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Mr. Bill Walker (Tayside, North) : The hon. Gentleman will be aware that Stagecoach is based in my constituency. Is he suggesting that it is not a good employer and that it has not done considerable good by the travelling public in my constituency? If he is, he does not know the people well or the benefits that have been received.
Mr. Wilson : I shall deal with Stagecoach later. However, I read in a transport magazine that, when there was discussion about whether a Hungarian company might buy out the Scottish Bus Group, a manager--the hon. Gentleman will be pleased to hear that it was a manager who made this disrespectful remark--suggested that he would rather work for Gorbachev than Souter.
I am sure that, as an upholder of law and order, the hon. Gentleman will wish to balance his remarks by giving
Column 981us a list of the offences of which that epic private enterprise company has been convicted since it has been operating on the highways and byways of Scotland.
The Scottish Consumer Council told me :
"We have no doubt that management-employee buy-outs run by people with a commitment to the communities that they serve will be the most effective means of protecting rural and off-peak services." As the Secretary of State has rightly said, the trade unions have voiced some support for the proposal because they see it as the best and probably the only way of defending the jobs and the conditions of their members.
Mr. Hamish Morrison of the Scottish Council (Development and Industry) is quoted as saying last year :
"Simply to offer assistance with drawing up a bid with no guarantee that management and employees will not be outbid by competitors with deeper pockets is wishful thinking. What is needed is a solid assurance from Mr. Rifkind."
We have not had that solid assurance tonight and, without it, the Secretary of State's presentation is worthless.
I wish to talk briefly about the English experience. Let us remember that, when the National Bus Company was privatised, there was a 5 per cent. discount offer to management-employee buy-outs. There is still no word of that in Scotland and it is perhaps a tribute to the Secretary of State's skill with words that he almost managed to make this sound like a bonus to the Scottish employees of the bus companies.
In England, the early sales of companies in the National Bus Company went mainly to management buy-outs with very little mention, incidentally, of employees. That was the early trend of the first 30 sales. Only a handful went to the existing private sector. Then the big guys realised that there was money in this and that these companies were being sold off at bargain basement prices. To help them on their way, the Government obligingly changed their rules under which the companies were to be sold.
A different picture then emerged. The Stagecoaches from north and south of the border started taking over the companies, so that, by October 1987, Bus Business again reported :
"Now it is unusual, not the norm, for managements to secure a buyout. And the true employee ownership approach, implicit if not explicit in the government's plans, has been seen in only three or four sales. The carefully controlled policy of promoting competition through privatisation has been faithfully espoused by the government in word but not in deed ... The industry grapevine is groaning with endless talk of companies that are secretly allied and of mergers deals and shadowy connections between others."
That is the reality of England and Wales at present. There is not the slightest reason to suppose that it will not become the reality in Scotland.
Mr. Nicholas Bennett : As the hon. Gentleman is quoting examples in England and Wales, will he explain why the president of the Bus and Coach Council, at its Eastbourne conference this year, was reported in Buses last month as saying that the industry is enjoying its new environment and its new role as an entrepreneur and was a "born-again commercial industry." He said that the industry was delighted that it was privatised and deregulated.
Column 982chairman of the Bus and Coach Council is. For all I know, it might be like the hon. Gentleman quoting in innocence the chairman of a Scottish health board.
It is already abundantly clear that the private sector will not sit back in Scotland and allow management-employee buy-outs to occur in the public interest. I am sure that the hon. Member for Tayside, North (Mr. Walker) would be appalled if that were the case. Mrs. Anne Gloag--I do not know whether she is any relation of the Famous Grouse, but she is the managing director of
Stagecoach--immediately announced :
"We certainly intend to consider submitting bids for all of the separate units when further details become available in the New Year."
That is the point at which the proud announcement by the Secretary of State that employee buy-outs would be entitled to the vast sum of £48,750 for a sort of bus-world legal aid is put into perspective. That sum is washers in the back pocket to such outfits as Stagecoach and others that these buy-outs will be up against. If that sum, plus a video, is all that the Minister has to offer, there will be precious few management-employee buy-outs.
