House of Commons Hansard Debates for 29 Oct 1992

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Government's laissez-faire philosophy says will produce the best for the consumer? What is proposed? We are to have a regulator to control costs and access, a franchising authority to allocate franchises and regulate fares, a rail track authority for the timetable and maintenance, the joint industrial board to co-ordinate ticketing and information, and the railway clearing house for company accounts. On top of that, we shall have the HSC, the Office of Fair Trading, the passenger transport authorities, the Department of Transport and--let us not forget it--the good old Treasury, which will have to ensure that everything fits its requirements.

Those are the bodies that will regulate the new privatised railway system-- a system that is supposed to have benefits bestowed on it by the invisible hand of the market. What a load of nonsense. The system will be more regulated under the proposed arrangements than it is at present. At least the Secretary of State is accountable for the railway system under the present arrangements. In future, he will be less so and will argue that the regulator is responsible. I should have more confidence if the regulator and the franchise officers were likely to have the benefit of knowledge and to do better than the Secretary of State. The one thing that the right hon. Gentleman has never shown in his present job is knowledge of transport. I might add that previous Secretaries of State have set a good precedent in that. Let us look at the notice in The Sunday Times advertising for people to fill the new posts. Among all the qualifications that the regulator needs, I was staggered to read : "knowledge of railways/public transport an advantage but not essential."

Yet the regulator is the man who will run the railway system. The Secretary of State does not understand the system himself, and now he is to appoint an adviser who need not have any knowledge of it whatever--on top of all the new regulatory bodies. Will that produce railways in rural areas and inter-city railways? Will that encourage people to get off the roads and on to the railway system? The whole thing is a load of waffle.

What will the new system cost? I wish that the Secretary of State would tell us how much the quangos will cost. How many civil servants will be involved, and what will be the extent of the bureaucracy? Some 17,000 to 20,000 people in the freight and transport services will be made redundant, and the same number of people will be employed in the bureaucracy. People who earn money and make value will be put out of work to make room for civil servants to organise the rail system so as to meet an ideological requirement and prove that it is possible to run a railway system privately --but only 5 or 10 per cent. of it, because the rest of it will have to be maintained by British Rail as the supplier of last resort.

I do not have time to deal with all the problems now. The Government have answered some of our questions and have agreed to provide some reports-- particularly one on employee conditions--which we look forward to seeing. As with the buses, I am sure that we shall see a move to part-time instead of full-time labour, the de-staffing of the systems and the loss of pensions.

What will happen to the transport police? The experience of previous privatisations suggest that there will be a move to part-time policing and private security systems. We desperately need security and safety on our

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railway system. Unless the Secretary of State proposes to make an exception in respect of the British Transport police, their services will be got rid of.

The track authority, the regulator, the franchising body and so on are all matters that give rise to numerous questions that I certainly do not have time to ask today.

It is now accepted that the railway system will be subsidised. It will be more regulated than it is at present. There is little hope of further investment. Let us not be too sure, for example, that leasing arrangements will produce new orders and investment. It will produce old trains, tarted up to run on profitable parts of the system. After five, eight or 10 years, companies will not want to invest. A massive amount of investment is needed to replace trains. A franchisee may want to operate for 10 years without investment and then run the service down and get out having made what money it can. Who will pick up the pieces and run the service? Good old British Rail, in the name of the Government. It will be a cherry-picking system that will work to the disadvantage of the community.

The White Paper has nothing whatever to do with new opportunities for our railways, and everything to do with creating massive profits for the Government's friends in the City. The Government are selling the community's assets, cherry-picking the most profitable routes and leaving the loss-making ones to BR and the taxpayer.

Theirs is a policy designed to impose an ideological 19th century laissez- faire straitjacket on an industry about to enter the 21st century. It will mean fewer services costing more. It will cause thousands of redundancies and reduced employment conditions for the lucky few remaining. It will mean newly painted old trains instead of new rolling stock, adding to the demise of our once great rail manufacturing industry. It will mean greater pressure to maximise costs at the expense of safer railways.

