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The Earl of Dundonald: My Lords, I wonder whether my noble friend will give way. I did not actually speak about the closure of the line but about the possible closure at some future date and this simply being a first stage.

Viscount Goschen: My Lords, I am very well aware that my noble friend is himself fully aware of the statutory closure process that the closure of any line has to go through. I do not see that the closure of the West Highland sleeper line is related to that issue at all. I would strongly contest the conspiracy theory put forward by the noble Earl, Lord Buchan, and the, shall I call it, "anti-Scottish theory" put forward by the noble Earl, Lord Mar and Kellie.

To these ends I believe it might be helpful if I give a little background to the situation which might help clarify some of the issues that we have discussed this evening. I believe that a good starting point would be a discussion of the role of the franchising director. He has been given the task of securing that passenger railway services are franchised as soon as reasonably practicable. He has statutory powers and duties which are set out in the Railways Act. Under Section 5 of that

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Act the Secretary of State has powers to set him objectives and to give him instructions and guidance. He is required to encourage efficiency and economy and to promote the use and cost-effective development of the rail network. I believe that that is an extremely important point.

In franchising rail services the franchising director has to secure value for money for the funds which he has available and to allocate them in the best interests of passengers. My noble friend Lord Renton went into this issue. I was very pleased to hear him acknowledge that the levels of subsidy must be taken into account in the context of the levels of occupancy. I am sure that my noble friend did say, and would say again, that he would not want to see levels of subsidy not examined and that they are of great importance in considering the issue.

Lord Renton: My Lords, perhaps my noble friend will allow me to intervene. He should also bear in mind that I said that the level of subsidy can be considerably reduced, as has been mentioned by some of my noble friends.

Viscount Goschen: My Lords, I believe that the only hard evidence that we have to go on is the actual levels of subsidy at the moment and the services offered by British Rail. As my noble friend acknowledged, the whole purpose of rail privatisation is to encourage a more efficient railway. We believe that the franchisees, in taking up the franchises, will be able to create great efficiencies and make more efficient use of the network.

It is important at this point to say that, should the successful franchisee wish to take forward a service, there is nothing to prevent him from doing that. The question under consideration is the passenger service requirement or the guarantee.

The question of the efficient allocation of funds will inevitably require the franchising director to take difficult decisions. One such decision is the level of the provision of sleeper services to Scotland. The franchising process is already well under way. The franchising director issued a pre-qualification document last December inviting organisations to apply for consideration as bidders for eight franchises, including ScotRail. Last week Roger Salmon announced the results of that exercise. Thirty-seven organisations have applied to pre-qualify. Many are interested in more than one franchise, with the result that the total number of applications for the eight franchises is over 160. So there is clearly healthy private sector interest in running passenger services.

Each franchise will be built around a passenger service requirement. The so-called PSR will specify the contractually guaranteed level of service which each franchisee will be required to operate. Among other things, it will specify frequency, journey times, first and last trains and weekend and off-peak services. Passenger service requirements will protect services to every station and on every route on the network. I hope that that guarantee will reassure my noble friend Lord Gainford about his concerns, which ranged beyond the question of the West Highland sleeper.

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Draft passenger service requirements for four of the first franchises were announced by the franchising director and my right honourable friend the Secretary of State for Transport last month. They cover the Great Western, London Tilbury & Southend, Gatwick Express, and South West Trains franchises. The proposed passenger service requirement for ScotRail will be announced in early summer. This will include proposals for those Anglo-Scottish sleeper services which the franchising director believes should be protected by the PSR.

There has been some discussion this evening, particularly by the noble Lord, Lord Clinton-Davis, about consultation and the early preliminary announcement by the franchising director. As has been said, the franchising director has already given an indication of the sleeper services which he is minded to include in the passenger service requirement. He announced on 14th December that he was minded to include sleepers to four of the five existing Scottish destinations—Edinburgh, Glasgow, Aberdeen and Inverness. At the same time, he made it clear that he was minded not to include the Fort William sleeper or any Motorail services in the PSR.

As we have heard, some people have taken the view that the franchising director's announcement has pre-empted the consultation exercise on the future of those services. I vigorously deny that. It is not the case. At the time of his announcement, there was considerable speculation about the future of sleeper services generally and worries that the franchising process would see the end of all Anglo-Scottish sleeper services. It was to calm this speculation that the franchising director made his intentions known.

Lord Clinton-Davis: My Lords, I am much obliged to the Minister for giving way, but will he indicate whether or not the charge that was made by the deputy or acting director general of ScotRail was right—that the Government had colluded and had agreed to the closure of the service as from 28th May?

Viscount Goschen: My Lords, I do not think that there are any accusations of collusion to be made at all. I shall set out what has happened; the reason for the franchising director's early announcement to quell speculation; the role of the franchising director; the role of the Government; the role of BR and the interaction between BR and Ministers.

