House of Commons Hansard Debates for 18 May 1992

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statistic about 93 per cent. of the country's commercial traffic going by road. Will he confirm that that includes the postman, the dustman and the milkman, to name but three? As far as I know, no one is proposing to build railways into every house and home in the land. May I say to him in his new post ; beware civil servants bearing statistics, because very often the statistics produced by the Department of Roads--I mean, the Department of Transport--are prepared to prove a case to him.

May I try to take my right hon. Friend with me? Does he agree with the proposition that we all know where we are at the moment with the ownership and operation of our railways, that we know where we want to get to but have no idea how to arrive there, so we are introducing a paving Bill and shall introduce a White Paper later this year, discuss its contents and then introduce legislation? Would that be a fair or an unfair assessment of the situation?

My right hon. Friend again used the word "franchise" this afternoon. I wonder how many of us know what is meant by "franchising" in terms of the future of the railway. Many hon. Friends and members of the Opposition will know that for many years I have been involved in a major hotel group, probably one of the main franchised organisations in the world. Any proposition purporting to suggest that railway franchising can be undertaken on the same basis as that carried out by, say, Holiday Inn or McDonald's is unlikely to be taken seriously. We are entering uncharted territory. It is as well to put these issues on record--that is not to say that solutions cannot be found, but we are entering uncharted territory. As my right hon. Friend said, our manifesto had three main aims. He mentioned a fourth and a fifth, but the three main ones were to franchise passenger services, to sell the freight business and to liberalise access to the network. May I put a simple thought in my right hon. Friend's mind? There is a potential conflict between selling the freight business and thereafter liberalising access to the networks. Does that mean selling a part of the business to a company but saying that it will nevertheless be open to competition in the future? By selling the freight business, do we mean to create a national freight monopoly as the Japanese have done, or do we mean something different? There is an enormous number of questions to be asked.

My right hon. Friend the Secretary of State for Transport touched on the possibility of certain private sector operators coming into the business. We often hear about Virgin Airways. I sometimes find it hard to agree with the hon. Member for Kingston upon Hull, East (Mr. Prescott), but I am forced to agree with him on occasions. He raised the point, which I raised in debate last week and which I make again to my right hon. Friend, that it would be unacceptable for us to create conditions in which the private sector had access to funds, and conditions of financing and operation which were not available to British Rail. That would be a foolish thing to do.

It is no wonder that Mr. Branson is reputedly interested--I do not know whether he is interested, because, despite three attempts to contact him, I have never had a reply--in the east coast main line and in the London to Edinburgh services--

Mr. Prescott : London to Aberdeen.

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Mr. Adley : The hon. Gentleman says that it is London to Aberdeen. I thought that it was London to Edinburgh. It is probably part of Mr. Branson's continuing vendetta with Lord King, who runs the airline services on that route.

There has been £500 million of public sector investment in the east coast main line. Is it really in the national interest for us to allow cherry pickers to pick off the bits that they think that they would like? There may be a case for the regulator, or whoever will make such decisions, to say to the operators : "Yes, you pick the services that you want to quote for and we will give you one as well. If you want bits of the east coast main line, you can have the Dartford loop line too." We could then see the measure of their commitment to public services.

I will not repeat the points made by the hon. Member for Kingston upon Hull, East. My right hon. Friend's predecessor as Secretary of State claimed, with every justification, that our European competitors and others are rushing here for lessons on how we run our railways. It is perfectly true that the train kilometres per member of staff employed on British Rail reflect favourably when compared with the figures for SNCF or Deutsche Bundesbahn. That is a comment on the quality of management of British Rail rather than on what may be done in the future.

It would be unwise for the debate to proceed without putting on record the fact that some of the other countries that have considered railway privatisation have wholly rejected it. The Japanese are frequently mentioned. I took the trouble of talking to them. They told me that I was the first British Member of Parliament who had ever bothered so to do. I drew up with them an agreement so that I was clear that I understood what they had done. I have that agreement here, but I will not weary the House by quoting from it. The Japanese have not privatised their railways ; they have restructured them, and they have created six regional public sector passenger monopolies and one public sector freight monopoly.

