrete over the rails, that would be serious and would cast doubts over public transport in Aberdeen. However, it is simply untrue. It does not. Its interest is legitimate and genuine. Unlike Opposition Members, its interest in rail privatisation is quite visionary.

Grampian Transport is a private bus company which has taken advantage of the Government's earlier privatisation policy, and it is a success story. It has a legitimate interest in rail privatisation in two key areas. First, the company wants to involve Aberdeen city to create a partnership between bus and rail services. The hon. Member for Cunninghame, North seems to be blind to the fact that the two are not mutually exclusive, but can be complementary with foresight and planning. The company has already commissioned a feasibility study into providing a rail system from one of Aberdeen's growing suburbs in Dyce—a growth area—to get commuters into the city centre speedily. ScotRail refused to do such a study.

Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North

The hon. Gentleman has been reasonably offensive, but I shall not reciprocate. Is he telling me that Grampian Transport has not proposed to convert existing rail lines into dedicated busways? If he is not telling me that, I think that he should withdraw his opening remarks.

Photo of Mr Raymond Robertson Mr Raymond Robertson , Aberdeen South

If the hon. Gentleman listens to me, he will understand exactly what Grampian Transport is trying to do.

In addition to that feasibility study, it commissioned another study, to use the Oban guided bus system between Aberdeen airport and the city centre. That combines the flexibility of the bus system with rails to produce the maximum utility of the track.

Those two projects have an exciting potential and are long overdue. They could soon be a reality. By getting the private sector involved, Aberdeen—Europe's oil capital—could get a genuinely first-class commuter service. Those of us who are campaigning to get the Petroleum Engineering Directorate relocated in Aberdeen will welcome the fact that we will be able to tell the seemingly reluctant civil service that people will be able to get from the airport to their offices in the centre of Aberdeen very quickly if the scheme goes ahead.

Why does the hon. Member for Cunninghame, North seek to prevent that? Why does the hon. Gentleman seek to deny the people of Aberdeen an integrated public transport system which could be the envy of Europe? I will gladly give way to him if he will tell me.

Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North

I do not want to take up the time of hon. Members on either side of the House—I have the opportunity to make a speech—but I will gladly debate with the hon. Member for Aberdeen, South (Mr. Robertson) the public transport needs of Aberdeen, and I will also explain to him how the transport policies of the Government that he so ardently supports have failed them for many years. However, on this specific matter, he seems to reinforce my point rather than contradict it. He might have investigated the brief before he read it.

Photo of Mr Raymond Robertson Mr Raymond Robertson , Aberdeen South

So the hon. Gentleman is not willing to explain to the people of Aberdeen why he will deny them this.

It is not just in Aberdeen that Grampian Transport has an interest. It is now preparing plans for Aberdeen's links with Elgin and with Inverness, with combined rail and bus services, through ticketing arrangements and one timetable. Passengers will be able to go from city centre to town centre with one ticket, on one timetable—bus, train, then bus again. If that is a success, the company is interested in extending the service from the centre of Aberdeen to the centre of Glasgow, to the centre of Edinburgh and even to other areas in the central belt.

I will end by quoting Moir Lockhead, chairman and managing director of the company: Lines which in the 1960s were unviable economically may have become potentially attractive to the private sector, due to the increase in congestion on the roads, pedestrianisation schemes and parking difficulties and a growing awareness of environmental issues as well as the reduction in costs from advanced technology and greater efficiency. Our approach will underpin the rail system, not undermine it. That does not sound to me like a man who wants to concrete over the rails and pull up the tracks.

In Aberdeen, the private sector is up and ready to go. It wants the green light from this House. What has happened in Aberdeen can happen elsewhere. Tonight, the House must defeat the Luddite tendency of the Labour party.

Photo of Mr John Gunnell Mr John Gunnell , Leeds South and Morley 8:59 pm, 2nd February 1993

In 1981–86, as leader of West Yorkshire county council, I had some political responsibility for the development of a local rail network. During that period, we were responsible for the start of the turning round of the rail network in the area, so we have something to tell the House—a story of success on the railways, something that needs to be taken into account when one is looking at the present proposals. I would judge that success by two factors. The policies that we followed and developed have been practised since, and are still in operation in West Yorkshire. In the 10 years from 1981–82 to 1991–92, we increased the passenger numbers from 6.6 million to 15.3 million—an increase of 130 per cent. At the same time, and as a result of the increase in passengers, there has been an increase in the recovery ratio—that is to say, less subsidy is now required per passenger.

At the time that I became leader of the county council, many lines produced less than 20 per cent. of their income through fares, with an average in the mid-20s. Now the average is 38 per cent., and that is a reduction from figures in the low 40s before the recession hit our area. But we have no individual line which is less than 30 per cent., and although the actual cash level of subsidy is only a little reduced, it is supporting a far larger rail network and more than twice the number of passengers. It is therefore important to ask what factors have led to those changes, because they are factors which can lead to success in the rail network.

I can list four: timetabling, pricing, marketing and investment. We have timetables which are designed to suit public use and not simply the convenience of rail operators. We introduced in 1981 a freeze on fares, and that freeze lasted until 1986. Since then, the increases have been modest. The freeze on fares was accompanied by ticketing of an imaginative kind, designed to attract more passengers to the network. The ticketing systems were accompanied by aggressive marketing, using television and posters.

