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There have been moves towards greater co- operation. The Brussels agreement of 1984 represented a step forward in terms of Britain's relations with Spain over the question of Gibraltar. It was intended to help Spain and the United Kingdom to sort out their differences on Gibraltar and to prevent further difficulties from arising. Those talks take place annually between Foreign Ministers.

Gibraltar is allowed to have a representative in the British party at those talks, but has so far resisted the invitation to join. That is a pity. A representative should be there, if only in a listening capacity. However, it would be far better if, in his discussions with the Spanish Foreign Minister this morning, our Foreign Secretary could persuade him that Gibraltar should have a separate place at the talks under the Brussels agreement, so that its representatives could argue their points of view themselves and have equal status with Britain and with Spain. After all, the future of Gibraltar will be discussed in those talks and I think that the residents of Gibraltar should be entitled to have their own say.

The condition of the economy in Gibraltar is crucial. Ten years ago, Gibraltar was probably two-thirds dependent on the Ministry of Defence for its sustenance. That has now dropped to about 9 per cent. and by the end of the decade, it will have decreased to only 3 per cent. That makes Gibraltar much more vulnerable to any action that Spain may take on the frontier, and there is no doubt that the financial services centre, which was a brave attempt to diversify, came into being at a bad time.

The economy of Gibraltar affects people beyond the frontier. I have referred to the 2,000 people who come into Gibraltar each day, most of them to work. The area of the Campo, La Linea and the whole region of Andalucia is at present run down. The people who live there regard themselves as poor relations of Madrid and I think that they do not receive the economic assistance from Madrid that they should. The Chief Minister, Mr. Joe Bassano, was brave to cross the frontier, the day after he was elected as Chief Minister, years ago, shaking hands with the mayor of La Linea and saying, "We are in this together. We shall help you and you help us. Let us be good neighbours." If that attitude could prevail in Madrid and in London, we could make progress on Gibraltar.

There is an opportunity for Gibraltar to provide a locomotive in that part of Europe--a locomotive that could help bring the rest of a rather depressed area into a better economic state and improve the lot of everyone.

If the airport agreement of 1987 were implemented, it would help. The problem is that the airport agreement was bilateral between Spain and the United Kingdom; Gibraltar was not party to it. If the financial centre is to work, it is very important that Gibraltar has a properly operating airport. At the moment Gibraltar is reluctant to implement the agreement simply because it does not trust Spain. The lack of trust must be overcome. The airport is on so-called "no man's land", which, at the time of the signing of the treaty of Utrecht, was a mosquito-infested bog which no one thought important. Now it is part of Gibraltar's lifeline. The matter of the airport agreement must be resolved.

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What is the way forward? The House should send a message to the Spanish Foreign Minister, Mr. Javier Solana, to put the question of the sovereignty of Gibraltar on the back burner for at least a decade and use those 10 years to build trust between Spain and the Gibraltar people. He should extend the hand of friendship rather than try to put a stranglehold on Gibraltar's economic future.

We already have excellent relations between the United Kingdom and Spain, which can be built on to good effect as regards Gibraltar. Spain must go out now and win the hearts of the Gibraltar people, especially the younger generation. If one held a referendum today on Gibraltar's sovereignty, similar to the one that was held in 1967, when 12,000 people voted in favour of staying British, and only 44--I never quite know what happened to those 44 people--voted to join Spain, one might receive a different answer. If only Spain could improve its relations with Gibraltar so that the two became better neighbours, there would be a good chance that another referendum might give a different answer.

Mr. John D. Taylor (Strangford): Does the hon. Gentleman notice an inconsistency in Spain's approach? Today a very important meeting of the Fisheries Council of the European Union takes place in Brussels, and Spain is arguing for the right of access to the Irish box and other waters, on the basis that it does not want to be treated as a second-class member state of the European Union--it wants full rights. Should it not equally refer to Gibraltar as part of the European Union and extend to it the same full rights?

Mr. Colvin: That is a good point. There is a bargaining position here. I do not know what will be on the agenda this morning in the talks between the Foreign Secretary and the Spanish Foreign Minister, but I dare say that fishing rights and the Irish box will be mentioned as well as Gibraltar. There is room to bargain, but I do not think that this is a bargaining problem. Gibraltar should be fully in the European Union; if it were, many of those difficulties would be overcome.

