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Mr. MacGregor : Will the hon. Lady let me finish ?
At this stage, the draft guidance to the franchising director--there will be further drafts, but there will eventually be guidance and instructions to the franchising director--makes it clear that his principal objective will be
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"to secure as soon as reasonably practicable that the function of providing passenger railway services in Great Britain is performed by private sector operators".The franchising director will therefore want to examine most carefully any proposed bid involving a foreign public sector railway operator in order to find out whether that bid will assist him in meeting his primary objective.
Several hon. Members rose --
Mr. MacGregor : It is for all of those reasons that I believe that the Labour party--
Mr. Hugh Dykes (Harrow, East) rose --
Mr. MacGregor : I can answer questions later in the debate. I believe that the Labour party--
Several hon. Members rose --
Mr. MacGregor : There will be plenty of opportunitiy for my hon. Friends and other hon. Members to make their contributions, and I shall reply later.
The Labour party seeks to perpetuate British Rail exactly as it is now. That is a fundamental difference, and that is why I cannot accept the amendments.
Several hon. Members rose --
Mr. Dykes : Will my right hon. Friend give way?
Mr. Snape : There are Opposition Members who want to speak.
Mr. Dykes : Does my right hon. Friend agree that the difficulty in his argument is that, both under our national laws and under European Community rules and regulations, SNCF could perfectly legally establish a genuinely private public limited company in Britain--10 per cent. of which would be owned by SNCF, or whatever--which would be able to bid on that basis? Theoretically, could not such a company win all the franchises?
Mr. MacGregor : If SNCF decided to take a 10 per cent. stake in a company that made a bid, it would have to be clear that no state aid was involved in its contribution. Then the company would be able to bid. Presumably such a consortium would involve many United Kingdom participants, including some managers and employees attempting a buy-out. It would be for the franchising director to decide whether such a bid produced the best value for money.
Mr. Snape rose --
Several hon. Members rose --
Mr. Snape : I am grateful to the Secretary of State ; I presume that he is giving way to me.
Madam Deputy Speaker : Order. May we be clear? Has the right hon. Gentleman concluded his speech, or is he giving way?
Mr. MacGregor : I have finished.
Mr. Snape : We are all left thoroughly confused, Madam Deputy Speaker. I wanted to ask the right hon. Gentleman a question, having watched him bog himself down in that way--it had nothing to do with the French, although I appreciate the dilemma in which questions from his hon. Friends place him.
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It seems a strange proposition to say that when it comes to buy-outs managers still within BR will not be allowed to make a bid because their bid would be lower than it would be if those same managers were to mortgage their homes and attempt a management buy-out. I realise that I am no great intellectual in such matters, but I find the Secretary of State's proposition hard to accept intellectually. I should be grateful if he would enlarge on it when he sums up. He does not have a reputation as one of the great ideologues in the Government ; he is known more as a number cruncher. I do not know whether he regards that as a compliment or an insult, but when he gives us all that stuff about a monolithic nationalised industry, and talks about the public sector in a derogatory way-- Mr. MacGregor Indicated dissent.Mr. Snape : That is what the right hon. Gentleman said. Those were the reasons behind his refusal to allow British Rail to bid for any franchises. It is a disgraceful insult to hundreds of thousands of people-- managers as well as rank-and-file railway workers--who have spent many years working in the public sector for fairly low pay. Many of the managers have earned lower rates of pay then they might have been able to earn in the private sector. They did so because they felt that there was some public service ethos in running the railway system. For them to be written off and to be described as being part of a monolithic, nationalised industry does the right hon. Gentleman no credit. It is a totally inaccurate way in which to describe the diligent efforts of many thousands of people, including my own father who spent most of his working life on the railway system under both private and public ownership. He did not notice any dramatic change to a monolithic industry. It seems that Conservative central office may be writing the right hon. Gentleman's briefs in this debate because he has trotted out philosophical nonsense as a justification of a policy that I find incredible.
I do not know whether Conservative Members understand the basis on which railway franchises are to be allocated. I noticed some puzzled looks. The fact that the hon. Member for Harrow, East (Mr. Dykes), among others, had a few things to say and thoroughly confused the Secretary of State suggests that the right hon. Gentleman should go back to the drawing board.