In Germany, Helmut Kohl set up a Government railway commission two years ago to study the relationship between the German state and the railways. After 18 months, the Germans have rejected privatisation. Helmut Kohl is not a raving socialist. He was looking for a solution to the problems of the cost of the German railways to the German taxpayer. He did not find the solution in privatisation.

Sweden has been mentioned. Sweden has set up a corporate railway, but all the shares are held by the state and there is no intention of trying to sell off those shares. SNCF, as we know, is the pride of France. As I pointed out in Question Time to my right hon. Friend the Secretary of State for Transport, even the Americans--the United States is the home of capitalism--had allowed their private sector passenger railways to fall into such a state of total disrepair and awfulness that the passenger railways have been virtually nationalised by the creation of Amtrak.

There must be lessons here for us. My plea to my right hon. Friend is not to judge what he intends to do by the privatisations that we have effected in other industries. He should look at and learn from the experience of other countries whose state-owned railways also cost them a great deal of money and which have also had the benefit of studying the position, but have come to their conclusions after, and not before, they have considered the pros and cons, and the possibilities of what we are about to do. I will

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not discuss the Stagecoach experiment or the experience of my hon. Friend the Minister of State. However, they show that opportunities exist within the present framework and that ownership of railways is not the real nub of the problem.

I issue a friendly warning to my right hon. Friend. Many of our constituents use the railways. British Rail carries 2 million passengers daily. Some 458,000 of them come into and out of central London between 7 am and 10 am. Unlike the gas, water or electricity industries, which are turned on and off by the twist of a tap or switch, the railways are a "people" industry. People catch their train from their station and they talk to the staff. We must be very careful that we do not do anything that causes serious

disillusionment among the public if our proposals fail to continue to provide them with at least the minimum level of service to which they have been used.

The Bill is a paving Bill and we have a long way to go. By way of reference to reality as opposed to theory, I will ask my right hon. Friend the Secretary of State one or two questions. I presume that he will start with what I call the "easy" bits of privatisation--the retail side of the relationship between the railway and the passenger, such as car parking, catering, on-board staff and the termini. No one doubts that there could be improvements there or that there may be a role for private sector finance and private sector management. We then come to the far more difficult part of the task--what one might call the "production" side of the railway, such as drivers and the maintenance of rolling stock. I speak now to my right hon. Friend advisedly and after personal contact. He should not assume that all trade unionists in the railway unions are wholly opposed to everything that the Government propose. He should not assume their hostility. He should recognise that some of them are open to discussion. Will my right hon. Friend--I do not expect an answer now--consider at an early date having meetings with some of the trade union leaders, not necessarily those of the previous generation, but those of the next generation who have been directly elected by secret ballot among their members? He might then be favourably disposed to realise that some of them are interested in only one thing--a good railway and making a good railway better.

We have an awful lot of questions to ask. We must consider British Transport police. Who will pick up the bill for the £82.8 million that British Rail had to spend on its police force last year? Who will pay for the enormous heritage costs with which British Rail is involved? Is my right hon. Friend aware that last year alone £7 million had to be set aside by British Rail for safeguarding the structure of the St. Pancras station hotel? That is just one building, and there are hundreds that need to be funded.

My message to my colleagues is this : let us not concentrate only on the political aspects of railway ownership and railway activity. My right hon. Friend was courteous enough to say that he recognised that his Department must examine the investment criteria for road and for rail. I should have liked him to be a little more positive. I should have liked him to say that in his new job he intends to start again with a blank sheet of paper. I should be grateful if he would consider casting aside all the things that he has been told about the criteria and methods used by his Department and start again in the light of the social requirements of the railway as we approach the 21st century.

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The docklands have been mentioned. Some £400 million is anticipated from Olympia and York before the Jubilee line can get the go-ahead, yet £250 million of taxpayers' money was put into 1.5 miles of the Limehouse link road. That was automatically coughed up by the taxpayer and no questions were asked. That is the sort of double standard that many of us hope that my right hon. Friend will re- examine as part of his remit as Secretary of State for Transport. My right hon. Friend the Prime Minister was generous to me before the election in giving me plenty of time to put forward to him privately some of the views that I put to the House now. He asked me at one stage why I was so keen to defend a nationalised industry. I said that I was not keen to defend a nationalised industry but that I was keen to defend the railway, which I believe to be the last means of civilised travel known to man.