I do not make a great issue of the origins of the companies that are doing the buying out. That is not the problem. I have mentioned Stagecoach, which is active down south. It is a transborder operation. It is a firm of couthie Scottish capitalists of the many-a-mickle-mak's-a-muckle school of exploitation. When Scottish bus employees are asked by whom they do not wish to be taken over, they respond unanimously, "Souter." So the question- - [Interruption.]
Conservative Members, whose wits are dim--"dimwits" is probably an unparliamentary expression--think it tremendously funny that I should be saying that workers in Scotland fear a Scottish capitalist as least as much as an English or outside capitalist. Anyone who knows anything about class politics as opposed to tartan trivia, and anyone who knows the history of Scottish industry and enterprise, will understand that there is nothing funny or unusual about that attitude. It does not matter primarily whether we are talking of an English company or a Scottish company. The important considerations are the motives and nature of the company, the services it provides and the conditions that it provides for its workers.
Mr. Rifkind : The hon. Gentleman has made an important statement which is at variance with the questions that were put to me by the hon. Member for Edinburgh, Central (Mr. Darling). It seems that he does not mind whether it is a Scottish company or an English company. He thinks that the consequences will be exactly the same, and he draws no distinction between the two. Will he confirm that?
Mr. Wilson : I think that the record will show that I said that I do not think that that is the first priority. The priority is the nature of the company and where the management is. With Stagecoach the money comes from Canada--
There is an interesting example of how Stagecoach has operated in the south by jumping on the privatisation gravy train. The hon. Member for Tayside, North greatly approves of Stagecoach. The company bought Hampshire Bus, and one cannot go much further south than that company. I am sure that the hon. Member for Moray (Mrs. Ewing) approves of that move as a piece of buccaneering Scottish capitalism. It bought the Hampshire company for £2.1 million. Two weeks later, it sold the bus station at Southampton for £4 million. Is that what the Secretary of State describes as the enterprise culture? Presumably the buying price for the Hampshire company was recommended by Government officials as being in line with Government policy.
Mr. David Marshall : Does my hon. Friend agree that it is disgraceful that the Secretary of State for Transport has refused to divulge any of the details of sales of individual bus companies in England and Wales? He said that at some future date we may get the global sum when all the sales have been completed. It is a common belief--I must confess that I am not sure whether it is a fact--that one company sold assets worth £6 million, which was much more than the sum paid for the entire company. That is an example of what is taking place all the time. Unless the practice is checked, it will take place in Scotland as well.
Mr. Wilson : Of course it will take place in Scotland. It is all part of the game. That is what it is all about. It is not about encouraging management-worker participation. Instead, it is about flogging off public assets.
The asset-stripping potential in the sale of the Scottish Bus Group is considerable, and especially in the sale of Eastern Scottish Buses, which will be watched extremely closely. That is because along with the bus group goes some valuable real estate. I have no doubt that my hon. Friend the Member for Edinburgh, Central (Mr. Darling) will wish to expand on that.
Many of my hon. Friends will refer to the concerns that exist in the areas that they represent and the implications of this petty piece of privatisation. They will tell the House that managements and employees generally prefer to maintain the status quo and are not interested in buy- outs, except as a pre-emptive strike. Our interest lies in protecting employees and consumers and maintaining standards of safety, service and efficiency. We believe that these standards are best protected by the status quo, which the Government choose to despise. We have no doubt that they will be least protected by the market force mentality of bus entrepreneurs.
There is already an example of entrepreneurship in Scottish transport. In 1985, the Government sold a company called MacBrayne Haulage to the private sector. By any standards, it was a seedy privatisation. It demanded many answers and it attracted only a few. MacBrayne Haulage was a branch of the Scottish Transport Group and it had a social remit and a special responsibility to serve the isles. It had a modern fleet of vehicles. It had a depot in Blochaira road, Glasgow, which had a substantial value. It was estimated that the company's assets were worth £1.5 million. It was a tasty morsel for one of the entrepreneurs whom the Government are so anxious to encourage. As a result, the Government privatised the company.
