---

Lord West of Spithead: My Lords, I do not know the specifics that the noble Baroness is talking about, but I can say that we look positively on these things. It

20 Nov 2008 : Column 1204

is appropriate that we make sure that all the correct checks are done, particularly when looking after the safety of youngsters. It is also appropriate to make the right checks to protect our borders. We have done some revolutionary things to achieve that and had a number of debates in this House on it, so those things are important. We very much approve of these sorts of cultural event and assist them whenever we are able to.

Lord Howarth of Newport: My Lords, could not the choir have a collective visa at £65 for them all?

Lord West of Spithead: My Lords, I cannot say on the Floor of the House that that would be achievable. It is an attractive thought that for charitable things there might be some scope for such provision, but I certainly would not commit the Government to that because I do not think that that would be appropriate.

Taxation: Small Businesses

11.29 am

Lord Forsyth of Drumlean asked Her Majesty’s Government:

Whether their proposals to help small businesses maintain employment will include retaining after 1 April 2009 the staff hire concession, which prevents value-added tax being charged on the wages of agency workers.

Lord Davies of Oldham: My Lords, this year’s Budget announced the withdrawal of that administrative VAT concession from 1 April 2009. It was introduced as a temporary measure in April 1997 to correct a distortion of competition that no longer exists, and there is no basis in law for its retention. From April, normal VAT rules will apply to temporary staff suppliers. Most businesses will be unaffected as they can recover in full any VAT they are charged when hiring staff.

Lord Forsyth of Drumlean: My Lords, I thank the Minister for that very disappointing response. What does the Government’s rhetoric about helping small businesses and businesses to maintain employment in a recession mean if they plan to impose from 1 April next year a tax of 17.5 per cent on the wages of temporary workers? The Minister says that it will not affect many businesses but does he not realise that part-exempt businesses, which include financial services, charities, social care, education and social housing, will not be able to recover the VAT? I understand that even the Government think it will result in an extra £125 million being imposed on the costs of employing people. Should not the Government put their rhetoric into action and continue this concession, given the recession that we are about to face, which they have played such a part in creating?

Lord Davies of Oldham: My Lords, the Government will be translating rhetoric into action in the Pre-Budget Report on Monday. I hope at that stage that the Opposition’s rhetoric extends beyond the interests that

20 Nov 2008 : Column 1205

involve about 30,000 equivalent full-time workers when the country is facing difficulties for a very large number of the employed population. The noble Lord must recognise the magnitude of the issue we face; the Opposition—he is a significant figure in them—appear to be concentrating on an administrative concession that was granted by that Administration in 1997 on a temporary basis and which was declared in 2005 to be outside the law. Over the past three years, we have consulted and indicated that we intend to comply with the law. I hope the Opposition applaud that position.

Lord Razzall: My Lords, we cannot expect the noble Lord to anticipate the detail of the Statement on Monday but is he prepared to give two undertakings to your Lordships? First, will he undertake that, in making that announcement, the Treasury will take no notice of the siren voices of the Tory Opposition, who would lead us even further on to the economic rocks? Secondly, will he confirm that the plan on Monday will produce real tax cuts for hard-working families in this country?

Lord Davies of Oldham: My Lords, that broadens the Question, which was about a small concession on VAT that affects a very small section of the population. The noble Lord will expect me to indicate that I am well able to resist the siren voices of the Opposition; I have not always been able to detect such a phenomenon. However, I want to emphasise that the Pre-Budget Statement on Monday will address the issues facing the economy of this country at a most serious time. I am glad that the noble Lord, Lord Razzall, generalised on to broader issues—I find it somewhat surprising that the Opposition, at the last representation before the Pre-Budget Report, are concentrating on such a minor matter.

Baroness Noakes: My Lords, I am going to stick with the Question and not get distracted by Liberal Democrat party propaganda. The last Red Book estimated, as my noble friend Lord Forsyth pointed out, that the impact of this could be £125 million from 2010. The industry estimates that this would have an impact of £400 million. One of the sectors most affected is the voluntary sector. What estimate have the Government calculated for the impact of this on the voluntary sector and, for example, on healthcare provision? Are they absolutely sure they want to go ahead with it in these straitened times?

Lord Davies of Oldham: My Lords, I emphasise to the noble Baroness that we have no option but to go ahead with it because we have no legal basis for the concession that was advanced in 1997. A test case indicated that it is beyond the powers of Her Majesty’s Revenue & Customs to operate the concession, so we are seeking to come within the framework of the law.

