House of Commons Hansard Debates for 2 Feb 1993

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friendly, because all the rumours I have heard suggest that the link will be anything but environmentally friendly because it will be stripped to the bone.

I hope that under this resolution no more money will be given to Union Rail, whose chairman has produced what is probably the most insulting remark that even the arrogant British Rail and its subsidiaries have been able to produce over the past few months : they have said that their project is so important that no parish council should be allowed to have an effect upon it. That is the kind of contempt for democracy that means that Union Rail should cease to have any money from the Government.

10.56 pm

Mr. Simon Hughes (Southwark and Bermondsey) : I should like to put several questions to the Minister. One was asked by the hon. Member for Mid -Kent (Mr. Rowe) : whether the Government will undertake, if they are to authorise by this money resolution the expenditure or borrowing of so much money, to guarantee in every case that the highest environmental requirements will be met. The hon. Member referred to reports that, for example, on the channel tunnel rail link and elsewhere on these routes, there would not be the environmental safeguards originally proposed. If we are to commit so much money additionally, and to give the opportunity to borrow it, there is no excuse for not having the highest environmental standards.

There is an even shorter point which Ministers will anticipate from me. If it is expedient to spend so much money on doing something that most people in Britain do not want, and to borrow so much money for a proposal that they do not support, why is it not expedient either to give or to borrow money to make up the £70 million necessary to give the go-ahead for the Jubilee line?

If we are asked to authorise this expenditure, it seems to me mere peanuts to ask the Government to put their hands in their pockets for the money to give the Jubilee line extension the green light. It is a mere bauble. I will reserve my position on the money resolution until I have seen that green light and heard the chinking of cash from the Government. It could be a loan, if necessary. This money resolution provides an opportunity for the Minister to be popular in one bound. 10.58 pm

Mr. William Cash (Stafford) : First, I should like to endorse the remarks of my hon. Friend the Member for Southend, East (Sir T. Taylor) about the employment provisions. There is absolute absurdity in a Conservative Government, in a nutshell, ending up protecting trade unionists at the expense of those who are not trade unionists. I cannot for the life of me understand, even if one wanted to protect trade unionists, the idea that, with these liabilities contained in schedule 6 to the Bill, and under clause 118, in the transfer of undertakings provisions that go right to the heart of the money resolution, we should be protecting one kind of worker as compared with another. It does not make any sense. If it is going to be done at all, it should be done equally.

Having said that, I should like to refer to the way in which the subsidies will operate in relation to the money

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resolution. I have already raised the issue with my hon. Friend the Minister. Although we have become used to not getting answers on Maastricht, perhaps we can have an answer on the money resolution about the implications of the new privatised rail system for the subsidies from the European Community under the European regulations.

My hon. Friend knows that the arrangements which are made through the European Community go back to the Transport Act 1968 and the European Council regulation of 1969, which was amended in 1991. They raise the question of the public service obligation, which is at the heart of the financial status of the privatised rail system. I said in an intervention in the speech of the hon. Member for Bradford, South (Mr. Cryer) that directions given by way of compensation under the relevant clause would enable sums of between £3 billion and £5 billion to be given not merely by the Secretary of State, as has been the case so far, but also by the franchising director. That is a new dimension.

It struck me as interesting, to say the least, that the amount that the British Railways Board is allowed to borrow at the moment under the British Railways Board (Finance) Act 1991 is precisely the same as the amount of money that the franchising director is able to give by way of directions-- the limit being £3 billion at the lower level and £5 billion at the upper level. If the franchising director is allowed that degree of power, we need to know how accountable the system will be. It is not simply a question of whether the Secretary of State has the power ; the franchising director has it too. I should also like an answer on what the European Transport Commissioner had to say about the privatisation of our rail system. I can assure you, Madam Deputy Speaker, that I am not going outside the money resolution, because the question of moneys payable to us through the European Community arises not only by way of borrowing but also by way of grants. Grants can come from the European Community to fulfil our public service obligations.

As I understand it, the European Transport Commissioner issued a threat that, if we privatised our rail system, we could not expect the same subsidies as other member states. That is an intolerable state of affairs. I may not be an enthusiast for subsidies, but I am damned if this country should receive an unfair allocation of its share of European moneys when the French, the Germans and the other countries in the European Community are receiving subsidies, and we, as a result of going down this route, are put in an unfair and unreasonable position vis-a-vis the other member states. I raised this point in the trans-European networks debate, and I received no reply. The Minister was on the Front Bench on that occasion, and I would like some clarification.