We have much to lose. There is much at risk : a national timetable, through ticketing, interchangeable tickets, national products such as travelcards, senior citizens' concessions and facilities for disabled travellers. Many people, including pensioners, anxiously await answers to questions concerning those services.

I have described railway privatisation as a potential poll tax on wheels. I am glad to see that the words "railway privatisation" are not included in the Queen's Speech. I take that to mean that there has been a reduction in dogma but that the Government maintain a determination to try to improve the railway service. I accept that that is the intention of my right hon. Friend and his colleagues and, for that reason, I have no intention of voting against the Bill ; but, before I can be persuaded to vote in favour of a Bill that may be presented to the House later this year, I shall need to be convinced that my judgment of my right hon. Friend's intentions towards the future of our railways is backed by the words of the legislation that they produce.

5.10 pm

Mr. Alan Williams (Swansea, West) : As one who is sponsored by the Transport Salaried Staffs Association, I always enjoy hearing what the hon. Member for Christchurch (Mr. Adley) has to say about the railway industry. I apologise to him if I do not follow his arguments today. I shall touch briefly on one aspect of the railway industry but I have been prompted to take part in the debate principally because I am concerned about the implications of the form of the Bill for the House of Commons.

I have always had a high regard for the Secretary of State in his various offices and thought that he was a good Leader of the House. That is why I find it sad that, as the ex-champion of Back Benchers' rights, he has come to the House today with a Bill that is a constitutional obscenity. I am deeply sorry that he comes here today as the ex-gamekeeper--the ex-leader who has become leader of the poachers.

As I shall show, the Bill is utterly in keeping with the arrogance and contempt that the ex-Prime Minister always showed to the House. The Secretary of State referred to the Bill as a "standard form" Bill. That is how democracy and the rights of the House are eroded. It is standard form, is it? I remind the right hon. Gentleman that this so-called standard form was introduced in 1988 when the former

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Prime Minister, with typical disregard for the House, wanted to drive through her measures relating to the electricity and water industries.

The Bill represents another step in the erosion of the powers of the House. I ask hon. Members--particularly new Conservative Members, who, I understand, are full of excitement at being here and full of conviction that their party must be right, to look at the form of the Bill. I ask them what they would say had a Labour Minister introduced a Bill containing powers anything like as obscure or general as the powers contained in the present Bill.

Clause 1 states :

"Where the Secretary of State is at any time proposing that any functions, property, rights or liabilities should be transferred the functions of the relevant corporation shall include the power to do anything appropriate for facilitating the implementation of the proposal."

Then comes the provision which I think should be unacceptable to the House, and above all to the Secretary of State. Clause 1(5) provides that "the powers"--that is, the powers now given to those industries--

"shall be exercisable whether or not Parliament has given any approval on which the implementation of the proposal depends". Only in one other piece of legislation have I ever seen anything so constitutionally absurd and so potentially dangerous in the breadth of its implications.

I have expressed my regard for the Secretary of State as an individual and I have no doubt that he has included those words honourably because he knows what he intends to do. Unfortunately, however, we have recently had something of a rush hour at the Department of Transport : one might almost say that we need a signal box system to usher Secretaries of States in and out of the Department. We have had seven of them--and a Prime Minister who likes playing trains, too. Yet the Bill contains a general power to do anything : it is a "Freedom for the Minister to do what he likes Bill". It is a Bill giving him an absolute power, introduced in the absence of a White Paper against which we can judge his future actions, in the absence of a Bill against which we or the courts can decide on his future actions and in the absence of any firm indication from him of precisely how he, as the latest transient incumbent of his office, would envisage using that power.

Mrs. Dunwoody : Is not the position even worse than that? Does not the Bill also say that anyone designated by the Secretary of State should be able to act on his behalf in the same extraordinarily wide-ranging way?