Column 984The privatisation took place before I became a Member of the House, but sitting on the Government Front Bench during the relevant period was Mr. John MacKay, sadly now departed to other places. Mr. John MacKay advanced much the same case as the Secretary of State adduced tonight. He talked about greater efficiency and competition and sweeping out the cobwebs of public ownership and introducing thrusting, dynamic private enterprise.
MacBrayne Haulage was put up for sale and it did not attract much interest. It is not clear to this day whether there was one offer or two. The Scottish Office said that there were two, but the second was never identified. There was certainly one offer, however, and it came from a Mr. Bill Walker of Kildonan Transport. He is another couthie entrepreneur. Alas, he is not a constituent of the hon. Member for Tayside, North. Such entrepreneurs must exist elsewhere as well. Mr. Walker put in his bid for MacBrayne Haulage, only to find that it was refused. By a strange circumstance, Mr. Walker shared the same firm of financial advisers as the Scottish Transport Group, which had been ordered to sell off the company. Doubtless it was all completely above board. Kildonan Transport and the Scottish Transport Group went into a huddle. Lo and behold, this time round a deal was struck. The £1.5 million assets of MacBrayne Haulage were transferred to Kildonan Transport for a figure reported at the time--it has never been denied subsequently, although it might be on the high side--of £450,000. Mr. Walker was asked whether he thought that he had secured a bargain, to which he replied, memorably:
"It would be a stupid man who did not think that."
He added that he had been looking for a device that would enable him to stop paying tax. He had assumed that MacBrayne Haulage was a loss-making concern. Instead, when he examined the books he found that it was a profitable business with tremendous potential. As a result, he bought it for £450,000. It was calculated immediately that within two years he would be able to recover his outlay and have in excess of £1 million of assets, after taking depreciation into account. It was asked, "How could this happen?" It was private enterprise at its best. This week, slightly on the long side of two years, Mr. Walker is negotiating with a company in Bradford. I expect the sale of Kildonan Transport to be finalised within the next few days for a sum in excess of £1 million.
That is what privatisation is about. It is the ripping off of public assets by a combination of greed and incompetence. If such things were to happen in the private sector, it would be defined as corruption. If a trustees or solicitors handled a person's assets in the same way as the assets of MacBrayne Haulage were handled by the Government, there would be an outcry and an investigation. The Public Accounts Committee should set up an investigation into the circumstances under which MacBrayne Haulage was privatised. I must refer to Caledonian MacBrayne. To some extent we must welcome what is before us. We must welcome the fact that at least in that case the petty doctrinaires have had to retreat because of political pressure and, more important, because of community pressure. When faced with the prospective loss of lifeline services or the handing over of lifeline services to a seaborne Mr. Billy Walker or Stagecoach, islands people of every political persuasion
Column 985said that they did not want that under any circumstances. At that point, the Secretary of State, unusually, had to listen.
The Government went along to their tame Tory consultants and asked for a way to privatise the ferries. They asked for a solution that could be put as credibly, if that is how we can describe the Secretary of State's comments tonight, as the selling off of the buses.
My hon. Friend the Member for the Western Isles has established that the cost of the Pieda report was £20,597. Frankly, the Government might just as well have thrown that little dose of public money in the Minch. The Pieda report provided the Government with a few options, but even by their standards, the Government realised that they could not get away with the recommendations. Of course the Government had to cover up their embarrassment over the report and the climbdown on privatisation of ferries.
A continuing threat hangs over two of the services, Gourock to Dunoon and Wemyss bay to Rothesay. The arguments about that should perhaps be left to another evening because those routes will not be affected in the near future and we hope that they will not be affected at all. However, it is nonsense to continue to talk about privatising two of the more economically viable routes within the CalMac network. The only ground for privatising them is that they are reasonably economically viable. However, the inevitable corollary of privatising viable routes is that the less viable routes would require more subsidy because they would have lost the balancing factor of the Clyde services. Alternatively, the level of service would diminish.