We are not talking about peanuts but about the payment of a massive amount of money from the European taxpayer, which is directly related to the manner in which the privatised rail arrangement is being worked out.

I take something of an interest in such matters, not least because my great great grandfather founded the London to Brighton railway in 1830--a great privatised railway, in the days when we did not have to unscramble the situation. Just as he inquired into the finances of George Hudson, the railway king and great monopolist, I should like to be sure

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that we are going to make everyone, whether in the House or in the European Community, accountable for the vast sums of money that are being used in relation to the Bill.

I shall reserve my decision on the vote on the money resolution until I have heard the answers to those questions. I am as interested as the hon. Member for Peckham (Ms. Harman) in the Jubilee line, because my constituency is equally--

Madam Deputy Speaker (Dame Janet Fookes) : Order. If the hon. Member wants to hear answers, he will have to give the Minister time to give them.

Mr. Cash : I am grateful, Madam Deputy Speaker. I have concluded my remarks.

11.5 pm

The Minister for Public Transport (Mr. Roger Freeman) : My hon. Friend the Member for Southend, East (Sir T. Taylor) asked about the Transfer of Undertakings (Protection of Employment) Regulations 1981, which deal with the transfer of conditions of employment. I can confirm that British railways are in exactly the same position as any other industry or employer. The regulations apply to the franchising of railway operations in the same way as they apply to changes in the private sector--for example, when one company is reorganised or merges with another. The provisions apply to all staff, whether or not they are members of trade unions.

My hon. Friend the Member for Southend, East is right when he draws a distinction between those staff who have a right to consultation and those who have not. I understand that the Minister responsible in the Department of Employment has recently made it clear that, in the Government's judgment, those consultation rights should only be extended to the recognised trade union.

As far as the Railways Bill is concerned, the railways are no different from any other enterprise, industry or business. The regulations apply across the board. I have noted carefully what my hon. Friend the Member for Southend, East had to say on the matter. If he will permit me, because it is important, I shall correspond with him after I have discussed the matter with my colleague in the Department of Employment.

The hon. Member for Bradford, South (Mr. Cryer) spoke about four issues. I shall see if I can answer him in the order that he mentioned them.

First, he pointed out that the £15 million for the cost of the franchising director, his staff and the regulator would cover approximately 50 per cent. of the cost of the new rolling stock. He and I both agree that new rolling stock is needed for the Leeds-Bradford electrification system. He may not have been in the Chamber when, in response to the speech by the hon. Member for Morley and Leeds, South (Mr. Gunnell), I gave an undertaking that I would meet the chairman of the West Yorkshire passenger transport authority, because it is possible that British Rail could use part of the new £150 million leasing facility to lease new rolling stock to come on to the electrification system. That is a matter for BR.

The hon. Member for Bradford, South asked about management and employee buy -outs. I confirm that the limit is £100,000 per management-employee group interested in organising a bid. Obviously, the total expenditure, which must come out of British Rail's

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external financing limit, depends on the number of groups, but I said earlier--the hon. Gentleman may not have been here--that about 20 groups had expressed interest. Whether they will all move to the stage of requiring financial assistance for professional advice remains to be seen.

The hon. Member for Bradford, South also asked me about the budget under the railway administration orders. That will fall to the franchising director's budget, which is essentially the total of the passenger service obligation grant. The hon. Gentleman knows that that is approximately £1,000 million. We shall shortly set the sum for 1993-94. The franchising director--distributing public subsidy and accountable to this House through the Secretary of State--will have to find all the moneys that he provides for subsidised services, and he is accountable for them.

The hon. Gentleman asked me about loans to British Rail. There may be occasions when it is necessary to consider extinguishment. The channel tunnel preparations are an example. For various reasons--my hon. Friend the Member for Mid-Kent (Mr. Rowe) knows this better than anyone--British Rail has been engaged during the past three or four years in some abortive work. Debt moneys have accumulated because British Rail has had to spend money on acquiring properties and preparing for routes that are not being taken forward. It may be sensible under this Bill--I give no guarantees--to extinguish that debt because it carries interest and is a burden on the railways. British Rail itself made a decision about properties purchased and preparations made.

My hon. Friend the Member for Mid-Kent asked me specifically about the freight facilities grant. I can confirm to him that what we have announced tonight is the extension of the grant to cover the removal of freight from the roads, motorways and trunk roads, so it is a valuable addition. At the moment, as my hon. Friend knows, it covers only urban and rural roads, but if it is extended to motorways and trunk roads there is a possibility that more shippers of freight will be persuaded to ship by rail rather than by road.

