House of Commons Hansard Debates for 21 Apr 1994

Mr. Spearing : I am grateful to the Secretary of State, who is courteous in these matters. In replying to the hon. Member for Gravesham (Mr. Arnold), he mentioned the Union Rail route. Is he aware that the Bill that he

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mentioned will contain a provision for the tunnels to run underneath many hundreds of homes in Newham, instead of below the existing railway--which it does for part of the route ? Is not that asking for trouble ? Will the right hon. Gentleman examine that matter, because the Bill will surely be held up unless the route is changed to run below the existing line rather than underneath houses ?

Mr. MacGregor : The hon. Gentleman makes a point that has completely escaped the hon. Member for Holborn and St. Pancras. To ensure the most effective route and one that takes account of local communities--and obviously it is not possible to meet everyone's requirements--an enormous amount of time and resources were spent and there were huge public consultations. A hybrid Bill will also be required to be passed by the House, and that will clearly take a great deal of time. The hon. Gentleman thinks that somehow or other we can do it just like that and we will have the railway system in place tomorrow. He completely ignores the two to three years that are involved in the process. That is the point at which some of the issues can be examined.

Mr. Heald : Before my right hon. Friend leaves his point about the early-day motion, and given that motion's clear inaccuracy, will he give the hon. Member for Holborn and St. Pancras (Mr. Dobson) the opportunity to withdraw his comment which is false ?

Mr. MacGregor : I have made the position clear to the House. I have read out exactly what I wrote to the hon. Gentleman and I hope that he will now withdraw his comment.

My charge relates to matters much more serious than the trivial and misleading episodes to which I have referred so far--although the hon. Gentleman's speech contained a lot of other examples. My charge is both that he has no policy and that he is still attempting to mislead the country into thinking that he has. He spent almost his entire speech criticising our levels of investment, despite the fact that we have invested a great deal more than the previous Government. The implication of that criticism--there was a complete roll-call which we will be studying carefully--is that a Labour Government would be engaging in all those programmes and carrying out all that investment. Recently, the shadow Chancellor said that the Labour party's so-called spending commitments simply do not exist--that there are no manifesto commitments to public spending at this stage. Let me ask the hon. Member for Holborn and St. Pancras some questions. Has he secured from the shadow Chancellor an increase in the overall transport investment programme ? He has already put forward the most enormous range of criticisms of spending and therefore, by implication, clearly expects changes to be made, and made quickly ; he has complained about the speed of such changes. He ignored the fact that we have invested huge sums in the east coast main line ; the west coast main line is the next priority. He seemed to think that both of them should have been done at once. There is a clear implication

Mr. Eric Martlew (Carlisle) : Will the right hon. Gentleman give way ?

Mr. MacGregor : No, I am addressing the hon. Member for Holborn and St. Pancras, who expects a big increase in

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the transport programme. We shall simply cost the range of proposals that he has put forward today and be clear about what they are. If he does not have an increase in the programme, where will he make cuts ?

The hon. Gentleman said little about the roads programme. In the House the other day, he described it as bloated--despite the fact that, as he knows, a large number of his colleagues on the Back Benches were urging me to get on with road projects in their areas. I assume that the hon. Gentleman will make savage cuts in the roads programme. He should therefore tell us exactly where he will make the big cuts. He must then face this point.

Mr. Foulkes : Will the right hon. Gentleman give way ?

Mr. MacGregor : I am still on the same paragraph. Even if overall passenger rail traffic could be increased by 50 per cent. as a result of the massive investment that the hon. Gentleman claims he would make, it would cut passenger road traffic by only some 3 per cent.--less than one year's growth at present. It would be a totally silly use of resources to cut the road programme savagely and switch over. That would add a great deal to what we are already spending. We are spending 40 per cent. of our programme on public transport for 10 per cent. of the traffic. The hon. Gentleman wants to make the big switch to spend 60 per cent. or 80 per cent. of his total programme on public transport. That would not only be a bad use of resources ; it would disappoint a lot of communities around the country. During our exchanges on the road review, the hon. Member for City of Durham (Mr. Steinberg) was at least honest. He said that he was not sure which way he wanted to go on my decision about the A167 western bypass at Durham : he said that he was sitting on the fence. The hon. Member for Bolsover (Mr. Skinner) said that he was on the roundabout, going nowhere but round and round. At least the hon. Member for City of Durham was honest in saying that he was sitting on the fence.