But as well as that, there was investment in rail. We have invested over the years in new stations. Eighteen new stations have been opened, increasing the number from 47 to 65, a rise of 38 per cent. New rolling stock has been purchased, and more new rolling stock would be under way at the moment if the money were released for it. Instead, in the present uncertain climate, as I mentioned to the Minister in earlier debates, those orders are held up and the company in Hunslet in my constituency is unable to proceed with their manufacture. The Minister said that he would meet the chairman of the passenger transport authority to discuss the subject. I know that he has met the chairman, but I do not think that he has yet given him or the company involved a guarantee that part of that £150 million will be used on those trains that are currently held up in west Yorkshire.

Those mechanisms, which have been used elsewhere, have been successfully used to turn around a rail network. I think that the Settle-Carlisle line is an example of a line that the former Minister of State for Transport reprieved after joint action by local authorities and British Rail. Positive marketing of that line significantly increased the number of passengers on it.

Changes can be made that will improve the rail network. We have all agreed today that we want the rail network in this country to develop, but the proposals in the Bill are the politics of the asylum. If we are to have a successful privatisation, it must be based on potential profit.

When the Government have been privatising, they have generally taken industries that have clearly been capable of delivering a profit—often monopoly industries, which have been certain to deliver a profit. However, the rail network makes little, practically no, profit on most lines. It is significant that, in order to start work on the system, the Government are having to take selected lines and pull them out of the network to create an artificial profit.

Through the lines selected and a grant system, the market is being rigged to generate profit. I am not opposed to the grant system as such, but under the system, profit is falsely generated. The rail network is a public sevice and should remain so. The changes will not work unless that remains the case.

Photo of Mr Keith Mans Mr Keith Mans , Wyre 9:02 pm, 2nd February 1993

I am grateful to be allowed to make a short speech before the wind-up speeches.

My hon. Friend the Member for Norfolk, North-West (Mr. Bellingham) made an eloquent speech, but it contained an error. He suggested that the Government and the Conservative party had been considering rail privatisation only for the past two and half years. It has been a subject of much debate for much longer than that.

Some four and a half years ago in the Chamber, we had a debate on rail privatisation under the Consolidated Fund. In that debate, a number of my hon. Friends and I advocated a track authority, a franchising operation, the splitting up of tracks and trains, and privatisation generally. Since then, the debate has virtually completed a circle. We have considered regional monopolies and various other ways of achieving the movement of British Rail into the private sector.

Therefore, I am delighted to welcome the Bill whole-heartedly, as it follows on so closely from that debate of four and a half years ago. During that debate, I drew an analogy between what I considered to be the success story of the airways among the airlines and what was proposed for British Rail. At that time, the recently privatised British Airways was going from strength to strength.

It is worth acknowledging the position in Europe, whereby virtually all the railways are in the public sector and are making a loss, and the vast majority of larger airlines in Europe are still in the public sector and are making a loss. However, British Airways, in the private sector, is making a profit, even during the recession, when virtually every other transport company—in both the public and private sectors—is making a loss.

If it shows nothing else, that illustration shows that, if one gets it right and produces an organisation that is customer not producer-orientated, one can attract passengers and freight, and make a success of encouraging further investment. That is a shining example of what can be done with British Rail when it moves into the private sector.

Some may consider that certain routes are cherry picked, but we can improve upon even British Rail's good routes, ensuring that they give an even better service to the public, attracting passengers away from other forms of transport and back to the rail network. Therefore, there is nothing wrong with the idea of moving even the profitable routes in the public sector into the private sector.

The Opposition are always of the view that, for a service to be improved, it must have more money poured into it. It is important to measure not the inputs, but the outputs. The success of this legislation will be judged not by the doom-laden prophets of the Opposition but by the British public, in the choice that we shall give them and in the improved rail service that they will get. I am convinced that they will choose by travelling on British Rail, by allowing more investment and by allowing the service to expand during the years ahead in the private sector.

Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North 9:10 pm, 2nd February 1993

We have had a good, if fairly predictable, debate for the most part. I was interested to note that paragraph 1 of the Conservative central office brief advised Conservative Members to emphasise that British Rail is not working well, and all the little parrots lined up to oblige on that score.

It strikes me as cheap and pretty miserable that people who have been in Government for 13 or 14 years—one Conservative Member who spoke held a central position advising Ministers on the policies to be pursued—take no responsibility for the consequences of their actions. Instead, as a political device, all they can do is denigrate the efforts of the people who have worked valiantly over the years to keep the railways going and to create what in many areas of Britain is still an excellent and socially responsible railway system.

Out of the clutch of press releases today—the Secretary of State managed six—perhaps the jewel in the crown is the one headed First lines to be prepared for franchising". We even have a helpful map to illustrate the final selection. That map will be of great interest around the country. It will not be of all that much interest in areas whose lines have been selected, where apprehension might be a better word, but people throughout Britain will notice that their lines are not on the map and it is they who will be asking questions.

Those lines and sectors that have been selected by the Government as the first to prepare for franchising will, during the next year, receive the kind of attention that will presumably make them fit for Mr. Branson, or whoever, to inherit. But people served by the rest of the network will wonder what will happen to their lines. I shall be pleased to give an answer to that tonight.

If money is to be poured into the Tilbury-Southend line in order to bring it up to the standard to enable it to be sold off, will that come from within Network SouthEast or British Rail's existing capital allowances? If so, will that not inevitably be at the expense of the rest of the network?