If the Clyde services are taken out of the public sector and the integrated Caledonian MacBrayne company, the result will be a diminution of service through the rest of the network or an increase in subsidy from the public purse. Why should the Secretary of State wish to go down that road? If the Government try that, they will receive the same response that they received in the early 1980s when they tried to privatise the Gourock-Dunoon route. Hell hath no fury like Tory ladies on the Clyde when they are threatened with the prospect of standing on a pier waiting for a ferry that does not come on a wet Tuesday in February. I believe that it was the former Member, Mr. Michael Ancram, who went to Dunoon on that occasion.
Mr. Wilson : It was the Secretary of State. Well, whichever Minister it was, he retreated in some disarray and I do not fancy the chances of the present Under-Secretary of State for Scotland against the Tory ladies on the Clyde coast.
Arising from the proposal to privatise the routes in future is the proposition that the headquarters of CalMac should be moved away from Gourock. We should not prejudge that idea in advance of reasoned debate. My hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham) will deal with that matter. The headquarters have been built up over 20 years and 110 people are employed there. Why on earth should they be uprooted? If one is sitting in Barra or Stornoway, the headquarters of CalMac are at the end of a telephone. It does not greatly matter where the headquarters are
Column 986located. If on the other hand one is sitting at the end of a phone in Arran, Rothesay or Dunoon, it is no greater convenience to have the headquarters moved to Oban. That must be considered and unless there is a very good reason for change, which I have not yet heard, matters should be well left alone.
This Bill is petty. It will not rock the firmament of society. It is an irritant and it will provoke insecurity. It improves nothing. We will try to improve it in Committee, but we weep for the fact that valuable, legislative time on Scottish affairs, which could have been used to better the living standards of the Scottish people, will be frittered away on this ideological nonsense which is unasked for and unwelcome.
Sir Hector Monro (Dumfries) : If the past 40 minutes are an indication of the new furious forty-niners, for goodness, sake bring back the hon. Member for East Lothian (Mr. Home Robertson). We have heard a tirade about nothing, and if ever someone was trying to stir up the reason for a three-line Whip on a Bill that is patently required by the Scottish public, the last 40 minutes of sheer boredom show just how far from reality the hon. Member for Cunninghame, North (Mr. Wilson) has strayed. As the Opposition Front-Bench spokesman, he must bear in mind his responsibility for parliamentary privilege and not make comments about companies and individuals unless he is absolutely sure of his facts. Hon. Members have always been very careful not to breach parliamentary privilege when they are on the Front Bench.
I welcome the Bill, and I believe that the majority of the people in Scotland will also welcome it. We all know that rural and urban public transport is extremely important in Scotland. To most, of course, it means rail and bus transport. Many, as the hon. Member for Cunninghame, North admitted, have private motor cars. We welcome that and it shows the improvement in the quality of life throughout Scotland. To many, that transport means ships or ferries. It also means transport by air where that is appropriate.
The Government's actions about CalMac were right. They are also right to demand better services with more acceptable timetables than at present. We want more convenient timetables. Heaven knows, it is difficult with the island services to provide that. However, if we are to develop tourism and industry in the inner and outer islands, we must have more convenient services than at present.
Tourists may want to visit an island for a day. They may want to visit Rhum, Eigg or Canna. It is particularly difficult to visit such islands, do something and come back the same day.
It is right that my right hon. and learned Friend the Secretary of State for Scotland should set as his target much higher standards and better services and facilities than we have at the moment-- [Interruption.] I wish that the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) would stick to his own Front-Bench responsibilities, about which he seems to know very little.
Column 987I note and welcome what my right hon. and learned Friend has said about the amount of investment in CalMac since 1979 --£22 million. His announcement about Vatersay tonight shows his determination to help all communities of whatever size. I am sure that he will help that island and particularly the movement of stock, which has been so difficult in the past.
My right hon. and learned Friend was right to proceed in the way that he did in relation to CalMac because that is a socially necessary service and difficult to run at a profit. He must move with caution until the situation is right to take further steps forward. The Bill does not cover air transport, although in a broad sense that is Scottish transport as well. The privatisation of air services in Scotland has been valuable, and we have a better and more competitive timetable as a result.
