House of Commons Hansard Debates for 3 Nov 1993

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Railways Bill

8.33 pm

Several hon. Members rose --

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse) : Order. I have to acquaint the House that the message has been brought from the Lords by-- [Interruption.] Order. [Hon. Members :-- "On a point of order."] Order. I will take one point of order, of which I have already been given notice, from Dr. John Marek.

Dr. John Marek (Wrexham) : On a point of order, Mr. Deputy Speaker. I raise my point of order with you particularly in view of your statement that the only amendments that will be before us are the amendments brought from the House of Lords, labelled 1A, 1B and 1C in the Vote Office. I looked at amendment 1B in the Vote Office, and it says :

"Subsection (4), line 6, leave out from ( for') to ( in') and insert ( selection as the franchisee.')."

If you, Mr. Deputy Speaker, look at line 6 of subsection (4) of amendment (a) from last night, you will not see the word "for". That means that you either have a different amendment from the ones that we have in the Vote Office or the amendment patently is nonsense. May I suggest to you that the only way out of this impasse is for us to have a period of consideration and for you to suspend the sitting of the House for 15 minutes?

Mr. Deputy Speaker : In answer to the hon. Gentleman, the line number is correct, but it refers to the italics on the bottom of the sheet.

Several hon. Members rose --

Mr. Deputy Speaker : Order. I have to acquaint the House-- [Hon. Members :-- "On a point of order."] Order. I have to acquaint the House that

"The Lords do not insist on their Amendment to the Railways Bill to which the Commons have disagreed ; they agree to an Amendment proposed by the Commons in lieu of a Lords Amendment with Amendments to which they desire the agreement of the Commons ; they agree, without Amendment, to certain other Amendments proposed by the Commons in lieu of that Lords Amendment ; and they agree without Amendment to Amendments made by the Commons to certain other Lords Amendments."

Motion made and Question proposed, That the Lords amendments be considered forthwith.-- [Mr. MacGregor.]

Mr. Deputy Speaker : The Question is that--

Mr. Nigel Spearing (Newham, South) : On a point of order, Mr. Deputy Speaker. May I now speak to the Question that you are about to put ?

The Secretary of State for Transport (Mr. John MacGregor) : I beg to move, That this House doth disagree-- [Interruption.]

Mr. Deputy Speaker : Order. Settle down. I shall hear the hon. Member for Newham, South (Mr. Spearing). The Secretary of State was not here.

Mr. Spearing : I am much obliged.

I seek to illustrate why these messages should not be received or agreed. The Government's technical incompetence on pensions, transport, procedure and prorogation

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shows that the Government have got themselves into a tangle that is unprecedented and unfair on British Rail pensioners and, moreover, on Members of the House.

Last night, the House agreed to a Committee withdrawing to a special room behind the Chamber to draw up reasons for the--

Mr. Deputy Speaker : Order. The hon. Gentleman will be aware that the House has agreed to take the Question forthwith. The clock is running, so I hope that the hon. Gentleman will bear that in mind and bring his point of order to a rapid conclusion. [Interruption.] Order. I am listening to a point of order. Mr. Nigel Spearing. If there is no point of order, I shall call the Secretary of State. Question put and agreed to.

Lords amendments accordingly considered.

Clause 22

Public sector operators not to be franchisees

Lords amendment to a Commons amendment in lieu of a Lords amendment : 1A, in Subsection (4), line 2, leave out from first ("to") to ("in") and insert ("award a franchise under this Part").

Mr. MacGregor : I beg to move, That this House doth disagree with the Lords in the said amendment.

I shall also be asking the House to disagree with the other two. [Interruption.]

Mr. Deputy Speaker : Order. The House must settle down. I gave the hon. Member for Newham, South the opportunity to put his point of order. [Interruption.] Let me have an opportunity to hear the hon. Gentleman's point of order. Mr. Spearing.

Mr. Spearing : I am obliged to you, Mr. Deputy Speaker, for making the matter clear. I was under the impression that I was speaking to the debate, not to a point of order. But you have ruled that I am on a point of order, so I shall now put it to you.