Surely it is a fundamental tenet of Conservative faith that the public sector should bid against the private sector. After all, as we have heard from the Secretary of State, Conservatives believe that the private sector is inherently more efficient. What are they so frightened of? The fact that those with the greatest experience of running the railway industry will be excluded on the spurious ground that they will undercut the private sector will not benefit the consumer, the passenger or the freight user in the long term, even if it were true. There is not a shred of evidence that it is true. To exclude the very people with the experience of running the railway industry goes to show how daft the whole Bill is.
Mr. Nick Hawkins (Blackpool. South) : Surely the whole point of my right hon. Friend's remarks is that the people with experience will not be excluded. They will be encouraged to participate in management-employee buy -outs. What will be excluded will be the monolithic structure. I am glad that the hon. Member for West Bromwich, East (Mr. Snape) has just mentioned the most
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important people--the passengers. What we are trying to do in the Bill is to improve customer service. The people who most matter on the railways are the passengers. The railways are not run for the benefit of the employees. To listen to most Opposition Members, one would think that it was only the employees who mattered.Mr. Snape : The future of a once-great industry should not be decided on the basis of the personal ambitions of a callow youth from Blackpool. We are talking about the dismemberment of a railway industry. Let the hon. Member for Blackpool, South (Mr. Hawkins) think of this. We shall deal with the passengers and the benefits in a moment. Who exactly among the managers who run the railway now will run the railway while all this bureaucratic claptrap is being put together? Does the hon. Gentleman know, as he rushes to defend his own silly piece of legislation, no doubt in the hope of preferment in the future?
The hon. Gentleman is the secretary of the all-party railways group. For him to defend this legislation suggests that at the group's annual general meeting we should have a serious look at his qualifications for the job. My goodness, the sooner he is an Under-Secretary of State at the Department of Health and therefore gagged and prevented from taking part in these debates, the sooner we shall have a bit of common sense brought into them.
Mrs. Dunwoody : Come on. That is a bit much.
Mr. Snape : Perhaps I over-promote the hon. Member for Blackpool, South.
Mrs. Dunwoody : Northern Ireland?
Mr. Snape : My hon. Friend says Northern Ireland
Madam Deputy Speaker : Order. What has this got to do with the new clause and the amendments under consideration?
Mr. Snape : It has a great deal to do with the fact that those of us who know something about the railway object to the claptrap to which we have had to listen this afternoon, Madam Deputy Speaker. However, if you can contain the hon. Member for Blackpool, South and prevent him from making long interventions, I shall do my best to confine my remarks to the new clause--
Madame Deputy Speaker : Order. I do not enter into bargaining propositions with hon. Members.
Mr. Snape : That is very wise, if I may say so, Madam Deputy Speaker.
Another fallacy peddled by the Secretary of State is that British Rail is the monopoly provider of public services. Where is the monopoly in the railway system? What is the monopoly against internal air services? We have privatised long-distance coach services. We in the United Kingdom are addicted to the company car. Where is the monopoly? This monopoly exists only in the minds of some of the sillier Conservative Members--
provoked the right hon. Gentleman into rising to his feet by saying that. I hope that this will be a very short intervention.
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Mr. MacGregor : The hon. Gentleman has pointed to other methods of transport in which there is competition within and competition between them. There is competition between all of them and within them in the private sector. Why does the hon. Gentleman think that the railways should be the main area of transport that can be run only by a single organisation and in the public sector?
5.45 pm
Mr. Snape : I do not think that. That is not what the Bill is about. The Opposition have acknowledged that there is a place for the private sector in the provision of transport. Of course, we have admitted that the state cannot possibly provide everything. The new clause and associated amendments are about giving British Rail under its current structure the opportunity to demonstrate that it can compete against the private sector on, to use an overworked phrase, a level playing field. There is nothing ideological about that. If the right hon. Gentleman is so sure of his facts, he has nothing to worry about because the private sector will win hands down anyway. To avoid facing the fact that there may be managers within the public sector who are every bit as well qualified, if not more so, than their private sector counterparts to make these bids, the right hon. Gentleman has to invent stories about them deliberately undercutting the private sector to preserve their own empires. There is not a shred of evidence for that.