Changes have occurred since the running down of the Ministry of Defence establishment in Gibraltar. At that time there was the presence of many thousands of soldiers, sailors, dockyard workers and many members serving in the Royal Air Force. Much of the property in Gibraltar was owned by the MOD. There was physical contact with the people of Gibraltar and there was therefore a stronger relationship between Britain and Gibraltar, secured in a sense by the two Governments. Since the withdrawal from Gibraltar, we have witnessed the beginnings of a break between Gibraltar and the United Kingdom in governmental terms, and it is important that Her Majesty's Government try to mend the break that has occurred.

A solution can be found only if Britain and Gibraltar approach the problem together in agreement. In the meantime, I should like my right hon. Friend the Minister of State, in replying to the debate, to confirm that the policy of sustaining and supporting Gibraltar in its present difficulties will continue.

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10.37 am

The Minister of State, Foreign and Commonwealth Office (Mr. Alastair Goodlad): I congratulate my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on his repeated good fortune in winning the ballot for Adjournment debates, and wish him well in the national lottery on Saturday. I also congratulate him on mentioning a subject that is of enormous importance and great interest to the House, and about which he speaks with great knowledge and considerable vision.

The timing of the debate, as my hon. Friend said, is opportune because my right hon. Friend the Foreign Secretary is at this minute meeting his Spanish counterpart, Mr. Solana, for talks about Gibraltar under the Brussels process, and I shall say more about that in a moment.

It is by his own choice that the Chief Minister of Gibraltar is not present at the talks. He is in no sense barred from them and is kept closely informed of developments.

I shall first discuss the subject that my hon. Friend mentioned of the intrusive additional frontier controls introduced by the Spaniards at the border at the end of October. They are unacceptable. Every country has the right to reasonable checks at a frontier, but they must be proportionate; those imposed by Spain were not. They led to unacceptable delays of up to nine hours for vehicles crossing the border and two to three hours for those crossing on foot. As the House will be aware, we have made repeated strong protests to the Spanish Government in the last few weeks. I understand that those measures are not currently in operation, but we are watching the situation closely. There must be no question of their being reimposed. We should not forget either the lesser but still severe checks that have been in operation for many years and which Spain justifies on the ground that Gibraltar is not a member of the common customs tariff.

It is not enough to return to the delays that were the norm before. Our partnership in Europe requires that Spain goes further. We have suggested that the way forward is the use of red and green channels or random checks. It is true that Gibraltar is outside the common customs tariff by virtue of her omission from Council regulation 2154/1984 which defines customs territory and which has been the justification for the checks at the border. Technically, Spain is within its rights in carrying them out, but, as I say, the present level of checks is a disgrace and it is important that they cease permanently.

Mr. Colvin: I am glad to hear what my right hon. Friend says, but will he acknowledge that there is an agreement between Her Majesty's Government and Spain to chase drug runners which has been relatively successful? The police in Gibraltar have proved extremely efficient in chasing smugglers, too, but there may be a weakness in the Customs and Excise. That is one branch of the Gibraltar Government which could well be strengthened. But the House should not believe for a moment that not enough is being done, in co-operation between the United Kingdom, Gibraltar and Spain, to chase drug traffickers.

Mr. Goodlad: I am grateful to my hon. Friend for raising an important point. I shall come to smuggling in a moment.

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First, I reaffirm the Government's commitment to the people of Gibraltar, most recently made in the House by my right hon. Friends the Prime Minister and the Foreign Secretary. We shall never allow the people of Gibraltar to pass under the sovereignty of another state against their freely and democratically expressed wishes. That is set out in the preamble to the Gibraltar constitution and it is a pledge which I reiterate to the House today.

My hon. Friend mentioned the recent speculation in the British press about dirty tricks. I can give him every assurance that there is no question of the United Kingdom being involved in dirty tricks of any sort to undermine the Gibraltar Government. That could not possibly benefit anybody. Speculation about that is totally unfounded and unhelpful. In that context, the word "rubbish" has appeared in at least one of today's papers and that sums up the matter fairly accurately.