As I have said, the ScotRail passenger service requirement will be subject to consultation in early summer. All the issues that have been raised this evening concerning tourism and other important questions will be fully aired.

Baroness Thomas of Walliswood: My Lords, I apologise for intervening, but is it not the case that an announcement that the service will be ended was made before the end of the consultation process which the franchising director instituted? That is the question to which we are all awaiting a reply. If that is not the case, why does the Minister think that that impression has

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been so widely received by most noble Lords, including the noble Lord, Lord Gray, as he mentioned in the opening speech?

Viscount Goschen: My Lords, I believe that there has been some misunderstanding. If the noble Baroness will allow me to say so, I think that perhaps she has perpetuated some of that misunderstanding—

Baroness Thomas of Walliswood: My Lords, I was asking a question.

Viscount Goschen: My Lords, I believe that the noble Baroness is confusing the role of the franchising director, who is involved in setting the passenger service requirements for guarantees of future service levels after privatisation, and the question of BR announcing that it would no longer run the service. That is not the passenger service requirement. That is not the role of the director of rail passenger franchising. This is a question for British Rail—

Baroness Thomas of Walliswood: My Lords—

Viscount Goschen: My Lords, if the noble Baroness will remain in her seat for a moment longer, she will hear me fully explain the situation.

Perhaps I may return to the issue of consultation. The draft passenger service requirement will be sent to all the interested local authorities and to the relevant rail users' consultative committees. The Office of Passenger Rail Franchising will have detailed discussions on the services to be included and the franchising director has made it clear that he will consider any representations he receives about the inclusion in the PSR of the Fort William service.

I turn now to the reasons why the franchising director reached the preliminary view that the Fort William service should not be included in the PSR. Essentially he was concerned that the very high cost to the taxpayer of these services and their low usage suggested that they represented very poor value for money indeed. In respect of the Fort William sleeper, the cost in subsidy to the taxpayer of keeping that service running is £450 per passenger journey including infrastructure costs.

The noble Baroness, Lady Thomas, challenged me to explain the difference between my figures and those given by my noble friend. I do not believe that I can do that at the Dispatch Box. Our figures come from British Rail. After all, it is British Rail which operates the service. The figure that I have quoted is not far short of the average subsidy which travellers in the south east receive for a full year's commuting. Whatever strong arguments or otherwise have been put forward this evening, I believe that it is vital that that context is taken into account.

I believe that levels of usage are critical in analysing the case that has been made by noble Lords. On average, the Fort William sleeper is only 60 per cent. full in summer—about 36 passengers per train—and 50 per cent. full in winter when the number of carriages per train is reduced. Average occupancy in the winter, therefore, is about 18 people. In addition, demand is

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falling and could be expected to continue to do so in future. On Motorail, 17,600 cars were carried in 1993-94, representing 48 per cent. of capacity.

Faced with those figures it is perhaps not surprising that the franchising director reached the preliminary view that he did. Nevertheless, he is certainly well aware of the importance which is attached to these services locally, which has been ably expressed in the House this evening. He will also have noted the campaign which has been mounted to save the services. I have given the undertaking that he will take fully into account the report of this evening's debate. The franchising director's mind is not closed and if the consultation process leads him to conclude that the services should be preserved, they will be included in the PSR and the franchisee will be contractually required to operate them.

It is for the franchising director to use his judgment to decide what services to include in franchises in the light of the consultation. The objectives, instructions and guidance which have been issued to him give him general guidance but leave specific decisions to him. The Secretary of State has therefore instructed the franchising director to ensure that for the initial letting of franchises, the passenger service requirements are based on the service level being provided by BR immediately prior to franchising. This does not mean that he has to include every service provided by BR. It would be wrong to try to fossilise the existing pattern of services in this way.

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The second half of my noble friend's Question deals with British Rail's decision to withdraw the Fort William sleeper and Motorail services from the summer timetable, which effectively means that the services will stop operating on 28th May. This is the point about which the noble Baroness was talking. Until franchises are let, decisions about individual services are a commercial matter for British Rail. It is for BR to judge the market and to allocate its resources in response to the needs of passengers. Ministers have no powers to direct it on matters relating to the provision of individual services. On this occasion, BR has taken the view that it cannot justify continuing the services into the summer timetable.

I regret that I have run against the buffers of the time limit. My right honourable friend has asked BR to ensure that all the assets needed to run the Fort William sleeper and Motorail services will be kept available at least until the end of the consultation process on the ScotRail franchise.

I hope that the House will accept that Ministers and the franchising director are in no doubt about the strength of feeling expressed by noble Lords this evening.

Jobseekers Bill

Brought from the Commons on Friday last and printed pursuant to Standing Order 48; read a first time.

        House adjourned at nine minutes before nine o'clock.

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