Mr. Williams : Yes, and it is a constitutional monstrosity. There is a joke about getting one's reprisal in first ; the Bill is about getting one's retrospective legislation in first by giving oneself the power to do that which may be deemed necessary at some time in the future but of which the House cannot be told at present. The Minister said that the use of the powers would impose small costs, with the interesting qualification that those costs would be small in relation to the total public expenditure involved in the industries. In fact, it will be a substantial sum, and we have precedent to demonstrate it. In the case of the denationalisation of the water industry, the cost came to £39 million. That may be small in relation to the total expenditure of the industry, but none the less it has to be borne by the industry's customers. In terms of parliamentary accountability, it is a cost that Ministers refuse to recognise.

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I am a member of the Public Accounts Committee, and I refer the House to its minutes. A short time ago, we interviewed Sir Terence Heiser, permanent secretary at the Department of the Environment, who has now retired. Asked by the present Chairman of Ways and Means--not a Labour Member--

"Why do you exclude the £21.4 million national awareness campaign and indeed the £17.9 million regional campaign, both of which, it is stated, were a necessary forward activity for a successful flotation?",

Sir Terence Heiser said,

"the industry had already decided beforehand on the marketing, the awareness campaign."

Why was it excluded? Because under the standard form clause--as it has become at its second usage--the Minister had given in advance powers for the industry to undertake spending that it thought were necessary to implement his policies. But when it comes to accounting to the House for the cost of implementing his policies, the Minister refuses to accept that those costs were attributable to privatisation because they were costs incurred under the enabling Bill. Accountability is virtually all that Parliament has to enable it to exercise control over the Executive, and the Bill represents yet another minor nail in the coffin of accountability.

Mr. MacGregor : Naturally, I was concerned to hear the right hon. Gentleman's misgivings about the Bill. He was right to say that, as Leader of the House, I was jealous of safeguarding the powers and position of the House. However, the right hon. Gentleman misunderstands his main point, particularly in relation to clause 1(5). None of the proposals for privatisation could go ahead until we have introduced the main Bills and had them approved by the House. There is no question of our trying through this small Bill to assume in advance what will happen to the major Bills.

The Bill simply enables British Rail and British Coal to incur expenditure and consult outside advisers so that the Government can engage in discussions with those industries about the proposals and some of the questions that will be raised in relation to the proposals as the main legislation makes progress through the House. British Rail and British Coal do not have powers at the moment to engage outside advisers for some of the purposes that we shall want so that Parliament can be better informed by the time that we consider the main legislation. If the right hon. Gentleman wants to raise any other points, I shall be happy to consider them. However, there is no endeavour in the Bill to pre-empt debates in the House about the main proposals.

Mr. Williams : The Secretary of State has proved my case. He sincerely believes what he has just said. I do not doubt his honour or ability in this matter for a second. However, the Government refused to recognise that £39 million was spent prior to the privatisation of the water industry under a power which is also contained inclause 1. Clause 1(1) states that the corporation "shall include the power to do anything appropriate for the purpose of--

(a) facilitating the implementation of the proposal ;"

The tab for the £39 million, which was spent on an awareness campaign, was picked up by the customers of the water industry as a result of a power equivalent to that in clause 1(1). The Secretary of State is facilitating a similar

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power today. I accept that he is also facilitating the freedom to take part in discussions, but the industries do not need legislation to do that.

I was a Minister in the Ministry of Technology when it was responsible for coal, power and gas. We had wide-ranging and regular talks with the industries. We do not need an Act to allow an industry to talk to its Minister about its activities. The Bill authorises what would otherwise be illegitimate expenditure of that industry's money in facilitating a political privatisation.

Mr. William O'Brien : I served on the Standing Committee on the paving Bill in relation to the water industry. My right hon. Friend is right : provisions were made in that paving Bill to allow a charging structure--namely, compulsory water metering trials--in a water authority. We had such a trial in my constituency. The Government were involved in that expenditure and the private water companies could not recover that cost. There are hidden charges in this paving Bill and my right hon. Friend has every right to express his concern about them. We all share his concern and I hope that he will develop his points further because they should be revealed in every detail.

Mr. Williams : My hon. Friend is very helpful.