Will you please confirm, Mr. Deputy Speaker, that, in the normal circumstances of the House, business that is brought to the House at short notice which, by its nature, cannot be transferred to those who wish to debate here, can be stopped by the House accepting a motion that the House do now adjourn. Will you please confirm that the timetable motion, which was moved by Her Majesty's Government a couple of days ago and accepted by the House, precludes that safeguard for keeping the minorities' rights alive? Therefore, the fact that the Question that has just been put, which was taken forthwith without opposition, means that we will not have the opportunity to move the Adjournment of the House?

Secondly-- [Interruption.]

Mr. Deputy Speaker : Order. In an attempt to cool down the excitement, I inform the House that the hon. Member approached the Chair and asked to put that point of order. I took it to be a point of order and that is why I allowed it. I have now got the hon. Member's message, so I call the Secretary of State. [Interruption.]

8.45 pm

Mr. MacGregor : I have already begged to move that the House doth disagree with the Lords in the said amendment, and I shall be asking the House to disagree with the other two as well. [Interruption.] The three

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amendments from the other place that we are being asked to debate are basically about one point, the bidding system for franchises. I remind the House of the objectives of the franchising system- -

Mr. Ken Livingstone (Brent, East) : On a point of order, Mr. Deputy Speaker. Will you assure the House that, unlike other Ministers proposing privatisation legislation, the Secretary of State for Transport will not be rewarded by a well-remunerated position on the privatised railways once this legislation has been pushed through--a big fat backhander, like all the rest of them had?

Mr. Deputy Speaker : That is not a point of order for me, and it has taken up precious time.

Mr. MacGregor : --and they are all to improve the services for passengers. They will do so by promoting the competition for franchises, by encouraging management buy-outs to provide the franchises, by encouraging new entries into the passenger railway industry to provide more competition for franchises and by preventing the dominance of any one person or persons in the market. Those are the key objectives of the bidding system that we have for franchises.

The amendments passed in the other place this afternoon would seriously undermine all those objectives, for which the House voted last night by a clear majority. I have had reports of the debates in the other place, and the only speaker who addressed the amendments was my noble Friend the Minister for Aviation and Shipping. The rest of the speeches were all extremely general.

Therefore, I propose to address the amendments and explain to the House why we invite the House to reject the amendments.

Mr. Alex Salmond (Banff and Buchan) : Will the Minister give way?

Mr. MacGregor : If the hon. Gentleman will listen, I shall tell him the purpose of the amendments. I shall not give way, because we have only one hour. The clock is moving, and I know that many hon. Members wish to speak. There is not much time, and it is important that the House understands what we are discussing. I intend to address that, rather then what was said in the other place.

The first two amendments effectively say that the eligibility of a British Rail bid will be decided at the time of awarding the franchise rather than at the time of invitation for tender. [Interruption.] I am not at all surprised that Opposition Members do not wish to hear the arguments on the amendments ; they have never done. That is part of the problem. They do not address the real issues. That is exactly why-- [Interruption.]

Mr. David Winnick (Walsall, North) : On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker : Order. The Chair, and I am sure every other hon. Member, is having great difficulty in hearing the Secretary of State. The House must now settle down and get down to the serious debate. Before we do that, I shall take one last point of order from the hon. Member for Walsall, North (Mr. Winnick).

Mr. Winnick : The Minister has referred to the debate in the other place. My point of order is simple and clear. At the moment, we have not had an opportunity to study the arguments by which the other place came to its decision. It

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makes a total mockery of the democratic process that we should be debating these matters when we are not in a position to know why their Lordships came to the decision that they did, and I am asking you, Mr. Deputy Speaker, to rule on that.

Mr. Deputy Speaker : The House was fully aware of the situation when it decided to debate the amendments forthwith. Mr. MacGregor.

Mr. MacGregor : It was made perfectly clear-- [Interruption.]

Mr. Deputy speaker : Order. The House must now settle down and listen to the Secretary of State and any other hon. Member who is called to speak.

Mr. MacGregor : My right hon. Friend the Leader of the House made it clear that we might be considering Lords amendments this week when he made his business statement. This is a perfectly normal procedure at this stage of the Parliament. [Interruption.] If the hon. Member for Walsall, North (Mr. Winnick) wants to hear the arguments and what this is about, he should listen, instead of Labour Members making that great noise which shows their hypocrisy and how little they care about the arguments. I shall repeat what the amendment does as I am sure that Labour Members and many of my hon. Friends did not hear because of the noise.