Above all, the policy will cost the taxpayer more, with a needless expensive bureaucracy and quangos. That will lead to higher fares and force passengers off rail and on to roads, causing great congestion and environmental damage. That is why we reject the crazy philosophy behind the White Paper and any Bill based upon it.

6.18 pm

Sir John Stanley (Tonbridge and Malling) : In contrast to the hon. Member for Kingston upon Hull, East (Mr. Prescott), I found the White Paper imaginative. It introduces some welcome and radical new thinking into the running and financing of railways. Like my right hon. Friend the Secretary of State, I look forward to seeing what further progress can be made in harnessing the private sector to produce better railway services.

However, I have two very deep concerns about the potential practical implications of the proposals, particularly in relation to my constituents. My first concern relates to fares to which my right hon. Friend the Secretary of State did not refer. As far as my constituents are concerned, the bottom line will be the fare implications for them.

As I represent a constituency in Network SouthEast, my right hon. Friend the Secretary of State will be aware of the pressures faced by those who use the commuter rail services on that network. In practical terms, those people

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have no alternative but to use the rail services to London. They have faced yearly real increases in fares, and another real increase in fares has recently been announced. It costs about £2,000, payable from after-tax income, for an annual season ticket from my constituency to London. That cost for travel to work has become the largest single item of inescapable expenditure in the household budget, with the possible exception of food, for many people. Fare levels have already reached the limits of many people's capacity to pay. For some people in my constituency, fares have risen beyond their capacity to pay and they have had to resign posts in London and try to find alternative employment elsewhere. The fare dimensions of the proposals are critical.

Considering the history of previous privatisations, will the privatisation of the railways be a rerun of the privatisation of gas? If that is the case, then all well and good. In real terms, gas prices are about 15 per cent. below what they were before privatisation. If that happens with the railways, that will be fine. On the other hand, will the privatisation of the railways be a rerun of the privatisation of water? Water charges are now 26 per cent. higher in real terms than they were before privatisation. If there were fare increases in real terms of that order, that would be immensely damaging financially for my constituents. I do not know which way it will go, but I have an uncomfortable feeling in my bones that it might go more the water way than the gas way. However, I earnestly hope that I am wrong.

Although I do not agree with the sentiments or philosophy of the hon. Member for Kingston upon Hull, East, it is worth considering that the experiences of Charterail and Stagecoach show that, when the private sector is involved, a higher rate of return may be required, with consequent fare implications for the users of rail services.

Mr. Paul Flynn (Newport, West) : Will the hon. Gentleman give way?

Sir John Stanley : I will give way, but I am immensely conscious of the number of hon. Members who wish to speak, and I do not want to delay the House longer than I have to.

Mr. Flynn : Perhaps a more telling illustration is what has happened in respect of the deregulation of buses, which have much in common with rail services. The experience in metropolitan areas is that fares have increased by between 25 per cent. and 33 per cent. in real terms.

Sir John Stanley : I hear what the hon. Gentleman says, but I take a different view from that of the hon. Member for Kingston upon Hull, East in respect of bus deregulation, which, in my part of the world, has produced a variety, range and flexibility of services which did not exist before deregulation.

The fare implications of the proposals will hang wholly on what happens in two critical areas of policy--the policy on subsidy and the policy on the degree to which fares are controlled.

The subsidy element is critical in Network SouthEast. As the White Paper states, the subsidy paid in the financial year 1991-92 was £345 million, which was approximately 28 per cent. of the network's turnover. If we consider the policy for subsidy in the proposals, the franchising

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consultation document says--a reference which my right hon. Friend the Secretary of State effectively repeated earlier--

"The Government has said that it will continue to pay subsidy, where necessary, for as long as it is needed in order to secure the provision of socially necessary services."