The right hon. Gentleman referred to 30 managers who had already expressed- -
Mr. Snape : Thirty five? The figure has gone up already. A note has obviously come from the Box. One of the 35 managers who have expressed an interest wrote to me recently. He told me that he wrote to the Secretary of State saying that he thought that his plans to dismember the railway industry were extremely damaging and that they would have grave long-term consequences for the economy. He said that he received a letter back thanking him for his interest and enclosing all the documents necessary for him to make an application for one of the franchises. If the other 34 managers are like that, the right hon. Gentleman's case becomes even more questionable. From listening to him, I believe that it is pretty questionable already. Where are the parameters against which the bids are to be measured? There is none if British Rail management are to be excluded from the whole process. The right hon. Gentleman said that the regulator will, of course, look at how much the service costs under the existing British Rail network and will measure the quality of the bids against that cost. That presupposes that one can break up a national railway industry financially into 25 nice little compartments and that one can say that if running trains within one twenty fifth of the railway costs £X million, the franchise should be around £X million. I am not sure how well qualified the right hon. Gentleman is in accountancy. Again, it will be, to say the least, a fairly elastic process if that is how it will be done.
We all know that the franchising director will accept the lowest bid for a particular group of services. I hope that the right hon. Gentleman and the Minister for Public Transport, the faithful Sancho, will agree at least on that.
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Let us suppose that there was a bid of £20 million for a hypothetical group of services in the west midlands. Let us suppose that the existing BR managers, whether they had mortgaged their homes or not and whether they had decided to be capitalists rather than railway workers or not, said that instead of a £20 million bid for a half-hour service, they would bid £22 million for a 20-minute service. With their knowledge of the railway industry, they could perhaps do that with one extra unit and with two extra crews. Such a bid would be disqualified under the Bill.Mr. MacGregor indicated dissent.
Mr. Snape : The Secretary of State shakes his head. He has already said that if the bid came from within the public sector, it would be disqualified. To throw away all that expertise purely for ideological purposes is nonsense.
I appeal to Conservative Members, many of whom are here today, who have taken an interest in railway matters over the years to tell the Secretary of State that once again he has got it wrong. Not everyone--managers, employees or people in the salaried or wages grades--in the railway industry believes in what the Secretary of State calls an inefficient monolithic organisation. Many believe in the future of the industry to which they have given their lives. It is totally nonsensical and unfair to exclude those railway men and women from the whole tendering process. For that reason, Conservative Members--at least, those who care--should support this group of amendments.
Mr. Hawkins : The concern of those whom I represent, who care about the railways as deeply as I do, is to ensure that the legislation works in practice. The importance of the new clause, and the reason why the Government are right to maintain their position that management and employee buy-out bids should be allowed but British Rail should not be allowed to bid, is that the railways should benefit from the skill and expertise of the people who understand the running of them and who can be encouraged to be involved in management-employee buy-outs. However, there should be every opportunity for customer service to be improved without the danger of the whole purpose of the Bill--to bring in private sector management and skills--being undermined. It will be undermined if, as my right hon. Friend the Secretary of State rightly said, the monolithic British Rail, as it has been for so many years, is allowed to bid in its own right.
Labour Members seek to undermine the whole basis of the bid by allowing British Rail to undercut private competition. That change is unacceptable because it would ensure that all the customer complaints up and down the country about the unacceptable quality of British Rail services continue in the years ahead. We want to see an improved railway service. It is no good hon. Members such as the hon. Member for West Bromwich, East (Mr. Snape) talking about ideology. We are interested in serving the public. It is not possible for Labour Members to ignore the voluble and voluminous complaints that they get, as I get, about the appallingly low quality of many British Rail services. It is simply not acceptable for them to ignore the volume of customer and passenger complaints about so many lines, which have resulted from the mismanagement of so much of British Rail over so many years.