Take note, the lines on the map are the ones that have been selected and in which the Government have a vested interest in promoting as potential franchises. But that can only mean that the fragmentation has begun, along with the rundown of the rest of the railway.

I want to start with the question of safety, as I do at a high point in every speech that I make on this subject. Since we debated the matter a couple of weeks ago, much attention has been given to the Health and Safety Commission's report. I do not object to political point scoring, but I do object to the gloss that the Secretary of State has persistently put on the report because the subject is of such seriousness.

The Health and Safety Commission gave no clean bill of health to what is being done: let there be no misunderstanding about that. In case some Tory Members still do not understand what the Health and Safety Commission's report says, I quote it again. It says: The consequences of failing to achieve adequate systems of control will be seen in an increased risk in the railway system and the likelihood of an increase in the numbers and possibly also the severity of accidents. I desperately hope that will not prove true and that the number and severity of accidents does not increase. If the Bill is passed, I hope that the Health and Safety Commission's 38 proposals to ameliorate that risk will be sufficient and will be implemented.

Who in this country asked the Government to put in place a railways system that is inherently more dangerous to the extent that such safeguards must be taken? The answer is, no Member of Parliament, no one who works on the railways, and no one who travels on the railways. As the evidence given to the Select Committee proves, almost no one in the country wants the Government to do that. It is a unilateral act of irresponsibility on the Government's part to put in place a railway system that is less safe than that which exists.

We are already seeing attempts to rationalise irresponsibility. One of the alleged intellectuals of the Conservative party, the hon. Member for Havant (Mr. Willetts), produced a document that is of considerable interest to my right hon. and hon. Friends, though I suspect that there is less concern among Government Members to publicise it. Such is the way that ideas start. Soon, for reasons that we can well understand from today's debate, an explanation will have to be given as to why less money should be spent on safety, because that is the direction in which all the pressure will be applied.

The hon. Member for Havant's advocacy of rail safety deregulation confirms that the surest way to be hailed as an intellectual and thinker is to say something of such stupidity that no cautious mortal would dare to advance it. The hon. Member for Havant reached the momentous conclusion that railway safety is not cost-effective and wants a moratorium on new safety measures. He has a point when he says that safety costs money and that that is reflected in fares. However, if the hon. Gentleman thinks that rail safety costs money and drives passengers away, what does he imagine their perception of danger would do?

The hon. Member for Havant should say what is the cost-effectiveness of a rail accident—of a Clapham disaster.

Photo of Alan Duncan Alan Duncan , Rutland and Melton

In the absence of my hon. Friend the Member for Havant (Mr. Willetts), will not the hon. Gentleman admit that my hon. Friend was simply pointing out that there is a statistical quirk in published safety figures—that when fewer people travel on the railways, the per capita safety record worsens, even though more money might have been spent on safety? My hon. Friend was merely making a statistical point. If the hon. Member for Cunninghame, North (Mr. Wilson) cannot understand that point, that reflects on him and not on my hon. Friend.

Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North

It is not a statistical quirk but statistical drivel. I would have told the hon. Member for Havant that I intended to refer to his article, but I knew that he was around earlier and was capable of being present.

The hon. Member for Havant should not only come to the House and try to justify a moratorium on safety expenditure; he should stand outside any commuter railway station on Network SouthEast and tell passengers that Tory thinking is that too much money has been spent on saving lives on the railways, and that by some demented ideological device less money should be spent for that purpose.

Photo of Alan Duncan Alan Duncan , Rutland and Melton

The hon. Gentleman misrepresents my hon. Friend's argument.

Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North

I am not misrepresenting it but representing it very well. That argument is there in black and white and represents a train of thought in the Conservative party that will be brought into play more forcefully. [HON. MEMBERS: "Hear, hear.") I hear support for it from the Conservative ranks. That thinking will be brought more into play because of the need to force down—

Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North

If the hon. Lady thinks that her colleague's words are drivel, she should so inform him.

We learnt today of the complete separation of Railtrack from the operators, in the form of a separate company, and of the appointment of Mr. Robert Horton to preside over it—a man too abrasive for BP but just the person to act as the interface between the track authority and rail users.

The Secretary of State said today that Railtrack should contract out services and that would be vital in keeping its prices down. Perhaps the Secretary of State will say which services he has in mind. Will they be the maintenance services performed by the people who work on the track and who undertake necessary safety work at present? If Railtrack contracts out those services, it can only lead to casualisation—to people working on the railway lines who are not used to that work. It can only lead to cheaper labour. The Secretary of State confirmed that when he said that contracting out services will be vital in keeping prices down.

Then the Secretary of State tells us that track franchisees will pay only what they can afford in charges. What does that mean? Does it mean that a subsidy will bridge the gap between what it costs to maintain a safe railway and what the operators can afford? Does the Secretary of State guarantee that that gap will be fully bridged? The moment that he fails to do so, there will again be pressure on British Rail to keep down spending on safety: that is the inevitable logic of what he is saying.

Let me now deal with the general subject of network benefits. Last week, a document emerged from the Department of Transport. Its contents have, to a substantial extent, been confirmed by what the Secretary of State has said today. It is a very honest document, and I believe that its contents, and the statements that are emerging from it, will capture the public's interest in the weeks ahead as much as anything that has been said in the debate. The matters involved directly affect the travelling public.