The hon. Member for Devon, North (Mr. Harvey) does not even admit that he sits on the fence. He has been extremely critical of the roads programme. Recently at the Liberal Democrat party conference, a resolution was passed drawing attention to the urgent need to shift the emphasis from road building to public transport.

The hon. Gentleman undoubtedly knows that almost all his colleagues keep fawning on my hon. Friend the Minister for Roads and Traffic urging him to get their road schemes through as quickly as possible. He knows that in different parts of the country his colleagues are saying that they want their roads urgently--he criticised the Government for not producing them. Those hon. Members want schemes cut back in different parts of the country, where other hon. Members are saying that they want their road schemes and that they want cuts made elsewhere. It is absolutely typical of the Liberal Democrats to be saying different things in different places. They have not made up their minds and are all at sea.

Mr. Nick Harvey (North Devon) : When we have debated the roads programme on previous occasions I have, indeed, taken a hostile stance on the majority of that programme. The Secretary of State said, in a tone of astonishment, that I seem to be for some roads and against others. I put it to him that there is not one hon. Member in the House who is either in favour of or against all roads.

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We have said consistently that we want a moratorium on motorway widening and a review of the roads programme. Clearly, local schemes can go ahead within that. It is the motorways with 14 lanes that we speak against, and we have done so consistently.

Mr. MacGregor : I am grateful to the hon. Gentleman because at last we have flushed him out : he is hostile to the majority of the roads programme. We will now tell all Liberal councils and councillors across the country, who call for increased and more rapidly spent money on the roads programme--in Newbury and in lots of other places--what the hon. Gentleman said. He cannot get away with saying that we must simply avoid widening the motorways. He must face the fact that the business congestion costs about which he complained are mainly concentrated on motorways. Ordinary motorists who want to journey around the country are being held up mainly on motorways. If the hon. Gentleman does not propose to do anything about the motorways, we shall remind the country that in 10 years' time it will be the Liberal Democrats' policy to have our motorways as parking lots for cars with their engines running. That is entirely what the hon. Gentleman's policy means.

If this debate has achieved one thing, it is that it has shown us the transport policies of the Liberal Democrats. Now we know what those policies are and we will let the country know.

Several hon. Members rose

Mr. MacGregor : No, I must get on.

My final point relates to the charge in the motion of the hon. Member for Holborn and St. Pancras that we have failed the country. That charge is defeated not only by the fact that we have greatly increased spending, and by the other things that I shall mention in a moment, but by surveys of informed overseas business men and companies.

I have in front of me a survey of European senior executives that was undertaken by Healey and Baker in connection with more than 18 capitals around the world. The questions in the survey related to the best cities in terms of external transport links and the best cities in terms of transport infrastructure. In each case, London came second out of the large range. That does not suggest that London is regarded as not having good links.

In a recent survey of foreign-owned companies operating in the United Kingdom, KPMG said :

"The UK's infrastructure and transport were highly rated with closeness to key markets, road, air and rail access all exceeding expectations."

The hon. Member for Holborn and St. Pancras always tries to shout down and talk down our transport infrastructure. Those who have experience of it regard it as one of our great assets. That is why the hon. Gentleman's motion completely fails.

The hon. Gentleman criticised the levels of capital investment. London Transport capital investment is nearly three times larger now in real terms than under the Labour Government and the GLC in 1978-79. The total investment in London Transport between 1974 and 1979 was less in real terms than capital investment this year. That is what we are doing now. It is no wonder that the hon. Gentleman

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does not like it. We are spending more now in real terms than was spent throughout the whole period of the Labour Government. Capital investment in the rail industry-- [Interruption.] It is no wonder that Labour Members are trying to drown me out ; they do not like to hear the facts.

