House of Commons Hansard Debates for 12 Jan 1993

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Throughout, I have stressed the paramount importance that has been given to safety matters in our privatisation proposals. That was emphasised in the White Paper that we published in July 1992. I utterly reject the accusations about safety that have been made. What my hon. Friend the Member for City of Chester (Mr. Brandreth) said in his intervention was absolutely right : British Airways simply cannot be accused of ignoring safety requirements in the event of privatisation. Indeed, the situation is quite the reverse. It would be commercially disastrous for companies such as British Airways or for franchise passenger services to acquire a bad reputation in respect of safety. Of course, such undertakings will attach paramount importance to the question of safety, as will the Government. That must be made absolutely clear.

I am grateful for the opportunity to refer to the definitive report of the Health and Safety Commission on the appropriate future safety arrangements for the railways. [Interruption.] Given his interest in safety, the hon. Member for Kingston upon Hull, East, instead of shouting across the Chamber, might listen to what I have to say about this extremely important matter. Over the next few months there will be ample opportunity to discuss the report.

The House will be aware that the Health and Safety Commission is the independent authority responsible for safety on the railways. Its report, which was foreshadowed last July in the White Paper, in which we asked for a detailed and thorough study of our proposals, contains 38 detailed recommendations, including proposals for new regulations under the Health and Safety at Work etc Act 1974, which would provide the statutory framework for the new arrangements. I am pleased to tell the House that the Government accept the commission's recommendations in full. I am satisfied that the commission's proposals will provide a robust and practical framework for ensuring that the benefits that privatisation will bring to the railways will in no way diminish the safety of passengers using or of employees working on the railways.

It is very important that it is the Health and Safety Commission, which is independent and which I am sure the hon. Member for Kingston upon Hull would never criticise in that respect, that has produced this report and I have said that its proposals will provide a satisfactory framework. In particular, the Government accept that considerable care will have to be taken--this point is made in the report--to set up systems to ensure that new operators are properly equipped and organised so that they may give confidence that risk will be effectively controlled right from the start and that important matters will not fall between the safety arrangements of the various parties.

We also agree that it is vital that the process be properly planned and managed, having full regard to the capabilities and morale of staff who have to make it happen, and that it is essential that British Rail's specialist expertise be retained to ensure proper validation of the new organisations. The proposals are designed to achieve those ends and that is why they have our full commitment and support.

Mr. Prescott : This is disgusting.

Mr. MacGregor : The hon. Member for Kingston upon Hull, East says, "This is disgusting." What he really means is that he is extremely disappointed that I have been able

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to come to the House this afternoon and say that we have a report providing an assurance in respect of safety and that all the recommendations will be implemented in full. I hope the hon. Gentleman agrees that this is a major issue and that it is right that I should devote attention to it. If I had not done so, the hon. Gentleman would have spent the afternoon levelling safety accusations against me. In fact, he is disappointed that I have been able to say that we accept in full the recommendations contained in the report.

Mr. Prescott : What the Secretary of State has said is absolutely outrageous. We have protested about the fact that the document was not available. We have not been able to make our judgment, but I am sure that the Health and Safety Commission will say a number of things and enter a number of qualifications. The report says : "The consequences of failing to achieve adequate systems of control will be seen in increased risk on the railway system and in the likelihood of an increase in the numbers and severity of accidents." Presumably it goes on to justify the stated opinion concerning safety. It is not fair for the Secretary of State to criticise the Opposition when we have not had access to the report. A document as important as this one should have been the subject of a statement to the House. We should have been able to subject this report to proper critical analysis. The Secretary of State should at least be courteous enough to recognise that we have not had an opportunity to read the report. It is totally unacceptable that he should characterise our protests as being outrageous. If only for the sake of decency, perhaps he would like to withdraw that remark.

Mr. MacGregor : It is hardly appropriate for the hon. Gentleman to use the word "disgusting" when I am telling the House about the report and its recommendations on this crucial matter. I have emphasised that, as the Bill goes through the House, there will be endless opportunities to discuss the details. The report is very detailed and there will be full parliamentary debate.

The report sets out the guiding principles, which the Government accept in full. The commission's central recommendation is that there should be a "cascade model" of safety validation for railway operators. In layman's language, this means a system that properly establishes the different levels of responsibility. It is proposed that each railway undertaking should produce a railway safety case, which would set out the undertaking's safety policy, risk assessment, safety management system and maintenance and operational arrangements insofar as they relate to health and safety issues.

These railway safety cases would be validated by the infrastructure controller--that is, Railtrack. At the top of the cascade, the Health and Safety Executive would validate Railtrack's railway safety case, including Railtrack's system for validating operators' safety cases. British Rail's safety organisation will be maintained as a unit and will be transferred to Railtrack.

