House of Commons Hansard Debates for 2 Feb 1993

Mr. Hawkins : Will the hon. Gentleman give way?

Dr. Marek : I will not give way, as I have only 10 minutes. It is one of the problems of limiting speeches to 10 minutes, and I apologise to the hon. Gentleman.

The public certainly do not agree with privatisation, and the civil servants in the Department of Transport do not know much about it, as the Department is heavily road-oriented. As an example of that, the document entitled, "Railway Privatisation :--A Voice for the Passenger" has on its back cover a map of the railway system which has completely forgotten the Wrexham to Chester railway. The Shrewsbury to Wrexham part is there, but not the rest. That is typical of what we get, simply because the Government do not rate very highly the railways and railway investment.

The only ones in favour of privatisation are the Secretary of State, the cheap and cheerful Minister sitting next to him and some right-wing Members who agree with the proposals. So why will the Bill go through? Basically, Conservative Members, with a few notable exceptions, do not use the railway system. They are more interested in claiming 68p a mile and using their 2000 cc cars to get to London. I would be quite happy if the Fees Office published a list of those who claim 68p a mile to get to this place. The country would like to know ; then people would be able to judge those who support the Bill. By and large, the people who will vote the measure through this evening are hon. Members who do not use the railway system. Let me say what I think will happen. First, it is clear that railcards will disappear. The Secretary of State has as good as said so this afternoon. The hon. Member for North Devon (Mr. Harvey) is quite right to say that we need a national timetable with good connections, but I fail to see how we will get that if the demands on making a profit mean that a connection will be missed. Will there be a regulator to say that a train will have to run five or 10 minutes late in the interests of a national timetable with

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good connections? I do not believe that will be the case. We may have a national timetable, but good connections will depend on luck. We will have through ticketing, but will that be at discounted fares? Again, the Secretary of State has as good as said that through ticketing will not be possible at major ticket offices. If a travelling guard can issue tickets, will that guard be able to issue through tickets as at present? I very much doubt it. That is another potential loss to the public resulting from the Bill.

Will there be a common set of conditions of carriage, or will the Secretary of State vary it for any particular franchisee encountering special difficulties, and apply special conditions? Will train service frequencies be retained, and will we still have evening and Sunday services so that any member of the public can travel anywhere in the United Kingdom, knowing that there will be a reasonable train frequency so that, although it may take a little longer than normal, they can reach their destination? I very much doubt that. I believe that evening and weekend trains will disappear.

Will there be national information and seat reservation systems? I very much doubt that, if there are to be different franchisees, all varying their timetables without notice, just as occurs in the present deregulated bus system.

What about access for disabled people? Will the Bill applying to rolling stock include a set of conditions which will guarantee and preserve the advances that have been made in access for disabled people to the railway system?

What will happen if a franchisee goes bust? If I turn up at the railway system and the franchisee has gone bust, or if that franchisee has only a few wagons or engines, or if the driver has not turned up because he had an accident on the way to work, or if there is a fault with the engine so that my train cannot run, will it be a case of : "Hard luck, mate--come back in three or four hours and we will try to get it repaired"?

I know that British Rail is not perfect, but, by and large, if I turn up at a railway station, I know that the train will run, or, if it does not, if the delay will be more than an hour or so, British Rail will put on alternative bus services. I do not believe that will happen under the Bill. There will be fewer staff on station platforms securing people's safety, especially at night. Staff cost money, and that eats into profit.

If the Government privatise rolling stock, will the quality of build be maintained? As we all know, there will be no build in Britain, as the manufacturing industry here is about to go bust, but will the orders and specifications placed for that rolling stock be up to the quality and strength of that which we have today? My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) was far too kind to the Government when he spoke about safety. Between 1980 and 1985, the Government made conditions applying to level crossings easier, so that British Rail could spend less. The effect was to allow car drivers to kill themselves, until the disaster near Hull when the Government finally saw common sense. The Government deliberately loosened conditions at level crossings to save money.