The hon. Member for Southwark and Bermondsey (Mr. Hughes) talked about the highest environmental standards.

It being three quarters of an hour after the commencement of proceedings on the motion, Madam Deputy Speaker-- put the Question pursuant to Standing Order No. 14 (Exempted business).

Question agreed to.

Resolved,

That, for the purposes of any Act resulting from the Railways Bill, it is expedient to authorise--

(1) the payment out of money provided by Parliament of the following, namely--

(a) the remuneration of, and any travelling or other allowances payable under the Act to, the Regulator, the Franchising Director and any staff of the Regulator or the Franchising Director, any other sums payable under the Act to or in respect of the Regulator or the Franchising Director and any expenses duly incurred by the Regulator or the Franchising Director, or by any staff of the Regulator or the Franchising Director, in consequence of the provisions of the Act ; (

(b) any sums required by the Regulator for the payment of the remuneration of the chairman of a railway users' committee, any travelling or other allowances payable under the Act to such a chairman or to other members of such a committee, any sums

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payable by way of reimbursement of travelling or out-of-pocket expenses to members of a sub-committee of such a committee and any expenses incurred by such a committee ;

any sums required by the Secretary of State for making grants-- ()

to the Board or any wholly owned subsidiary of the Board, towards the expenditure of the Board or the subsidiary, as the case may be ; ()

(ii

to any successor company which is for the time being wholly owned by the Crown, towards the expenditure of that company ;

(iii

towards the provision of facilities which are to be provided by any person for or in connection with the carriage of goods by railway or inland waterway or the loading or unloading of goods carried or intended to be carried by railway or inland waterway ;

(d) any sums required for the making by the Franchising Director of grants or other payments under or by virtue of the Act ;

(e) any sums required by the Secretary of State for making grants or loans to a company in relation to which a railway administration order has been made ;

(f) any sums required by the Secretary of State for making any payment in respect of an indemnity given under the Act to a person appointed to achieve the purposes of a railway administration order ;

(g) any expenses incurred by the Treasury or the Secretary of State in acquiring securities of a successor company ;

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(h) any compensation payable by the Secretary of State in respect of compliance with directions given under the Act in time of hostilities, whether actual or imminent, severe international tension or great national emergency ;

(i) any sums required by the Secretary of State for fulfilling guarantees given under the Act ;

(j) any administrative expenses incurred by the Secretary of State or the Treasury in consequence of the provisions of the Act ; (

(k) any increase attributable to the Act in the sums payable out of money so provided under any other Act ;

(2) the charging on, and issuing out of, the Consolidated Fund of any sums required by the Treasury for fulfilling guarantees given under or by virtue of the Act ;

(3) the payment out of the National Loans Fund of any sums required by the Secretary of State by virtue of the Act for making loans to--

(a) any wholly owned subsidiary of the Board ; or

(b) a successor company which is for the time being wholly owned by the Crown ;

(4) the reduction of the assets of the National Loans Fund by amounts corresponding to such liabilities--

(a) of the Board, in respect of loans made to the Board under section 20 of the Transport Act 1962, or

(b) of a successor company which is for the timebeing--

(i) a wholly owned subsidiary of the Board, or

(ii) wholly owned by the Crown, in respect of any loans, as the Secretary of State may by order extinguish.

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Railways Bill (Ways and Means)

Motion made, and Question proposed,

That, for the purposes of any Act resulting from the Railways Bill, it is expedient to authorise--

(a) the inclusion in licences granted under the Act of conditions requiring the rendering of payments to the Secretary of State or the Rail Regulator ;

(b) the inclusion in franchise agreements, within the meaning of the Act, of conditions requiring the rendering of payments to the Director of Passenger Rail Franchising ;

(c) the inclusion of provisions under which monetary penalties may be imposed on persons who contravene or fail to comply with conditions or requirements imposed by or under the Act ;

(d) the imposition of charges to corporation tax by provisions relating to the taxation of persons who are transferors or transferees in relation to transfer schemes under the Act ; (e) the payment of sums into the Consolidated Fund or the National Loans Fund.-- [Mr. Chapman.]

11.10 pm

Mr. Nigel Spearing (Newham, South) : On this not very usual motion for receipt of moneys it is clear that the Secretary of State intends to receive moneys for licences and a good many other issues. I wish to speak on three relatively short matters and I hope that the Minister will be able to give me a reply. I am glad to see that the Secretary of State is also here.