Capital investment in the rail industry now is 50 per cent. higher in real terms than it was 10 or 11 years ago and is at among the highest levels for 30 years. Capital investment in national motorways and trunk roads is 87 per cent. higher in real terms than in 1978, yet the hon. Gentleman has the gall to say that we are not investing in our transport infrastructure.

I shall turn to other aspects of transport, not only the investment in infrastructure. Our transport industries are not only investing a lot in infrastructure ; they are much more efficient and competitive. Compared with the completely public sector-oriented policy that the Labour party is pursuing

Mr. Foulkes : Will the right hon. Gentleman give way ?

Mr. MacGregor : No, I will not.

Mr. Foulkes : I have been sitting here all through the debate.

Mr. MacGregor : I am afraid that the hon. Gentleman will have to sit for a bit longer.

On long-distance coaches, our changes have multiplied choice and lowered fares. The deregulation of buses has produced an increase in bus mileage and has made services more flexible. There are more operators, and subsidies have been halved. There are good returns for those who were previously providing subsidies.

Mr. Foulkes rose

Mr. MacGregor : As a result of privatisation, British Airways is now one of the most efficient, competitive and profitable airlines in the world. It is highly regarded.

Mr. Foulkes rose

Madam Deputy Speaker : Order. I make the point to the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), as I did to an hon. Member from the Government Benches : if a Minister, or anybody else who has the Floor, does not choose to give way, hon. Members must resume their seats.

Mr. MacGregor : I have given way a good deal more than the hon. Member for Holborn and St. Pancras did.

Our ports have been modernised, and they are attracting business again because of privatisation and the abolition of the dock labour scheme. That is the kind of transport policy to which the hon. Gentleman wants us to return. He complained about privatisation and deregulation, but they have worked in practice to increase investment and to provide greater choice and, in many cases, lower fares. The policy has worked and that is why the Opposition are now by and large refusing to reverse it.

What did the Labour party do ? It failed to get investment and to reduce inefficiency, overmanning and restrictive practices in the transport industries, so failing the consumer. The Labour party opposed each and every one of the policies that I have just described, which brought such massive improvements.That is why I totally reject the motion on the Order Paper, and that is why the Government do not think that the hon. Gentleman has made his case.

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Turning to the future, let me begin with rail. Everyone realises that there is a need for change and improvement on the railways. The system that existed before 31 March on British Rail had been ossified for too long. As a monolithic, nationalised industry, BR was not responsive enough to what its users needed. At the heart of our reforms are the interests of the users--the passengers and the freight industry.

I fully acknowledge that much improvement has taken place in recent years under Sir Robert and Sir Bob Reid, and their boards. The programme "Organising for Quality" and the impetus given by the passengers charter undoubtedly produced big improvements in the standard of service. The hon. Member for Holborn and St. Pancras laughs, but standards of improvement are coming through and that clearly motivates staff.

For example, the latest results show that, on average during the past year, 13 out of 15 commuter routes in the south-east were meeting or exceeding the punctuality standards set by the passengers charter. The London, Tilbury and Southend line has seen a performance turn-around, and it is one of the most punctual of all. That shows what can be done by changed systems, the targets of passengers charter and better management.

All of that took place before the large-scale investment. There has been a big turnaround, and major investment is now in hand. Work on a £83 million resignalling project is now under way.

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

Mr. MacGregor : I must get on. I have given way a great deal. The franchising of passenger services is one of the key elements in our plans. The franchising targets which I set for the franchising director last month are ambitious, but achievable. They are based on my desire to see that railway passenger services in Great Britain are provided under the franchise agreements as soon as is reasonably practicable. It is through franchising that we will see an overall improvement in the quality of services that are available to railway passengers.

Today, the franchising director published his timetable for the programme. He sets out how he intends to meet those targets by awarding the first six franchises by the end of 1995 and by franchising over half of BR's current passenger services by April 1996. I am confident that franchising and competition will attract keen interest from the private sector from companies with experience of the transport sector, companies looking to diversify and from BR management-employee buy-out teams.