As British Rail has been forced into privatisation, there are bound to be arguments about platform space and about whether the platforms are owned by Regional Railways, a franchisee or by InterCity. If there is a delay or something goes wrong, and a train has to use a platform that is not part of the franchisee's domain, extra charges

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will have to be paid, as happens now between Regional Railways and InterCity. The franchisee may say that, as passengers have to wait only 12 minutes or thereabouts, they can wait outside the station to avoid the extra cost. That is what bringing accountants into the service would do.

Unfortunately, we have the worst Government this century ; there is no doubt about that-- [Laughter.] Conservative Members are laughing, but only one or two of them. We have the worst balance of payments crisis that I can remember, and the worst public sector borrowing requirement. Indeed, the PSBR is worse than it was in 1976, when we suffered an oil price rise, and now we have the benefit of North sea oil.

According to the official figures, 3 million people are unemployed, but really it is more like 4 million. We also have a clapped out railway system ; time and time again, I am amazed at how it manages to run. We spend 0.14 per cent. of GDP on rail, whereas Germany spends 0.57 per cent. and France 0.61 per cent. The Government are in no position to put it right, and the Bill does nothing to put it right. I appeal to 12 Conservative Members to put the Government and the Secretary of State out of their misery at 10 o'clock tonight. 6.40 pm

Mr. Henry Bellingham (Norfolk, North-West) : The hon. Member for Wrexham (Dr. Marek) mentioned that there were few Members on the Conservative Benches, but 18 Conservative Members are taking an interest in the debate, and only eight Members of the official Opposition are in the Chamber, so perhaps he can learn to count. I intend to ask why we should privatise British Rail, comment on how we should do so and on some aspects of the Bill, and refer briefly to freight services to King's Lynn.

I was taught to subscribe to the dictum "If it ain't broke, don't try and fix it." However, it is broke--the whole culture is anti-consumer and we are talking about attitudes that look back to the 1960s, rather than forwards. That is why the Government could not stand still and do nothing, but had to move forward with the Bill. I shall not dwell on the reasons, as they are self-evident. I like the Government scheme and its structure, because it is evolutionary, imaginative and highly flexible. However, I have one or two small nagging doubts, which I shall express briefly. First, the offices of director of franchising and regulator are to be set up. I have studied the Bill carefully, and listened with care to my right hon. Friend the Secretary of State. I do not understand why those two offices could not be combined. Surely that would be a pragmatic and sensible step forward, and I urge the Secretary of State to consider it.

My second doubt relates to InterCity. British Rail was told to be more responsive to the public's requirements, to be more aware of what the punter wants, and to run a service for the benefit of passengers and not for the benefit of staff. To a certain extent, InterCity has achieved those aims. It has a successful brand name, and I would be sad if it disappeared. I understand the Government's argument, that they do not want to sell a vertically integrated company, but surely we could keep the brand name.

I would have preferred the option of privatising InterCity outright. My hon. Friend the Member for Orpington (Mr. Horam) mentioned the advantages of the

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operator controlling costs, and I think that that has additional advantages. Also, the attractions of vertical integration are obvious if we want to get private sector capital into the infrastructure. For example, it is apparent that delays can take place during electrification--the line to King's Lynn was electrified--and a close interface between the track infrastructure and rolling stock is required. If too many factors were outside the control of the operator, there could be disincentives and disadvantages to electrification. We must bear in mind that InterCity has to compete with other modes of transport. An operation that has 8 per cent. of journeys of more than 50 miles has only a very small segment of the market, and we want that share built up.

So far, we have been talking about two franchises being offered for InterCity. If the same organisation were to bid for both, I should like the Minister to keep open the option of a vertically integrated company, which would also own the infrastructure. It would be sad if that option were not kept open. I see that my hon. Friend the Minister is nodding, and I should like him to comment on that. The most important thing is to allow the very successful InterCity brand name to remain in existence.

Although I have been critical, I welcome the proposals, and I think that franchising will work. It has been carefully thought out. People say that it has not been given enough thought, but the Department has been considering the proposal for two and a half years, has consulted every possible organisation, has studied the matter carefully and has come up with proposals. Few Bills have had more work put into them. That is why the proposals can and will work, especially for the loss-making lines in Network SouthEast and Regional Railways.