Let us go through the headline conclusions of the document, as confirmed by the Secretary of State today. According to the Department, discounts and through ticketing "should not be imposed" on private operators. Train operators cannot be expected to sell tickets for services other than their own, because this runs contrary to commercial interests". Any scheme to replace railcards should be decided by each private operator on the basis of "their own marketing strategy", and private operators might choose to retain railcards for the disabled, but would do so for the public relations benefit". Those are the conclusions in the document, and the Secretary of State confirmed today that the disabled persons' railcard would be retained for public relations reasons. According to the document, only 40,000 disabled persons hold railcards. Financially it is not very significant one way or another. Many operators might consider that the public relations benefits of continuing to offer discounts to disabled people are well worth such a small cost.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

Last week, some members of the Select Committee visited the networking office at Euston. We were told that if more than one operator ran trains on a piece of line, the long-hallowed advantage of being able to turn up and get on to a train would probably be lost, because everyone would have to have a piece of paper. Has the hon. Gentleman considered that, in the light of the fact that the east coast main line is to be franchised although part of it will continue to be run by Regional Railways and others?

Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North

The hon. Gentleman is absolutely right. It is transparently obvious that there will be problems in the whole business of the inter-availability of tickets once the fragmentation of operations has begun. But let me return to the question of disabled people, which, I know, concerns the hon. Gentleman as much as it concerns Opposition Members.

Let me make it clear that Opposition Members do not see the railcard for the disabled as a public relations benefit for some cheapskate operator. The Department of Transport document make no mention of rights or of social need. Only 40,000 disabled railcard holders can be bought off for the benefit of public relations; but the families, pensioners and young people who hold railcards are too numerous, and will therefore be dispensed with. There is no guarantee of a national rail network benefit for them.

Let me repeat the question that I asked the Secretary of State earlier: will he guarantee the continuation of national railcards for pensioners and for people of 24 and under? Will he also guarantee the continuation of the London travelcard, which at present covers travel on London Regional Transport, London Buses and British Rail, and the continuation of the family railcard? I am not the one who is waiting for an answer; 4 million people, many of them constituents of Tory Members, are waiting for that answer, which will be either a deafening silence or an eventual no.

Notwithstanding all the other provisions, the sheer vandalism of breaking up InterCity takes a bit of beating. How these ideologues despise anything in the public sector that actually works, and works well—that returns a profit, provides decent working conditions and gives people a reason to take pride in their work. They despise it, and they must destroy it: they cannot just leave it to operate more successfully. That has led to the breaking up of InterCity, and to the hiving off of profitable routes, especially the east coast route, from the rest. When one takes away what is profitable, what is left for that which is unprofitable?

Within InterCity, the east coast main line route makes a profit of about £60 million. If one adds together the three sections of InterCity which will be put into the shadow franchises, one has a profit of roughly £70 million. The overall profit of InterCity last year was, say, a couple of million pounds. It does not take a mathematician of even Conservative standards to work out that if one takes £70 million out of the equation and sets it against a £2 million overall profit, there will be a deficit of about £68 million left for the rest of InterCity.

Is the Minister saying that there is to be a subsidy on the parts of InterCity which remain with British Rail? Is a railway which is not at present subsidised going to be subsidised to allow the private sector to make a profit on what has been hived off? If there is to be no subsidy, who is to meet the cost of the deficit which already exists on those parts of InterCity which would remain within the public sector?

I want the Minister for Public Transport to clarify what is to happen to InterCity. I have already referred to the map which is headed First lines to be prepared for franchising". There is no word of shadow franchising or experiments and no sign that it may or may not happen.

The hon. Member for Norfolk, North-West (Mr. Bellingham) raised the issue of InterCity being retained as a single entity. The Minister told us, helpfully, that he was shortly to meet the director of InterCity about retention and strengthening of InterCity identity. That will be an interesting conversation. He will tell the director of InterCity that he is taking away three of his profitable routes to turn them into autonomous businesses within British Rail while, at the same time, he is talking about the retention and strengthening of InterCity identity. How are the two compatible?

To be fair to the Minister, I believe that in this instance his words reflected his own thinking and wishes. He said that the Government had taken no long-term decisions about the future of InterCity. With the authority of the Secretary of State, the Minister must tell us whether this is true or false: are the InterCity routes designated on the map the first lines to be prepared for franchising? Is that a positive categorical statement, or have no long-term decisions been taken about the future of InterCity?

The Minister should make no mistake, because no one who lives on the sections of the InterCity routes which are not covered by the proposed franchises will be in any doubt about that. If InterCity is fragmented, many of the communities which at present benefit from InterCity services, especially direct InterCity services, will not have them in the future. That message will strike a chord with everyone who instinctively understands it to be the truth.

Of course we welcome the freight initiatives which were announced today. Of course we would, because we, and especially my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), have been arguing for them for many months. We shall make a closer inspection of the small print, but basically, if the measures are designed to get freight on to the railways and off the roads, we are behind them.

Surely the Minister can say how long we are to wait for the measures to take effect. Is it to be 18 or 8 months? Are we to stand idly by for another six months or one year watching the haemorrhaging of rail freight continue? Are we to watch the cargoes of cement, oil, bitumen and chemicals transfer on to the roads?

In referring to the central office brief, hon. Members raised the issue of charges being imposed by British Rail for its freight services. There is a problem. I deplore the increase in charges on which British Rail is insisting. There are, however, conflicting statements which the Minister can resolve now.