I am aware that some people have criticsed the number of bodies that will be involved in our privatisation proposals. The Health and Safety Commission, as the independent safety authority, is, of course, one of those bodies. I wish to emphasise that the commission is already, under current circumstances, the safety authority. Thus, we are not adding a new body ; we are ensuring that we

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have the full machinery that we need to fulfil all safety commitments. I do not believe that anyone in the House would wish otherwise.

The report has been fully discussed with British Rail and I myself have had a meeting with the chairmen of the Health and Safety Commission and British Rail for the purpose of going over the key issues. I can tell the House that Sir Bob Reid is fully satisfied and that this afternoon he is welcoming the report and endorsing the proposals. I am today asking the chairmen of the Health and Safety Commission and of British Rail to press ahead with implementation of the commission's proposals.

Clearly, I do not have time this afternoon to go into any of the detailed recommendations, but the House needs to know that the report concludes :

"It is considered that the recommendations in this report, if implemented, will provide the necessary assurances for the public and the work force."

As I have said, we have accepted the regulations and agreed them with British Rail and will implement them. The regulations will replace British Rail's internal rules for the carriage of dangerous substances. It is accepted that the carriage of such substances should be subject to statutory regulation, especially with new operators entering the field, and that will be done.

Mr. Dalyell : Does the Secretary of State accept that there is a special case for the carriage of nuclear substances?

Mr. MacGregor : I have already said that we shall be implementing the recommendations in full by way of regulations.

I express my warm appreciation to the Health and Safety Commission for its skill and hard work in carrying out such a detailed and thorough study. The way in which it has carried out its task has been exemplary and ensures that our safety regime has been thoroughly validated at professional and expert level and has been agreed by all concerned. That was a major priority in our privatisation proposals and it has now been successfully accomplished. We shall now proceed with the implementation.

The hon. Member for Kingston upon Hull, East accused me of trying to conceal the report. On the contrary, I wanted it to get as much attention as possible.

When I last spoke to the House, I said that I had had meetings with the major rail unions about our proposals. The issue on which they most pressed me, and an issue on which they all felt strongly, was pensions. I have made clear to them that I fully understand the importance that they attach to the pension arrangements. It has been raised by a number of hon. Members in the House and many right hon. and hon. Members have written to me and to my hon. Friend the Minister for Public Transport about pension matters.

The union pressed two views on me : that the BR pension funds should be secure, and that for the future some form of joint industry arrangement should be developed from the present pension funds. I shall be publishing a paper on pensions within the next two weeks, but I am able to say now that the Government agree that there should be a joint industry pension scheme to succeed the present BR scheme ; that there should be arrangements to ensure that pensions to which railway staff are now entitled are safeguarded ; and that their future pension benefits should be no less favourable than in the present BR scheme.

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We do not think that participation in the joint scheme should be compulsory for future employers in the industry for all time. We consider that those employers should be compelled to protect the accrued pension rights of those in the industry. The paper will explain the sort of joint industry scheme that we have in mind. I wish to deal separately with the rights of railway pensioners. The industry is not to be privatised as one. That is why a joint industry scheme is necessary. It would be impractical to allocate to new parts of the industry all the people who have retired or deferred their pensions. Therefore, we propose one of two options. The first is that the appropriate part of the existing fund should be set aside and administered separately for the pensioners. The fund would not be guaranteed, so the pensioners would depend on the skill of the fund managers for their benefits. Alternatively, part of the fund could be taken over by the Government who would undertake to pay index -linked pensions. That option would provide a firm guarantee, but the benefits would not improve in real terms as they might under the first option. We want to hear the views of the BR trustees, whom we shall consult closely on these matters, and the pensioners themselves about those options.

I cannot in this speech go into such an important topic in depth. The paper will deal with such matters as how the new scheme should be governed. We shall, of course, study the comments of the industry when it has considered the paper. It is likely that amendments will be required to the Bill, particularly in order to procure future arrangements for pensioners. Amendment will obviously depend on the responses, but it seemed to us better to consult first rather than be too prescriptive. I hope that what I have said will reassure the members of the pension schemes. I am also able to tell the House that I have discussed the proposals with the chairman of BR and that he is broadly content.

The House will know that the pension law review committee chaired by Professor Goode is due to report by June. I hope that we shall be able to take account of its thinking in establishing the joint industry scheme.