Mr. Hawkins : Will my hon. Friend give way?

Mr. Bellingham : I cannot give way, because of the 10-minute rule. Those lines need an injection of private entrepreneurial flair and private investment, and my goodness we will get it.

Yesterday, I learned--much to my dismay--that British Rail has terminated the link to Boston docks. I do not know the details, but King's Lynn docks uses the railways to shift roughly 150,000 tonnes of coal and 50,000 tonnes of urea a year. Also, Dow Chemicals uses rail freight distribution to shift about three or four wagonloads of hazardous goods each month.

British Rail and Associated British Ports are in negotiations on the future of train freight haulage of coal from King's Lynn docks, and I understand that the negotiations are not going very well. The manager of the docks has told me that he has come up against a thoroughly negative attitude on the part of British Rail, which has insisted on a 15 to 16 per cent. increase in tariff. The dock operators have said that they will run the shunting loco and take on ancillary operations, but British Rail has a negative attitude. If I brought the manager of Associated British Ports in King's Lynn to see the Minister, would he be prepared to discuss the matter with him and explain the impact of today's announcement on freight and how it could present opportunities for King's Lynn?

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I welcome the package of four measures that the Secretary of State announced, because it could save the link to Boston.

Mr. Wilson rose --

Mr. Bellingham : I cannot give way, but perhaps we can talk in the Lobby afterwards-- [Laughter.] --if the hon. Gentleman comes to our Lobby.

We must try to ensure that the eight or nine wagonloads of butadiene--a potentially hazardous commodity--that are transported each month remain on the railway. British Rail told Dow Chemicals on 25 January that the service would be terminated. If the negotiations between ABP and British Rail on trainload freight for haulage of coal collapse, the rail freight distribution service to King's Lynn and the link to the docks could be put in jeopardy. Given British Rail's thoroughly negative attitude, I hope that the Minister will agree to meet that delegation, and that the four proposals announced today will have some impact. I am sure they will.

Mr. Freeman : I hope that I shall be in the same Lobby as my hon. Friend tonight. In case I do not have the chance to talk to him, I assure him that I look forward to meeting his constituents from the docks. Also, I can assure him that I shall shortly be meeting the director of InterCity to talk about the retention and development of the brand name, even within the franchising regime, and to confirm that we have taken no long-term decisions about the future of InterCity.

Mr. Bellingham : I am extremely reassured by that.

If the Minister thought that I was being critical, I hope that he deemed it constructive criticism, because what I particularly welcomed in the Secretary of State's speech was his description of the proposals as evolutionary and imaginative. The Secretary of State also said that, if changes were proposed in Committee, he would consider them and listen carefully and, above all, that he would try to ensure consensus throughout the industry to bring these difficult, imaginative and challenging plans forward.

If the Minister has perhaps sensed today that there is some opposition on the Government's side--my hon. Friend the Member for Orpington made it clear that there were parts of the Bill which he did not like, as did my right hon. Friend the Member for Tonbridge and Malling (Sir J. Stanley)--I would urge him to stand firm. I am reminded of a quotation that I think came from Lord Jenkin back in the 1960s : "The time when people start to doubt your policy is the very time when you should strengthen your nerve and see it through." 6.50 pm

Mr. Alan Williams (Swansea, West) : I thank you, Madam Deputy Speaker, for giving me, as an hon. Member sponsored by the Transport and Salaried Staffs Association, an opportunity to take part in the debate.

Sadly, history is not on the Minister's side in the case that he is trying to argue. The private owners could not believe their luck when, in the first world war, the Government took the industry off their hands ; and there was an outbreak of mass panic when, after the war, the Government suggested that they should take it back again. The Government had to introduce an Act to set up the old LMS, LNER and GWR to take on the industry, which then tottered through the inter-war period and was on the

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verge of collapse when it was again taken over at the start of the second world war. It is not generally realised that some of the old GWR shareholders are still deriving dividends under the arrangements made for the takeover at that time.