The statement begs more questions than it answers. Which rail services do the Government consider to be socially necessary and therefore worthy of subsidy? Is the whole of Network SouthEast regarded as socially necessary or only part of it? If the latter is the case, which part?

The statement also begs a question to which my right hon. Friend the Secretary of State did not refer. Perhaps my hon. Friend the Minister for Public Transport will deal with it when he replies to the debate. My right hon. Friend referred to subsidy being maintained. Is the commitment to maintain not merely the level of subsidy, but the level of subsidy at least in real terms? That would be the crucial issue for fares. Those are central questions about subsidy to which we still await answers.

The second issue is whether fares will be controlled by what my right hon. Friend the Secretary of State acknowledges in the White Paper to be monopolies--in other words, by the franchises. The documents make it clear that during the franchising period the franchising body will have the right to exercise fare control. However, it is not necessarily clear whether the franchising body will actually do so.

Paragraph 66 of the White Paper states :

"As long as London commuter services are franchised, any abuse of monopoly power will be controlled through the contracts between the Franchising Authority and franchisees."

There is a clear locus for the franchising authority to deal with the "abuse of monopoly power" and ensure that fares are constrained. However, the franchising authority is also responsible for getting franchises off the ground and ensuring that franchising takes place. When it does that, it will clearly be interested in showing that the maximum revenue can accrue. In that capacity, it will not have an interest in fare control ; its interest will be to make the degree of fare control light.

There is a direct conflict between the position of the franchising authority being responsible for, in the Secretary of State's words, preventing abuse of monopoly power when it is also the body responsible for establishing the franchises with the maximum benefit to the franchisee in revenue terms. That is a fundamental contradiction in the position of the franchising authority. The consultation document on franchising makes an attempt to resolve that underlying conflict. It appears that the Secretary of State for Transport will act as referee between the two tensions. Paragraph 2.3 of the consultation document states :

"the Secretary of State for Transport will provide guidance on :

in what circumstances and to what extent fares might be controlled."

The House should note that the term is "might be controlled" and not "will be controlled."

There is a guidance role that the Secretary of State will perform. That in principle might be thought to be welcome, but even the involvement of the Secretary of State, based on history, does not guarantee that the level of increase in charges will be kept down to a reasonable amount.

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We had exactly the same position with the water privatisation. I have with me the press release that was put out by the then Secretary of State for the Environment on 7 February 1990, in which he announced how he was going to exercise his control of water charges. Charges went up in real terms throughout the country. In my constituency in west Kent, the Secretary of State's controlled increase in year one was 20 per cent. in real terms ; in year two, a further increase of 20 per cent. in real terms ; in year three, a 4 per cent. increase in real terms ; and in year four, a further 4 per cent. increase in real terms. That is not a very happy history for my constituents. It would be very helpful if my hon. Friend the Minister for Public Transport would say how the Secretary of State will exercise his intention to issue guidance on fare control in relation to franchises.

I am sorry to say that my second concern is narrowly based, but it is of the utmost significance to my constituents. It is possible that my constituents will face not merely an increase in fares, possibly of a substantial order, in real terms as a result of the proposals, but a diminishing number of commuter trains at peak periods. That could come about in this way : my constituency is astride the main existing rail link from Cheriton, the channel tunnel portal, to Waterloo, on which the through channel tunnel trains will, I hope, start to run at the end of next year or, possibly, in 1994. As the House will know, that line runs through Ashford, Tonbridge, Sevenoaks and up to the centre of London.

It has always been evident to me that a significant potential risk could occur for my constituents : those on board channel tunnel through passenger trains--for example, the Euro-officials and the Euro-business men from Paris and Brussels--would wish to arrive in London in the morning at exactly the same time as my constituents wish to arrive and would therefore compete for exactly the same train paths.