The hon. Member for Kingston upon Hull, East accused us of producing complex proposals and spoke about quangos, ignoring the fact that some already exist. The vast majority of the organisations about which he spoke are in being and would certainly exist under any scheme that he would propose. I have never suggested that the reforms would be simple, because British Rail is already a large and complex organisation. This process of radical change is bound to be complex, but it is certainly not over-complex and there are good reasons for all the proposals that the hon. Gentleman criticised.

In other areas of transport we do not generally expect the provider of services to run the infrastructure as well. Therefore, the split between Railtrack and rail services is well precedented. The simple arrangement of private sector operators running services on track provided by Railtrack and the public sector providing the infrastructure is at the heart of our proposals. Obviously, that means the setting up of Railtrack. Other supporting organisations will make the system work.

We currently pay subsidies of £1 billion a year to British Rail. In future, subsidy will be paid to franchisees. That should assure my hon. Friend the Member for Cheadle (Mr. Day). There must be someone to specify the service,

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to nominate funds and to ensure value for money. That is what the franchising authority will do, but in public. All that activity takes place now, but behind closed doors within British Rail. One of the strangest criticisms of the setting up of the franchising authority is that the public must not know how much subsidy goes to some lines lest people be shocked. Our proposals are a positive advantage in terms of open government and open discussion about where taxpayers' money is spent.

The regulator will protect consumers' interests, prevent anti-competitive behaviour and ensure that operators have equitable access to the railway. All privatised industries with any element of monopoly have a regulator to provide such protection and the railway should be no exception. Some people have even criticised the establishment of rail users consultative committees as adding another layer of bureaucracy, quite ignoring the point that such committees already exist. To ensure that there are as few different bodies as possible, I have proposed that those committees should report to the regulator, who will, after all, be the guardian of the consumers' interests.

I have already dealt with the safety authority. It cannot remotely be criticised for being a separate body, because it is that already. Our proposals do not amount to the great bureaucracy which the hon. Member for Kingston upon Hull, East accused us of creating. I should like to nail one or two other canards, although I have already dealt with some in answer to questions. It has been said that there will be widespread closures of passenger services. I have said repeatedly and say it again that we shall subsidise socially necessary services. As I have said, subsidy will continue to be paid through the franchising director to franchisees who will bid for it for lines that cannot operate without it.

One of our main aims is to get better value for money over time. The franchise contractors will deal with fares. Where there is an element of monopoly power, as there is on the London commuter routes, the franchise contracts will fix the fares. The regulator will control the fares of open access operators with monopoly powers. Elsewhere the franchising director will need to consider the proposals of potential operators when judging their bids to run franchised services. A fixed formula might be incorporated in the franchise contract to limit fare increases. We shall be able to debate all those issues later, but I have made the position clear about closure of lines, franchises and subsidies.

As I have said, we shall maintain the formal statutory closure procedure, offering no less a safeguard on proposals for closure than the existing one. Plainly, there will need to be some changes to the existing procedure to reflect the changed structure of the railway, and the details of the scheme will be set out in the Bill. The hon. Member for Kingston upon Hull, East spoke about the timetable. A few days ago the old railway traditions of interest from the clergy were observed when Canon Hugh Montefiore suggested that there could be no national timetable. There will be such a timetable and Railtrack will be responsible for providing it. Some critics say that it will not be possible to buy a through ticket, but that criticism is answered in the White Paper because such tickets will be available and the Bill will provide for them. Those are just a few of the misunderstandings that I have sought to correct. I hope that they will not be repeated in the House or outside.

Shortly, on Second Reading of the main privatisation Bill, we shall be able to debate all these matters again. I

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believe that we have got the structure right and I am absolutely convinced that in order to bring about further improvements in British Rail passenger and freight services it is right to introduce more competition and choice and inject private sector management skills and capital.

As the Bill goes through Parliament we shall be able to discuss all the issues and make adjustments where we consider that they are justified. But the clear message is that privatisation is necessary to inject private sector discipline into the railway industry. It will happen, but not in a great unseemly and ill-thought-out rush. We are making our preparations steadily and deliberately. There is no U-turn. I look forward to introducing the Bill to the House and to getting on with it and that is why I support the amendment in the name of my right hon. Friends.

5.9 pm

Mrs. Gwyneth Dunwoody (Crewe and Nantwich) : One should have sympathy for the Secretary of State. He reminds me of a person in a glass maze in a funfair, eternally seeking a way through but always bumping his nose on another piece of glass. He took over an incredible dog's breakfast of a product and he is finding it impossible to organise a sensible or even acceptable policy to move towards privatisation.