The Secretary of State asserted that the proposal is in the interests of both the consumer and the taxpayer. He went on to quote precedents from other privatisation measures which he felt proved his case. I point out to the House that in each privatisation measure the Government have used rather different initiatives to ensure that any advantage goes not to the consumer or to the taxpayer but always to the new shareholders.

In the gas industry prices were put up 10 per cent. a year above the rate of inflation for three years to give a 33 per cent. cushion to guarantee profitability for the industry and higher prices for the consumer. Jaguar was allowed to remain in public ownership by this Administration until the taxpayers' investment programme was completed, and then the profits were privatised. Sadly, it then gradually slipped into its old ways and had to be taken over by Ford.

In the case of the electricity industry, although the Government claim that they got £8 billion from the sale of the electricity industry, as the hon. Member for Orpington (Mr. Horam), who served on the Public Accounts Committee will know from the report that we undertook, only £5 billion of that came from the shareholders ; the other £3 billion came from an artificially created debt which was imposed on the industry and then taken from the industry which had had prices set at a level that would recoup the debt. So we had the anomalous situation that the customers who had previously owned the industry now had to pay £3 billion by means of their prices to help someone else acquire the ownership of the industry.

The most outrageous example, however, was the water industry. It demonstrates the sheer nonsense of what the Government are willing to consider in order to favour the shareholder and private enterprise. In this case, £35 billion of public assets were sold for £3.5 billion. Ten companies were sold for the price of one. The Government wrote off £5 billion worth of debt on which the taxpayer was obtaining interest, gave £1.5 billion of public money--which cost the taxpayer interest-- as a donation to the industry, and then gave it £7 billion worth of tax write-offs to ensure that it would not have to pay any tax for most of this century.

The cumulative result of this package--the lost interest on the write-off, the lost interest on the cash injection and the exemption from taxation--is that within about five years all that the Treasury gained from the sell-off will have been given back, and the industry will have been given away for absolutely nothing to people who will go on creaming profits from the public. So while the idea that privatisation is some great initiative on behalf of the consumer is fine on the political platform, it does not bear close scrutiny. I wish that the Secretary of State were still here. I have sparred with him for many years and I have a great regard for him, but this is the first time that I have heard him venture into nonsense arguments. It is a new departure for him but one that he undertook with his customary charm and giving the impression of greater experience than we all know he has had in that respect. The thought that worried me towards the end of his remarks was that he might be beginning to believe some of the arguments that he was putting forward. But I know him better than that, and I

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am sure that if he comes to the Committee our old confidence in him will return, because he knows as well as we all do that the railways were always cross-subsidised, even in his good old days of private ownership. The trunk line subsidised the feeder lines. As far back as Beeching, under public ownership, the branch lines cost 40 times as much per passenger mile as the trunk lines. There has always been cross-subsidy.

I urge hon. Members to consider this matter from their constituents' point of view, particularly those who represent commuter areas. If, instead of that cross-subsidy going into the rest of industry, it goes in dividends, it means that we need not just the same subsidy ; we need more subsidy, more taxpayers' money, in order to sustain the present level of services. Yet all we have had is an assurance that subsidies will continue. There has been no indication of the level at which they will continue. It is no good their staying constant because we all know that, with the inevitability of inflation--I am not making a political point ; inflation has been a feature of any society for most of the century--if the subsidies were continued but frozen at one level, they would wither in real terms. So either the burden would pass to the farepayer--and it is doubtful whether the market could bear it--or there would be cuts in services or lines.

All this is ominous for those of us in south Wales who depend on our valley rail services for commuting and those who depend on the central Wales line, the mid-Wales line, the north Wales coast line and so on. Even on the 125 line to my constituency there are doubts about what will happen to the service between Cardiff and Swansea if the proposal put forward by the Minister goes ahead. We are fearful that there may be cuts in that service.

Safety is of crucial importance to the public. I was pleased that the Minister said that he regarded it as a high priority. The trouble is that Ministers do not last long in the Department of Transport, and one Minister's reassurance might not even be valid by the time the Bill finished its journey through the Committee. They tend to be rather high- speed travellers as they reach the Cabinet via that Department.

