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Sir George Young (North-West Hampshire) (Con): It is a pleasure to follow the hon. Member for Hayes and Harlington (John McDonnell). It would be fair to say, however, that he and I approach the railways from different philosophical perspectives. I hope that the Government will resist his blandishments to take the railways back into public ownership, but as a member of the Selection Committee, I also hope that, when we meet on Wednesday to appoint the Standing Committee, the Government Whips will have the good sense to appoint him, so that the radical amendments that he trailed in his speech can be fully considered.
In my brief contribution, I wish to examine what has remained the same in the past 10 years and what has changed. The landscape still contains many familiar features. The track, signalling and stations are in unified ownership and depend predominantly on the private sector for funding—on Railtrack in the past and now on Network Rail. The rolling stock companies—ROSCOs—are in private ownership and lease the rolling stock to the train operating companies. A series of TOCs, which are in the private sector, compete for the various franchises of different lengths. The basic landscape has not changed that much in the past 10 years. We have had an element of stability, to which my hon. Friend the Member for South Suffolk (Mr. Yeo) referred.
What has changed is the focus. When the industry was privatised, we tried to set up a structure in which the TOCs looked outwards towards their customers—their market—to make the industry more responsive to the needs of the consumer. At the funding end, we wanted an industry that looked to the private sector—the City—to raise the capital needed to fund the improvements that we all agreed were necessary. That outward looking industry was an essential component of the reforms that we introduced.
The Bill will change those two perspectives and move back towards the situation that existed before 1993, when the Government and the Secretary of State had a more important role. That is likely to lead us back to the position of the 1980s and 1990s, when the industry simply could not access the capital it needed for modernisation. I remember when I was Secretary of State for Transport under the last Conservative Government. I attended a series of Cabinet Sub-Committees that were deciding the allocation of public expenditure. The argument was that the Government's top priorities were health, education and law and order, so the resources for transport came well down the list. That was one of the reasons for privatising the railways, as it had been for privatising other nationalised industries. It was done to open up access to capital and to bring the industry into the 21st century.
Following the debacle of Railtrack, the industry once again has to look to the Government for more and more of its capital to keep it going. Some of the ambitious projects that we hoped to get off the ground a few years ago have now gone back to the end of the queue. I am
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very disappointed that Thameslink, which I thought that I had signed off nearly 10 years ago, is still nowhere near inception. I had also hoped that we would have started on Crossrail by now, but it is still a dream with no serious Government commitment to it. That is one consequence of the industry becoming once again more dependent on the Government for its funding than the structure that we envisaged at the time of privatisation.
I was interested to look at the back of the Bill to see how many pages of repeals there were. I see that there are about the same number of repeals of the provisions of the Transport Act 2000 as there are of the Railways Act 1993.
I hope that the Secretary of State will use the powers he receives under the Bill to allocate longer franchises. I am sure that I am not alone in having several stations in my constituency that need investment. Andover, Grateley, Whitchurch and Overton stations all need larger car parks to cope with increased demand for the railways. However, the TOC has a short franchise and cannot justify the substantial investment necessary to expand the car parks. The TOC referred me to Network Rail, but it does not have the capital to make those modest improvements because it has all been spent on the west coast main line and other desirable projects. I hope that we can seriously consider granting longer franchises to give the TOCs the incentive to invest in improvements to stations, car parks and security.
My last point relates to clause 6, under which the Secretary of State will be given powers to give guarantees and to make grants and loans, and to the classification of the guarantees and loans that the Government will provide under that clause. As the House may know, there has been an argument between the Office for National Statistics on one hand and the National Audit Office on the other about the status of the guarantees that have been given through the SRA to Network Rail. With the SRA disappearing from the equation, those liabilities will now fall on the Secretary of State.
When the Secretary of State made his statement earlier this year, he said:
"It follows, therefore, that the Strategic Rail Authority will be wound up, and that the majority of its functions, including all its financial obligations, will be transferred to the Secretary of State."—[Official Report, 15 July 2004; Vol. 423, c. 1547.]
One might assume from that that the SRA's liabilities will be absorbed into the Department for Transport and that Network Rail's liabilities will therefore end up on the Department's balance sheet. If so, the Chancellor's statement last week would be seriously affected, because some £9 billion of borrowing would then reappear on the Government's balance sheet. I want to press the Minister to make it clear that, under the new structure, Network Rail's liabilities will indeed be Government liabilities.
Chapter 3 of the White Paper says:
"The Secretary of State . . . will take responsibility for setting the national-level strategic outputs for the railway industry, in terms of capacity and performance."
"This means that the Government will be responsible for deciding the overall size and shape of the network; the key time-table outputs; policy on regulated fares; minimum performance targets; enhancement priorities",
and so on. In respect of the criteria used by the ONS to determine on whose balance sheet such things appear, the ONS says:
"the guiding principle for classifying institutions as public or private is who exerts control over general corporate policy, including the appointment of directors."