Britain's railway system, which grew up in an age when rail was a new form of transport and able to attract great investment, went through a period when private industry was no longer able to produce a profit. Any railway system anywhere in the world will demonstrate only too clearly that we need a state railway system, subsidised by taxpayers, integrated and planned on the basis of people being able to move easily from one form of transport to another and providing a service. I was struck by the fact that the Secretary of State believed that, somehow or other, it was wrong to maximise service. Surely the main function of a railway system is the transportation of people and goods in a manner which is convenient and useful to them. When it ceases to perform that function, it is an anachronism. I am sorry to say that the proposed privatisation of British Rail is an unalloyed disaster because it has not been thought out. No one has produced, either today or on any other occasion, an adequate reason-- certainly no adequate economic reason--why the proposed changes will improve the service. It is clear that any transport system must have money from the taxpayer if it is to operate efficiently. The Secretary of State congratulated himself on the time he had taken to bring the changes about, but at no point did he explain why he was not prepared to publish a Green Paper, consult widely with private and state industry and produce a proper workable plan.

We are rushing ahead with a Bill which answers none of the basic questions. Already the uncertainty created by the risk of privatision is leading to a flight away from the carriage of freight within the industry and causing the private firms which provide the rolling stock openly to declare that they are facing a long period of industrial blight and cannot look forward to order books with even adequate amounts of work. The Railway Industry Association went public with the information that 75 per cent. of its private firms are working at only 75 per cent. of their capacity now, expect almost empty order books in

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1994 and will be unable to provide within a reasonable time either work or rolling stock for any new system, privatised or non-privatised.

We now have the worst of all worlds. The Government are committed to privatisation but have not thought it out. They cannot provide an economic argument or even produce a practical plan for supporting the existing system. British Rail, whose reorganisation has already led to enormous uproar and which is facing real problems of morale, is being told that it must nevertheless face yet another period of uncertainty. All the men and women who work in the industry, who in the past five years have experienced enormous changes and have responded with enormous alacrity and great good will to the demands made upon them by the British Rail management, are now told that, regardless of how much better their productivity is or how much effort they have put into improving it, they are to be subjected to yet another period of violent change. Some will be told that they will lose their jobs or that their pensions are at risk, and the majority will look forward to a period of uncertainty and change which is not justified on political or economic grounds but only on grounds of pure dogma.

It is no accident that increasing numbers of ex-Conservative Members of the House are voicing real worries about the future of the railway system. They know that, there is a direct link between the support of the electorate and the provision of a proper transport system. They understand that, without a transport system which enables people to go to work safely and to give a good service, the Conservative party will pay in terms of votes and political support. Those arguments have so far been completely ignored, not just by the Secretary of State but by the Government, who should know better. I am not surprised that the report "Ensuring Safety on Britain's Railways" has been dealt with in the slightly cackhanded manner that we have seen today. One has only to look rapidly at some of the things that it says to realise why there are real worries about privatisation. The report says :

"BR will specify to any potential new operator the safety-related conditions of access".

It goes on to lay down various pieces of machinery. On page 22, paragraph 3.7, it says :

"At present BR is obliged to control and is responsible for all aspects of railway safety ; it controls the infrastructure and operates all services. In any scenario which divides this control by introducing new independent operators the body which controls the infrastructure will continue to hold a dominant position." Whatever is introduced, the report lays down the need for machinery which will respond to the real safety needs of the passenger. The Secretary of State has a responsibility to explain why a fragmented system will produce a better service for the passenger, but he has never once done so. He has told us that subsidies will continue because he knows that any private operator who comes in will look immediately for a good return on capital invested. A private operator will want property, facilities and all the things that can be taken out of the existing system without necessarily putting back the expensive services which are at present the function of British Rail. Whatever the Secretary of State says, private operators will not rush into buying new trains and providing new services. Private operators will not want the difficult bits of Network SouthEast or the

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commuter lines around Manchester. They will know all too well that those are difficult and expensive services with many problems. The Secretary of State should be prepared to say that, whether one is talking about safety, subsidy, investment or an integrated planned transport system, privatisation is not the answer. British Rail does not do all that we want it to do, but instead of accepting that some of its problems arise from lack of investment, the Government come here and say that it would be much better if it were sold off in bits to any private franchisee wishing to take on the service. That is totally irresponsible, as I believe many Conservative Members know. Many hon. Members at all levels understand the importance to their constituents of a transport system which delivers people, safely and at a reasonable price, to the place where they want to go. People want clean, safe railways which do not just deliver them to certain mainline stations, but provide subsidiary local services at the desired times and places. All those facilities could be available if the Secretary of State were prepared to tell the Treasury, "The only thing basically wrong with the existing system is lack of investment and support."