What would happen if an industry incurred another £39 million of expenditure in order to facilitate moves towards franchising--which happens to be the hobby-horse, or hobby-train, of the Secretary of State ? What would happen if the Secretary of State were replaced by the equivalent of Cecil Parkinson--I am not sure what we call him now--

Mrs. Dunwoody : Viscount Branson?

Mr. Williams : Has he been enobled already? I must have missed that. I apologise ; I meant no disrespect.

What would happen if we had a new Secretary of State for Transport when the main legislation was introduced? What would happen if the new Secretary of State were more impressed with what Viscount whatever-his-name-is had to say than with what the present Secretary of State has to say? Who would pick up the bills? Would there be compensation for the Government if they changed their mind? They might claim that they did not reveal what they were thinking and that they had not enacted anything yet. They might claim that they were simply having talks. If that were the case, the customer would pick up the bill.

Mr. Richard Page (Hertfordshire, South-West) : I want to raise a point with the right hon. Gentleman because we both served on the Public Accounts Committee and both considered privatisation costs. Those costs are huge. Does not the right hon. Gentleman believe that the Bill would help to clear away doubt and confusion, so that, when and if privatisation occurs, it will be more focused and concentrated, thus saving more money in the long run?

Mr. Williams : The Bill does nothing of the sort. It simply adds extra obscurity. The hon. Gentleman's point about privatisation being better financially for the taxpayer in future echoed a point made by the Secretary of State earlier. He said that privatisation will "undoubtedly give the taxpayer good value for money."

The hon. Member for Hertfordshire, South-West (Mr. Page) sat beside me when I asked the former permanent

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secretary at the Department of the Environment about the privatisation of water. That industry was one of the first industries to be affected by a Bill like this one.

From my questioning, it became clear that 10 companies worth £34.6 billion were sold for £3.5 billion--ten were sold for the price of one. Undoubtedly, that gave taxpayers good value for money. I asked the then permanent secretary about the cost, but he said that one could not take it into account and that we should consider the value on the stock exchange. I asked him how much it would cost the 10 companies to set up the industry today. I asked whether they could set it up for £3.4 billion. He told me that it would cost £34 billion to recreate the industry. That good value for taxpayers' money was £1 back for £10 that the taxpayers put in in respect of the water industry.

We also provided a cash injection of £1.5 billion. I asked the former permanent secretary whose money that was and he told me that it was taxpayers' money ; yet the Secretary of State still says that privatisation will undoubtedly give taxpayers "good value for money".

It did not end there. We are talking about industries that are not known for their profitability. We also wrote off £5 billion-worth of debts to the national loans fund which was providing an income to the taxpayer of £500 million a year. Having provided a £1.5 million cash injection and £34 billion-worth of assets for a mere £3.5 billion, we then provided £7 billion-worth of tax allowances so that future profits could be written off against those tax allowances. That was the first time in a takeaway that the teller paid the customer. Private companies have walked away with industries and they are bleeding their customers now despite the massive subsidies that they have already received from the Government.

The Government face problems in relation to such major industries. They do not know how to get rid of them. They are simply driven to get rid of them. They think, "If it's publicly owned, get rid of it." They know that they cannot get rid of the whole railway industry. It is a loss-maker and always was. It was a loss-maker before it was nationalised. It was a loss-maker before the wars.

Even under private ownership, the railways have always existed on the basis of cross-subsidisation. In the days of GWR, LMS, LNER and Southern Rail, the profitable lines subsidised the non-profitable ones. What will happen now? We know what will happen. The cream of profit from one sector which previously helped to subsidise the feeder lines will be hived off to the private sector. So where will the money come from for the feeder lines? It will either come from the customer or the taxpayer--more likely the taxpayer--or it will come from cuts in services.

We have already had an indication that the Government intend to cut services. The Secretary of State said something which I must admit I have not heard before. He said that privatisation could mean selling off stations. Why does one sell off stations if one is not getting rid of the services that go through them? The Government are already planning for the cuts that will be made as a result of giving the profit to private shareholders. At present, that profit goes to subsidise the commuters. We in Wales know very well that our local services, our mid-Wales service and even our high-speed service between Cardiff and Swansea are likely to be casualties of

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the process. The Secretary of State called the Bill a small Bill. It is a small Bill which combines constitutional obscenity with industrial absurdity.