The first matter may not be strictly in order. The question is whether it is. The hon. Member for Mid-Kent (Mr. Rowe) mentioned Union Rail. I take it that in the ambit of the Act-to-be there will be some arrangement between the Government and Union Rail and that the latter will be paying some money into Government funds in respect of licences issued. The hon. Member for Mid-Kent mentioned the fact that Union Rail will be funded by public and private money. He also expressed some dissatisfaction about the relationships between Union Rail and its senior staff and the people in the area. He mentioned a parish council in Kent.

If this money is coming back from Union Rail when it becomes a private, floated firm under the Act, as I presume that it will, can the Minister use his powers to persuade those officials to liaise more courteously with the people on the route of the railway? When it is running, it will be paying money to the Government. At present the route has still to be decided, but I have heard from my local borough council that Union Rail officials are unwilling to go through the usual consultation procedures in a few weeks' time when the route has been made public.

I wish to express the grave dissatisfaction of the people in the Newham and Stratford area about this because it would be a major feature of the area and the Union Rail officials appear not to be very much concerned about the financial arrangements that they would make for such consultation. They will have to deal with the matter ultimately through a statutory instrument rather than a private Bill, which makes public relations on the spot even more important. The second matter that I wish to raise--I am glad to see that the Secretary of State is here for it--is the question of payments of franchises into the Government funds in respect of this order. The Secretary of State comes from Norfolk. His local depot is, I think, Crown Point, Norwich. I received an answer from the Minister on 28 January which could well apply to that local depot of his.

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I asked him what would happen when various franchisees of existing services shared maintenance depots and stabling yards, and what arrangements would be made ; they would all have to pay money to the Government. The Minister courteously replied :

"Where the depot concerned is dedicated to a passenger service which is to be let as a single franchise, the depot will usually be leased for the period of the franchise to the incoming franchisee. Where one franchisee will be the predominant user of the depot, he will usually acquire the lease subject to conditions requiring him to make facilities available to other operators. In some cases, it may be feasible to divide a depot into separate parts for use by different operators, or to lease a depot to a third party maintenance operator."--[ Official Report , 28 January 1993 ; Vol. 217, c. 800 .]

All those involved will be paying money to the Government. I ask the Secretary of State, who is present today and who represents an important part of East Anglia, what will happen if Crown Point depot, Norwich has no fewer than two or three franchises? It is difficult enough to run as it is, as are those at Cambridge and Ilford. Years ago, they were all run under the single administration of the former Great Eastern railway. The finances and arrangments for lessees, sub-letting, and all the operational problems that will arise under the terms of the right hon. Gentleman's answer, the Bill and the ways and means motion could cause grave difficulty and disrupt the former Great Eastern railway services between InterCity and Regional Railways. Those services are already disrupted and already cause difficulties, as the Secretary of State's constituents know.

My next question on payments is more important than the others put together. As I understand it, under the motion, payments in respect of licences will be made to the Secretary of State or the rail regulator. That money has to come from somewhere. It will come from charges made by the franchiser for the traffic, whether freight or passenger, plus any money that the Secretary of State receives for necessary public services--he currently receives money for the buses. We shall start with the existing timetable, but that could be adjusted. An amount will be paid to Railtrack and an amount to the Secretary of State.

The Secretary of State and the Minister have repeatedly said, publicly and in answer to questions, that the franchiser will be more effective and efficient in his operation than existing British Rail. That is a hope rather than a proven fact. I asked a question, which was again courteously answered by the Minister. I asked him to identify

"those services or operations which can be made more effective or efficient consequent to the enactment of the Railways Bill"--[ Official Report, 28 January 1993 ; Vol. 217, c. 799. ]

As a consequence of the ways and means motion, more money will be paid from those services--I see the Minister nodding. I received no precise answer, but was told :

"All passenger and freight services should be capable of more effective or efficient operation as a result of our reform proposals."--[ Official Report, 28 January 1993 ; Vol. 217, c. 800. ]

I am a little foxed by that. It is a matter of hope and faith--not accountancy, on which the Minister is a known expert.

I want to ask the Minister an important question about efficiency and the income from which the money will be paid. An experienced railway person recently said to me, "Nigel, they will cut the wages and make the conditions more difficult--that is how they will improve efficiency."

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According to that experienced person, the only scope for major efficiency increases and the only source for the funds was the efficiency that would result from reductions in labour costs and changes in the conditions of work and service. I do not know whether that is in the minds of the Government or of those currently preparing the franchises. I wondered whether it was, and I asked the Minister a question which he has not answered today.