The Brussels process was initiated in 1984 to facilitate avenues of practical co-operation between Gibraltar and Spain. Its provisions include the establishment of the free movement of persons, vehicles and goods, provisions which have been met by Spain more in the breach than the observance. That is yet another reason why the question of checks and other harassment from the Spanish side is so intolerable. None the less, it is an important and useful vehicle for discussion on the way ahead in Gibraltar. There is plenty of unrealised scope for practical cross-border co-operation which could benefit both economies. I should like us to have more of that and less megaphone diplomacy--or, should I say, lack of diplomacy--which has been the hallmark of many of the public pronouncements emanating from the Spanish side of the border in recent weeks.

We would welcome participation by the Government of Gibraltar in the Brussels process discussions. Their voice should be heard and I regret that the Chief Minister chooses not to attend the sessions at which, as I said earlier, he would be welcome. The Governor is currently attending the discussions instead. Talks under the Brussels process also provide for discussions on sovereignty, but that is against the background of our commitment to the people of Gibraltar to which I have just referred.

My hon. Friend mentioned the airport agreement. Gibraltar is concerned that the implementation of the 1987 airport agreement has implications for sovereignty. Those concerns are unfounded, but we have committed ourselves not to impose the agreement on it and officials are continuing to work towards a solution which is acceptable to all parties.

Mr. Colvin: The other means of communication out of Gibraltar is by sea and at the moment the only thing that stands in the way of the ferry service between Gibraltar and Algeciras is Spain's reluctance to permit it. I hope that that is another matter that will be on the agenda at this morning's talks between the Foreign Secretary and the Spanish Foreign Minister.

Mr. Goodlad: My hon. Friend raises an important matter. If the ferry is not a subject on the agenda this morning, it soon will be. My hon. Friend also referred to self-determination. We in the House are aware of the keen debate that is taking place in Gibraltar on self-determination. The right of self-determination has, as my hon. Friend said, to take account of the treaty of Utrecht, under which independence is not an option without Spanish consent.

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Any changes to Gibraltar's future status will have to be acceptable to all parties and we do not consider that, in adhering to article 10 of the treaty of Utrecht, which accords sovereignty to the United Kingdom, we are in breach of the United Nations charter.

My hon. Friend referred to drugs and smuggling. One of the allegations that Spain has produced to support its activities at the border has been the smuggling of drugs. I make it clear that we in the Government and in the House detest drug smuggling and the Government are committed to the fight against it. The Government of Gibraltar have repeatedly said that that is their position, too. The Gibraltar Government are currently implementing into their legislation the important 1988 United Nations drug convention. The Royal Gibraltar police, a small but determined force, have been most effective in seizing quantities of illegal substances. In the past year alone, they have seized nearly 2 tonnes of drugs and made some 500 arrests. That, by any standards, is an impressive total which puts paid to spurious claims by the Spaniards of inactivity. Her Majesty's Government actively support the Government of Gibraltar in the fight against drugs with expert advice and specialist equipment, including fast launches. There is good co- operation between Gibraltar and its Spanish counterparts at local level and successful joint operations have been mounted. We are keen that that should continue and not be hampered by political interference.

There is more that the Gibraltar Government could do. Too many fast launches are still not caught by existing legislation. Other controls could be imposed. I would like to see action on that front, but it is up to the Spaniards, too, to ensure that the climate is right to enable new steps to be taken.

On tobacco smuggling, which my hon. Friend raised--it is another stick that Spain uses to beat Gibraltar--I should make it clear that Her Majesty's Government do not condone it any more than any other sort of smuggling. The appropriate legislation is, of course, not within Her Majesty's Government's area of responsibility, but we are in close contact with the Government of Gibraltar, to whom we have repeatedly and forcefully represented our concerns, about appropriate measures.

Mr. Colvin: This is a rather important point, because the export of tobacco from Gibraltar at present--perhaps through illegal smuggling--is probably worth about £15 million to its economy. Since the rundown of the Ministry of Defence commitment, other economic activities had to be found. It has been suggested--certainly in the press--that Britain is playing Nelson and turning a blind eye to the smuggling of tobacco, because Britain understands that, were it not for the value to the Gibraltar economy of tobacco, Britain would have to find money elsewhere to support the economy. Will my right hon. Friend comment on whether that is true or false?

Mr. Goodlad: I am grateful to my hon. Friend for raising those untrue allegations. Of course, Great Britain is certainly not turning a Nelsonian blind eye.