5.31 pm

Mr. Iain Sproat (Harwich) : As this is my first speech as Member of Parliament for Harwich, before I speak strongly to support the Bill, I wish to take this opportunity to pay great tribute to my predecessor, Sir Julian Ridsdale. He represented Harwich for some 38 years with great distinction as both a Minister and a Back Bencher. For all those years, he served the constituency faithfully and well, and he has left an enormous legacy of respect, admiration and affection--feelings of respect, admiration and affection which cross party lines. I am sure that hon. Members from all parties wish to send their good wishes to Sir Julian in his retirement.

I said that I supported the Bill, and I do so for two broad reasons. The first is because, as my right hon. Friend the Secretary of State said, it paves the way for more privatisation. In my opinion, privatisation has proved itself demonstrably and comprehensively successful, whereas nationalisation has equally comprehensively proved itself a failure.

There are many ways of judging the success or failure of privatisation and nationalisation, but I suggest that one clear, practical and straightforward way is to ask two simple questions. First, which system provides the individual customer with the best service? Secondly, which system is most economically successful? If we take an industry such as British Telecom, of which we have had experience as both a nationalised and a privatised industry, the answer to the first question can hardly be in doubt. There cannot be a Member of the House of Commons who does not remember that, when British Telecom was nationalised, one had to wait weeks, months or even up to a year for a new telephone. Today, a new telephone is available on demand.

In the days of nationalisation, when one obtained a telephone it was either black or white. It was of a simple design. One could not say what one liked. Practically every telephone kiosk one tried to use was vandalised and out of use. Today, 96 per cent. of public telephones are in working order. When one made an appointment for someone to come and fix one's telephone, British Telecom would not say whether someone would come in the morning or afternoon. It would not tell one if it came not at all. It would not say whether it would give compensation. In contrast, today, under privatisation, one can make an appointment for the morning or the afternoon. If by chance the engineers do not turn up, there is guaranteed customer compensation.

The benefits that arise from privatisation seem clear beyond dispute. Of course one must be careful about making comparisons in too much detail, but I cannot believe, certainly after Question Time today, that there is a person in the country who would claim that the nationalised British Rail, which is one of the industries with which the Bill deals, is better than the now privatised British Airways in any respect--whether care for the customer, efficiency or profit. Whether one takes an industry that was nationalised and is now privatised or compares an industry which is still nationalised with one in a roughly similar sector, the success of privatisation is massively apparent.

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The second question that I suggested one ought to ask was whether nationalisation or privatisation had been economically successful. We all know that the history of nationalisation from 1945 onwards has been studded with gigantic losses. My right hon. Friend the Secretary of State gave us some staggering figures for the British coal industry, but no doubt, when we come to the Bill for which today's Bill paves the way, we shall be able to discuss the coal industry in much more detail.

When British Airways was privatised about five years ago, the chairman said that the losses of all nationalised industries since 1945 had amounted to more than £200 billion. Successive Governments had to fund the losses of that nationalised industry. Think what could be done with that money to provide better schools, houses, pensions and roads.

My right hon. Friend the Secretary of State referred to wider share ownership as a result of privatisation. I believe that the figures are that, in 1979, when the privatisation programme started, about 1.5 million individuals in Britain owned shares. Today that figure has risen to about 12 million--a real redistribution of wealth away from the state to the individual family. Not only is that the type of redistribution of wealth that we want to see in Britain, but a high proportion of those employed in former nationalised industries own shares in them. Some 90 per cent. of employees of the National Freight Consortium own shares in their business. More than 90 per cent. of the employees of British Airways own shares in that business. That must be good for the stability and profitability of those businesses.

I said that I strongly supported the Bill for two reasons. The first was because it leads to privatisation. The reasons that I have given are what one might call the reasons looked at from the outside. But I have a second reason. When I was previously a Member of Parliament, I was lucky enough to be the Minister of Aviation and Shipping when we were preparing British Airways for privatisation. British Airways was still a nationalised industry.