Rail and bus services are most important to those wanting public transport. British Rail has been subjected to a great deal of criticism. An all-party group of hon. Members and representatives of trade unions in south-west Scotland and Ayrshire had satisfactory discussions with British Rail and local authorities, and the rail service is now very much better than was anticipated a year ago. With the new sprinters and other improvements, British Rail has shown its determination to provide the British commuting public with a better service. We should not constantly slam it when it is trying to improve its service and, indeed, is meeting with some success. The hon. Member for Cunninghame, North had only miserable criticism to offer the House. Had he listened to my right hon. Friend's statement on investment in roads during recent years, he would appreciate that it is very substantial. It includes preparations for the completion of the M74--
Mr. Deputy Speaker (Mr. Harold Walker) : Order. I know that we have a wide debate on Second Reading, but I remind the hon. Gentleman that there is nothing in the Bill about British Rail or about roads.
The Bill is an important step forward in an integrated transport system. There will be greater competition and a greater variety of routes and buses, from minibuses to double deckers. The school system will have a greater choice of buses with various carrying capacities.
There has been a great increase in mileage since deregulation. Services have been improved, yet they are being provided at a lower cost. That is the best of both worlds. My right hon. Friend is right to transfer ownership of the Scottish Transport Group to a selected group of companies. He has decided how the groupings should operate. I note with interest that Dumfries and Galloway--currently run by Western--are to be linked with Clydeside. That will give us 750 buses and about 2,000 employees. It should be a thoroughly valuable operation and well worth the great interest in both areas being shown in a management-employee buy-out.
Column 988I note from the local newspapers that the area manager in Dumfries, Mr. Bill McGowan, is "happy with the proposals." Mr. George Watson, the general manager in Clydeside, said :
"We could be bigger than ever."
The 210 employees in Dumfries have been putting aside part of their wages towards a management-employee buy-out. They, together with those employed in Clydeside, hope that the headquarters will be at Kilmarnock, which was the centre for Western for many years. The management and the employees have a positive wish to be involved in future operations and are keen to be involved in a buy-out. I have written to Western offering to help in any way that I can. I shall pass on information from my right hon. Friend about his preparations to ensure that the employees have the necessary information on how to proceed towards a management-employee buy-out. Such local enterprise will be warmly welcomed in Scotland. It was wrong of the hon. Member for Cunninghame, North to hint that privately operated buses might be less safe than the current Scottish Transport Group buses. He knows that the Scottish traffic commissioners and the police would be extremely concerned if any of the regulations were breached by any bus company, of whatever ownership.
Mr. Wilson : The hon. Gentleman must recognise that my remarks were about a possible threat to safety, and I stand by what I said about competitiveness on the roads. Anyone who has driven on a Scottish trunk road knows that buses shoot past each other at very high speeds. My concern has nothing to do with party politics ; it is simply concern about road safety because of the way in which those buses are driven.
Sir Hector Monro : Is the hon. Gentleman implying that buses owned by the Scottish Transport Group are being driven at slower speeds than those of individual operators? He certainly gave the impression that the safety record of Stagecoach was not as good as that of other companies. I dispute that. I have no interest in or knowledge of Stagecoach, other than that it is a jolly good Scottish company that is doing very well. Indeed, it runs a company in Cumbria, and I understand that that is working satisfactorily. Opposition Members are opposing a thoroughly good Bill. The hon. Member for Banff and Buchan (Mr. Salmond) likes throwing stones in glasshouses when he is here and the other 71 Scottish Members are not. He is not here tonight to debate an important Scottish Bill. He should be careful about his comments, because they do him no good.
My right hon. Friend made it clear that the pensions of all those involved would be guaranteed. I hope that in Committee we can discuss why bus complaints are dealt with by the Scottish Consumer Council rather than the Transport Users Consultative Committee. It would be better if complaints about buses were handled by the consultative committee. The bus aspect should not be hived off. It would be better to have all the transport complaints under one umbrella which would benefit the passengers.
I give my right hon. Friend 100 per cent. for introducing the Bill. I wish it a speedy passage through Committee. I should be surprised if the Opposition did not realise their mistake in opposing the Bill on a three- line Whip. The Scottish people are looking forward to its success.
