Orders of the Day — Railways Bill

Part of the debate – in the House of Commons at 7:40 pm on 2 February 1993.

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

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.