I was somewhat horrified to read in The Independent yesterday the headline :

"Major urged to halt spending on rail safety".

A former director of the Thatcherite Centre for Policy Studies, now the hon. Member for Havant (Mr. Willetts), was quoted as asking, "How can you spend over £200 million a year on rail safety and increase transport deaths ?"

He was reported as saying that

"by forcing higher spending on rail safety, passengers were being driven on to the roads by higher fares, where the risk of death was almost five times greater."

He also said that the Prime Minister

"might also call for a moratorium on implementation of all further rail safety requirements".

That is horrific nonsense. Instead of the train taking the strain, the train will take the risk if the hon. Member for Havant has his way.

It used to be an axiom of economics that, if one had two competing services, one tried to invest to the point where the marginal rate of return on each was equal, which resulted in optimum investment. Now a right -wing Conservative Member says that we should disinvest to the point where the marginal rate of accident is equal--a peculiar proposition to make. Why did he not suggest that we should invest more in road safety ? Why did he support

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the deregulation of the bus services ? If the railways are that much safer, why does not the hon. Gentleman come into the Lobby with us tonight ? I hope that he will.

7 pm

Mr. Robert Adley (Christchurch) : I pay tribute to the memory of the late Sir Peter Allen, who will have been known to some of my colleagues in the House. I read in his obituary in The Times that, like me, he was a railway and steam train enthusiast. Like me, he would be described by my colleagues on the Front Bench as eccentric. Unlike me, he was chairman of ICI. Quite a few people are concerned about the Government's proposals--Sir Peter Allen certainly was. Where should we start? Why not start at the point that we have reached today. The damage caused by the very threat of the Government's proposals is already evident. Rail freight is haemorrhaging away. My hon. Friend the Member for Norfolk, North-West (Mr. Bellingham) should ask British Rail why it has vastly increased its prices. He might find that its answer provides the answer to many of his questions. Private sector manufacturers of rolling stock are in crisis because British Rail is unable to place orders. My hon. Friends insist that that has nothing to do with the Government's proposals, but everyone in the private sector knows that it is directly related to them.

Who is in favour of the proposals? The Centre for Policy Studies is, of course, and the Adam Smith Institute would claim that it invented them. My right hon. Friend the Secretary of State is in favour of them and some of my colleagues, particularly new Members of Parliament, have already expressed their enthusiasm. They would probably want to privatise everything--it will probably be the Army next. The prime architect of the Bill, Sir Christopher Foster, has not figured much in our deliberations. He was the director-general of economic planning under Barbara Castle in the Ministry of Transport between 1966 and 1970, and this is largely his Bill. He was the inventor of the freight integration council, among other things. If that does not frighten my hon. Friends, it certainly should. Who is opposed to the Bill? We know that millions of our fellow citizens are. Those who use the railways, such as the Confederation of British Industry and its commercial members, oppose it. The transport users consultative committees, appointed by the Government to look after passenger interests, oppose the Bill, as do those who run the railways, those who work on them and those who build the rolling stock for them--to name but five groups.

In 14 years of Conservative Government we have seen fluctuating investment on the railways, reductions in the public service obligation grant and consequently numerous customer complaints. The Bill has been introduced as a means of alleviating those complaints. There has been a total lack of any coherent transport policy during the past 14 years, which has caused the problem. The hostility of the Government under Lady Thatcher to anything in the public sector forms the background to today's Bill.

We have had no discussion--nor is there anything in the Bill--about the road versus rail argument. When the CBI appeared before the Select Committee, it gave interesting figures. My hon. Friends who intervened in the speech of my right hon. Friend the Secretary of State might read the statistics in Hansard. On a dollar-per-head

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basis for the latest years for which figures are available, rail investment is as follows : in the United Kingdom, under $7 ; in Germany, $24 ; in France, $37 ; and in Italy, $50. Is it any wonder that complaints are made here about railway services while there are comparatively few complaints among the customers of our continental partners in Europe?

From where is the investment to come for Railtrack? Who is to finance the new railway? There is no mention of any investment regime in the Bill. Investment is fundamental to the success of a railway. My hon. Friend the Minister of State has already confirmed that there is a direct correlation between new investment and satisfied customers on the Chiltern line. That is how to build a successful railway.