I ask the Secretary of State in all sincerity not to think of our transport system as an ideological ball to be tossed in the air to show how much more Conservative the Government are than any of their predecessors. Destroying the present integrated system will not produce a better result for the passenger or for the economy--it will simply pile confusion on confusion and hazard on hazard. Unless the Secretary of State asks the Cabinet to think again, it will not be only Opposition Members who find themselves in grave difficulty when the Bill is presented. All Members who generally want to protect their constituents' interests will have to ask themselves a simple question--whether the Bill will improve the transport system or make it worse ; and if it will make the system worse, we can surely all unite in defeating it in no uncertain manner.

5.21 pm

Sir David Mitchell (Hampshire, North-West) : There is something of an enigma in the Opposition's attitude to British Rail. They have spent the past 10 years lambasting its management ; now they oppose the most effective way of lifting it into the 20th century. Yet British Rail is not so very bad. Britain runs more trains at over 100 mph than any other EC country ; BR has the fastest fleet of commercial diesels in the world ; and in InterCity it has the world's only profitable main line railway. Privatisation will provide many opportunities for BR to build on those achievements and to improve passenger services. Of course that will mean change, and change means fears and uncertainties, but I think that we can draw some confidence from what has happened in other public services when the private sector has been introduced.

I hope that Railtrack will draw on the experience of local government, which has made a great success of contracting out. Local government is taking on the role of enabler rather than that of doer, and huge benefits have resulted. I hope that my hon. Friend the Minister will

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confirm that he proposes such action, for private contractors will be able to invest in the most modern machinery, outside Treasury control.

In local government, contracting out has led to changed working methods, more modern equipment, higher productivity, larger pay packets and lower costs. I should like an assurance that Railtrack will not perpetuate British Rail's current institutionalised position as doer rather than enabler. We need a culture change, and I believe that that is the way to achieve it.

On the subject of franchising, large subsidies have been made available-- £300 million for London Commuter Services and £700 million for Regional Railways. We can learn from the example of the bus industry, which was given subsidies on condition that it tendered competitively to the county or metropolitan councils first. That saved £40 million per year. I believe that similar benefits can be gained from franchising with competitive bids, for the minimum public subsidy.

Investment is a vital aspect. I find myself in a minor alliance with the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) in that I fear that there is a danger that BR will not invest in rolling stock because it does not know whether it will hold the franchise, and the franchise companies will not invest yet because they do not know whether they will have it either. There is a danger of a gap in the flow of orders to the railway manufacturers. I believe that the best solution would be for the manufacturing industry, or the City financing institutions, to set up leasing companies to build new rolling stock which they expect a future operator to acquire--whether that operator is BR or a franchise company.

I ask my hon. Friend the Minister to take the initiative, and to see that such an operation is set up, so that the manufacturing industry does not experience a continuation of the current drying up of orders. It is likely that orders will run out in 1994. Such an arrangement would also make new rolling stock available to a future operator when it is needed.

I wish to make two points about freight. First, BR appears currently to be preparing the freight sector for privatisation by making its existing operation leaner, fitter and more viable--and hence more attractive to private sector bidders or a management buy-out. It is achieving that by pricing off non-viable freight traffic. However, as the Government's whole case for privatisation is that the skills of the private sector, its productivity, its capital and its lower costs all mean that it can win more traffic off the roads and get it on to the railways, surely there is a case for introducing open access now. I fear that the traffic now being priced off is the very traffic which ought to be and would be retained on rail in a private sector operation.

I know that my hon. Friend the Minister believes that transferring more freight on to rail will provide substantial benefits, including environmental benefits. If those benefits are to result from private sector involvement, we should surely allow open access now so that the private sector can bid for the services which BR is currently pricing off and not making available to the private sector. I hope that my hon. Friend will announce this week that he will require BR to provide open access to freight operators immediately, rather than waiting until a future time when a significant part of rail freight will have been transferred back to the roads. That would be a very bad start to a major opportunity for the private sector to extend its activities on the railway.

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Secondly, the extent to which freight is carried by rail depends chiefly on the charges made for the use of track. What will be the basis of those charges? It used to be the marginal or extra costs, with the main sector user carrying the structural costs. Will that still apply? As privatisation and franchising are introduced, every user will attempt to offload the costs to other users. I am expressing the anxiety that there will be a tendency to try to shift costs on to freight which previously were borne by the main sector operator. Will my hon. Friend the Minister publish the criteria on which freight will be charged for the use of the railways and ensure that there is an appeal procedure against overcharging? Otherwise, I fear that far too much freight will be priced off the railways because the costs being attributed to freight are disproportionate to that which they should be.

I hope that my hon. Friend the Minister will reply to those points when he replies to the debate.