As my hon. Friend says--with his knowledge about it--Gibraltar's economy is a delicately balanced instrument, and the serious problems resulting from the frontier queues are not to be underestimated. We are also conscious of the potential implications of the drawdown

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of the Gibraltar garrison. It is a direct result of the political and strategic changes that have taken place in Europe. Her Majesty's Government are, as the House knows, subject to economic pressures and the need to use their resources to best effect. The changing world affects us all and we must adjust to take account of those changes. The Ministry of Defence is conscious of Gibraltar's particular problems and is providing specially tailored training courses for those affected. It is also setting up a special service to assist staff to find alternative employment. The Chief Minister has expressed his understanding and gratitude to the Ministry of Defence for its imaginative and sensitive approach.

As times change, so we need to look at new ideas. In answer to the Chief Minister's special plea for assistance to Gibraltar in that context, a joint economic forum was established earlier this year to draw together all possible sources of advice and assistance to Gibraltar. It has met three times so far, most recently on 12 December. It is of prime importance that Gibraltarians use the opportunity to introduce new ideas. We will do our part.

One idea that Gibraltar is taking forward is to establish itself as an offshore financial services centre. A financial services commissioner, Mr. John Milner, has been recruited, as my hon. Friend mentioned. He started work in August and is tasked with building up Gibraltar as a financial centre and to ensure that regulatory controls are carried out to the highest UK standards. We have asked the Spanish authorities to substantiate their allegations about Gibraltar as a money-laundering centre and to provide examples where co-operation has been refused. To date we have received nothing. Money laundering is, of course, a criminal offence and neither Her Majesty's Government nor the Government of Gibraltar condone it. The European Community money laundering directive will shortly be in force in Gibraltar and the financial services commission, under Mr. Milner, will deal effectively with any attempts to evade the law. The way ahead should lie in building up the economy, not handouts. On Gibraltar's development aid programme, the Chief Minister himself told us in 1988 that he wished Gibraltar to be able to stand on its own feet. We applaud that and believe that Gibraltar's economy may, despite its serious difficulties, be resilient enough to bounce back.

My hon. Friend mentioned the European Union. Gibraltar is, of course, part of the European Union by virtue of British membership. At the time of British accession, Her Majesty's Government negotiated for Gibraltar a special status within the Union, which relieves Gibraltar of many burdensome aspects--for example, it is not part of the common agricultural policy, or the common customs territory, nor does it have to levy VAT. It is therefore not a contributor to Community resources.

Gibraltar's position within the Union gives it access to the single market in services--crucial to its aspiration to develop as a financial services centre within the Community. We have also negotiated for Gibraltar an impressive package of EU structural funds. Between 1994-96 Gibraltar is due to receive some £8 million. That

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funding is well above the UK average, which takes careful account of the territory's distinct needs and problems. That is a mark of our commitment to securing for Gibraltar the maximum possible benefits from its position within the European Union.

In that spirit of shared mutual interest, we have discussed with the Gibraltar Government the backlog of directives awaiting implementation in the territory. In recent months, we have identified a package of specific measures--primarily EC directives--that require implementation in Gibraltar. Implementation of those measures would amount to a major step forward for Gibraltar in addressing its backlog. That is essential, and turning a blind eye to legally enforceable obligations cannot be an option.

Many of the directives are important for reasons of good government and sound administration. They concern regulatory standards in Gibraltar's financial services centre, open tendering of Government contracts and the curbing of money laundering. Others are important because of the protection that needs to be extended to Gibraltarians, for example, against dangerous working practices, environmental pollution and so on. Gibraltarians should have that protection just like all other European Union citizens.

Mr. Michael Jopling (Westmorland and Lonsdale): Does my right hon. Friend agree that many Members of the House have been disturbed about reports in the Sunday press two days ago that the very matters that he is talking about--European Union regulations--have not been implemented? It is very difficult to understand why they have not been. Will he give an assurance that the Government will do everything possible to ensure that the Government of Gibraltar will implement all those regulations at once so that they can appear to be--and be--squeaky clean in the eyes of the world in terms of smuggling, drug running and money laundering?

Mr. Goodlad: My right hon. Friend is, of course, absolutely right. These are not a selection of tiresome, meddling, interfering demands; they are international obligations and include very important measures, and Gibraltar and Gibraltarians will benefit from their implementation.