I pursued that issue at a very early stage. I am glad to say that I have a letter of 25 July 1986 in which I received a most important assurance on that point from the then Minister for Public Transport, my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell). In that letter he gave a commitment that internal services--in other words, domestic commuter services--would not be curtailed on that line in order to make room for through channel tunnel trains. The House will not be surprised to know that I have been clutching that letter to my breast pocket ever since. The relevance of that letter to the White Paper lies in paragraph 37 of the White Paper, in which the Government make it clear that privatisation is to be extended to European Passenger Services Ltd., which is the British Rail subsidiary which will operate the through passenger services from the channel tunnel as from next year or thereabouts. The White Paper states :

"The Government is considering how EPS should be transferred to the private sector."

I stress that the word used is not "whether" it should be transferred to the private sector but "how". Will my hon. Friend the Minister give a firm and unequivocal assurance that the--

Mrs. Dunwoody : Preferably in writing.

Sir John Stanley : Across the Floor of the House will be every bit as good ; it will be in Hansard. Will he give a clear and unequivocal assurance that the undertaking that I was given in July 1986 that there would be no curtailment of

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internal domestic services to accommodate channel tunnel through train services will hold good, even when EPS is apparently to be privatised?

Until I have clear answers to my deep concerns about fares and train paths for channel tunnel trains, my position on the legislation can only be one of very guarded neutrality.

6.34 pm

Mrs. Gwyneth Dunwoody (Crewe and Nantwich) : I have often wondered what the advantages of a public school education really are. I have decided that it is the ability to congratulate someone in the first instance and then knock hell out of him for the subsequent 10 minutes of one's speech. I congratulate the right hon. Member for Tonbridge and Malling (Sir J. Stanley) on putting his colleague the Secretary of State for Transport firmly on the spot.

The debate has been rather frightening. I have never thought of the Secretary of State as Scarlett O'Hara, but a tremendous amount of the proposed legislation can best be summed up as, "I will think about that tomorrow," pronounced either with a southern accent or with a Scots accent. It amounts to the fact that we are actually proposing major changes in a basic transport system without any clear idea of what it entails.

The Secretary of State, even after the traumatic events of last week, did not say, "As a Department, we have estimated that, if we push through this privatisation, the job loss in manufacturing, in trains and in rolling stock as an industry will be a minimum of 30, 000." He did not say, "If we push through this legislation, the job loss for railwaymen and related workers in other industries will be so great that we have not had the courage to specify the number." He said, "We think that it would be a very good idea if we privatised this system. The slight problem is that we don't know how we're going to do it. We don't know who is going to be stupid enough to pick it up, and we're certainly not going to spell out any of the implications, because the House might find them unacceptable." The Secretary of State should have told us the answers to several basic and important questions. What is the Government's environmental policy in relation to the use of railways? Why has he not given us one indication of his vision of the use of railways on a crowded island in the 21st century? Why has he not been prepared to set out in any detail why we need a railway system, how it will be properly funded and how it will best benefit the people of these crowded islands? None of that appeared anywhere in his speech.

On top of that, the right hon. Gentleman has decided that he will say that privatisation has proved itself in the transport industry. I do not know how anyone who watched what happened to the bus industry can seriously say that we know that privatisation of basic services works. The bus industry was a classic example. The women who are standing around in the wet because the central bus stations in many of our towns have been asset-stripped by the small private companies that took them over have a clear idea of whether privatisation works. The people in rural villages for whom the provision of bus services is difficult have an even clearer view of whether privatisation works.

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We are talking about a system which, unlike buses, requires very specific tracks--very specific hardware--to provide a service. Oddly enough, trains do not jump in front of one another when one breaks down. Oddly enough, if individual companies are concerned, it will not be easy for someone to provide alternative services. Who will have the contingency responsibility, if for any reason any of the franchisees do not provide a service of the highest quality, to substitute rolling stock trains or other services? That is not made clear. We are simply told that employment as well as other aspects of transport such as safety will be discussed in the future. Frankly, that is an astonishing attitude for a responsible Government to take. I also find it astonishingly irresponsible.