Some of the similarities between the Railways Bill and the Bill to privatise electricity should provide a warning to some of my right hon. and hon. Friends. The problems of the coal industry today are the direct result of the way in which the electricity industry was privatised. If one looks at the phraseology of both Bills, one can understand why some of us are concerned about the Railways Bill. The Bill contains a fundamental flaw which has been touched on by all those who have spoken so far. It separates responsibility for track and signalling from the operation of trains--a recipe for endless conflict. What would have happened in the recent crash at Borough Market junction if the two trains involved had been operated by two different companies? Each would blame the other for everything--and both would blame Railtrack. Some of my constituents were killed in the Clapham junction rail crash. Within hours, British Rail accepted responsibility. Would a private sector company immediately have accepted responsibility for a crash involving one of its trains? Of course not.

Vertical franchising is the demand of the private sector and of almost all the companies which came before the Select Committee. My hon. Friend the Minister of State nodded as he listened to the suggestions of some of my colleagues who stated that complete vertical franchising should be considered. It is clear that the creation of a track authority and the surrounding paraphernalia is at the heart of the Bill's proposals. There is no point in pretending that vertical franchising--other than in the Isle of Wight--is for the Secretary of State anything other than a dream.

Who will provide the long-term funding for all the franchisees? They are being encouraged to invest money for 15-year franchises. Has my hon. Friend the Minister received permission from my right hon. Friend the Chancellor to provide guaranteed funding at constant levels for 15 years? Will the Chancellor be in place for 15 years? Will there be a Conservative Government in 15 years' time? Relying on a public sector rail track for infrastructure and the vagaries of the Treasury to provide guaranteed subsidised funding for private sector operators for all those years forms an unlikely scenario-- [Interruption.] My hon. Friends must make their own speeches. I have heard too much about breaking up. I am not in politics to break things up--I am in politics to build. We are breaking up the national railway system and replacing it with a vacuum. It will be a lawyer's paradise. We are legislating not for deregulation but for reregulation.

Safety has been mentioned. The more people who are involved in safety, the more safety is jeopardised. The

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proposals contained in the Bill are a recipe for muddle, indecision and conflict. Like everyone else in the House, I want a better railway, but the Bill is a clear illustration of the muddled thinking in the Department of Transport. It illustrates the conflict of private sector ambition versus public sector obligation. To satisfy the former, it will be necessary to diminish the latter.

Where do my right hon. Friends stand on the conflict between the ambition of the private sector to make profits and the obligation on the public sector to run a full railway system efficiently? The Bill is a laboratory experiment conducted by civil servants in Marsham street with a vital piece of our national transport infrastructure. My hon. Friend the Member for Eastleigh (Mr. Milligan) talked about Sweden, where the Government are making 45 per cent. additional infrastructure investment a year for 10 years and Sveriges Ja"rnva"gen--the state railway--has gained 99 per cent. of the contracts to run trains. Here British Rail is forbidden to enter the competition and there is absolutely no investment regime in the Bill.

I shall finish with a quotation from an unusual source--the new ambassador from Saudi Arabia, Ghazi Algosaibi, formerly the director of railways in his country. He wrote to me yesterday and mentioned the theory of privatisation. He said :

"Any service that is deemed so essential that it requires subsidy is, by definition, not suitable for privatisation. Railroads belong in this category. Railroads were in my time, and remain today, heavily subsidised by the government. Under these circumstances privatisation makes no sense. If you stop the subsidy, the service will deteriorate and might terminate. If you continue with the subsidy, the whole thing becomes an exercise in futility!" That, I fear, is where the Bill will lead us.

We all know that BR is far from perfect and there are many ways of improving it. I want to see the private sector brought in, initially by ending the freight monopoly, but it seems that my right hon. Friend has rejected that proposition.