These are difficult times for Gibraltar, both politically and economically. We will do our bit to secure Gibraltar's future, and will do so gladly. But the impetus for much of what is needed must come from Gibraltar itself. The Government of Gibraltar must ensure that they have the legislative framework in place and the infrastructure support that they need if they are to make the most of the opportunities.

The future must also lie in the development of a sensible, unpolemical and practical working relationship with Gibraltar's northern neighbour, Spain. We believe that to be crucial. Let us examine co-operation and the benefits that could flow to both sides of the border from it. Let me assure the House that we shall do all that we can to help Gibraltarians make the most of the opportunities available to them and to help them meet the challenges effectively.

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Points of Order

10.59 am

Ms Harriet Harman (Peckham): On a point of order, Mr. Deputy Speaker. Will you ask the Secretary of State for Employment to make a statement to the House today about part-time workers? We understand from the newspapers that later today, by way of a written answer, the Secretary of State will announce a change in the law relating to Britain's 6 million part-time workers. He should make a statement because part-time work is of growing importance to our economy, not only to the women who work part time in order to combine work and family responsibilities but to the growing number of men who work part time because they cannot get a full-time job. The Secretary of State should recognise that economic success will be achieved only if we have a well-motivated, confident work force rather than a growing number of people who feel insecure at work. He should make a statement to the House today.

Mr. Deputy Speaker: The hon. Lady knows that it is not in my power to demand that any Secretary of State or Minister come to the Chamber at any time. I therefore regret that I am unable to accede to her request.

Mr. Paul Flynn (Newport, West): On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: I hope that it is on a new subject.

Mr. Flynn: Indeed, it is. I want to raise a matter with you, Mr. Deputy Speaker, as you are a defender of the rights of Back Benchers. Last week, by way of answer to a parliamentary question in the Chamber, a decision was made that affects 1,000 jobs in my constituency. I believe that the same thing will happen today in relation to jobs at Companies house in Cardiff. Can we examine the way in which such matters are announced--

Mr. Deputy Speaker: Order. It is not for the House to anticipate what may or may not happen later today or later in the week. The hon. Gentleman is a Back Bencher, but he is taking up the time available to the hon. Member for Cunninghame, North (Mr. Wilson).

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Railway Manufacturing Industry

11.1 am

Mr. Brian Wilson (Cunninghame, North): I am grateful for this opportunity to raise as a matter of urgency the plight of our railway manufacturing industries. With your permission, Mr. Deputy Speaker, and that of the Minister, some of my colleagues who have a particular interest in the subject will be participating in the debate. This is not a hypothetical threat. According to the Railway Industry Association, 5,000 jobs have been lost in 1994 alone and about 20,000 more jobs are under threat, 2,000 of them in the very near future. It is a rapidly unfolding, utterly unnecessary tragedy created solely by the Government's policies towards the railways. Even after 15 years, I find it incredible that the Government are prepared to stand idly by and see another great industry, in which Britain long led the world, being destroyed. But that is what is inexorably happening.

This year, 1994, is the first year in the history of our national rail network that British Rail has not authorised the construction of new rolling stock. As recently as last week, Richard Hope and Professor Bill Bradshaw stated in their report to the Select Committee on Transport that on current projections it would be 1997 before new orders were placed. By that time, Britain would undoubtedly have lost the capacity to build whole trains. Until 1 April this year, British Rail owned 11,800 coaches which were then handed over to the rolling stock leasing companies which, for the time being, remain in the public sector. The life expectancy of trains ranges from 25 to 40 years. If one assumes an average of 30 years, the average rate of replacement should be about 400 a year. On top of that, there should be an on-going demand from London Underground. Together, those sources of orders should provide a stable base for train builders and their suppliers which can be topped up by the export orders which, mercifully, our industries continue to attract. However, one cannot have an export industry for very long without a home base and that is what Government policies are denying the railway manufacturers.

In September 1992, the then Minister for Public Transport, the right hon. Member for Kettering (Mr. Freeman), said that he did not intend there to be any hiatus in rolling stock investment. In reality, Ministers could not have been more effective in creating a fatal hiatus for the train building industry if they had planned to do so. I have sheaves of similar examples of Ministers giving assurances to my colleagues and me that there would be no such hiatus. During one exchange, my hon. Friend the Member for York (Mr. Bayley) pointed out with uncanny accuracy what was going to happen to ABB in York. He was attacked by the right hon. Member for Kettering as a designer socialist who did not understand how those things work. We now know who understood how things worked and thousands of train makers are paying for that knowledge with their jobs.