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Mr. John McAllion (Dundee, East) : The hon. Member for Dumfries (Sir H. Monro) showed no little irritation about a three-line Whip for this Bill. I can guess the reason for that, and it is not because of the nature of the Bill. Like me, the hon. Gentleman is an office bearer of the all- party Scotch whisky group. The Scotch Whisky Association is holding an event this evening in Half Moon street and we have been invited to partake of Scotch whisky. The hon. Gentleman and I would have liked to take advantage of that invitation, and I am sure that that is the reason for his irritation.
The Bill deserves to be debated fully and should be opposed because, ultimately, it can only damage the comprehensive nature of the public network in Scotland. I will certainly argue that the Bill should not be given a passage through the House but should be opposed.
Mr. McAllion : Only two other Scottish Members received an invitation to the reception. Scottish Members will be elsewhere doing their work, as they always are if they are not in the Chamber. This is not a major Bill in terms of size. It has only nine pages and 18 clauses, and no schedules. But it is major in terms of its impact on a neglected area of Government policy, and that is the important area of public transport. It is neglected because whereas the Department of Transport has no fewer than 1,200 people employed on its road building programmes--the hon. Member for Dumfries referred briefly to that when he boasted of the Government's extensive road programmes--only 120 people look after the Department's strategic responsibilities for public transport. That ratio of 1,200 : 120 of civil servants responsible for roads and private vehicle users to those responsible for public transport works out at exactly 100 : 1, which reflects the importance that the Government attach to public transport and explains why they can introduce a Bill which can only damage public transport in future.
Few people would argue with the notion that the Government seek to create a society which is more dependent on private road transport than any other in Europe. To be honest, the Government have already succeeded in doing precisely that. Whereas the people in Germany make almost one third more journeys on public transport than 20 years ago, in the United Kingdom the reverse is the case. We are making 20 per cent. fewer demands on public transport than 20 years ago. I understand that one Minister even referred to the public transport industry as a sunset industry. I do not know exactly what he meant by that, but I assume that he means the same as Ministers who refer to shipbuilding, car manufacturing and heavy engineering in the same terms and that decent public transport will become a thing of the past if the Government have their way. It will decline into a skeleton service designed only for the unfortunates who cannot afford the convenience of a private motor car. It is certainly true that recent Government action has brought us perceptibly closer to that sorry scenario.
Perhaps this is not the time or place to talk about the merits of bus deregulation since 1986, but far from
Column 990reversing or even halting the long-term decline in public transport, the number of bus passengers, as distinct from vehicle mileage or bus operators about which the Secretary of State boasted, has continued to fall in the first year after deregulation, as the Scottish Consumer Council has pointed out.
The immediate impact of deregulation on the Scottish Transport Group was to force the company to cut its bus fleet, to close its engineering and depot facilities and to issue redundancy notices to hundreds of staff. Those are hardly the measures that can be associated with reviving an ailing industry or improving the quality and frequency of bus services. They are the undeniable consequences of opening the bus industry to the operation of free market forces. That is the central question that divides us on the Bill. The Government insist that the answer to reversing the long-term decline in public transport and to improving the quality and frequency of services is privatisation and letting the market rip. We in the Opposition have the certain knowledge that these measures must damage the quality and frequency of services and will ultimately threaten the survival of a national public transport network.
I should like to set out some of the arguments which have persuaded me that it is important to oppose the Bill. There is the question of improving services to customers. In my area the bus market is dominated by three major companies. I live in Dundee in Tayside region and the three major operators are Stagecoach, the Perth-based company much beloved by the hon. Member for Tayside, North (Mr. Walker), the regional council's public transport company and Strathtay, which is a local subsidiary of the Scottish Bus Group. Together they account for more than 80 per cent. of bus services in Tayside. Some 30 smaller companies operate the remaining services. It is difficult to conceive of any of those 30 minnows mounting a serious challenge to the three major companies. Only Stagecoach is in the private sector, which explains why it is the one so beloved of the hon. Gentleman.