Since November, when the Railways Act received Royal Assent--it is only a short time ago--we have achieved, with the full co-operation of BR and Railtrack, a massive restructuring of the railway industry to get it into shape for our reforms. It is the most far-reaching reform of the industry in half a century. Railtrack is now a fully independent company, and passenger and freight-operating companies have begun to operate as units within the board. Those will emerge as separate companies in the next year or so.

The infrastructure maintenance has been put together under one management, and we are already seeing the benefits of greater management focus and transparency of accounting. Better decisions will be made that way, and

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that is a point that the hon. Member for Holborn and St. Pancras completely fails to understand. Passenger services in particular are beginning to demonstrate new creative ideas about the services that customers want. All this is happening well before the franchising and other privatisations get under way.

Mr. Dobson : Does the Secretary of State welcome the initiative from the new management of what is now called North London Railway artificially to re-zone Hampstead Heath station from zone 2 to zone 3, so that they can put up the prices by 36 per cent. ? Does the right hon. Gentleman welcome that sort of initiative ?

Mr. MacGregor : I am sure that the hon. Gentleman understands that when some zoning areas are out of line with the rest, they must be adjusted. That happened under the previous system : there have been a number of occasions on which it has taken place. I must tell him that that has nothing to do with our reforms.

Railtrack is another clear example of why our reforms will produce better management and better decisions. As the chairman, Bob Horton, made clear, Railtrack believes that a public service business must behave like every other modern business. I agree with that. Costs must be transparently sourced, and it is on that basis that Railtrack has derived the cost of running the network and apportioned it into access charges.

It is not in Railtrack's interests--nor is it in the interest of the public or the railways system--to make unrealistic charges. Railtrack has divided up the entire cost of running the network at around £2 billion. We are discovering--as a result of the efforts and resources about which the hon. Gentleman complained--where the costs lie and the ways in which they can be put right.

Railtrack has allocated around £2 billion according to the use made by particular operators. For the first time, users of the infrastructure will bear the true cost of running the network. The advantage is that they will see where the true costs lie, and that is the key to real management control.

There are other advantages. The arrangement enables depreciation to be covered, and track investment can be given a priority that it has not always had. At the same time, Railtrack has been set challenging targets to get efficiency gains, and also to get its costs down and to give a realistic return to invest in the development of its asset base.

On pensions, once again the hon. Gentleman made outrageous charges which, if they have any effect outside the House, can only frighten people and lead them in completely the wrong direction. For a start, the hon. Gentleman is wrong. We have made our proposals following discussions with the British Rail pension trustees, as we have said. We have put our proposals out for consultation and the hon. Gentleman indicated that he would like to see them. I must tell him that copies have been in the Library for some time, and are therefore available there.

Of course, the moment we finish consultation we will make our proposals to the House in the way that we have always been expected to. I expect orders to be laid in this House and in the other place in May. That is in time to enable us to have them in place before the arrangements come into operation in October.

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I must make an important point to the hon. Gentleman. We have agreed with the trustees on all the absolutely key issues, and I am therefore confident that there are few issues--and they are not substantial ones--which remain unresolved. If there are any, they will be put to the House. The way in which the hon. Gentleman once again accused us of purloining funds was quite outrageous.

I want to mention the new regime of rail safety to which the hon. Gentleman referred. Railway accidents are rare, and rail remains one of the safest modes of transport. Building on that, the Government, Railtrack and British Rail are committed to maintaining and improving our enviable safety record. Both boards have my full support in ensuring that safety remains a top priority during the significant organisational changes to the industry.

This year's safety plan for the rail industry is published today, and sets out strategic safety objectives for BR and Railtrack for the coming year. There are also detailed arrangements for managing safety and reports on BR's safety performance in 1993-94. The safety plan is a comprehensive and forward-looking document which fully meets, and in some respects exceeds, current safety performance. It demonstrates a high level of commitment and resources which are being devoted throughout the industry to running a safe railway. The hon. Gentleman should have the grace to acknowledge that fact.