5.30 pm

Mr. Nick Harvey (North Devon) : The Secretary of State said that he could not understand why we were holding this debate today. His press department must have given him the recent cuttings and he must be aware that, whether it is privatisation, semi-privatisation or commercialisation, the Government's policy is wrong.

As the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) said, this proposal has been on the agenda for some time. It has exercised the Secretary of State's predecessors, who have contemplated it, tussled with it, thought better of it and discarded it. There has naturally been some speculation that perhaps the right hon. Gentleman would do the same. He has confirmed today that he intends to press ahead very much along the lines of the White Paper published last summer. In doing so, he is setting about something quite new and he is right to say that it is nearly privatisation. It does not compare with anything that we have seen before in this country or with another train regime in the world.

We have not heard to my satisfaction any clear statement of the benefits for passengers. I think that the Secretary of State said that BR managers would be allowed to bid in the franchising operation. If I am right, that is new and not what I have understood him to say before. Will he go one step further and confirm that BR, as an entity, will be able to bid in the franchise process? That single factor would give some credibility to the project. The Secretary of State placed different emphasis today on the time scale. I welcome the suggestion that the process might take as long as the German process, which took 12 years. In a previous debate the Secretary of State said that it was his aspiration to get the majority of the network into the hands of private operators within the lifetime of this Parliament. On another occasion he said that private sector interest in these opportunities was such that he was holding back the floodgates until the spring of 1994. I welcome the change of emphasis which I believe that I detected today in suggesting that the timetable might be more relaxed.

In whatever form it finally happens, and at whatever time, the problem is that privatisation is happening after years of underfunding by consecutive Governments, as even the hon. Member for Kingston upon Hull, East (Mr. Prescott) acknowledged. The confusion and delay of

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the past five years have prevented forward planning. There has been a hiatus in investment by British Rail, any possible private players in the rail system and local authorities.

The question that I ask is whether the proposals that have been made, which were restated today, are practical and possible to implement. It is difficult to find anyone outside the House who knows anything about the rail system and is prepared to express confidence in the arrangements. I sincerely doubt whether the proposals can create a national rail network capable of meeting and providing a socially necessary service.

The Secretary of State is charging pig-headedly onward in the face of opposition not only from Opposition Members but from leading Conservative luminaries who have held his post in the past, from the chairman of British Rail and from the majority of members of the Transport Select Committee. If the Government proceed at full steam, they will stoke up a heap of trouble in suburban and rural areas, where voters are predominantly Conservative. The comment of the hon. Member for Crewe and Nantwich that there will be a high electoral price to pay for this will prove correct.

Mr. Milligan : The hon. Gentleman's stinging attack on the Government's policies is bizarre as his party supported at the last election the principle of franchising the railways.

Mr. Harvey : My party has had a lengthy debate on these issues, which is probably more than can be said for the Conservative party. We would have been perfectly willing to entertain any sensible suggestions--we have no ideological objection to private involvement in the railways and we would have liked the Government to make believable or credible proposals-- but the White Paper is a recipe for chaos and anarchy on the railways, which we cannot possibly support. It is perhaps a pity that more notice was not taken of those who urged a sensible approach which would have enabled private operators to be involved. No doubt entrepreneurs will snap up the profitable routes. They may be able to improve some services because they will get access to the capital markets and will be freer of the Treasury rules. My concern is for the majority of rail passengers who use lines which need some subsidy but which will continue to lose money even after privatisation. Such lines, even with some subsidy, will prove pretty unattrative to the private sector. Despite the Secretary of State's refernce to holding back the floodgates, there is no real evidence that there is a market.

It will require substantial funding to keep those services operating to the standards that the public demands. The catch-22 is that if franchisees take on routes and begin to improve their performance and financial returns, the Government will gradually reduce and withdraw the subsidy. Is that not a disincentive to anyone who might be interested in making a go of those lines ? If the Government proceed with the proposal to franchise whole geographical areas, might not the new operators of those zones or areas start wanting to cut the loss-making services ?

The Government have said vaguely that they will safeguard socially necessary services and have restated that again today, but we have not had a clear definition of a socially necessary service. The fear must be that more and more services would be cut and replaced by inferior bus services. The Secretary of State squirmed over

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guarantees and safeguards. He said at one point that the majority of lines would be safeguarded, and at another point that almost all of them would be. If Government support to the non-economic franchisees is strictly cash limited, there may be pressure on the franchising authority to decide that various services are no longer socially necessary.

One can foresee the pressures which would build up against some of those lines. The new transparency will mean that the full costs will be exposed, making some of them more vulnerable. The cross-subsidy will disappear, at least in the form in which we know it. The cost of upgrading lines to the new, tougher safety standards will be higher. The infrastructure costs in general are higher in rural areas because more is spent on avoiding hills and on tunnelling and bridges. There has been a decline in standards in many rural areas for many years as British Rail has been forced to tighten its financial belt and has been starved of vital resources.