Mr. Bill Walker : I hope that the hon. Gentleman understands that I was reacting to attacks on a company which provides a good service in his constituency and mine. I feel just as strongly about Strathtay, which is also a good company.
Mr. McAllion : The hon. Gentleman has warm remarks for Strathtay, which he expects to be privatised in the near future, but he makes no reference to Tayside public transport which used to employ him as a bus driver. That is regrettable and I hope that he is equally enthusiastic about the public service. I will happily give way now and allow him to praise Tayside public transport for its service to the people of Dundee.
Mr. Bill Walker : The hon. Gentleman will be aware that there are still people working in the Tayside transport company whom I knew as a young man. I have no hesitation in saying that they and those who run it have done a good job. No one has ever heard me criticise them.
Column 991companies. Since each of the major companies concentrates largely on its own particular area of domination, it is difficult to conceive of even these three seriously competing with one another directly for any of the 80 per cent. of the services which they already control. For example, most of the local registered bus routes in the city of Dundee and in the province of the regional council's transport company are not seriously competed for by either Stagecoach or Strathtay.
I cannot see the case for arguing that privatisation of Strathtay will significantly add to the competition between bus companies in Tayside or that it will lead directly to the improvement of local bus services. Strathtay already stands in a competitive relationship with Stagecoach and the public transport company. The privatisation of Strathtay will do nothing to alter that relationship. The only difference is that while Strathtay remains in the public sector it cannot be subject to any takeover by another private sector company, whereas post-privatisation it will be subject to such a takeover. That is the only major difference arising from this privatisation measure, and it is an important one. The locally led bus company, which was much praised by the Secretary of State, will now be vulnerable to takeover bids either from Stagecoach in Perth--that would lead to a near-monopoly in Tayside and would, I hope, be unacceptable to hon. Members on both sides of the House--or from outsider companies such as the cash-rich predators from the south, about which we have heard so much. They are looking for rich pickings and quick profits in the Tayside area.
I can see no gains in improved services as a result of the Bill. The reverse is more likely. I quote from a document issued by the local management and employees of Strathtay. It says :
"We fear that where ownership could pass into other hands, then there would be a significant likelihood that profit maximisation would become the overriding objective, to the detriment of bus services on Tayside, and to the detriment of bus users on Tayside." Those people are correct to fear that happening in the aftermath of privatisation.
Where a commercial bus service is being run, a continuing and careful balancing act between the available resources of the company and customer demand for the service has to be performed. After the deregulation measures in 1985, no one is immune from such pressure, even the regional public transport company. As a result of these commercial pressures and the withdrawal of cross-subsidisation by the Government, one of the bus services in my constituency has had to be re-routed. That led to an outcry from the residents in the affected area, who saw a serious deterioration in their bus service as a result of the introduction of free market principles to the running of bus services.
While the bus companies are locally owned and managed by people with a real commitment to the local bus industry and its users, incidents of this kind will be kept to a minimum. What will happen if the bus company is owned from outside, and there is no real commitment to the needs of the local people? What will happen if local bus operations are viewed solely as a means of maximising profits, or as assets that are ripe for stripping when the profits no longer flow? What will happen when investment is seen not as a guarantee of securing a future for expanding bus services but as something to be kept to a
Column 992minimum because it interferes with profits? What will happen when staff reductions and significant fare increases are seen not as defeats but as victories for the free flow of market commercialism? There will be a gradual decline in the frequency and quality of public bus services in areas such as Tayside.
If the Minister is sincere in saying that this should not happen, he must take the necessary steps to prevent the realisation of the one potential major development for which the Bill provides--the takeover of a locally based indigenous Scottish Bus Group by cash-rich predators from outside the area where the group is located. That such a threat exists is certain.