I was horrified when I looked into the internal workings of the running of a nationalised industry and the mechanisms by which the sponsoring Government Department ran it. I saw how Government Departments interfered in the commercial running of the business in both great and small matters. Government Departments would interfere with the most minute commercial matters and prevent the business from being run properly.

In 1982, I discovered that there was no financial director on the main board of British Airways--it was absolutely amazing--although the company was about to turn in losses of £544 million and had a debt of £1.2 billion. The then and present chairman of British Airways, Lord King--a splendid man--found a finance director and agreed what to pay him. I had to write to the Chancellor of the Exchequer to ask if that was alright. To my amazement, the Chancellor wrote back saying that he thought that we were overpaying him by about 20 per cent. The absurd epistolary ping-pong went on for months between the old Department of Trade and the Chancellor of the Exchequer, who said that Lord King was wrong and did not know how much Gordon Dunlop--that great man who became the finance director --ought to have been paid.

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I am arguing in support of what the hon. Member for Kingston upon Hull, East (Mr. Prescott) said earlier. The Treasury was interfering in the way in which British Airways was run, by not allowing it to appoint the finance director that it considered necessary at a time when it was facing gigantic losses and had a vast debt.

I saw the internal workings of the Department of Trade vis-a-vis industry and its absurd interference in commercial decisions. Almost without exception, the customer came second to the vested interests of the industry, and the Department and the industry colluded in that. The interests of British Airways passengers came second. I also saw the way in which the private sector always came second to the interests of British Airways. Other public sector bodies, such as Manchester airport, also came second because they were not a sponsored industry in the same sense as British Airways was. Ministers and Governments of all parties interfered to put the interests of the nationalised industry above those of the customer and of other private sector companies, and thus did them down.

Mr. Prescott : Why did the Government nationalise Rolls-Royce?

Mr. Sproat : I saw the absurd financial distortions which resulted-- the losses written off, and the subsidies and grants given. The mushy fudge of public dividend capital was merely an excuse to dish out money to nationalised industries without any real return. I do not know whether any nationalised industry has ever paid a dividend on its public dividend capital. I do not think that British Airways ever did. It was just another excuse to inject money into nationalised industries, money that they were not competitive enough to earn.

I also witnessed costly time-wasting exercises. Executives in nationalised industries prepared corporate plans and explained them to civil servants, then tinkered with them and readjusted them after discussions. The civil servants and the Department then went over the plans, saying that they did not like this, or that had to be changed. They rewrote them, fixing performance and financial targets. Once the Government Department had gone over the plans with the company, the Treasury then had to go over them. The company, the Department and the Treasury spent endless hours tinkering about with corporate plans.

Mr. Prescott : Why did the Government nationalise Rolls-Royce?

Madam Deputy Speaker (Dame Janet Fookes) : Order. The hon. Member knows well that sedentary interruptions of that kind are to be deplored.

Mr. Sproat : The Government's policies have done so much to get rid of another aspect of what was badly wrong with the relationship between Government Departments and nationalised

industries--nationalised industries' preferential access to the ears of Ministers and civil servants. That is why I welcome the Bill, because it will get rid of that problem with British Coal and, in part at least, with British Rail. The industries were allowed access to Ministers and civil servants, which enabled them to affect relevant policies as they were being made, and to ensure that the policies were more in their interests than in those of the customer or of private sector companies.

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When I was at the Department of Trade, I think that it would be true to say that, if the chairman of British Airways ever wanted to see me, he usually did so within 24 hours. However, if the chairman of Britannia or British Midland--two fine airlines--wanted to see me, it would be difficult. They would be told that the Minister's diary was booked up and several weeks would pass by, because they did not have a proper arrangement.

Nationalised industries got preferential treatment. As a result, there was a cosy consensus between the nationalised industry and the Department. The Department did not wish it to be that way--it just happened because of years of preferential access and agreement between civil servants and the industry.

For example, the busiest internal air routes in the United Kingdom were, and perhaps still are, Heathrow to Glasgow, and Heathrow to Edinburgh. Yet the Government had granted British Airways a monopoly of those routes. The chairman of British Midland said, "I'd like to have a go at that monopoly and compete with British Airways." I had to consider the matter. Without violating any detailed advice that I received, in the new spirit of Government Departments being opened up I can reveal that not one person or body asked for official advice recommended that there should be competition. Everyone recommended that the monopoly should remain.