The Freight Transport Association and other bodies will say that when British Rail imposes large increases, the reason given is that British Rail is still required to operate according to the financial objectives set down by Cecil Parkinson in 1989. If the Government had any wish to get freight on to the railway and off the roads, instead of driving it at an alarming rate in the other direction, they would have long ago abandoned those objectives. It is no longer tolerable for the Government to tell British Rail that it must pursue those objectives and for British Rail to tell the customer that that is why it is having to impose the increased charges, while Ministers tell the House that nobody has talked about those objectives for years and that there is absolutely no requirement for British Rail to abide by them; and for Tory Members then to abuse not the Government for their objectives but British Rail for carrying them out. There is an opportunity tonight for the Minister to clarify those matters.

Photo of Hilary Armstrong Hilary Armstrong , North West Durham

Is my hon. Friend aware that such charges have led to the proposed closure of a railway line in my constituency which is used by Blue Circle to transport cement? The proposed closure of that line from 1 April will mean that the cement is carried on a rural, narrow road. The threat to the environment and to the safety of many people in the area, which the Government have established as a tourist area, will be great.

Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North

Let us take that as a test case. The Minister could return to his office tonight and sign a piece of paper which would put an end to that proposal here and now. It is a question of whether the Government will do that. They have stood idly by and brushed aside all such ideas. It is 18 months since the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind) got a bit of cheap publicity by talking about transferring freight from road to rail. Since then, nothing has been done and freight has moved at an enormously fast rate in the other direction.

Today, the Government have tabled proposals which are unexceptional. When will they be implemented? If the Government wait much longer, many more hundreds of thousands of tonnes will be lost by British Rail and many thousands of lorry loads will be transferred to the roads. That is the reality. Let us have a declaration tonight that the proposals will take effect immediately, although belatedly. All Labour Members will then be pleased to support the Government's freight proposals.

I am interested in the idea that it is possible to subsidise freight. It is possible to accept the idea of no cost being made to the infrastructure by freight. Why was not that proposal accepted six months or a year ago? Why did not the Minister accept that proposal when we discussed it in a television studio less than three weeks ago? Everything in this game seems to have been thrown together at the last minute to put some gloss on the proposals.

We have had an interesting preliminary debate tonight and we will proceed to an interesting preliminary vote. No hon. Member in the House should believe that it is anything more than that because the real debate is in the country. Today's events have accelerated the debate. The Secretary of State is losing the debate at a rapid rate of knots, even before people really start asking questions. As I said, people will be looking at the map and seeing which services are not on it.

The west coast line has been referred to frequently tonight. Conservative Members also have an interest in that. Let us have another case study. The Minister should be able to tell us with some authority the future of investment in the west coast main line if the lines on the map are the first to be franchised, and if some gritty entrepreneur races trains up the east coast main line to take advantage of the £700 million or £800 million of public money which has been invested in it. Who will invest the money in the west coast main line?

The Government must have some idea who will give the money to Railtrack for investment in the west coast main line. If the Minister cannot answer the question, it is fatuous for Conservative Members piously to hope that there will be investment in the west coast main line. The simple answer is that there would be no major investment in the west coast main line. We all know that trains can continue from Edinburgh to Glasgow as a result of development of the east coast main line.

As a result of under-investment on the west coast main line and the increasing failure rate on that line because of the age of the infrastructure, how long will it be before Railtrack decides that the InterCity line will stop at Preston and thereafter be handed to Regional Railways? A similar pattern will be replicated all around the country. There will be Rolls-Royce lines on which a limited number of services will operate, and the rest will become feeder lines—second-rate and under-invested lines.

Throughout the months of debate on the matter, I have not heard a satisfactory explanation about where the investment in Railtrack will come from. I know the theory of where investment will come from for train operators—entrepreneurs will appear to run trains and merchant bankers will fall over themselves to invest money for the enormous rate of return which will be offered. However, I have never yet heard anyone seriously attempt to explain where the capital for Railtrack will come from—other than from the revenue raised through the operators. The operators will not be able to pay the costs needed to maintain the infrastructure. The infrastructure will diminish and we shall have fewer lines, fewer services and fewer passengers on the railways and more traffic and freight on the roads. That is the formula on offer. There will be no railcards, no national network benefits and a huge bureaucracy—a fact that will be more clearly understood as the debate continues.

Photo of Alan Duncan Alan Duncan , Rutland and Melton

Will the hon. Gentleman be chivalrous enough to give way?

Photo of Alan Duncan Alan Duncan , Rutland and Melton

The hon. Gentleman challenges us, saying that there will be a huge bureaucracy. He will be amused to know that I have a little list of his own policy proposals on how to administer the railways in the public sector. He proposes a new transport forum, new regional authorities for strategic planning, a new transport users' body, new passenger safety inspectorates, a disputes ombudsman, a consumer protection commission and a railway commission. How can the hon. Gentleman accuse us of wanting to create a bureaucracy when his policy document calls for far more bureaucracy than our proposals would ever create? [HON. MEMBERS: "Hear, hear."]

Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North

It does not matter how much Conservative Members baa their approval The argument advanced by the hon. Member for Rutland and Melton (Mr. Duncan) is very weak. I must make an admission: I would not know how to run up a £50 billion public sector borrowing requirement even if I wanted to, and I do not. If the hon. Gentleman reads our document, he will find that our proposals come within the existing frameworks. If he really wants a fright, let him read the Government's policy documents and discover the range and number of quangos that they plan to put in place. The only spiritual and moral consolation that I can offer the hon. Gentleman is that there will probably be a few chairmen's jobs for his friends.