The report that came out yesterday proved that many private industrial companies will face empty order books from the middle of next week. That shows what can happen when part of the transport industry--railways--is thrown into chaos. Unless there are full order books for new rolling stock, services will not improve. It does not matter who provides services--they will not improve. Unless there is a way of subsidising services which are socially useful, and unless that is a continuing commitment, services will not improve. Unless there are trained railway staff to provide not only safety but facilities and services, services will not improve. I would not have thought that that was a difficult concept for any Government to understand, but it appears to be beyond the understanding of a Conservative Government.

It is a disgrace for the Minister to talk about a major change, which will result in job losses that we cannot fully estimate at present, without spelling out exactly what the Government will do to replace, protect and help those people. Let me make it clear. British Rail Engineering Ltd. was sold off as part of the rage for privatisation. We were told that there would be greater efficiency and much better provision of equipment. We were also told that everyone would benefit.

On a simple matter such as pensions, which we shall discuss in dealing with the forthcoming Bill, BREL is an interesting example. The Government said that British Rail would be responsible for ensuring that its employees were protected until the change of ownership took place. Beyond that point BREL, employees immediately found that they faced a diminution of their pension rights and the loss of many of their privileges, which had been part of the calculation of their wages. Even when they bought shares in BREL, they found it extremely difficult to get any specific benefit from the sale of their own company.

Those who talk about management buy-outs should examine what happened to BREL. Only one of the original directors who fronted that management buy- out has remained with the company. Those who work for BREL have even been told that they cannot sell their existing shares, because the company that took over BREL's assets organised the sale in such a way that the shares could go only to the new company and only at a highly artificial and controlled price.

So much for management buy-outs. They have not protected jobs ; we have lost jobs. They have not improved the lot of those who work in the industry, and they certainly have not in any way replaced the conditions that the employees had when the company was a subsidiary of British Rail. That is what would happen to railwaymen

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and women if privatisation went ahead. There can be no doubt about that. Neither their employment nor the benefits which they currently receive would be protected.

I find the debate totally obnoxious, because we cannot tell our constituents that the House will happily accept the introduction of a paving Bill which is so wide in its terms that almost any amount of taxpayers' money could be used to create a completely new set of organisations without a clear statement at an early stage of what would actually happen.

It is not clear whether the Department of Transport has worked out a method by which a system of transferring lines could take place. It is not clear whether the Department has considered that private operators will be quite happy to take tiny pieces of the lines--for example, the Victoria to Gatwick line--but they will not be happy to run services from Preston to Blackpool or anywhere else. The cost of that in terms of employment and good transport systems is absolutely indescribable.

Tonight, the Minister has presented dogma in its purest and most irresponsible form. It cannot be defended in terms of economics, politics or a commitment to provide a good service for those who use the transport system. As the Minister cannot give us any of those reasons, may we assume that he is suggesting that it would be useful for the Treasury to asset- strip the railways part of the transport system in the way that bus companies asset-stripped the bus system? 6.45 pm

Mr. Matthew Banks (Southport) : I am grateful to you, Madam Deputy Speaker, for calling me so early in this important debate today to make my first speech in the House. As you know, I am one of the youngest Members of the House, having been elected earlier this year at the tender age of 30. I am now 31. After the events of the past two weeks, I am not sure whether I am any wiser, but I certainly feel a great deal older.

I have the honour and privilege to represent a delightful Victorian seaside resort. Southport is a constituency which, after three years of hard work, I managed to wrest from the Liberal Democrats. I should like very much, without further ado, to pay a fulsome tribute to my predecessor, Ronnie Fearn. As hon. Members will know, Mr. Fearn was for some time the Liberal Democrats' transport spokesman in the House. Although the political complexion of my constituency has now changed, I am pleased that Mr. Fearn has been replaced by another Member who is equally interested in transport matters.