I just say this to my hon. Friends. If the size of their majorities is bigger than the number of rail users in their constituencies, they should not have too much to worry about. We are here at Second Reading. It is glad confident morning today. The Bill is born of dogma, conceived in theory and adjusted in the Whips Office. I am sad to say that, like my right hon. Friend the Member for Tonbridge and Malling (Sir J. Stanley), I cannot support the Bill on Second Reading.

7.10 pm

Mr. Keith Hill (Streatham) : It is a privilege to follow the hon. Member for Christchurch (Mr. Adley), who has spoken for every informed observer of the Government's proposals. Can any Government have launched a major piece of legislation amidst more general criticism and more misgivings from the professionals who are supposed to make it work than the Government in their rail privatisation proposals? Even the poll tax had its enthusiasts. This poll tax on wheels has no enthusiasts whatever.

Let us be charitable to the Government in their embarrassment. Let us assume that rail privatisation is not merely, as seems likely, the last confused spasm of a worn-out Thatcherite ideology. What then was the problem that the Government set themselves to resolve in evolving their present proposals? Was it the creation of a

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less bureaucratic railway? Hardly that. The Government are planning a positive quagmire of quangos to run the railways. It will be a bureaucrat's fantasy and an operator's nightmare.

Was it the creation of a more efficient railway? Not that either. On top of the quangos, the Government are proposing a split between infrastructure and rail operation with cuts across every principle of modern railway practice. It will prove a minefield of day-to-day conflicts between operators and the track authority and a prescription for endless litigation.

Was it the creation of a cheaper railway? Hardly that either. What hopes for lower fares with no guarantees on subsidy, with Railtrack under instruction to secure a commercial rate of return for every line that it runs and with operators seeking to maximise their profits also?

Was it the creation of a sharper, more entrepreneurial style? Where would that come from? Would it come from the bus operators who have managed to lose 13 million passenger journeys a year since bus privatisation in 1985? Would it come from Mr. Branson, who wants to spruce up old diesel locomotives to run at lower speeds on a newly electrified east coast main line?

The deep irony is that the Government's best hopes for a new management appear to lie in buy-outs by the old managers of British Rail--the very last group, I should have thought, that Conversative Members would want to see running the railway for them.

But, lo and behold, where are the profits to be made by the new thrusting entrepreneurial style? The Secretary of State has confirmed it today--by privatising the very services where profits are already being made. I shall believe the privatisation of the

London-Tilbury-Southend line when I see it.

Was the Government's aim the creation of an expanding railway, better equipped to play a larger part in meeting the environmental, social and economic needs of the nation? Certainly not that. Scour the pages of the multitude of consultation documents flowing from the Department of Transport ; listen to the words of the Secretary of State ; examine the Bill. Where is the strategy? Where is the thinking about the future role of railways in the nation's transport system? Vision is the last thing that we have heard from the Government in relation to rail privatisation.

The truth is that the Government's proposals are the wrong answers to the wrong question. The fundamental question is that of investment--investment which is already too low and is in danger of becoming yet lower under the Government's proposals.

We have become used over the years--we have heard it again today--to a constant barrage of complaint and criticism about British Rail's performance. Yet the most singular aspect of British Rail is not that it all too often performs badly, but that it manages to perform at all. It is about time that Conservative Members recognised just what British Rail has achieved in sustaining the network and in maintaining a service when it has been so grossly underfunded for so many years in comparison with similar railways elsewhere. Britain spends a third of the cash spent by France on its railways and a quarter of that spent by Germany on its railways. In subsidy by head of population, we spend one fifth in comparison with France or Germany. No wonder we have higher fares and less reliable services. Yet in all international comparisons of railway productivity, BR

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appears high in the rankings. That is a remarkable achievement, given the low levels of investment in the system.

The Secretary of State never tires of telling us that investment is currently at record levels, and, of course, he is correct. What he omits to point out is that in the early 1980s under this Government we had the lowest continuous levels of investment in the railways in any period since the 1920s.

Mr. Michael Stephen (Shoreham) : Will the hon. Gentleman give way?

Mr. Hill : I will not give way in view of the strict time limit. I should love to do so in normal circumstances.