We shall have more bureaucracy, fewer services, more freight on the roads, higher fares and no railcards. That is the prospectus on offer. The debate is not ending; it is beginning.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering 9:36 pm, 2nd February 1993

Some 22 right hon. and hon. Members have spoken in the debate, and I shall try to respond to all the points that have been made. On those that I cannot cover—in particular, those raised by the right hon. Member for Strangford (Mr. Taylor) and the hon. Members for York (Mr. Bayley) and for Ynys Môn (Mr. Jones)—I shall write to the hon. Members concerned.

Let me correct the hon. Member for Cunninghame, North (Mr. Wilson), who opened his winding-up speech by saying that Conservative Members had sought to denigrate British Rail. No Conservative Member has criticised Sir Bob Reid or the management of British Rail. We have merely said that we can get a better quality railway system by bringing in the private sector. My hon. Friend the Member for Rutland and Melton (Mr. Duncan) was right to point out the complicated bureaucratic nature of the proposals published by the Labour party yesterday, and I shall illustrate that point.

The Select Committee rightly raised a number of unresolved issues. I shall deal briefly with five of the key issues. The first concerns franchising and open access. My right hon. Friend the Secretary of State has dealt with that by saying that, in respect of the first franchises, there may have to be a degree of exclusivity.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

No, not a monopoly. The competition will come from the private sector in the form of competition for the franchises. We do not rule out open access for some services, passenger or freight. We want a coherent railway system. My right hon. Friend the Secretary of State has responded positively on that matter.

Secondly, on the separation of track and operations—the important matter raised by my hon. Friends the Members for Orpington (Mr. Horam) and for Christchurch (Mr. Adley)—there is room for argument on both sides. The Government have reached a clear conclusion. I will put to my hon. Friend the Member for Christchurch three questions concerning his proposal for large, vertically integrated, regionally-based franchises. First, how does one control access to those railway companies? That would be very difficult. In the late 19th century, when the House sought to legislate to encourage competition on the railway system, it found that railway companies controlling both infrastructure and operations were not keen to allow other rail operators on their tracks. Secondly, there is the difficulty of having a national, coherent track charging regime. Thirdly, infrastructure is extremely expensive. It is a little hard to accept that, in the early years of our reforms, private sector companies could be expected to come in and take responsibility not only for rolling stock but also for infrastructure.

Several hon. Members:


Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

I have 22 hon. Members to reply to, and exactly 20 minutes in which to do so, so I shall not give way.

Fourthly, it is very difficult to contemplate how a national timetable and national control over train paths would be consistent with regional, vertically integrated companies.

The hon. Member for York rightly raised the question of network benefits. First, we are proposing that Railtrack should be responsible for producing a national timetable, as it will be responsible for controlling train paths. Secondly, we have said that it will be mandatory for rail operators to ensure through ticketing. Finally, on the question of discounts, the disabled card is the only genuinely socially necessary card. All the others were introduced by British Rail for commercial reasons—to increase the number of passengers on the railway network. Ministers do not direct British Rail to introduce railcards, and there is no evidence to indicate that, with the advent of private sector operation, cards will disappear.

My hon. Friends the Members for Southport (Mr. Banks), for Newbury (Mrs. Chaplin) and for Christchurch asked about investment, as did the hon. Member for Cunninghame, North (Mr. Wilson). On the question of infrastructure, I can confirm that Railtrack, as a public sector body—which is what it will be initially—will be funded in exactly the same way as British Rail. It will have access to the national loans fund for its investment requirements and, in the case of the west coast main line, for tracks and signalling. It will be the responsibility not only of British Rail but of its successor, Railtrack, to ensure that investment is made. British Rail will make a start.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

I have made it quite clear that I shall try to answer all the questions that hon. Members have put. I now have 19 hon. Members to reply to, and the hon. Gentleman is taking up time that should be spent on replies.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

The hon. Gentleman has not been here during the debate.

The west coast main line infrastructure is badly needed, and I hope that in the next year British Rail will make a start on the resignalling work. That responsibility will continue under Railtrack.

My hon. Friend the Member for Newbury talked about rolling stock—an extremely important matter. We have asked British Rail, by Easter, to identify the lines—they may well include in the South Yorkshire PTE area the lines that the hon. Member for Morley and Leeds, South (Mr. Gunnell) mentioned—on which the £150 million of additional resources for rolling stock procurement will be spent. That money will provide additional orders for the rolling stock manufacturers, and we want British Rail to continue to order rolling stock beyond that point. However, we need to see a private sector leasing market develop. I am convinced that, as my hon. Friend the Member for Newbury indicated, the Government will have to assist that development, as no such market exists at present.

As I have indicated to the hon. Member for York, I shall be very happy to meet representatives of the large manufacturing company in his constituency, as well as of GEC Alsthom, immediately, now that we have issued our document on rolling stock procurement, to seek their participation in the early development of a leasing market. We must maintain a high level of investment in our railway system, and we are quite convinced that the private sector can come in. As my hon. Friend the Secretary of State said at the beginning of the debate, this will be supplemental to very great public sector support.

My hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell) asked what steps the Government were taking to develop the rail freight industry. My right hon. Friend the Secretary of State made some very important announcements, which were welcomed by hon. Members in all parts of the House, but particularly by those on the Conservative Benches. He said that for our new regime, when Railtrack is introduced, rail freight operators will be asked to pay as a minimum the avoidable track costs—the marginal costs. That regime has applied hitherto in this country and it is favourable to the development of a rail freight industry.

But the Secretary of State said that we would introduce a grant regime to pay the track costs of rail freight operators where that could be justified, and that was welcomed on the Conservative Benches. We have said that we intend to expand the section 8 grant scheme, including giving benefit to the calculation of motorway and trunk road miles avoided by freight which is carried by rail as opposed to road.

As for combined transport, we have said that we shall issue a consultation document shortly to give a concession to lorries carrying 44 tonnes on six axles for the carriage of freight to rail terminals. I assure my hon. Friends who represent Kent constituencies that that concession will not apply in Kent because the channel tunnel will not be regarded as a rail terminal. We are directing the concession principally at the nine channel tunnel railheads throughout the country.

I come to the announcement made by the Secretary of State about the seven lines which are to be prepared for franchising in 1994. They are the InterCity east coast, the InterCity Great Western, ScotRail, the south western division of Network SouthEast, London, Tilbury and Southend, the Victoria-Gatwick express and the Isle of Wight line. I have noted the warm support from Conservative Members for the selection of those franchises. Four specific questions have been asked—

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

I am seeking to answer the debate.

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

Order. It must be obvious to the hon. Member for Dundee, East (Mr. McAllion) that the Minister is not giving way.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

I am doing the House the courtesy of seeking to answer the debate.

My hon. Friends the Members for Cheadle (Mr. Day) and for St. Ives (Mr. Harris) have raised with me, either in the debate or separately, their natural concern about the prospect of a franchising system causing lines to close and services to end. I wish to make it absolutely clear that we intend the franchising director, when he is appointed, to start franchising with the existing timetable and existing services. My right hon. Friend the Secretary of State has today published a map showing precisely the routes, which include Penzance, Aberdeen and Inverness.

Photo of Mr Stephen Day Mr Stephen Day , Cheadle

I am grateful to the Minister for dealing with the points that I raised. May I have an assurance that where passenger transport executives or passenger transport authorities exist the Bill will not affect their existence or in any way affect the structure of subsidies that the regime implies?

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

I can give those assurances, and in Committee we can go into those issues in detail. We propose no change to the responsibility of the PTAs and PTEs.

My right hon. Friends the Members for Tonbridge and Malling (Sir J. Stanley) and for Mid-Sussex (Mr. Renton) raised their concerns about increasing fares on lines which are franchised, and even those that are not. I am grateful that my right hon. Friend the Member for Tonbridge and Malling has at least suspended judgment on the matter, and I will explain briefly the logic of our position and why we believe that we have adequate controls over railway fares.

We have said that franchising will be based on the existing timetable. We shall have a competition to see whether the subsidy that we pay to British Rail to run the existing timetable can be provided more cheaply by the private sector. That might well be an advantage. We propose a cap on fares for those services which are a monopoly, and I can confirm that the commuting lines into London constitute a monopoly.

Network SouthEast fares have risen by an average of 2 per cent. above the retail price index over the last 10 years. In Committee we can go into the detail of how fares on Network SouthEast train services will be controlled.

I should say to my right hon. Friend the Member for Mid-Sussex that extra investment does not necessarily mean higher prices. If one takes airlines or long-distance coaches—

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

Order. I should be obliged if the Minister would use the microphone. I find it difficult to hear and we need his remarks to be recorded.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

I shall address my remarks to the microphone, Madam Speaker. Extra investment does not necessarily mean higher fares. One can have additional investment in transport infrastructure. If it is provided more efficiently, fares are controlled.

My hon. Friend the Member for Norfolk, North-West (Mr. Bellingham) referred to the InterCity lines. We have proposed three initial franchises for InterCity services, but we have not ruled out continued use of the brand name. It is a successful brand name, but we have not ruled out co-operation by all InterCity services using and marketing that name.

We have taken no decision on the ultimate shape of the transfer of InterCity to the private sector. That is many years in the future. We have begun the process and on the west coast main line urgent decisions about infrastructure and replacement of rolling stock need to be taken and are better taken in the next 12 months, outside the franchising system.

My hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale) raised the question of management and employee participation. I am glad to tell him that some 20 management-employee buy-out groups have expressed an interest in participating in the reform of the railway system and in franchising. That is welcome and is a vote of confidence by the staff in our reforms.

Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North

What the Minister said about InterCity needs clarification. As I understand it, he said that franchising of all sections of InterCity was far in the future. Does that mean that there will be franchising of sections of InterCity and therefore that retention of InterCity for the foreseeable future is reasonable and logical? Would that be a reasonable interpretation?

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

No, it is not reasonable at all. I was talking about sale, which is far in the future. Here we are talking about franchising initially three InterCity services.