We broke that monopoly, and what happened ? We got more services, lower prices, a better service and a wider range of fares. Everybody was pleased. Everything that is supposed to happen under competition happened. Given that that was such an obvious case--the busiest route in the country--one must ask oneself why, under a Conservative Government, no competition was allowed. The answer is that years of preferential access had constructed a cosy consensus, whereby the values of British Airways--which had the monopoly--gained a monopoly over the culture of the Department. That was an evil thing, and privatisation has helped to sweep it away.

I welcome the Bill, because it will provide for more competition. I hope that it will sweep away such problems in two other industries. I look forward to the Bill bringing closer the day when British Rail will be as efficient and profitable, and thoughtful and caring for its passengers, as British Airways.

5.48 pm

Mr. Malcolm Bruce (Gordon) : I am interested to follow the hon. Member for Harwich (Mr. Sproat), who, on the previous occasion, left the House as I came in. No doubt he will be hoping that the people of Harwich prove a little more stable than the people of south Aberdeen, who have had five Members of Parliament, not one, in the past 25 years. His style and approach do not seem to have suffered from his absence, and no doubt we shall be hearing more from him. He has warned us how Ministers can become prisoners of their Department. One wonders why he did not change the Department.

Mr. Sproat : I did.

Mr. Bruce : One does not necessarily have to turn the ownership and structure of an industry upside down to reform it. If that were the only way forward, Ministers would have a limited course of action open to them.

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I shall tackle both aspects of the Bill, taking the coal industry first. The Bill is, of course, an enabling one. It is relatively general and it is about bringing private money to and the restructuring of both industries. Liberal Democrats believe that the coal industry needs restructuring and that it needs access to private capital. The same is true of the railways. The terms of the Bill are necessary and acceptable because we recognise that anybody who is to change either of the industries would need such a Bill.

The real areas of potential division will arise when the detailed proposals for each industry are published. That was achnowledged by the hon. Member for Christchurch (Mr. Adley). However, I echo the view that, in the past, money has been spent on paving the way for privatisation in an unnecessarily profligate manner. One hopes that by going through such a process as set out in the Bill and having a proper and systematic explanation of events, we will not see such substantial amounts of public money squandered as a sweetener for privatisation. However, at present, the Government do not appear clear about the way forward.

I am worried about the Bill and the words in the Queen's Speech that state that the Government will bring forward proposals to return British Coal to the private sector. I remind the Government that British Coal was never in the private sector. It is an extraordinary idea to return it to a place from which it never came. The implication behind the Government's statement is rather worrying and I hope that the hon. Member for Harwich can see exactly why that is so.

It is proposed to take British Coal as a single entity, and to transfer it as such to the private sector. There are no proposals to introduce competition into the coal industry or to open it up to possible employee participation or that of other groups. The Minister is looking quizzical, but the Queen's Speech talks of returning the industry to the private sector. If the industry is to be sold as a single entity, perhaps even offered to a multinational company, I assure the Minister that the Liberal Democrats will oppose it. We will seek to press the Government to use a little more imagination and flexibility than they have with some of their previous privatisations. On two previous occasions, I tabled amendments to coal Bills to try to change the basis on which coal is owned and how it is licensed. Under current legislation, British Coal is the owner of all coal reserves in the United Kingdom. It would be quite inappropriate to transfer the company, in whatever form, to the private sector should it continue to be the owner of all coal assets in the United Kingdom, whether mined or not.

I suggest that this is an appropriate time for the Government to follow something similar to the practice for oil and gas reserves--to transfer the ownership of coal to the Crown and license it through, perhaps, a Crown agency. That agency could be the regulator for the coal industry and of the extraction of coal and it could set the conditions under which the licences operated and determine to whom they should be allocated. In those circumstances, the industry could be opened up to more than one company and there could be different approaches and tests.

Mining is a matter of judgment, as well as of knowledge and technology. Different people have different views on the efficient and competitive extraction of coal. That suggests that, to benefit from such different approaches, more than one company should operate our pits.

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