Two of our amendments--the third amendment is closely linked to them-- relate to the eligibility of a British Rail bid. Under the amendments, the decision of the franchising director as to whether a British Rail bid should be eligible will be made at the time of awarding the franchise, rather than at the time of the invitation to tender, as we proposed. Last night, we had a lengthy debate on this issue.

I shall briefly explain what the effect of the amendments will be. First, most, if not all, management buy-outs will be totally discouraged from bidding for the franchise. If management buy-outs do not know whether British Rail will be made ineligible until after the invitation to tender and after the whole process, they will feel exactly as we agreed last night --that they are being squeezed out and wholly discouraged, and therefore will not incur the expense and the effort to make the bid in the first place.

Secondly, other bidders whom we talked about last night and whom we wish to see bid will be deterred. Hence it will undermine one of the whole purposes of the franchise system and the bidding process, which is to encourage competition for franchises. It will not help--indeed, it will create chaos and confusion. It will not help with the argument that I raised last night- -that the amendment from the other place, which we addressed yesterday, will mean that in each individual franchise, the people who may be framing the British Rail bid will be the ones who also wanted to do a management buy-out. As I spelt out yesterday, that is a recipe for total chaos and confusion. It will also mean that there will be a great deal of unnecessary cost.

Our amendment is preferable because it avoids all the problems ; it encourages management buy-outs and other bidders ; it encourages competition for the franchises and it avoids the confusion and unworkability. Indeed, what we now face would work out in practice as simply having a

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single monopoly supplier of the services again. The Bill is designed to prevent the dominant single supplier in the public sector.

Mr. Hugh Bayley (York) : Will the Secretary of State give way?

Mr. MacGregor : I will not give way, because the debate is a short one.

I must make the point that we have debated these issues on many occasions in the House. We debated them for two hours yesterday, although the vast majority of Labour Members were not present to hear the arguments. We have given much more time to these issues and debated them at greater length than did the other place. Fundamentally, this means that we will not get all the changes and benefits of competition that we are seeing in the former nationalised industries.

Yesterday, some of my hon. Friends pointed out that we were debating this Bill at a time when we saw yet another benefit of privatisation with the reduction in British Telecom prices that had just been announced. We would not get that benefit.

As I explained yesterday, our amendment will still enable British Rail to bid in defined circumstances. I do not need to repeat the arguments but that is one of the big changes that we accepted on the original Peyton amendment. Last night, I argued that, for a variety of reasons, it would be unworkable and would not meet our objectives. That will remain the position with the amendment that has come back from the other place.

The third amendment is closely linked to the other two. It has two main effects--it will delete the promotion of competition for franchises from the criteria which the franchising director must take into account, and insert instead a requirement that the transfer of services to the private sector should not significantly increase the costs of the franchising director. [Interruption.] The reaction of Labour Members shows the frivolity with which they approach these matters. It is clear that they do not care and they are not serious. The amendment has one bad effect and is unnecessary. The bad effect is that it removes the objective of promoting competition for franchises. Since that objective is one of the basic purposes of the reforms that we are undertaking, it cannot be right that we should ask the House to remove it.

The second point is that the amendment argues the case that an award should not significantly increase the cost to the franchising director. That is unnecessary, because the process that we have made clear--the process that is involved in our proposals, which I have talked about on many occasions-- means that the franchising director will take into account the costs in any awards that he makes, not least because he will have as his benchmark the historic track record of the existing passenger franchise, the new shadow franchise, when he examines the bids.-- [Interruption.] I am explaining precisely what it is about so that everyone understands. If the franchising director decides that the bids are not viable or competitive, or involve increased costs, he will not award any franchise and it will return to the existing British Rail operation.

In addition, value for money, which the amendment is supposed to be about, is already one of the franchising

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director's objectives. So I have explained clearly and precisely that we object to the amendments for the very reasons that, last night, the House passed our amendment by a substantial majority. That is why I invite the House to disagree with the Lords in the said amendment.