The 1991 procurement plan for British Rail envisaged a programme of 800 class 471 Networker vehicles for Kent coast services--600 to replace slam- door stock and 200 to reduce overcrowding. In fact, the Kent coast services will get 15 of the four-car Networker express trains now being completed by ABB at York--60 vehicles instead of 600. That is important not only for the train

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building communities but for those which depend on railways and are suffering from obsolete stock because of the collapse in manufacturing orders.

There were to be 248 class 341 Networkers to upgrade services on the Great Eastern route and 32 locomotives and 320 coaches as part of the long- overdue upgrading of the west coast main line. Neither of those projects has reached first base. I stress that, at present, there are no plans for new orders in 1995.

So far, I have concentrated on rolling stock but it is exactly the same story in other aspects of railway manufacturing. In the last two years of British Rail's responsibilities, which ended on 1 April this year, there were no new contracts for signalling or electrification projects of any significance. That has not changed under Railtrack and it will not change in the current year in the light of the external financing limits announced by the Government following the Budget.

Late in the day, the Tories reluctantly conceded that there could be such a thing as a public/private finance initiative. So far, that has yielded only the Northern line order for London Underground, which was granted only after an intensive campaign by the manufacturers in alliance with the Opposition and important sections of the media, notably the London Evening Standard . The Railway Industry Association said:

"Whilst there may well be a role for Private Finance Initiative projects in the longer term, it will take time, and time is something manufacturing industry does not have."

In any case, the private finance initiative is not a panacea and cannot be presented as such. In fact, in many ways it further complicates the possibility of orders being placed rapidly because it imposes yet another hurdle between a project being conceived and an order being placed.

The unfolding tragedy is at its most acute in York, where there has been large-scale investment by ABB to create a production line which is the equal of anything in Europe. However, the cupboard is bare of orders and thousands of jobs are on the line. The same is true of suppliers to that company. The situation will become terminal when the Networker contract expires towards the end of next year unless replacement orders are received.

Unless Ministers intervene and cut through the bureaucracy of rail fragmentation and privatisation, there will be no such orders. That is the stark reality. Because of the uncertainty in the railway industry, no one is in a position to order new rolling stock--not British Rail, not the leasing companies and not the operators. Only the Government have the power to break the deadlock but so far they have shown a shocking lack of interest in doing so.

There is no doubt that, at the time of privatisation, ABB was sold British Rail Engineering Ltd. under false pretences. There was supposedly a long- term procurement programme and there was no hint of the politically motivated chaos which was about to be visited on the whole railway industry.

Mr. Richard Hope, one of the most authoritative observers of the railway industry, wrote in Modern Railways about the "precipice diagram" heading rapidly towards disaster in 1995 and wipe-out in 1997. He said that nothing could happen in terms of new orders "before 1996 at the earliest and then we can only guess at how long a privatised ROSCO"--

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or leasing company--

"would take to strike a deal with a newly appointed franchisee, go through the Euro-procurement gavotte punctiliously and then place an order."

The railway manufacturing industries cannot wait that long. The Government have already decimated the British shipbuilding and bus building industries through the politics of dogma. Are they now going to do the same to railway manufacturing? The indictment is already serious; 5,000 jobs have been lost in the year now ending. Are the Government prepared, for the sake of privatisation dogma, to go the whole hog and deny Britain a train building industry?

The extraordinary irony is that, so far, the greatest victim of the obsession with rail privatisation is the existing private sector of the railway industry--the people who build trains and other railway equipment. Must American, Spanish and Korean workers benefit yet again from the destruction of a great British industry? Those are the countries that will supply our trains if our own industry is allowed to wither and perish. That is the question that the Minister must face today, and his answer will be closely listened to in every railway manufacturing community in Britain.

With your leave, Mr. Deputy Speaker, I should like the rest of my time to be taken by my hon. Friends who have constituency interests in such matters.