I welcome the fact that, for the first time in a debate on rail--I have been a regular attender of such debates--the hon. Member for Kingston upon Hull, East (Mr. Prescott) said that he accepted that there had been both
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management and employee failures in British Rail. One welcomes a sinner who repenteth and a conversion on the road to Damascus, however late it is. It is to be welcomed that at long last there is some acceptance on the part of Labour Members that there have been many things wrong with British Rail in the past. That is why it is so extraordinary that they are still arguing that British Rail should be allowed to bid. That would undermine the whole purpose of what the Government are doing, which is to bring in the fresh air of private sector management to improve customer service. Labour Members will be taken seriously on this issue only when they start talking about the volume of customer and passenger complaints.I shall refer to a point made by the hon. Member for Hampstead and Highgate (Ms Jackson). She suggested that the Government's response to new clauses tabled this afternoon was the result of pressure from an organisation called Save Our Railways. I have examined carefully the heavily hyped media launch of a Save Our Railways press release issued yesterday, which talks about a number of Conservative Members, including me, and the reaction of the public--in the view of Save Our Railways--in those Conservative seats. When one looks carefully at the press release--clearly, those members of the media who concentrated on it heavily in the past 24 hours did not look at it carefully enough--it makes it clear that 5,300 people in 53 seats were surveyed. The briefest acquaintance with statistics would show that that means that precisely 100 people in each seat were surveyed. That is hardly a statistically significant sample.
The Save Our Railways survey referred to the feelings of a percentage of the people in each Conservative seat. The figures of 79 per cent. and 6 per cent. suggest that a large number of people were surveyed. However, if only 100 people in each seat were surveyed on their views of the various clauses, the figures of 6 per cent. and 9 per cent. show that only six people and nine people respectively were surveyed.
Before the hon. Member for Hampstead and Highgate readily adopts a rail union-funded campaign, which claims to be all-party on the basis only that a single former Conservative Member, however distinguished, was involved in the launch of that campaign, she should examine the survey more carefully. When I look at the figures relating to my seat, I have the endorsement of 79 per cent.--79 of the 100 people surveyed agreed with my views on rail privatisation. That is a ringing endorsement and it is one of the reasons why, at the local elections last week, a rail union councillor was defeated and we won a seat from Labour.
Madam Deputy Speaker : Order. Passing reference is one thing, but to expand it to an entire speech is another. The hon. Gentleman must return more closely to the new clause being debated.
Mr. Hawkins : I am grateful for your guidance, Madam Deputy Speaker. I simply wanted to make the point that, despite the remarks of the hon. Member for West Bromwich, East, 79 per cent. of the people in my constituency who were surveyed by Save Our Railways agreed with me. That is a ringing endorsement of the Government's opposition to clauses such as new clause 24. It is one of the reasons why I support so readily my right hon. Friend's opposition to these suggestions.
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Dr. Marek : It is always a tell-tale sign that, when the Secretary of State is on a weak footing, he attacks Labour Members, and he did so on this occasion. He is shaking his head--he should look at the Official Report. During debates on other amendments, perhaps when he was about to give way or he was sure of his ground, he did not attack Labour Members.
The Secretary of State said that the Labour party wants no change. I do not think that any Labour Member holds that view, because we all know that there are problems with the railway system in the United Kingdom--it is grossly underfunded, the rolling stock is old, the capacity to build rolling stock is in doubt unless action is taken and the system is understaffed. Frankly, one wonders how the industry ever gets a train to leave and arrive on time as it does. The staff manage to do that, despite all the handicaps under which they must work.
The Secretary of State said that Labour Members want a large monolithic organisation to continue. I cannot subscribe to that. But I subscribe to the proposition that the railway system is a network, a system and a unity of its own. Wilfully dismembering the system without producing the slightest shred of evidence that the way in which the Government intend to do it is right is not in the interests of the country or of the passengers and customers.
The Secretary of State did not mention the customers or the passengers. I agree that the hon. Member for Blackpool,South (Mr. Hawkins) eventually mentioned them, but the Government Front Benchers certainly did not. The Secretary of State should look at the Official Report tomorrow--and I shall do the same.
