rose to ask Her Majesty's Government whether the possibility of a world shortage of oil should influence strategic plans for the electrification of a greater part of the railway system.
My Lords, before speaking I must declare my interests as a member of the Strategic Rail Authority and of the Commission for Integrated Transport. Neither body has been involved in any way in preparing what I have to say. As my membership of those bodies and my membership of your Lordships' House has from time to time been a matter of contention with officials, I have informed the Minister and the chairmen of both bodies of my intention not to seek reappointment to the SRA in June when my appointment expires, and to resign from the Commission for Integrated Transport at the same time. I have always observed the Addison rules assiduously and I do not want to embarrass either chairman for whom I have the greatest respect.
I put forward tonight's Unstarred Question for debate at the time of the fuel crisis last year. At that time, it became evident that if oil fell into short supply, industry, commerce and personal journeys would quickly become adversely affected.
I do not intend to revisit the fuel crisis. It may be that the Government, through robust action, would have been able to stabilise the situation at least by directing available oil supplies to priority users so that the country would not have ground to a halt. I sincerely hope that that would have been the case because I have no desire to see the government of the country subverted by those who would use non-democratic means to achieve their ends.
The fuel crisis gave us the opportunity to consider how dependent our transport systems--road, rail and air--are upon oil. It also called to mind a conference that I attended in the late 1970s which included representatives of major oil companies, where the possibility of what they called a geo-political accident in a major oil producing area--presumably the Middle East--would destabilise world oil supplies. We have since experienced the Iraqi invasion of Kuwait. The Middle East remains vulnerable to political destabilisation, as do other oil-producing areas, and OPEC has the potential of any cartel to exert great pressure upon dependent consumers.
My object tonight is to consider, and to invite the Government to consider, the strategic implications of a sustained world shortage of oil and particularly the implications of that for Britain. I want to focus on the part that an electrified railway system might have in mitigating those effects.
Only 38 per cent of the British railway network is electrified. In the 1999 Network Management Statement, Railtrack forecast that that is likely to grow by very little over the next 10 years. Meanwhile in Europe, where we face great competitive pressure, France has 45 per cent of the network wired up, Germany 49 per cent, Italy 65 per cent, Holland 73 per cent, Belgium 74 per cent and Switzerland 100 per cent.
Apart from the fact that a small part of our railway network is electrified, we have seen a tendency for new investment not to use the potential of that part of the system which is so equipped. Almost all new freight locomotives are diesels. The Virgin bid for the East Coast Main Line franchise includes the use of powerful diesel trains. New trains used by Anglia Railways between London and Norwich--a wholly electrified line--are diesels. So in considering whether an electrified railway has a significant role to play in providing an alternative to the use of oil as a fuel, we must consider the provision of new rolling stock as well as the infrastructure.
In 1980, when I worked for the British Railways Board, the Department of Transport and the board published a review of the case for main line electrification. That concluded that a substantial programme of main line electrification would be financially worth while, with all the larger options showing an internal rate of return of about 11 per cent. Those forecasts were based on traffic predictions well below those considered likely at the time.
That review proposed that a large fast option be adopted to be completed over 20 years. It included the East Coast Main Line as far as Edinburgh and Aberdeen; a trans-Pennine route, a cross-country route between York and Bristol and to Reading and most of the Great Western Main Line. Of that only the East Coast Main Line has been completed as far as Edinburgh.
In addition, small extensions to electrification have been made around Birmingham and Leeds. The review suggested that up to 80 per cent of passenger and 70 per cent of freight would be electrically hauled. Part of the proposition was that three or four teams should be assembled to carry out a continuing work programme over 20 years. Industry would equip itself and train people to carry out the work.
"Electrification is off the SRA's agenda".
He went on:
"In 21st century Britain, extension of railway electrification is both difficult to implement and hard to pay for and in no one's commercial interest".
He goes on to explain the fact that Railtrack would have to pay compensation for the disruption caused while the work progressed and that rolling stock leasing companies would rather build versatile "go anywhere" diesel trains than electric trains, which are more limited in their deployment capability.
Roger Ford goes on to quote from the reply to a letter sent to the SRA asking about the prospects for electrification. The reply states that,
"future electrification is likely to depend on comparative prices of energy and maintenance costs".
In that case, Mr Ford concludes, that the strategic case for the extension of electrification is weak.
Investors, be they private investors or those spending public money, work within the constraint of earning a return on their investment over a relatively short time-scale. They use financial discount rates which place great emphasis on the short term. Where social benefits are involved, these must be clearly identified and costed. Where the benefit is uncertain and strategic in nature, such as defending the nation from the effects of an oil crisis, the benefits are such that they cannot be accommodated within our present systems of financial appraisal.
We now come to the nub of the argument and the reason for tonight's debate. If as a country we are prepared to spend large sums of money under our military budget to secure our oil supplies, surely there is an argument for spending a very small proportion of this money in providing for a largely electric railway which would offer an alternative means of transport to many people and to freight users if oil suddenly became short.
If the Strategic Rail Authority were told to prepare with Railtrack, the train operators, and the rolling stock companies a 20-year programme of electrification and to build that into the franchise programme, the issue to be addressed is the cost that would be added to the modernisation which is in prospect already. To put that clearly: what costs would arise over and above those of a mainly diesel railway?
This extra money is, in effect, a strategic supplement. We ought to know what it is and whether it is a premium we are prepared as a country to pay to defend ourselves--in part--from the effect of an oil shortage.
My purpose tonight is to ask the Government to ask the SRA what amount of money is involved and to ask themselves, in a strategic sense, whether this premium would be worth paying. I do not know whether it is, but I am sure that it would be a fraction of our defence budget. In preparing for tonight's debate, I tried hard to discover the cost of maintaining the no-fly zones in Iraq. I can assure your Lordships that it is very high, but several Questions tabled by honourable Members in another place have failed to produce a figure to put before the House tonight.
I believe that it would cost little to find out the answer to my question from within the railways. I believe that government, as they are responsible for the defence of the realm, ought to know and ought to give serious consideration to the issue.