Mr. Dobson : What contribution to the improvement of safety does the Secretary of State think has resulted from Railtrack saying that it is unwilling to finance centrally the advisory service for children to keep them off the railway ?

Mr. MacGregor : I understand that that is the responsibility of British Rail, not Railtrack. I should have thought that the hon. Gentleman would focus on the substantial funds that are being deployed to ensure that we have safe railways. If he looks at the safety plan, he will see that that is the case.

Mr. Dobson : Will the Secretary of State give way ?

Mr. MacGregor : I must turn to roads. I shall be brief because we debated roads in March and the roads review has been published. I simply wish to make a few key points which are important in a debate on transport policy.

The roads review was one of the scheme priorities. There was a clear managerial need to establish priorities. To progress all the schemes in the programme with the same effort and often at much the same pace did not make the best use of resources. It wasted money and time and created uncertainty.

Mr. Dobson : The right hon. Gentleman says, apparently having been advised by his colleague--another expert on these matters--that responsibility for the anti-trespass and vandalism scheme is the responsibility of British Rail. Robert Horton, the chairman of Railtrack, wrote to the Associated Society of Locomotive Engineers and Firemen saying that the scheme was the responsibility of Railtrack and that Railtrack did not intend to discharge it centrally and would delegate it to individual managers. At least that is my understanding of the letter.

Mr. MacGregor : Perhaps we can clarify this comparatively small point. I am happy to clarify for the hon. Gentleman where the responsibility lies. I think--I

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shall have to check--that the responsibility lies with the British Transport police, of which British Rail is the employer. However, it is extremely important that the hon. Gentleman withdraws his accusation about lack of attention to safety on the railways. That is the key issue.

I was saying that the aim of the roads review was the better use of resources. The review has resulted in savings of up to £100 million a year which would otherwise have been committed to preparation and holding inquiries too early. That money could be better spent elsewhere in the roads programme. I should also make it clear that there is a high level of road building. Even with that, it was clear that some schemes would not have entered the construction frame for a very long time. So I felt that it was realistic to withdraw some of the schemes. I understand the concerns of those who have complained about the withdrawal of schemes, but it was clear that construction was a long way away.

For all the schemes which remain in the programme--the vast bulk--the review has not resulted in delays. The priorities assigned to the schemes made public what would have happened in practice. I took the opportunity of the review to consider an up-to-date assessment of the balance between the different environmental and economic considerations. That is why I decided to withdraw some schemes such as the M12 and the trans-European network from Stansted to Oxford. In addition to the roads programme review, many other effective, important and often radical policies are being pursued. That, again, is why the hon. Gentleman's motion is so wrong. First, the delivery of the roads programme is being speeded up. We have set up the Highways Agency, which will certainly ensure better delivery. I have already referred to road safety. I strongly attack the hon. Gentleman for suggesting that we have not devoted resources or a great deal of attention to road safety. The evidence is all there in the results. All our policies reflect the importance that we attach to getting the balance right for the environment. To give one example, the Government have recently published planning guidance which seeks to reduce the need to travel. Our sustainable development strategy published in January sets out our thinking on how to reconcile society's need for access to an ever wider range of goods and services with our ability to sustain the quality of life for future generations.

Then there are the initiatives on electronic motorway tolling and the design, build, finance and operate programmes, the next stage of which I have taken forward in the past month. That leads me to another important point.

Mr. Foulkes : While the right hon. Gentleman is shuffling his papers, will he give way ?

Mr. MacGregor : I do not want to go on for too long so I am throwing away some of my notes. I prefer to concentrate on the important points. The hon. Member for Holborn and St. Pancras misunderstands the nature of the private finance initiative. He suggests that the Labour party has invented the idea of bringing private finance into the system. However, he gave the game away in his criticism of the Northern line proposals and of what Asea Brown Boveri and the other tenderers in that competition are being asked to do when he said that it was wrong that they should take on some of the risk.

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It is clear that the Labour party's idea of private finance is not to transfer the risk but simply to engage in off- balance-sheet financing to get round public expenditure controls. That is another way in which the hon. Gentleman simply piles up expenditure on the public expenditure programme. That is also why his policies for the future simply do not add up.