Without the significant increases in the past two or three years, we would not have had a railway in any recognisable form. However, it was too little too late. For all the Secretary of State's protestations, that investment will not be sustained. Next year, investment in the existing railway will fall to half this year's level. It will remain below this year's level to the end of the current programme in 1996.

Already, InterCity has no rolling stock investment plans or refurbishment plans for the next five years. Already Network SouthEast is operating with an estimated infrastructure budget shortfall of £200 million. The railway supply industry has no orders on its books beyond 1995. Its representatives told the Transport Select Committee that the industry, responsible for 50,000 jobs, faces annihilation. Only last week, Lord Prior, on behalf of GEC Alsthom, a major railway supplier, told the Select Committee that unless more orders are forthcoming no industry will be left in three years' time.

I say this to the Government in all seriousness : there is an immediate crisis of underinvestment in the railway industry. Even if their privatisation plans succeed in creating new investment demands, which I doubt, they are unlikely to come on stream for several years. Therefore, the Government should urgently undertake to provide at least steady levels of state finance for the first five years of privatisation in order to protect the quality of service and to maintain a rail manufacturing base.

Of course the Opposition accept that there is a role for the private sector in rail investment. We have looked at the experience of the nationalised French railways where all new major investment since 1990 has been funded by borrowing on the private market, including the City of London. We have looked at the experience of Japan where new capital projects are jointly funded by central and local government and by private finance raised by the still nationalised railways.

My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has repeatedly put forward proposals for leasing and joint ventures along those lines. The Government have rejected those proposals on grounds of dogma and, as we now learn, a totally antiquated set of Treasury rules. By contrast, the Government's proposals threaten to impede, not favour, the vital need for new investment in the railways. They will create an excessive and costly bureaucracy which can only serve to increase costs for operators and track authority alike.

The separation of track from operation will create a tangle of operational difficulties. Sensible railways

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investment requires an integrated approach to infrastructure and operation, but that is absent from the Government's proposals. Those same arrangements mean that half the cost of running services--that arising from the infrastructure--will be outside the control of the private sector businesses. Railtrack itself--half the railway system --will anyway remain in the public sector and be subject to the current severe Treasury spending constraints.

That is not a hopeful scenario for generating new investment in rail. A railway renaissance is taking place throughout Europe. The Government will bear a heavy responsibility if, because of their current policies, this country does not share fully in that rebirth of rail.

7.20 pm

Mr. Tim Devlin (Stockton, South) : I must first declare two interests. I regularly use the national railway system a minimum of five hours a week in travelling to and from my constituency. Sometimes, I use it much more than that. The present InterCity service, combined with a laptop computer, is one of the most congenial working environments available to a Member of Parliament. Also, if 14,000 new contracts are to be signed at the conclusion of our consideration of the Bill, there are several reasons why I, as a lawyer, may be tempted to be the first in the Lobby enthusiastically to support it.

More realistically, I address the House as the Member of Parliament for the constituency which was the birthplace of the railways and which ran the first successful privately owned railway ever laid down. To this day, one of the largest railway workshops in the country is to be found in my constituency. Furthermore, a regular complaint in my postbag concerns the coal that falls from viaducts in my constituency as it is transported from Durham to the south. In his introductory remarks, my right hon. Friend the Secretary of State said that the east coast main line will be one of the first services to be franchised. It is instructive to look back at what was said about not only the east coast main line but the fortunes of the London and North-Eastern railway in the nationalisation debate in 1946. The LNER had emerged from the war having been extensively bombed--connecting as it did most of the airfields and industrial areas of Britain--and suffering from a long period of under-investment between the wars due to the recession that set in then. At the end of the war, there were extensive plans to renew the network and to develop new services and branch lines. With that in mind, the then Opposition voted against nationalisation because they anticipated, rightly, that instead of private companies competing for capital on the markets and applying it to worthwhile schemes, the national conglomerate--known as the British Transport Commission--would direct investment in a way that reflected its perception of national priorities, and often not do as good a job as the private sector. In reviewing the history of the railways, I believe that I am right in thinking that British Rail has never constructed a new line.

Mr. Adley : I remind my hon. Friend of those serving Stansted and Manchester airports.

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