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Lady Saltoun of Abernethy: My Lords, before the noble Lord sits down perhaps I can say that the Press and Journal is a north Scotland newspaper printed in Aberdeen.

Lord Gainford: My Lords, I am grateful to the noble Lady for that information. The cutting was sent to me by my brother who lives near Fort William. I thought therefore that it was from that district. I am grateful for the correction.

8.11 p.m.

The Earl of Dundonald: My Lords, I too add my support to that of other noble Lords in the Chamber. Many of us feel strongly about this matter. I wish to start by looking at the other side of the coin to the one presented by my noble friend Lord Mountevans.

The Government clearly have a duty to deal in the best possible way with the assets owned by British Rail. I should like to point out to the Minister and to others that the principal asset of the West Highland line is that of the track. Any businessman will say that one should make the maximum use of any fixed asset if one is paying for it day in and day out regardless of whether or not it is being used. I suggest, therefore, that if we

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were realistically looking at the business we would be trying to run services on the line 24 hours a day, 365 days a year. Clearly that is not possible—but we should try to move towards that.

The other aspect is that the rolling stock is bought and paid for. I know that it is going into a separate leasing company, but if there is to be an excess of rolling stock once this service, and perhaps others, are cut, then there will be a lot of secondhand rolling stock lying around the country and it will not have the same value as its original cost. The break-even point on this service, therefore, is the cost of the variable costs of the business, not that of the fixed or rolling costs. The variable costs do not amount to much; they incorporate things like wages, fuels and everyday repairs and renewals. The Government really should take note of that.

Coming back to the point relating to the track, if the Government are saying that we should preclude ourselves at this moment in time from using half of that asset—that is, the night time part of it—then it will be that much more difficult to see any form of realistic payback on it. Hotels, golf courses, or any other assets that deal with services and people, do not take that view.

The next point is a follow-on and one to which other noble Lords alluded. If we take away half the available time to make money to recover those costs, it makes it that much more expensive to run the other part of those services. It means that the Government will have to subsidise the other services more than they do at present. It may be possible to take the view that it would make closure of the line in its entirety that much easier at some time in the future. I should like to think that that is not the case, but it may be possible to draw that conclusion.

I should perhaps draw my noble friend's attention to a letter received by his friend in another place, Lord James Douglas-Hamilton, from Arjo Wiggins, a major employer in the area. It made the point that the company transports 55,000 tonnes of freight annually. In the event of the line being closed—I know that that is not what we are discussing tonight, but it may be possible to suggest that—it would cost an additional £160,000 per annum. That makes it extremely difficult to run those sorts of businesses.

To turn to the effect on local businesses in the area, it seems strange that we should be discussing the closing of an opportunity tonight when recently there was talk of through sleeper services from both Glasgow and Edinburgh to Paris, Milan and other European capitals. I do not understand the logic and perhaps my noble friend the Minister will explain that to me in his response. There are 16,000 passengers who use the sleeper service on an annual basis. That is a lot of people.

Lord Mountevans: My Lords, if my noble friend will allow me to say, that amounts to 14 people per train. The figure of 16,000 sounds a lot, but it is only 14 people per train.

The Earl of Dundonald: My Lords, perhaps I can continue and expound the point in relation to local businesses. Assuming those passengers spend £100 a

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head, to withdraw the services may produce a fallout of as much as 50 per cent. The effect on the local economy, therefore, could be as much as £1 million per year. That is a significant part of the tourist income in an area such as Fort William and Lochaber. Again, I do not understand the logic of that. When we are trying to encourage tourism in those areas, that does not seem logical.

We have the opportunity to make British Rail in the west of Scotland work properly, and that opportunity is being taken away. I draw the attention of my noble friend the Minister to the Scottish Association of Public Transport which wrote, as he may or may not be aware, to the Prime Minister on this matter promoting its North Star proposals where the franchise director may be encouraged to incorporate services other than the ones he is at present considering into the ScotRail franchise. They would include the opportunity to expand and develop the sleeper services on the West Highland line. What better way of arriving in Fort William or the west of Scotland than having had a good night's sleep and breakfast on a sleeper car, passing over Rannoch Moor.

In conclusion, it seems illogical, just as the Government are trying to encourage new franchisees into the system, to close down what is a wonderful opportunity for those businesses.

8.18 p.m.

Baroness Thomas of Walliswood: My Lords, like others, I thank the noble Lord, Lord Gray, for introducing this debate. In particular, he not only asked two important questions which query the Government's willingness to exercise their remaining powers in regard to privatisation, but in doing so he provided, as several other noble Lords pointed out, a valuable series of figures and advice drawn from known experts in the field as to the real cost of maintaining this service. I hope that the Minister, in responding to the debate, will clarify how those costs compare with the figures given by Ministers in another place. It may be that those figures were given here. If so, I apologise for the error. It seemed to me that there was a considerable discrepancy between the two which needs to be clarified.