Mr. Dobson : Will the Secretary of State give way ?

Mr. MacGregor : I shall not give way because the hon. Gentleman took a long time.

To accuse us of not getting on with the private finance initiatives is a gross travesty of what is happening. I have here a list of schemes that are already being constructed under the private finance initiative. They include the Jubilee line, the Dartford-Thurrock bridge, the second Severn bridge, the Heathrow express rail link. The hon. Gentleman clearly does not realise that a £400 million private sector contribution has been made to the Jubilee line.

Mr. Dobson : Will the right hon. Gentleman give way ?

Mr. MacGregor : I shall not give way.

In order to get the initial feasibility study under way, Railtrack launched the west coast main line competition. More than 40 organisations responded and Railtrack has appointed the winner. That is the first stage of the project. It has created tremendous interest and it is going ahead.

We are taking forward the second channel tunnel rail link and crossrail as joint ventures. I hope that the Private Bill Committee which is considering the Crossrail Bill will get through the House. It has the Government's full support. We can then get on with that project. We are moving fast on the competition to find a private sector promoter to design and build the second channel tunnel rail link and to operate the international services on it ; 74 organisations have already responded and requested the

pre-qualification documents. We shall move ahead with issuing the full tenders in June. Many other private finance projects are in the pipeline. Those projects also show where the Government's policies are working.

I want to speak briefly about shipping. I agree with the hon. Member for Holborn and St. Pancras about the importance of shipping. We are pursuing five specific measures to assist the industry. I hope to announce them in greater detail more publicly but I shall outline them quickly now. First, I announced a package of measures to the House on 15 December. It was targeted specifically at the competitiveness of United Kingdom shipping and included new regulations which are now in force. The regulations simplify ship registration law and enable ships on bareboat charter to be brought on to the United Kingdom register for the first time.

Secondly, I announced consultations on changes to the officer nationality requirements for United Kingdom vessels. Those changes should be in place by autumn. My announcement came shortly after the Baltic Exchange approached me with a proposal for a British open register. After carefully considering the proposal, I decided not to proceed with it for the present. I am worried about the impact that opening the new register would have on the existing United Kingdom shipping register. It would be better to assess the effectiveness of our new, much freer regime for the existing register over a reasonable period before considering whether to go further.

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The third measure is connected with the important subject of seafarer trading. The 15 December package included proposals to extend the financial assistance for that.

Fourthly, we have made it clear on several occasions that it would not be in the best interests of the industry, the consumer or the taxpayer to offer blanket financial assistance to shipping. Nevertheless, we recognise that British shipping can be at a disadvantage when competing with foreign shipowners who benefit from various fiscal measures.

As the hon. Member for Holborn and St. Pancras said, after careful consideration, my right hon. and learned Friend the Chancellor of the Exchequer has announced today that he proposes to introduce a provision which will allow capital allowances, being balancing charges for ships, to be rolled over for up to three years : that is, roll-over relief. We estimate that the measure will benefit the shipping industry by up to £20 million per annum in a full year. Subject to our obligation to notify the Commission, my right hon. and learned Friend will introduce the necessary legislation in next year's Finance Bill with retrospective effect from today. The fifth important matter to which we have given close attention is substandard shipping. I have focused strongly on that matter since I became Secretary of State for Transport. We have encouraged the European Commission and the Council of Ministers to do likewise. I am delighted that we are making real progress on it in the European Union, where action on the subject has been positive.

We welcome and support the International Maritime Organisation's efforts to improve flag state control and to ensure that all states apply and enforce the agreed international standards. However, until all states meet their international responsibilities, we shall have to concentrate on enhancing our own port state control measures. We inspect more than 30 per cent. of the foreign flag ships that visit our ports. Last year 6 per cent. of the 2,000 ships inspected--some 120 vessels--were detained.