11.10 am

Mrs. Gwyneth Dunwoody (Crewe and Nantwich): As you know, Mr. Deputy Speaker, the Select Committee on Transport is so concerned about the situation in the railway industry that it has undertaken to put on the record a report dealing with the immediate chaos and total confusion brought about by privatisation. Therefore, I cannot speak about either the evidence that will be given or that which has already been submitted to us in a short paper by Mr. Richard Hope. However, I shall speak about ABB, in my constituency, especially the nature of the bill of sale made out at the time of privatisation. It is important to realise that thousands of jobs in Crewe depended on what used to be called the British Rail works. That was the reason why the city exists; it was to build railway engines that Crewe was first set up on a green-field site.

At the time of privatisation, a large sum of taxpayers' money had gone into modernising the factory, and its working practices and overall organisation had been totally changed within the previous 18 months. ABB was taking on not an old-fashioned factory or a non-flexible work force, but a modern manufacturing unit capable of competing with the best in the world and of supplying British Rail throughout the country with the very best of equipment. The factory had not only done that in conjunction with British Rail in the past but was set up very much in line with what BR needed for the future. However, the reality for ABB has been different. My hon. Friend the Member for Cunninghame, North (Mr. Wilson) has spoken of the contract recently agreed for underground trains. Of course we are delighted when any manufacturing jobs in the railway industry have been brought to Britain, but even under that contract, much of the manufacturing will be done in Spain and France. Although the west midlands will benefit to some extent from the contract, most of the work will be not manufacturing but assembling, which the factories can

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carry out without much difficulty. Indeed, we have factories throughout the United Kingdom that can manufacture from scratch very high-quality trains.

Ministers continually tell us that they understand that without an adequate transport system, our economy would fall apart. In a recent speech that I discovered only today the Minister said:

"We cannot afford to ignore or even underestimate the economic implications of transport. Transport measures which would make it more difficult for our industries to flourish at home and compete abroad would lead to increasing unemployment and would deprive us of the wealth that is necessary to maintain and enhance our natural environment".

Why then do the Government seem so determined to ignore all the advice given to them since the beginning of the disaster of privatisation? In a remarkable and brilliantly researched report, the Transport Select Committee under a Conservative Chairman--the late lamented Robert Adley-- told them exactly what would happen if there was a hiatus between the initial decision to privatise and the decision to go ahead.

The evidence was spelt out in that report--evidence was even given by Lord Prior, not only a former Conservative Member of Parliament but a former Conservative Minister--explaining in detail what the railway industry would face if no immediate orders were placed and if there was not an immediate commitment to a considerable new build programme.

The Government ignored all that. They took absolutely no account of the destruction that they were bringing about in the railway industry. Indeed, they made it worse, because the suggestion was that privatisation would in future concentrate on Railtrack rather than on the ROSCOs. The chaos caused by those decisions added to the problems that already existed.

I shall not take up a lot of time, but I want to say one simple thing to the Minister. This country used to be able to compete throughout the world in manufacturing industry, especially manufacturing for railways. It is no accident that wherever one goes in South America or in the Commonwealth one finds the remains of British railway equipment manufactured in Britain--and it is of the best quality.

Yet, under the Conservative Government, there has been a deliberate rundown of those industries, on the grounds not of economics, or that we could not compete, but of a deliberate dogmatic commitment to the destruction of what were seen as subsidiaries of a nationalised industry. Even when it became plain to everybody that that was not the position, the Government persisted in treating the manufacturing units in that way.

The loss of jobs and skills has been horrendous. Every time that we lose a major order that should go to British railways and improve the lot of the customer, we lose a whole generation of skills as well as all the economic input to the areas concerned. Railway passengers are now travelling in increasing discomfort, as if we were using the rolling stock of Argentina in the 1900s, and they pay horrendously high fares. They can see no clear understanding of that on the Government's part, and no commitment to doing anything to improve matters.

When I look at what has happened in my constituency--at the agony of the destruction of the British Rail works and the jobs that it provided--and when I realise their total lack of understanding of the

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future of the British rail manufacturing industry, I see all that is worst in the Government. They are unimaginative and dogmatic and, so far as one can see, they are doing their best to hand over the whole of our manufacturing industry to any country in the world, so long as it is not this country. If they want to build bogies they send to France; if they want to build shells they send to Spain. They will not build trains in Britain because somehow they see that as a political decision.