Labour Members are worried that, if the changes come about--we can make general speeches on Third Reading--customers and passengers will not be able to undertake journeys from one station to another. Will passengers and customers have the security of knowing that, if they know that they must get up early tomorrow morning to catch the 7 o'clock train to somewhere, the train will run? I admit that trains do not always run on time now, but why add the extra danger that a franchising company that has bid too much or has not produced the figures that it expected when it was first given the franchise will go bankrupt or walk away from the operation at a moment's notice? If British Rail could bid for franchises, that would keep other franchise operators on their toes. Under the present circumstances, that would not happen. I would go a little further : I believe that there is a certain amount of dogmatic malice on the part of the Government against a nationalised industry such as British Rail and against the people who have run the service. The service has been understaffed and underfinanced. Employees have been attacked by the Government during the 10 years that I have been a Member of Parliament. The Government want to see the end of the nationalised industry and it does not matter to them how that is done. If the country has to suffer, so be it. I am afraid that that is how I look at it. That is why the Government are so keen to ensure that the new clause and amendments in this group are defeated.
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My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has tabled a new clause. I have tabled five amendments in this group. I suggest two ways in which British Rail could be brought into the operation to keep the private operators on their toes. The hon. Member for Ashford (Sir K. Speed) has tabled some amendments in
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the group. I hope that the new clause or one of the amendments will be accepted today. Of course, we shall support the new clause tabled by my hon. Friend the Member for Kingston upon Hull, East, if he decides to press it to a vote. I should also be happy to support the amendment tabled by the hon. Member for Ashford.I am amazed at the lack of information that is sometimes given in the press. The leader in The Independent today is entitled "A concession to speed BR's sale." It talks about two questions and says :
"The second of these questions is easier to answer. Far from being the leap into the dark its critics allege, private railways have yielded impressive dividends in Japan, Sweden and elsewhere." The leader makes no further reference to Japan, Sweden or anywhere else, but it is held up as an answer that the reader of The Independent can accept as the editors's judgment of whether the privatisation proposals are worth anything.
We all know that in Sweden any success that has been achieved has depended crucially on Swedish railways being able to bid. It has been successful in about 79 per cent. of the bids. In many cases, it has turned loss into profit. What is wrong with that? If a national operator that is kept on its toes by private competition can turn lines from loss making into profit making in another country, why does the Secretary of State for Transport intend to prohibit that in the United Kingdom? There is only one answer to that question : it is because of dogma, malice and hatred of public service and public industry.
I wrote down a few comments that the Secretary of State made. He said that he wanted to encourage management buy-outs. There is no difficulty in understanding why he wants to do that : it is because no one else can run the railway industries. So railway managers who have been slated by the Secretary of State in the past few years will suddenly be lauded by him because they will buy out the industry. Suddenly, they have a private entrepreneurial ethos. They will be completely different creatures. It is beyond me to understand why that should be the case and why, if there are constraints on British Rail, the Secretary of State cannot remove them.
I admit that the Secretary of State is removing some
constraints--for example, in freight operations. However, he could remove many of the constraints on British Rail without this dreadful Bill. If there were a referendum, I am sure that 90 per cent. of people would vote against the Bill. The Secretary of State also said that he wanted to restructure the industry into small units. If that happens, it will be more difficult for passengers to take a train from one station to another. The smaller the number of units, the more difficulty for the passenger and the customer.
The Secretary of State also said that he wanted a culture change. My thoughts immediately went to the water companies, which are now charging outrageous amounts and cutting off the supply of water from more desperate people and families than ever before. That is the culture that the Secretary of State wants to introduce. He wants to sweep away the idea of public service. That may be possible in other circumstances, but it is not possible for the major, necessary utilities or for transport systems. An integrated national railway service is certainly one of those. Therefore, it should be kept together.
If the Secretary of State were prepared to move some way, I would be prepared to accept that private capital and private interests should be brought in to keep the major provider of the network on its toes, as has happened in
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Sweden. Sadly, that will not happen here. It is a great pity. The Secretary of State shows his dogmatic malice by refusing to accept any argument. For the sake of the country--and for the sake of his party, which will reap the rewards if the clause is accepted ; but that is not a matter for me--I hope that there are enough Conservative Members who have not done a deal. I hope that they have not done deals. I have not been party to the negotiations and talks which have been held. I hope that Conservative Members will have sufficient integrity to vote for the new clause or one of the amendments. If they do, it is just conceivable that they can rescue an awful Bill and turn it into one that might work.Sir David Mitchell (Hampshire, North-West) : The new clause and amendments would allow British Rail to tender for franchises. I am glad that my right hon. Friend the Secretary of State intends to resist them. At first sight, the case for allowing British Rail to tender is superficially attractive. British Rail has all the resources needed to be a successful operator. It has a world of experience and expertise. It will be a continuing operator in other spheres of the railway service.