I come now to the hon. Member for Kingston upon Hull, East (Mr. Prescott) and his press statement—the three-page news release which constitutes a summary of the Labour party approach to reform of the railways. Nothing that the hon. Gentleman has said, nor anything said by his hon. Friend who wound up, shakes my belief that the Labour party still believes in total state monopoly of British Railways, even the rail freight industry. Indeed, as my hon. Friend the Member for Rutland and Melton reminded us, we would end up with even more control, a national plan and a national railways commission. [Interruption.] The hon. Gentleman talks about nine quangos, but my right hon. Friend said that under our proposals the only new function is for the regulator. All the other functions are already operating. The Labour proposals call for greater state control and no role for the private sector. The core of the proposals is borrowing by British Rail not only for extra subsidy and extra staff, but for additional investment. The hon. Gentleman's document says, essentially, that British Rail should be allowed to borrow from the private sector and implies that that private sector borrowing should somehow be disregarded in the public sector borrowing requirement.

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

The Minister must know from the autumn statement that my idea of a proportion of leasing agreement—namely, 10 per cent.—would be the only amount considered for the private sector borrowing requirement. That is exactly what the Chancellor has done. One does not have to count it all in the public sector borrowing requirement to borrow from the private sector.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

The hon. Gentleman has never understood public expenditure accounting rules. I quote from what he said in the supply day debate on 12 January at column 782: The private sector will not participate —that is to say, lend money— without some guarantee from the public sector."—[Official Report, 12 January 1993; Vol. 216, c. 782.] Any borrowing from the private sector would not only be more expensive than borrowing from the gilt-edged market, but it would be ultimately a public sector responsibility and therefore count as public expenditure. The hon. Gentleman is asking us to take private sector money when it is ultimately the responsibility of the taxpayer to ensure its repayment, but he does not want the active involvement or management participation of the private sector which will change the culture of British Rail. The hon. Gentleman's approach is disregard for the taxpayer and the consequences of borrowing, disinterest in rail freight and little reference to the passenger. In the Labour party's document I can find only two references to passengers. It is all about state monopoly and making sure that the passenger gets the service that British Rail wants to deliver.

In the supply day debate, my hon. Friend the Member for Christchurch rightly said: I should like the Government to go about bringing in the private sector initiative, energy, ambition and imagination that all Conservative Members recognise are missing from the railway system at present"—[Official Report, 12 January 1993; Vol. 216, c. 809.] That sums up accurately the view on the Conservative Benches. The hon. Member for Kingston upon Hull, East wants the private sector's money but does not want private sector participation. We want to end the British Rail monopoly and bring in the private sector in partnership with British Rail both in terms of finance and in terms of operating the railways sytem so that we can develop the railways system further.

I find it very hard to perceive a consistent line from the Liberal Democrat party. The Independent on 17 September 1992 stated: Malcolm Bruce, the Liberal Democrat trade and industry spokesman, called on the party to support genuine competition that will increase choice and improve services and argued that co-operation between British Rail and outside is worth looking into, but Beth Graham from Skipton and Ripon told the conference that when she first saw the document she said, 'I thought it had got into the wrong envelope and should have been sent to the Conservative party delegate.'". The leader and the trade and industry spokesman of the Liberal Democrat party are at variance not only with their party conference but with some of their colleagues.

We want to see the development of a modern, competitive railway system which will be competitive because we want the private sector to compete in the franchising process. Already some 50 companies and 20 management-employee buy-outs have expressed an interest in running the services. That demonstrates the degree of interest in our reforms, and we have said that we will support British Rail in providing financial incentives to management-employee groups in bidding not only for parts of the freight industry but for franchises. We want a reliable railway network and a change in the culture—

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

The hon. Gentleman mocks it, but that is what our reforms will bring about.

We want there to be an attitude of mind that puts the passenger first—a "can do" attitude. My hon. Friends will support Government proposals which put the passenger first and will ensure that with the addition of investment and the participation of the management and employees of British Rail under new leadership, the quality of our railway system will be improved. The Opposition's approach is not to end the state monopoly, to make no change in the ownership of the rail system, but to have increased national planning and extra borrowing from the public sector. I ask all Conservative Members to support the Bill and I commend it to the House.

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

The House divided: Ayes 302, Noes 269.

Division No. 138][10 pm
Ainsworth, Peter (East Surrey)Beresford, Sir Paul
Aitken, JonathanBiffen, Rt Hon John
Alison, Rt Hon Michael (Selby)Blackburn, Dr John G.
Allason, Rupert (Torbay)Body, Sir Richard
Amess, DavidBonsor, Sir Nicholas
Ancram, MichaelBooth, Hartley
Arbuthnot, JamesBoswell, Tim
Arnold, Jacques (Gravesham)Bottomley, Peter (Eltham)
Arnold, Sir Thomas (Hazel Grv)Bottomley, Rt Hon Virginia
Ashby, DavidBowden, Andrew
Aspinwall, JackBowis, John
Atkinson, Peter (Hexham)Boyson, Rt Hon Sir Rhodes
Baker, Rt Hon K. (Mole Valley)Brandreth, Gyles
Baker, Nicholas (Dorset North)Brazier, Julian
Baldry, TonyBright, Graham
Banks, Matthew (Southport)Brooke, Rt Hon Peter
Banks, Robert (Harrogate)Brown, M. (Brigg & Cl'thorpes)
Bates, MichaelBrowning, Mrs. Angela
Batiste, SpencerBruce, Ian (S Dorset)
Bellingham, HenryBudgen, Nicholas
Bendall, VivianBurns, Simon
Burt, AlistairHargreaves, Andrew
Butcher, JohnHarris, David
Butler, PeterHaselhurst, Alan
Butterfill, JohnHawkins, Nick
Carlisle, John (Luton North)Hawksley, Warren
Carlisle, Kenneth (Lincoln)