I asked the Minister what consideration had been given to maintaining a single conciliation service consequent upon the implementation of the Railways Bill and what assessment had been made of the desirability of maintaining a single structure of training and qualifications for various grades of personnel--other than the funding, I said in qualification, of the internal training and supervision which will be required anyway. I presume that that will be done on some railway association basis because one would expect grades of personnel in training and matters of safety to be on a national basis. We would expect there to be a single national bargaining arrangement for those grades of skill, experience, knowledge and training, particularly for people in crucial positions such as signalmen and drivers on whom the lives of others depend. Otherwise, one railway company--one franchisee--might begin to undercut another. There would be a market, just as there is informally inside British Rail, but on a single level of payment qualification and returns.

That is an important financial matter because the payments which will have to be made to the Secretary of State, Railtrack and all the others, will be crucial to the financial profits that the franchisers are expected to earn. We all know that in railways--my hon. Friend the Member for Bradford, South (Mr. Cryer) will correct me if I am wrong--by far the largest expenditure, other than for Railtrack which is being dealt with separately, will be staff wages and salaries. At this point, I conclude with a matter which both the Secretary of State and the Minister for Public Transport should bear in mind. In today's debate they have constantly used the word "culture". They are not particularly well informed on railway matters, although the Minister for Public Transport has learnt quite a lot in the past year or two, and I pay tribute to the personal care and attention that he has taken. There is and will be a railway culture. A railway requires those who operate it to have a particular way of life. I speak as a Member who has represented people working in two large railway depots--Old Oak Common on the Great Western, and Stratford on the former Great Eastern. Many of my former constituents and present constituents work in those areas.

Railway workers have 24-hour cycle. The railway is like a factory strung out over hundreds of miles where operatives are not in an office or workshop. They keep it going almost every day of the year except Christmas. That creates the sort of culture that is found among people who work together, sometimes in dangerous conditions, and who depend on one another for their own and their passengers' safety. They often come from families with the proud traditions of those who serve the railways.

There is a railway culture, and I put it to the House that it is a good, proper and useful culture which serves the passeners. I use the word "passengers" because they are

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passengers and owners, not just customers, as they are referred to on the tannoy. The idea of being customers of a public service that we currently own is one that jars.

Conservative Members mistakenly believe that some of the things that they would like to see--which we would all like to see, but which do not always happen--are the fault of some trade union or Labour plot to hold up progress. There may have been some tiny grains of truth in that in the past, or even in the present, but it is largely a myth and a miasma. As to the culture among the conciliation grades--I use that word advisedly-- before the public ownership of railways, the Association of Railway Companies got together and agreed with the National Union of Railwaymen historically as to the conciliation grades. A national machinery existed to deal with such matters. In my experience--and, I am sure, in that of virtually all right hon. and hon. Members--if one meets railwaymen and their families, one knows of the attitude that railwaymen bring to their jobs. If there is a negative culture, it is with management, who have been forced into adopting certain attitudes and ways which have not been entirely healthy in the past few years. If there has been a negative attitude, it has been found among management, not in the conciliation grades. When the Minister replies, I hope that he will give an assurance that neither he nor the franchise holders to whom he will grant licences are seeking greater efficiency not through better services but through lower costs, by providing lower returns to those who give their lives-- often to the inconvenience of their families, because of non-social hours-- to the service of the public in our great railway industry.

11.25 pm

Mrs. Teresa Gorman (Billericay) : I congratulate my hon. Friend the Minister for Public Transport on offering to franchise the dreadful line that goes through my constituency. It could not possibly be run more inefficiently or unreliably than it is at present, so therefore

Madam Deputy Speaker (Dame Janet Fookes) : Order. Before the hon. Lady continues. I remind her that the resolution's subject is fairly narrow and does not allow for debate on general policy.

Mrs. Gorman : I was coming to the important point, Madam Deputy Speaker, that my hon. Friend the Minister will be aware that the Government have already promised £50 million to update that line. When my hon. Friend the Minister replies, I would like him to confirm that that money is still on the table and will be in addition to any other moneys allocated to that line.

As to through ticketing--which is another financial issue--will my hon. Friend confirm that the proposal will not in any wary harm bus companies that want to take on a franchise, and that they will not find themselves falling under the auspices of the Office of Fair Trading, which might otherwise consider that a monopoly was being developed ?

Madam Deputy Speaker : Order. That issue is beyond the scope of this debate.

Mrs. Gorman : I understand, Madam Deputy Speaker. I have concluded my remarks.

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11.27 pm

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