There will be a meeting of European Ministers later this year to discuss improvements to the regional port state control system. I have spent much time on the matter with European Union

representatives because it is important for a variety of reasons. We shall work to bring all initiatives together in the coming months, to ensure that our actions and those of our international partners together increasingly deter substandard ships from using our waters and that those that continue to do so are identified, inspected and dealt with effectively.

That five-point programme contains nearly all the points on which the shipping industry has urged us to take action and I am happy to announce them as a complete package.

Mr. Richard Ottaway (Croydon, South) : Does not my right hon. Friend realise that the British open register proposed by the Baltic Exchange, which I advise, was not designed to help not the British shipping industry but maritime London and its institutions, such as the Baltic, Lloyd's and so forth ? I hope that my right hon. Friend does not rule out reconsidering that proposal.

Mr. MacGregor : I said that I was prepared to review it after a time and I well understood that that was the point of the proposal. Having talked to many people about it, the evidence showing whether it would have such an effect

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was slim and it could have caused problems for the existing register. In addition, the changes that I announced in December could well meet some of the objectives of the Baltic Exchange proposal. We must therefore wait and see whether they have that effect. My hon. Friend will know that many people at the Chamber of Shipping were extremely doubtful about the proposal and worried about it. If the changes do not have the desired effect in wider areas we must consider the criticisms. I made it clear that I am prepared to review the situation, but we have considered the matter carefully. On aviation, we have been guided by privatisation of airlines and airports and liberalisation of aviation systems in the European Union and beyond. There can be no doubt that our privatisations of British Airways and the British Airports Authority had tremendously positive results. As a result, BA is one of the world's most profitable, successful and competitive airlines. At the Transport Council in Luxembourg this week one of my colleagues complimented us on what we did and clearly implied that he wished that his country had acted to restructure and privatise the aviation industry when we did that with British Airways ; he recognises that we have realised the benefits. As for the BAA, there has been a much greater increase in investment than would have taken place if it had remained in the public sector and a sharpening- up of services for all those who use the BAA airports as a result of dynamic enterprise.

On liberalisation, the United Kingdom has played a leading part in securing the third aviation package to open up the skies in Europe. It is important to ensure that that package is implemented in two ways : first to ensure that there are no transgressions of the package ; secondly, to ensure that there are no unfair state aids, or that they are phased out as quickly as possible. I have spent much of my time during the past few months dealing with both, and that is a formidable task.

We have secured that package, which has great benefits for all air passengers, and it is important that we continue on that course. I assure the House that I will be very vigilant about any transgressions of the third aviation package and will pursue them and the state aid question with the Commission and in the Council. On aviation and the United States-United Kingdom negotiations, we remain committed to liberalising transatlantic air services. We tabled a wide-ranging liberalisation offer last December. Liberalisation tends to be viewed differently in this country and in the United States. For the United States, increased access for its airlines to Heathrow is the important issue. For us, it is opening up the United States domestic market to access to other airlines so that competition can be fair. For that reason, we have emphasised the British Airways-United States air deal. Approval for that deal was one of our key objectives in the negotiations.

I am very glad about another development--the recent proposed deal between Virgin and Delta, which involves closer co-operation in several areas, in particular code-sharing on Virgin's flights to Heathrow. We and the United States Administration are examining the proposal, which appears to show an increasing acceptance of the realities of capacity constraints at Heathrow. As I told the House, I very much regret the fact that the talks with the

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United States have stalled and I am trying to get them going again. The proposed deal between Virgin and Delta gives us another opportunity to do so.

I shall be responding shortly to the Select Committee on Transport about regional airports. Under this Government such airports have prospered and expanded dramatically. The hon. Member for Holborn and St. Pancras will also know that, in my proposals to the United States, I gave prominence--I put them right up front--to granting access to regional airports, because I understand the importance of that.

Mr. Tony Banks (Newham, North-West) : What about Stansted ?

Mr. MacGregor : As well as to Stansted. I am constantly trying to find out whether we can make a mini-deal that involves regional airports and Stansted, even if we cannot get the full deal quickly. I apologise for the fact that I have taken some time, but I have given way to

Mr. Foulkes rose

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