Bus Business has already been referred to several times. It is a management fortnightly publication for those in the bus and coach market. In an article last August, it gave detailed information of a new group with the acronym SEBIL, which stands for the South East Bus Investments Ltd. This consists of five former National Bus Company subsidiaries that have been privatised under management buy-outs and taken over by outsiders. They freely admit that they have come together to combine the resources of the member companies and to take advantage of future bus industry privatisations, including that of the Scottish Bus Group. Their clear aim is to make acquisitions as opportunities arise and if the Bill becomes enacted in this form, those opportunities will arise in areas like Tayside. If the hon. Member for Tayside, North wishes to see indigenous Scottish companies remain as they are, he should take that on board and be wary of it. In the same edition of Bus Business, it was revealed that Mr. Robert Beattie, who happens to be the chairman of a group known as Frontsource, and who has already purchased several National Bus Company operations, is now preparing to bid for parts of the Scottish Bus Group. These examples show that southern England-based conglomerates are forming with a view to cashing in on the privatisation of the Scottish Bus Group. Many of them have already acquired, via management buy-outs, not employee buy-outs, National Bus Company subsidiaries at 50 or 60 per cent. of asset value. It was strange to hear the Secretary of State insist that, if there were to be successful management-employee buy-outs, their bid must be commensurate with the asset value of the companies for which they were bidding. In the National Bus Company in England, the management groups, which had no employee participation, were given the assets at half their face value-- give-away prices, knock-down prices--but that is not to be the case in Scotland. That speaks volumes for the different treatment handed out to the Scottish management-employee buy-outs. These predators now have large cash reserves and borrowing powers and those pose a real threat to the continuing independence of the Scottish bus service. If the Secretary of State was serious in saying that the Bill provides a basis for creating a vigorous new Scottish companies, he has to address himself to the threat posed to those companies by the home counties-based predators.
It is not enough to promise financial assistance to management employee teams. It seems strange that, in the event of a management-employee team retaining professional advice and spending up to £75,000 on it, and in the event of its bid failing because, for example, a member of South East Bus Investments Ltd. is successful, the Secretary of State will return to the failed bidders
Column 993£48,000 of their own money. That hardly compensates for losing control of their own company and being prey to whatever comes into the minds of the predators from the south who have taken it over. The Secretary of State has not in any sense provided the kind of guarantees we sought.
It is not enough for the Secretary of State to say either that he wants to give preference to bids from management-employee teams. Wanting to give them preference is very different from actually giving them preference. The Secretary of State said nothing to suggest that he will do that. He must guarantee that, if management-employee teams can put together a financial package commensurate with the value of the public assets involved, he will not sell those teams and their companies down the river and allow the companies to be sold to a higher bidder elsewhere.
The other evening, I was reminiscing with my hon. Friend the Member for Dundee, West (Mr. Ross) about the days before the Scottish Bus Group was formed, and even before the old Alexander buses were brought into public ownership. He reminded me how hard were those times for the employees, who worked long hours for low pay and were constantly under threat of dismissal for offences as trivial as leaving a top shirt button undone.
When the companies came into the public sector, there was created the strength that comes from the joining together of workers from all over Scotland employed in the newly nationalised industry, which put an end to that particular brand of management bullying. Everything improved--wages, working conditions and the way in which employees were treated by management. The hon. Member for Tayside, North acknowledged the truth of that. He worked for the Dundee corporation bus group in the public sector and was given fair treatment as well. Those improvements were secured by combining with other bus workers throughout Scotland, usually through the Transport and General Workers Union.
The Bill worries me because it will divide the workers. Employees of other individual companies may no longer be seen as allies but as a threat to one's own job because they are competing for whatever services are provided locally. What is euphemistically called the right of management to manage, really means the right of management to impose upon workers conditions that they do not want. Rather than be fought against by workers collectively, such impositions may be slowly but surely conceded by workers in individual companies in competition with one another. I hope that I am wrong, and that the unions will be able to hold the line and to resist any deterioration in wages and conditions of service. Experience suggests that whenever there is privatisation there quickly follow cuts in wages and poorer working conditions for those workers involved.
Our votes will not be sufficient to prevent the Bill receiving its Second Reading tonight or to stop privatisation. However, I hope that the Minister has listened, and that he will respond to the need to protect the local character of the newly formed private companies and the Scottish character of those companies. I hope also that the right hon. Gentleman will recognise that the companies must remain indigenous, Scottish-based