Mr. Fearn was first elected as a local councillor in 1963 and has remained a councillor ever since, including his time as a Member of Parliament. He was first elected to Southport county borough council when it was in Lancashire. Sadly, my constituency is now in Merseyside. I should like to lay down a marker today. I make it clear that in the not-too-distant future, during the passage of the Local Government Bill--sadly, my predecessor voted against it--I shall do my utmost to make sure that the Local Government Commission brings my constituency back into Lancashire as a unitary authority. It is a tribute to my predecessor's standing in my constituency that my task in wresting the seat from him was so difficult, Indeed, I know that it is a great surprise to some hon. Members that I am here at all. My journey here was not courtesy of a first-class InterCity rail ticket ;

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it was something more along the lines of political Network SouthEast or Merseyrail ticket. I hope that the principles behind the White Paper will satisfactorily address something along those lines. I should also like to place on record my thanks to Sir Ian Percival QC. He represented my constituency between 1959 and his retirement in 1987 and is a former Solicitor-General. I am most grateful to him for the support, advice and the generosity of his time which he gave me in the past few years.

Finally, although it is not possible this evening for me to thank all those who have helped me and my colleagues over the past two to three years, I should like to place on record my thanks to a former Member of Parliament, Mr. Cecil Franks, who was the Member for Barrow and Furness between 1983 and 1992. He is sadly missed on the Conservative side of the House. I should also like to pay tribute to him tonight for guiding me through some of the difficulties of the past few years.

My constituency does not appear to be on the map at Westminster at present. I seem to have a tremendous task ahead of me. Unfortunately, all too often, right hon. and hon. Members confuse my constituency with Stockport. Stockport is some 50 miles away in land locked Cheshire. With the greatest respect to Stockportonians, there is a considerable difference between the two. No prizes for guessing which one I think is the more delightful.

If I am to put my constituency on the map, I must put myself on the map first. One of the difficulties that I have faced is that I am consistently, and irritatingly, confused with my hon. Friend and look-alike the Member for High Peak (Mr. Hendry). He is on the chubby side too, but if hon. Members bear in mind that he is the good-looking one, they will have no problems in future.

I am pleased to report that I have been able to solve one problem. I no longer receive the Refreshment Department bills of my namesake, the hon. Member for Harrogate (Mr. Banks).

On the White Paper, if the objective is to create better quality services through the gradual introduction--I stress the gradual--of private sector competition, it has my 100 per cent. support. Listening to some hon. Members speak in the House and outside it, one would think that the Government were trying to privatise British Rail lock, stock and barrel. That would be a ridiculous and impractical course of action.

I urge my right hon. Friend the Secretary of State to listen carefully to the concerns--I hope that they are constructive concerns--of right hon. and hon. Members in this debate. When a Bill on that subject is tabled and is considered in Committee, I urge him to ensure that important matters such as franchising, access to track, the independent regulatory authority and safety are considered sensibly. I hope that my right hon. Friend will listen carefully and, if necessary, amend his plans to ensure that those important proposals are as practical and workable as possible.

The idea of private sector competition and involvement in the railways is nothing new. About 40 per cent. of rail wagons are privately owned. I have no doubt that, in the years ahead, that percentage will rise considerably.

The White Paper is long overdue. I have been waiting to make my first contribution to debates in the House, and I wish that it had been possible for us to debate it earlier. I hope that it will not be too long before a Bill is introduced so that we can discuss the issue in greater detail. There will

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be occasions more important than today, especially in Committee, when hon. Members who have constructive suggestions for amendments will be able to table them.

I urge my right hon. Friend the Secretary of State to be clear in his mind that, while there are one or two honourable exceptions on the Conservative Benches who do not believe that the proposals are workable, in principle the Government have my support and they have considerable support among my hon. Friends.