In addition, the noble Earl, Lord Dundonald, made some extremely good points about the importance of not ascribing the whole cost of any particular part of the railway to one service and about the difference between total cost and marginal cost. I hope that the Minister will respond to those points.

Many noble Lords have spoken about the local situation. I have nothing to say on that subject. I claim no knowledge whatever of the West Highlands. But when one hears people who have lived there all their lives speak of those needs, we all have to pay attention. My noble friend Lord Mar and Kellie, who has not claimed to live there all his life, and the noble Lord, Lord Rankeillour, expressed those local needs very vividly indeed. Those needs should be taken into consideration, as in particular should the lack of alternative direct links with the capital of what is still

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supposed to be a united kingdom—however much I may agree with some of the points which my noble friend made, this is perhaps not the place to have that debate—and the fact that, as the noble Lord, Lord Rankeillour, said, the service is a lifeline to the outside world which is still required today. That is a good reason for maintaining it.

Other noble Lords have spoken of the opportunities that are available to advertise and to gain more users of the service. I should like to endorse what the noble Earl, Lord Buchan, said about the importance of these long-distance services now that we have a direct rail link to the rest of continental Europe. It is ridiculous to be destroying this kind of service at the very moment when it becomes more relevant, if anything, than it has been before. Now is not the time to be carrying out such destruction.

In a way, the noble Lord, Lord Renton, summed up these views when he spoke of the need to regard rail services as part of a public service approach to transport. I endorse that and add a point which essentially many noble Lords made, although not directly. Transport is not just one thing taken in isolation. The Government approach it in that way. It is very difficult to perceive any integrated transport policy in their attitude to such matters as the destruction of this or that part of a given service. I see that the Minister shakes his head—not his hands: he might be wringing his hands perhaps, but not visibly. Perhaps he can explain to me how the withdrawal of subsidy for these services satisfies some overall public transport good. I must say that it is invisible to me, as it is to many other noble Lords present today.

I should like to add one or two points which have not been mentioned by other speakers, at least not directly. The first concerns the relationship between what is happening here and rail privatisation. There is no doubt in my mind that the two matters are intimately connected, if only because it is the franchising director's decision not to include these services in the public service requirement for franchisees—not to subsidise the services—that has brought them to a point of crisis. The situation has been worsened by the fact that ScotRail, presumably a potential franchisee which would want to run this part of the rail service, is apparently threatening to cut the services in advance of the completion of the consultation process set in motion by the franchising director. It is that aspect of the matter which is the most shameful because it is not a suitable way to go about public business. As has been said, it is rather like closing a school and then consulting on the future of that school. That is not the kind of thing that local authorities on the whole do; and if they do, it does not reflect any credit upon them.

We believe that at least a golden share should be retained in Railtrack. That would remove one of the causes of this whole problem—the separation between Railtrack and the train operating companies. That is precisely why it is so difficult, as the noble Lord, Lord Gray, said, to distinguish between the costs of Railtrack and the costs of train operating when one is dealing with this or any other part of the growing and emerging so-called rail system in this country. We believe that we

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should retain at least a golden share in Railtrack so that the public interest and the public transport policy aspects of government can be encouraged through that share ownership.

Finally, I plead with the Minister to use his residual power to prevent the closure of this service before the public consultation has been completed. That public consultation should be used to bring all the concerns which noble Lords have expressed today into the public arena. I very much hope that he will be able to reassure us on that very important point.

8.26 p.m.

Lord Clinton-Davis: My Lords, I thank the noble Lord, Lord Gray, for initiating this important debate. It is a story that has been marked by an extraordinary amalgam of confusion, evasion, contradiction and non-answers, and also tonight by a number of admissions on the part of noble Lords opposite that perhaps they were wrong about support for privatisation—at least they have expressed some doubts about that.

It was last December that the franchising director, Mr. Roger Salmon, announced that he would not include Motorail trains on the Fort William/Carlisle and Carlisle/London, Plymouth/Edinburgh/Glasgow sleepers in his passenger service requirements. The Minister categorised that as a preliminary announcement—some preliminary announcement! But evidently the franchising director expected that the trains would keep running in the meantime. On the other hand, British Rail interpreted his announcement to the effect that the services should be withdrawn and in fact decided to do that as from 28th May this year. What is offensive about what has happened is that there was apparently no consultation about the effect on Scottish tourism. There was no consultation about the employment effects. But we were still informed that the formal consultation would take place. What did happen, according to British Rail—this was not mentioned by the noble Lord, Lord Mountevans—is that it consulted the Scottish Office and the Department of Transport and gained the approval of the Office of Passenger Rail Franchising before deciding to withdraw the service. I put it to the Minister: is that version correct?