However, the new clause and amendments would wreck the Government's purpose. They would fight off most private franchise operators for fear of unfair competition. British Rail would have disproportionate resources and much bigger muscle than any new franchise proposed operator. There is no way in which one could avoid
cross-subsidisation between one set of contracts and another in a giant organisation such as British Rail.
I remind my hon. Friends who may be considering supporting the new clause or amendments that one could not persuade potential private franchisers that there would not be artificial competition in a particular bid which it was preparing and spending money on. I am well aware that assurances would be given that the system could be policed, but it could not. I wish to give the House a read-across which illustrates that it would not be possible to iron out and prevent cross-subsidisation.
I ask my hon. Friends to consider what has happened in local government. We all know that there are many examples where in-house bids have been made by local authority departments for contracts which have been put out to competitive tender. In many of those cases there have been artificially cross-subsidised bids. The Department of the Environment has issued 45 notices where it has suspected anti-competitive behaviour in the bidding. So far, it has had to issue 21 directions for either anti-competitive behaviour or failure to achieve financial targets set for the department concerned. In other words, we have a direct read-across where, in local government, insider bids, so to speak, have resulted in artificial competition. Everybody knows that, if British Rail were allowed to bid in similar circumstances, the same artificial competition would result.
Mr. John Spellar (Warley, West) : To me, 21 does not seem to be a bad average when one considers that in this country there are tens, if not hundreds, of thousands of contracts let every day under competitive tendering. To find only 21 with which something is wrong seems very good odds to me.
Sir David Mitchell : I said that, so far, there had been 21. The hon. Gentleman must recognise that it takes quite a
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long time for these things to work through the machinery of assessment as to whether, as suspected, an artificial bid has been put in.Quite apart from the possibility of a deliberate intention to have cross- subsidisation, one has to consider whether British Rail would know whether there were cross-subsidisation. There are a huge number of areas in which there would be opportunity for judgment on the allocation of central overheads and servicing costs ; judgment on the period of write-off and how long rolling stock will last. All these matters of judgment will have a considerable impact on the level of the bid put in by British Rail in competition with a private operator.
Mr. Dykes : Why could that not all be handled adequately by the franchising director? Why does my hon. Friend have so little confidence in that operation?
Sir David Mitchell : Simply because, in a vast organisation such as British Rail, it would be possible to hide those costs. Let me give my hon. Friend an example.
When I had the honour of serving as a Minister in the Department of Transport, British Rail came forward with a proposal to close the Settle- Carlisle railway line. We asked British Rail to give us its costs and takings. It was a monumental task to try to unravel the facts and get to basic figures upon which to form a judgment. At one point, British Rail said that it was very sorry, but it could not read the till rolls, so it could not tell us what the takings were. Against that background, I have to say to my hon. Friend that anybody from outside who seeks to investigate whether
cross-subsidisation is going on will not have a snowflake's chance in hell of getting to the bottom of it.
Mr. Harvey rose--
Dame Elaine Kellett-Bowman (Lancaster) rose--
Madam Deputy Speaker : Mr. Nick Harvey--or is the hon. Gentleman giving way?
Sir David Mitchell : Yes, Madam Deputy Speaker. My hon. Friend wishes to intervene.
Madam Deputy Speaker : I am sorry. I thought that the hon. Gentleman had concluded.
Dame Elaine Kellett-Bowman : We were very delighted that the Minister did not allow the wool to be pulled over his eyes, and the Settle- Carlisle railway survived.
Sir David Mitchell : I will close by saying that this is a very powerful argument, which I hope will be found persuasive by my hon. Friends, for supporting the Secretary of State by resisting this amendment ; it would frighten away prospective franchisees from bidding, thus defeating the Secretary of State's purpose.
6.15 pm
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