Britain's railways play a vital role in the nation's transport needs. The White Paper offers the opportunity to expand and improve on those services. I emphasise that the White Paper refers to the gradual introduction of private sector competition. It does not concern me that in 1994 only one or two companies may be running franchises. The opportunity to do so should exist, and gradually many companies will take it. I welcome the fact that many companies have expressed an interest in running services on Britain's railways. In making my first contribution, I am mindful that I do not have the time to deal in detail with some of the matters relating to franchising, access to track, and the indpendent regulator, among others. I do not wish to take up the time of the House. There is no doubt that some genuine concerns exist on both sides of the House, which will need to be dealt with, and I hope that my hon. Friend the Minister will consider them.

The principles in the White Paper are important and I wholeheartedly support them. Given the difficulties in Britain's railways, and the enormous pressure on British Rail in the public spending round--not merely this year but any year and under any Government--it is vital that we give the private sector and the consumer the opportunity to benefit from private sector competition. In the months and years ahead, when private sector companies are operating franchises, I hope that their management and work forces will get closer to the travelling public and to the people whom they seek to serve.

Ultimately, the White Paper will provide opportunities to improve the quality of service, it will be good for choice and I sincerely believe that it will be good for my constituents in Southport. 6.55 pm

Mr. Nick Harvey (North Devon) : Before attending to the White Paper, I congratulate the hon. Member for Southport (Mr. Banks) on his accomplished and amusing maiden speech, and I thank him for his kind remarks about my predecessor, the Liberal Democrat transport spokesman, which were appreciated on this Bench. We look forward to more contributions from the hon. Member.

I do not voice my concerns about the White Paper out of any philosophical objection to the principle of private operators on the rail network, but for fear of the practical consequences of fragmenting the network. If the ground rules were right, we could envisage a slowly growing market for private sector operators. Our argument is about the ground rules.

If I have understood the Secretary of State correctly, he has said that he expects the majority of the network to be in the hands of private operators within the lifetime of this

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Parliament. That is pie in the sky. He was talking about the time scale as if he were holding back a deluge of would- be operators until the spring of 1994. My fear is that, if he goes ahead on anything like the time scale that he has described, there will be mayhem on the railways.

The proposals fail to acknowledge the social and environmental contribution that the railways make to life in Britain ; they do not merely reduce congestion but also mean energy savings and a reduction in CO emissions. The suggestion that the new track authority, Railtrack, must raise its funds "fundamentally"--I hope that I quote the Secretary of State correctly --by charging operators fails to put any value on the social or environmental contribution made by the railways.

There is no hint in the White Paper of who will pay for the vital investment needed in the rail network. Do the Government honestly believe that the would-be private operators will be able to afford the sort of infrastructure investment that successive Governments have failed to make? The fate of the two pilot operators--Charterail and Stagecoach--the difficulties that they encountered and their failure show that it will not be private operators but the passenger who will end up having to pay.

The hon. Member for Epping Forest (Mr. Norris) told us earlier this week, with commendable clarity :

"Someone has to pay for the operation of the rail service--and that means either the taxpayer or the user. I am convinced that it is right that users should pay enough to cover at least the majority of the operating costs".-- [ Official Report, 26 October 1992 ; Vol. 212, c. 762.]

The right hon. Member for Tonbridge and Malling (Sir J. Stanley) compared plans for the railways with the privatisation of the water industry. The crucial difference is that the customer base in the water industry comprises just about everyone and is more or less the same as the taxpayer base--except for fortunate souls like myself who are able to use a natural spring instead of a connected water supply. In the case of rail investment, the customer base is much narrower. I submit that the public are fed up with hearing that the Government are making a record investment in the rail industry, when they still find themselves commuting, crammed into carriages every morning like sardines, with their fares continually increasing. They know that that simply does not add up, and if one takes out investment in the channel tunnel project, they are right. Investment is nowhere near adequate.

The Secretary of State referred to Japan and Sweden. He did not mention that, before the first stages of Japanese privatisation, a massive programme of investment was carried out by the Japanese Government and all historic debts were paid off. He also failed to mention that with the Swedish system--perhaps the nearest comparison to what is proposed here-- the Swedish Government actively subsidise the track.