It is absolutely clear that, under the Bill, Network Rail is, in effect, an agency of the Government. Any concept that Network Rail is simply an ordinary private company, doing what it wants and borrowing against its own credit in the market, is strictly for the birds. It will do what the Government ask it to do. No one would dream of lending money to Network Rail unless a Government guarantee was behind it.
I hope that the Minister will address a specific question in winding up the debate: will he confirm whether, when the Bill is passed, Network Rail's debts will appear in future as Government debt and be part of the public sector borrowing requirement?
8.52 pm
Jeremy Corbyn (Islington, North) (Lab): I apologise to the House for missing three of the past four contributions—I was attending a meeting—but I was here at the start of the debate.
I welcome the Bill in principle, as it goes some way towards addressing some of the problems of the rail industry, which is very important in this country. I particularly endorse the work done by my hon. Friend the Member for Hayes and Harlington (John McDonnell) in chairing the RMT group in Parliament and the speech that he gave this evening.
The Bill gives us the possibility of getting rid of the SRA and of both unifying national decision making where it ought to be made—by the democratically elected Government in the House of Commons—and introducing regional activities through the Scottish Parliament, the National Assembly for Wales, TFL and the PTEs around the country. I shall say more about that in a moment. All that is welcome and a good step forward, but we must look at the Bill against the background of what was a sad and disastrous period for British railways before the Government's election in 1997 and, indeed, British Rail's treatment as an organisation in the past.
British Rail was starved of investment for many years and its services suffered as a result. It was universally pilloried and made a joke of by large sections of the media, but in many ways it was an innovative organisation. It achieved a great deal for train travel through the development of the high-speed train and the advanced passenger train. Those passing through Crewe can see the sad wreck of an APT, which has been parked in the sidings for years. The APT was overtaken by the Pendolino train run by Virgin—but where did the technology for the west coast main line Pendolinos came from? It came from the work done by British Rail Engineering and British Rail Research in Derby, which developed the APT. Sadly, the project was abandoned because the Government of the day were not prepared to see it through, and as a result we have had to buy in the technology from elsewhere. My hon. Friend the
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Member for Crewe and Nantwich (Mrs. Dunwoody) made some valuable comments on research and development in the railway industry.
The position after privatisation is interesting. Immediately before privatisation, the Conservative Government increased investment in the railways to form the basis for privatisation—in other words, they fattened them up. They then sold the whole industry off at knock-down prices and all the ensuing scandals and problems continue to haunt us today. Huge profits were made from rolling stock companies that were bought by former BR managers then instantly sold on; they are now extremely profitable enterprises. Huge profits were also made by people dealing in railway infrastructure and land sales immediately after privatisation.
We have made some progress since then, but the fact is that Britain now invests and spends more on its railways than any other European country. We provide a far greater subsidy than was ever enjoyed by British Rail at any stage in its history, yet enormous profits are being made from our railways by the train operating companies. When the original GNER franchise was handed out, the director of the company that got it admitted that he did not really know what he had got. He knew that he had the right, the obligation and the duty to run a train service along the north-east coast main line, but he also knew that his costs in running that service were guaranteed. Therein lies the problem: we are pouring huge sums into train operating companies, and much of the money disappears only to emerge elsewhere as profits.
When the companies fail to deliver and collapse, someone has to step in and take over, as happened in the case of South East Trains. Now, however, we are told that the public sector is not good enough to run the services and they have to be passed to someone else. I ask the Minister who will reply to give us some clear answers. South East Trains is better run and more efficient and the public are happier with it, so why not stick with the arrangement and allow a publicly deliverable service to remain in public hands? To do so would be a useful step forward and demonstrate a commitment to the principle of public operation of our railways, as well as public investment and public ownership of the track itself.
One part of the Bill that I welcome is the transfer of some powers to Transport for London and the accompanying possibility of integration of services. TFL is to take over the franchising operation for Silverlink Metro services. I assume that other services—not inter-city mainline services, but regional and local services that go in and out of London—could also be administered by TFL, by agreement. If that happened, we might see more imaginative developments of services. Let me give an example.
For a long time, Silverlink has run services on the north London line, which extends from Richmond to North Woolwich, and trains then run up to Northampton, Rugby and Birmingham. It also administers trains on the Barking to Gospel Oak line which, like the north London line, runs though my constituency. The Barking to Gospel Oak line is a sadly underused line, which has been kept going only through the diligence of a local users' group that has campaigned assiduously for many years. The service has improved somewhat and I hope that when TFL takes over
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administration of the franchise we will see far more imaginative services and the development of an outer-London rail ring.
I agree with the Secretary of State that the harmonising of ticketing and travel arrangements in greater London would do much to integrate tube, rail and bus transport with many other essential services.
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