One of the main concerns about the Government's proposals is the requirement for Railtrack--the new quango--to make a return on the system, which will make the future viability of some of the branch lines especially suspect. It is a matter of considerable interest to me as I come from the south-west which has a number of small rural services.

In 1981, my predecessor steered on to the statute book private Member's legislation which enabled British Rail to reopen on an experimental basis some of the rural lines which had been lost in earlier rounds of cuts. The White Paper states that the franchising authority will be allowed to decide whether those routes should be franchised. If they cannot be shown to be profitable, it is unlikely that there will be any prospect of their being franchised. At the moment those lines are not subject to statutory closure procedures, but they have proved their point. At the point of the privatisation of British Rail, which is seemingly to happen in the next few months, the Government should now safeguard those lines and subject them to the same closure procedures as all other socially necessary lines. The regulator and franchising authority will be the bodies to provide and qualify what the safeguards will mean. There is also concern that they will be much more centralised than the current responsibilities exercised by British Rail. At least since the organising for quality arrangements, British Rail's set-up has placed management decision making and accountability at a more local level for passengers. So far as I am aware, there is no provision under the new arrangements for local authorities to take on more

responsibilities.

Mr. Snape : Just the opposite.

Mr. Harvey : Yes, just the opposite--there is no provision for them to take on any more responsibility for service planning.

The track authority and the regulator are not even required to consult local authorities. In view of local authorities' scant budgets and the difficulties under which they operate, it is unclear how they would be able to play a part in that work. Even the role of the passenger transport authorities in the provincial conurbations may be threatened by the proposals.

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We welcome the confirmation that there will continue to be statutory national and regional committees for rail users' interests, but we want them to be independent of the regulator. Let us consider the example of another privatised industry. The Gas Consumers Council is independent of the regulator and its work is much more effective than that of organisations trying to act under the wing of the regulator. Crucially, we want passenger bodies to be able to comment on franchising specifications ; otherwise, it is almost pointless for them to exist.

I welcome the Secretary of State's stronger comments today about keeping network benefits such as through ticketing and timetabling. May we hope that they will be incorporated into the legislation as a requirement on any operator rather than being something that the regulator is merely invited to consider? May we hope that they will be referred to in the awarding of franchises?

The Prime Minister has harked back to the golden age of steam--I imagine that he has his copy of Bradshaw's timetable next to his collection of Wisden--but I wonder whether he really hankers after the time when people were able to operate their brightly coloured trains, fiercely competing against each other. Has he considered the possibility of trying to get from Huntingdon to Holyhead in such circumstances because he would find it very difficult? Unless operators are required to work to a common timetable instead of being left to their own devices, we shall have a recipe for utter chaos. The White Paper recognised the principle of a network--we heard more about that today--but it should be incorporated into the legislation as a requirement on operators.

We have not heard what will happen to the discounts enjoyed by various passengers. What will happen to student cards, pensioners' cards and any concessions for the disabled? Will the operators of the new franchised services be compelled to recognise those discounts, or will it be left to the operators' discretion and commercial judgment?

The proposals cause much concern, and I have outlined those which are of especial concern to people in rural areas. The proposals have serious environmental implications, and I fear that there will be less passenger and freight traffic on the railway. As a result, the environmental assistance that the railway could potentially bring to our national life could be lost.

We need a coherent national rail strategy. We must decide what role the railway can play in our economic and social life and in our environmental policies. We have not had such a debate, but it should have taken place before we embarked on the process that we are discussing. Rail must be given a level playing field with the rest of the transport network. My party has continually argued for that. We welcome the fact that cost benefit analysis will now be used in assessing rail investment, but could it not be extended to the awarding of franchises and to the principle of charges to be levied on operators when they use the track?

Just before Christmas I and members of two other parties were privileged to visit the new light rail set-up in Singapore. We saw an example of a Government having embarked on a major programme of investment, having built a service to the community and then offering private operators the opportunity to run it on a franchise basis. What a large contrast there is between that and what is now being proposed here.

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Mr. Peter Fry (Wellingborough) : Is the hon. Gentleman not aware that every light rail system being built in this country is virtually 100 per cent. supported by public money, either directly or through guaranteeing the amount of money that local authorities borrow and on which they pay interest, through the revenue support grant? The hon. Gentleman said that the Government have not taken the correct approach with light rail, but that is untrue : all such schemes are being handed to private organisations which will run them.