Mr. John Prescott (Kingston upon Hull, East) : This controversial Railways Bill, this arrogant Government and this incompetent Secretary of State for Transport have reduced Parliament to a running farce today. It started because the Secretary of State decided to deny this House and the other place the right to debate by introducing a guillotine in the way that he did.

The Government sought a cheap advantage by trying to rush the Bill through the House before proper debate could take place. That is the same charge that we lay against the Lords, who had to discuss Government amendments which were passed only last night and communicated by a reasons committee, of which I am member, which was set up at 2.30 in the Morning. I believe that I am still a member of that committee, which will have to meet again after this debate to tell the other place why we agree or disagree with their amendment. I resign from that committee. I cannot sit on it with any sense of democratic participation in view of the mockery of democracy that has been brought about by the Secretary of State. This is possibly my last appearance as the Opposition spokesman on transport. Since 1979, there have been 14 Secretaries of State for Transport. I have dealt with three of them, and this Secretary of State is by far the worst. He treats the House with utter contempt. The last three lasted only 18 months, and I believe that this month is this Secretary of State's 18th month. It is about time he went with the others.

The problem that the House faces today arises directly from the amendments and the guillotine procedure with which we were faced yesterday. The guillotine denies us proper and adequate debate on these essential matters. I remind those who attended yesterday's debate of the speech by the right hon. Member for Shropshire, North (Mr. Biffen) about the guillotine procedure. As he is an ex-Leader of the House, we all listen carefully to what he says. He said : "no House of Commons having even a modest regard for the self-respect of legislators would be presenting them with such an extensive Bill to be dispatched in two days."--[ Official Report, 2 November 1993 ; Vol. 231, c. 187.]

9 pm

That is at the heart of the problem that we face today. The problem in the House of Lords is exactly the same. This Government have deployed all the political trickery in the book to seek a political advantage to force down the throats of both Houses a view that they cannot substantiate in debate. They can enforce their view only by means of a guillotine and because of some Members who do not understand what they are doing. That has always characterised this debate. Yesterday my right hon. Friend the Member for Derby, South (Mrs. Beckett) described that, properly, as "a constitutional outrage". Any impartial person watching our debates on television might think that that is what is happening.

The argument to be placed against the Government is not only that they are a Government of cheats, but that they treat the House with utter contempt. The dates of our proceedings show that. Monday was a classic example. When the Government tabled a 10 o'clock business motion, it was reasonable to assume that the debate would

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be allowed to continue beyond 10 o'clock. The Government tabled that motion to lull the House into a false sense of security, thinking that there would be long enough to debate these matters, only to move a motion at 10 o'clock to close the debate and announce a guillotine. It was all to ensure that the debate would not centre on an examination of the real issues. The same procedures were adopted in the other place when a matter concerning these amendments was discussed, of which we have no record because it took place only hours ago.

The Secretary of State will know that, in the previous guillotined debate, we made great play of the argument of the memorandum of understanding concerning pensioners. The Government signed it prior to the other place voting on pensions, in the belief that the memorandum of understanding meant what the Government said it meant. The Government abrogated their agreement on that, but sought and got the vote in the other place. They got that by trickery. That is what has characterised the whole approach of the Government during these debates.

One of the Lords amendments changes a decision agreed by this House last night. I should remind hon. Members who have not attended our debates on these issues, as the Secretary of State has attempted to, what the issue is about. It is about the right of British Rail to bid for the franchise under the Bill's provisions for the privatisation of British Rail. There were some rebels--perhaps I should not use that word, because they did not materialise. If anybody thought that those amendments meant anything, they would buy anything.

When the Bill was first debated in the House, the Government did not believe that British Rail should have the right to bid for the franchise because, they said, it would blow a hole in the Bill. In other words, they did not want the most competent authority to bid for the facilities. The real intention of the Bill, which is at the heart of these amendments, is to allow the private sector to get its hands on the profitable bits of British Rail at the expense of taxpayers and rail travellers. So the House of Lords considered the matter and then restored British Rail's right to bid.