There is a clear need for large investment on that scale in this country before there is a market for private train operators. The Secretary of State told us that, towards the end of this year, he will publish a document outlining the access and charging arrangements. We have to hope that, when he does so, he will reconsider his suggestion that the new rail track body raise its income by charging operators. It is essential that there should be some direct investment in the track itself.

I am concerned also about the future of the freight industry. What free- marketeering freight operator will opt

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for the rail system when he can use the roads at a much reduced cost, subsidised by the Government in a way that they simply decline to do for the railways? If only the Government had addressed that point, this White Paper might have had some use.

We welcome the slight modification on the question of a level playing field in investment in road and rail, but that is not what we are going to get, in any meaningful sense, from the proposals in the White Paper. Once a franchise is up and running, there is little to be gained from an operator carrying out imaginative market research as there were a new product. I submit that the Government plans are plans for stagnation, and they are the reverse of enterprising. On the question of banning British Rail from bidding for franchises, there is certainly room for British Rail to improve its sense of enterprise ; the fact that private operators were involved might be just the incentive that British Rail needed. Why not allow British Rail to bid for franchises? No one in the private sector has ever run any sort of railway system before. Why should private operators not have to beat British Rail in a bid? Will the bids coming from the private sector be realistic, or will we see a repeat of the channel tunnel enterprise, when the bids were phenomenally lower than the true costs? If a franchisee does take on a loss-making service, what will happen when it goes wrong? I suspect that what remains of British Rail will have to take on the service, and in one way or another the taxpayer will pick up the tab.

There is a clear clash between open access and franchising. The European Commission wants to open up rail networks so that operators from other countries can run a rival service. It sounds rather like allocating slots at Heathrow airport and then saying that anyone who wants to do so can fly in or out at any time. The potential winners of those franchises will have to beware of falling into a trap : if they bid at a particular price for a private monopoly service, they will be in for something of a shock if, at some point down the line, a French or German operator comes in and operates a rival service alongside them. Why should the franchising authority be the body that decides on the grouping of services? We have already heard about the contradiction between their role in handing out the franchises and protecting the passengers. Why is there not a passenger body to do that job instead of a Government quango?

Given the performance of the other regulators in other privatisations, what grounds for hope can there be that the rail regulator will protect the passenger from higher and higher fares? The British public want binding guarantees. I accept what the Minister says about no rail line being guaranteed for ever, but the public want stronger reassurances that the level of service will not decline, that fares will not increase unfairly and that there will not be social blight in areas such as mine in north Devon, where many people are entirely dependent on the Barnstaple-Exeter line. The new bodies must be given terms of reference that demand that present services are maintained and improved.

It is disappointing, for example, to know that the Government are planning to transfer responsibility for deciding the fate of the experimental services that were set up following the work by my predecessor in 1981, which enabled some of the old lines to re-open. The White Paper is a missed opportunity. With a massive injection of capital along the lines which preceded

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the Japanese privatisation, the commercial skills of the private sector might indeed have been harnessed to run services to everyone's benefit. But the Government's conviction that, by simply decoupling themselves from the railways through privatisation, they will make the trains run on time is over-optimism in the extreme.

As other right hon. and hon. Members have said, the Government should have taken more heed of bus deregulation. By committing themselves to breaking up the British Rail network, rather than allowing a small and gradual introduction of the private sector, the Government risk the destruction of the enterprises that want to operate before those enterprises have even had a chance to get going.

I ask the Secretary of State to consider the time scale seriously. Earlier in the week, the hon. Member for Christchurch (Mr. Adley) called on the Government to await the findings of the Select Committee on Transport before going ahead. There are fears on both sides of the House and among the passengers who are crammed into carriages and stranded on platforms that a time scale of one parliamentary term is too short to force the entire network into the private sector.

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