Mr. Harvey : I did not say that. My point was that it would be helpful to the future of the rail network if that approach were extended to the rest of the network. It would be more credible to expect private operators to want to run rail services if they did not have to pay for the many years of underinvestment in the rail network and to pay for what is likely to prove a most unattractive--even prohibitive--charge for using the track. It contrasts completely with the example that I gave where the infrastructure was built and provided free of charge and on which the operator was to make a return.

There might have been circumstances in which my party could have supported a Bill on railway private operations--we have no ideological objection to private operators using the rail network--but there is no such Bill. As the Secretary of State rightly said, this is not a classic privatisation. In fact, it is a classic miscalculation--one which the Government make at their peril and which will haunt them for many years to come.

5.48 pm

Mr. Robert Adley (Christchurch) : The House has heard a thoughtful speech from the hon. Member for North Devon (Mr. Harvey). Indeed, he was gracious in mentioning his predecessor's interest in rail matters. I spoke twice in Barnstaple during the general election, which may account for the fact that the hon. Gentleman is here. Both speeches were about matters of public transport rather than party politics, which was rather the theme of the hon. Gentleman's speech. I mention, in a friendly way, that I happen to have here the Register of Members' Interests and I notice that the hon. Gentleman has not yet registered his visit to Singapore. He had better put it in the register before some unpleasant journalist picks up the point and makes trouble for him.

I have had discussions with the right hon. Member for Yeovil (Mr. Ashdown) on the subject. It is fair to say, as the hon. Member for North Devon has said, that his party is not dogmatic about the future of the railways. I hope that I am not dogmatic either. I am bound to say to the hon. Member for Cunninghame, North (Mr. Wilson) that to hear his hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) accuse my right hon. Friend the Secretary of State of being dogmatic and then to look at the single-line Opposition motion makes one realise that it is rather like the pot calling the kettle black. I say equally to my right hon. Friend the Secretary of State that the Government amendment and everything that he says makes one underlying assumption--that, whatever the state of the railways at the moment, things can only get better. I have grave doubts about that proposition. The Government amendment

"recognises that progress has recently been made in improving British Rail's services".

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I start my remarks with a point I have boringly made many times before in the House. In my view, party politics and public transport policy are very uneasy bedfellows. The railways are a vital part of the nation's transport infrastructure. If my right hon. and hon. Friends regard my enthusiasm for the railways as a crime, I plead guilty. However, when the party political shouting across the Chamber dies down and scrutiny of the Government's proposals begins, many more questions will be asked and will need to be answered than we have even touched on this afternoon.

Few would say that British Rail is perfect. I have never heard anybody say that it is perfect, so the proposition that there should never be any change to its structure or even partial ownership is an unwise position to take. However, I believe that we must have an analysis of the problem first.

That was why I intervened in my right hon. Friend's speech and mentioned Helmut Kohl's Government railway commission. I did so to make the point that if the Government are seriously trying to improve part of the nation's transport infrastructure, they have a duty first to analyse the problem. Is it caused by levels of investment? Is it caused by fluctuations in the public service obligation grant? Could taxation policy be used to advantage the railways and to forward a policy of transferring traffic from road to rail? Is there a level playing field? Are the Department's current road and rail investment criteria satisfactory in a country that is overcrowded and in which congestion and pollution are serious factors? None of those issues has even been discussed. They are not mentioned in the White Paper in any detail, nor, I suspect, will they even be touched on in the Bill.

The Labour party says no to any sort of privatisation. My right hon. Friend, if I may say so, reminds me of a schoolmaster at Uppingham, the late V.T. Saunders. When one entered his classroom for the first time, he said, "In this classroom, there are three ways of doing things : the right way, the wrong way and my way, and here you do things my way."

I commend yet again to my right hon. Friend the example of other members of the Cabinet recently. The Secretary of State for National Heritage produced a Green Paper on the future of the BBC. It was a very green paper. It was open-minded, it showed a willingness to listen, it was undogmatic and it allows plenty of time for consultation. Just before Christmas, my right hon. Friend the President of the Board of Trade produced another very Green Paper on the abuse of market power. Those are important documents. They need to be considered outwith the clamour of party politics. I regret very much that my right hon. Friend's proposals for the railways are being handled totally differently in the House from the way in which some of his Cabinet colleagues are going about discharging their ministerial duties.

The White Paper is a wholly inadequate basis for legislation. We have had the franchise document, which is a monument to Whitehall jargon. I suspect that the quangos that are mentioned therein would give Philip Holland nightmares, as those of us who have had the pleasure of serving in the House with him know.

I hope that my hon. Friend the Minister for Public Transport will tell me whether I am right when he replies, but I think that I am correct in saying that we were promised eight consultation documents-- [Interruption.]

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