A number of strange answers appeared in Hansard in both Houses about all this. But, as the noble Baroness just said, to imagine that in the light of what the franchising director had said, and furthermore in the light of what had been said by a colleague of his, Mr. James Watson, on behalf of the franchising director, that they were not intending to review the decision which was announced before Christmas but that they were intending to consult on that decision as part of the ScotRail PSR, who can believe in any genuine consultation? He has made up his mind. What will really happen now is simply that the franchising director will go through the exercise and say, "I have undertaken my statutory obligation", and that is that. The result is wholly predictable. I know that the Minister disputes that, but I really do not believe that he can say that with any conviction in his voice or in his thoughts.

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On 6th March the franchising director said that he expects "consultation" (so called) to begin in May and to last not less than eight weeks. Yet on 15th March, Mr. John Swift, the rail regulator, said that it is not up to British Rail to withdraw the trains. The decision should be made by the Government and the Office of Passenger Rail Franchising. That is precisely what happened. They have both colluded in that.

I want the Minister to answer this question: can the Secretary of State force BR to maintain the service until the so-called "consultation" has taken place? Do Ministers have any role? If they do not, why were they consulted by British Rail and why does British Rail pray in aid their support? Can Ministers interfere with the rulings of the regulator?

What about the users' committee? We know that Major General Lennox Napier, the chairman, declared roundly that Mr. Salmon should not have made the announcement that he did last December. He said that he should have waited for consultation to have taken place. That is patently obvious, as the noble Baroness put it in her contribution a moment ago. Evidently his pleas fell on deaf ears, as we have heard from Mr. James Watson, speaking on behalf of the franchising director.

So what is to happen? Having consulted the Scottish Office, the Department of Transport and OPRAF, British Rail proposes to keep the locomotives and coaches mothballed. What they should be doing, of course, is keeping the trains running pending consultation. The Government should take immediate steps to safeguard the services until proper consultation has taken place, although obviously that is now very difficult. They should undertake a proper, independent survey on the implications for employment and tourism.

Mr. Ian Grant, the chairman of the Scottish Tourist Board, has expressed deep concern regarding the implications for Scottish tourism, which brings in no less than £800 million to Scotland each year. So how is that likely to be affected by this decision?

Can the service be reinstated after it has been mothballed? The Minister must answer these questions. What about redundancy legislation and how that affects re-employment of redundant sleeper staff if the trains are reinstated after consultation? Would it not be necessary to have new recruits brought in who would have to be hired and trained?

Perhaps the most telling indictment in all this comes from Mr. Alex Lynch, the acting director-general of ScotRail for another few days. He is a most powerful witness. He said that BR and the franchising director have colluded in an unholy alliance to ensure the demise of the service before privatisation begins to take effect, undercutting the whole concept of consultation. The Minister must answer that accusation.

I shall not say anything about the cost because we know that the figures are clearly disparate and have been interpreted in a very different way. We have heard tonight the noble Lord, Lord Mountevans, say one thing and the noble Lord, Lord Gray, say another. What the House is entitled to demand from the Minister is a proper, independent investigation into the calculations. But whatever those calculations may be it is chicken feed compared with the amount that has been

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squandered on privatisation so far, which amounts to many hundreds of millions of pounds including £4 million for those advising on rail privatisation.

I believe that this is really about reducing the rail network over a period to a core of lines requiring no subsidy. It is a story of no effective consultation. It sets an appalling precedent. It is not fair, it is not reasonable, it is not democratic and all concerned should think again.

8.45 p.m.

Viscount Goschen: My Lords, I am indeed grateful to my noble friend Lord Gray for introducing the question of the West Highland sleeper this evening. As we have heard—especially from at least one of my noble friends whom I have not had the pleasure of hearing before—this is an issue which arouses strong feelings. I begin by acknowledging the strength of that feeling. I undertake to convey the feelings of the House to the franchising director. However, I believe that a little balance is required. I take the opportunity to clear up some of the misconceptions which have been aired.

I have not heard much defence of the level of subsidy this evening but a questioning of the figures. I shall go into the level of subsidy later on. But I feel that that is vitally important in considering the future of this service. I have also not heard a great deal about the levels of occupancy of the service. We have heard a great deal from noble Lords who feel that a case has been made for the retention of the service, but I do not feel that the issue of the very low levels of occupancy of the service has been fully addressed this evening.

In addition, this matter is not about the closure of a line, as some noble Lords have suggested. Indeed, a noble friend of mine said that he was not talking about the closure of the line, but then went on to talk about that. I would also strongly contest the conspiracy—

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