Anyone in his right mind knows that unless we manufacture in this country, we shall perpetually have to import other people's products. The Government will have to pay a high price for what they are doing to the railway industry.

11.18 am

Mr. Hugh Bayley (York): I congratulate my hon. Friend the Member for Cunninghame, North (Mr. Wilson) on securing the debate. When the Railways Act 1993 was before the House as a Bill, the Government often said that they wanted to avoid a hiatus in railway investment during the initial period running up to privatisation. That initial period has stretched because the franchising timetable has slipped, which has made the problems in the railway manufacturing industry even greater.

I shall speak briefly about the situation in my constituency which, as my hon. Friend the Member for Cunninghame, North said, faces the most serious problems. When BREL was privatised five years ago, the York carriage works employed 2,500 people. Now it is left with just 750 employees. After Christmas, with the end of the order for building the Strasbourg tram, there will be yet another 100 redundancies. Then the remaining work force will have their future literally hanging on a thread. They will have the tail end of just one order--the last part of the Networker order for Kent commuters--which will come to an end in the autumn of next year. Unless a further order is received in the next two or three months, the York works will close.

Since privatisation, ABB has invested some £50 million in the York works: £20 million in capital assets such as machinery and £30 million in staff training and new work practices. All that could be cast aside. When rail manufacturers from abroad come to the York works, they say that it is the most modern manufacturing plant for aluminium-bodied railway carriages in Europe. That would be lost if the plant were allowed to close.

There is a way to save the York works. It is for the Government and British Rail to invoke the clause in the present contract which allows the existing order for Networker carriages to be rolled forward into a fourth tranche. The only people who seem to be opposed to that are ABB's main competitor, GEC. GEC appears to be lobbying the Government to persuade them that the follow-on clause should not be invoked. The company says that, instead, the contract should go out to Europe-wide competition. GEC knows full well that if that happens, by the time the order is awarded, the ABB factory in York will have closed and the company will be in a monopoly position as the only major supplier of railway rolling stock in the United Kingdom. Such a predatory approach to the industry will lead to the

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destruction of the industry. It will lead to higher prices for British railway customers because there will be a lack of competition.

Mr. John Greenway (Ryedale): Will the hon. Gentleman give way?

Mr. Bayley: No, I am afraid that the hon. Gentleman had a good chance to speak yesterday.

I shall give 12 good reasons, all short, why the Government must act now. First, if they invoked the follow-on clause, the customer would get the trains at least 12 months earlier than if a Europe-wide tendering process was initiated. Secondly, British Rail would get the trains at a lower price because it is cheaper to use an existing production line than to close it down and build a new one. Thirdly, if the Government let the York works close, it would show an appalling contempt of inward investment, given that the company has brought £50 million of investment into the British economy. Fourthly--I say this with deference to a policy with which I do not agree--it would be a poor advertisement for privatisation to allow a company that the Conservatives privatised with 2,500 employees just five years ago to close.

Fifthly, it would not cost the Treasury a penny to invoke the clause. British Rail would be able, using the private finance initiative, to raise capital from the private sector. Indeed, it would be a good demonstration of the viability of the PFI. Sixthly, it would demonstrate the Government's environmental commitment to rail transport and relieving pressure on the roads. Seventhly, it would avoid the costly life extension repairs that would be needed to the clapped-out, 30-year-old, slam-door rolling stock which would be left servicing Kent commuters if the order did not come through. Eighthly, to place the order for the new carriages would respond to the safety case put up in the Cannon Street crash report that the old carriages should be replaced on safety grounds. Ninthly, it would improve the quality of service to Kent commuters. Tenthly, it would improve the income generation of the train operator in that part of the country. When ABB's carriages went on the Chiltern line, the number of passengers increased by 60 per cent. Eleventhly, to bring forward the order would avoid import penetration. As my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) said, the main competitor imports its body shells and bogies from abroad. Twelfthly, it would retain competition in the manufacturing of rolling stock in the United Kingdom. In summary, there would be massive economic benefits for York, London and commuters to London.

Last May the Minister with responsibility for railways told the hon. Member for Ryedale (Mr. Greenway) and me at a meeting of the York rail forum that the question of who would place the order and who would own the rolling stock could and should be resolved by September this year. Now the Government blame British Rail for dragging its feet, but they, too, have dragged their feet and they must break the deadlock.

11.26 am

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