It is offensive for Ministers to talk about whether the other places gives proper consideration to legislation or whether it has the experience to do so. The two Tory Lords who have been leading the attack on this were both Secretaries of State for Transport in different Tory Governments. One was a chairman of British Rail. I can only assume that they must know what problems face a railway system. Both are Tories, and both have tremendous experience in government and in the management of the railway system. Both take the view that the Government's view is utter nonsense. Lord Peyton described it as "not common sense".

Yesterday, the Government sought to provide a right for British Rail to bid for the franchise, and Back Benchers agreed. Lord Peyton saw that as a small step forward. It was made clear that the person who was to award the contract was to ensure that, if a private bidder bid against British Rail, even if his bid cost more, priority must be given to that private bidder, fixing the market, as the Government have done with the coal industry, to ensure that the private sector wins the argument.

The Lords could not accept that ; they rejected it. It is a reasonable proposition to reject, and that is precisely what they did. They have told the House that it is utter nonsense. They have now told us that they do not reject it totally.

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They welcome the Government's move towards some form of privatisation--something that Opposition Members totally reject--but they have told the Government that, if British Rail is now allowed to bid, it should be allowed to make a bid up to the time of award. The Lords have also made it clear that they are concerned from our debates that, if a private sector bid comes along that is more costly than the British Rail bid, the taxpayer might get conned. Why does the Secretary of State want an extra £2 billion from the Treasury if it is not plunder to put in the pockets of the private sector to bid?

In Sweden, the national operator has been able to provide a better service, and the franchise director has been able to give it the award. The Secretary of State fears that that will happen here. The Lords amendments before us say, "You will not give the franchise to a private sector bidder if its bid is substantially greater than the British Rail bid." They are even giving a margin of edge to the private sector. They are trying to protect, however, the pockets of the taxpayers. The House of Lords defended the taxpayers when the Government had already given up.

Apparently, Lord Peyton and others do not understand that the purpose of privatisation is to take money out of public funds and put it The Government say that they stand for employee and management buy-out bids. The real reason is that the 50 private companies that were said to want to bid have not materialised ; they have vanished. They have considered the problems and they are scared of what is likely to happen. In desperation, the Government now want to fix it so that a few managers can get into the market and bid against British Rail. That will cause confusion in the British Rail system and conflict in the management, who will divert their energies from running a railway system into making competing bids in the name of privatisation. That is not the way to run a railway system. The Lords amendment is right. We disagree about the principle of privatisation, but they are trying to limit the damage and protect the interests of the taxpayer. One would have thought that the Secretary of State and Conservative Members would have been worried, but no ; they will troop into those Lobbies again today to tell the House of Lords that they totally reject their amendment.

That is the issue. It is a matter of substance. Tonight we are debating the credibility of the Secretary of State, the arrogance of the Government and an affront to democracy. That is why we shall oppose the Government's amendment tonight.

Sir David Mitchell (Hampshire, North-West) : The Lords amendment is a thinly veiled attempt by Lord Peyton to destroy the Government's rail privatisation measure in its entirety. Successful franchising is an essential part of the Bill. Railtrack will remain in the public sector. All of the system that is not franchised will remain in the public sector. It is on the franchising front only that the private sector becomes involved. Therefore, the benefits of this massive Bill rely on the success of franchising.

Franchising will bring three benefits to the public : first culture, secondly competition and thirdly cash. By "culture", I mean the interjection of the enterprise culture that has been so desperately missing from British Rail's

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activities, and the wind of change that that will bring to the whole of the enterprise. By "competition", I mean that there will be astonishment when several bidders fight each other for the minimum amount of subsidy that they require to operate the service. That experience has been offered elsewhere in the transport world and will undoubtedly repeat itself if we are successful in enacting the Bill. The third benefit is cash to get rid of the Treasury's dead hand and enable those people to go to the markets for money and increase their investment in a way which the Treasury would never permit. Those benefits would be denied if the Lords amendments were accepted and the benefits of franchising were taken away.

Bids for franchises will come from four main sources : management buy-outs ; international rail engineering companies ; existing transport companies such as P and O and Virgin ; and City-backed entrepreneurs. None of those would bid if the amendments were accepted, because the amendments would destroy effective bidding by the private sector, which would have to bid against British Rail's unfettered right to bid. Only once that had happened would the franchise director assess the bids and question whether British Rail's bid should be barred.

On that basis, there would be no bids, because there would be no level playing field. Bidders would be scared off by British Rail's financial muscle, the fear of deliberate artificial

cross-subsidisation, the knowledge that British Rail would not know whether it was cross-subsidising, and British Rail's access to cheap public money, which would not be available to other franchise bidders.

The amendments would put a tourniquet around the throats of managers considering a bid. None of them would dare to bid against his employer, knowing that afterwards he might lose his job and that his job would be on the line the whole time that he was preparing his bid.

Will my right hon. Friend the Secretary of State be wary of amendments that have obviously been drafted by British Rail's lawyers for British Rail's benefit and sponsored in the Lords by past British Rail management? I go further and say that it is improper for British Rail to use public money to campaign against a Government programme approved by the electors.

Mr. Hugh Bayley (York) : The Secretary of State's speech contained three fatal errors. First, he said that, because we have spent hundreds of hours debating this Bill, we need not debate it any longer. But we have never debated this proposal from the Lords. It has never come before either House until today.

Secondly, the amendment allows the franchising director to rule out absolutely any BR bid unless it is substantially cheaper than private sector bids. What possible objection could there be to that? Thirdly, he said that there would be a conflict of interests if BR managers put together a management buy-out bid in competition with BR, when BR were also bidding. But a conflict of interests will exist if those managers challenge their company by submitting an alternative bid while remaining in the company. If there is to be a level playing field, private sector firms will have to bid from outside BR. The managers who want to opt out of BR should prepare their bids from outside and leave BR free of interference from outsiders to put together its own bid.

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The Government intend to vote down the Lords amendment for just one reason : they are afraid of the competition that BR would bring. They are afraid that, if BR is allowed to bid, it will provide better and cheaper services for the public. They are determined to destroy that possibility by means of their privatisation measure.

Mr. Tim Rathbone (Lewes) : The opening speech of the hon. Member for Kingston upon Hull, East (Mr. Prescott) slid into personal invective, which is the last resort of anyone without a rational argument on which to rely. If we needed further confirmation of the need for that guillotine motion, which I found unfortunate, the atrocious behaviour of Opposition Members provides it.

We must remind ourselves and the other place that yesterday's House of Commons majority of 34 confirmed the improvement that has been made to the Bill throughout its consideration on the Floor of the House of Commons, in Committee and in reaction to the previous set of Lords amendments.

The other place, however, has clearly misunderstood those changes--perhaps because it did not have time to consider them. I hope that it is considering them now. Certainly it was not given time to debate them, in contrast with the time allowed for discussion of the amendments tabled by my right hon. Friend and his colleagues. The Lords amendment undercuts the whole principle of the level playing field to which numerous speakers on both sides of the House referred in yesterday's debate. It also undercuts true competition between the franchises. Such competition must be in the interests of more efficient rail services, which are more cost-effective for the taxpayer.

9.15 pm

I believe that a misunderstanding existed in all their Lordships' minds when they voted last night. That was confirmed by the comment made by Lord Marsh in a broadcast at 6 o'clock this evening. I heard what he said, and I was not relying on annunciator screens or television sets--I was there when he said it. He said that, under the House of Commons amendment, the SNCF, the German Bundesbahn or any other foreign railway could bid for a franchise while British Rail could not, but that is not true. The whole point of the amendments that we discussed yesterday was that British Rail would be allowed to bid, except--

Several hon. Members rose --

Mr. Rathbone : No, I will not give way. I hope that other hon. Members will have a chance to speak later.

British Rail will have a chance to bid, except when the franchising director believes that that is not in the interest of competition. That is the measure that we passed yesterday, and that is what went down the Corridor earlier today.

I believe that Ministers and the House considered the so-called Peyton amendments, as their Lordships wanted them to do. They concluded that those amendments themselves required amendment, made the necessary changes, and passed them back to their Lordships for consideration. I believe that we should pass them back yet again in a few moments' time.

Mr. Nick Harvey (North Devon) : The Government face this problem for the first time in 16 years entirely because of their own incompetence and obstinacy. Their handling of the Bill has been deplorable throughout its

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