I agree with the noble Lord, Lord Forsyth, and the noble Baroness that it is essential that we have measures—they will be announced next Monday—that address the problems facing employment levels in the country; we all know that there are great difficulties ahead. However, the noble Baroness is surely not asking the Government to persist in operating outside the law.

20 Nov 2008 : Column 1206

Lord Skelmersdale: My Lords, the Minister has given the House the impression this morning that this concession would have been maintained but for the law. Why did the Government continue with it for six years?

Lord Davies of Oldham: My Lords, because there were market imperfections at the time. I am not critical of the previous Administration for having introduced the concession to deal with those imperfections, which have now largely been eroded. We continued with the measure because it produced some beneficial effects at the time.

Once it became clear that a judgment of the House of Lords in its judicial capacity found against Inland Revenue’s powers to operate this concession, we had to do something about it. Why has it taken so long? We sought to consult with the industry, and wanted a decent lead-in time before the concession was withdrawn. Three years have therefore elapsed. We announced in the 2008 Budget that we would withdraw the concession, and that that would be implemented in next year’s Budget. The Government could not have acted more fairly than that.

Business

11.36 am

Lord Bassam of Brighton: My Lords, my noble friend Lady Morgan of Drefelin will repeat the Statement on safeguarding children after the debate in the name of my noble friend Lord Adonis.

Railways

11.37 am

The Minister of State, Department for Transport (Lord Adonis) rose to move, That this House takes note of the prospects for the future of the United Kingdom’s railways.

The noble Lord said: My Lords, in rising to move that this House takes note of the prospects for the United Kingdom’s railways, I want first to pay tribute to all who work on and for the railways, including the British Transport Police. They do a great job of service for the British public, often at unsocial hours; we owe them a debt of gratitude and they are rightly proud of their work and their industry.

The history of the railways was, until the turn of this century, one of extraordinary innovation and dynamism by the Victorians, followed by a century of gradual and then precipitate decline and stagnation. Like all simplifications, this is an oversimplification. The Victorians made their mistakes, not least their failure to build effective north-south and east-west links across London, which has bedevilled commuters and the national economy ever since and is only now being put right by Crossrail and the Thameslink upgrade. There were also notable successes in the 20th century, such as the electrification of southern England’s commuter network. Certainly, however, the 50 years between the Government of the grandfather of the noble Earl,

20 Nov 2008 : Column 1207

Lord Attlee, in the 1940s and that of John Major in the 1990s was a period of decline and underinvestment which many thought would never be reversed in the face of the seemingly relentless rise of the car and the truck. This year marks the 50th anniversary of the opening both of Britain’s first motorway and of Gatwick airport. Road traffic has increased 15-fold since 1950. For all British Rail’s commendable marketing efforts in the 1970s, it is fair to say that the last half century was the age of the car and the plane, not the age of the train. The botched rail privatisation of the mid-1990s, followed by the Hatfield rail crash and the collapse of the privatised Railtrack, was in many ways the nadir for the industry.

The 20th century decline of rail was of course an international phenomenon, but the relative decline was greater in Britain than in much of western Europe—although less than in the United States—because of slower rates of innovation and investment.

While most of western Europe went straight from steam to electric traction for intercity and commuter services in the 1950s and 1960s, Britain only partially electrified; and while France, followed by most of its neighbours, built high-speed lines from the 1980s, we sat on the sidelines. We did build the Channel Tunnel after a century of dithering, an historic achievement of the Government of the noble Baroness, Lady Thatcher. However, as President Mitterrand noted at its opening in 1994, the Eurostar trains would speed through France at 186 miles an hour but then slow to half that to enable passengers to enjoy the beauty of the Kent countryside, not to mention the glory of the south London suburbs.

Since the late 1990s, a renaissance of the railways has taken place. Passenger numbers and freight volumes have grown at a remarkable rate. Passenger numbers are more than 50 per cent higher. There were 1.2 billion passenger journeys last year, higher than at any time since 1946. Freight traffic is up by 40 per cent in the past decade. The number of services, and service quality, have also improved steadily. Almost exactly a year ago, St Pancras re-opened as the terminus for High Speed 1, the quintessential marriage of Victorian railway grandeur and 21st century high-speed technology. It is a moment that will surely come to be seen as the start of a new era in Britain’s railways.

There is plenty in all this for the railway romantic, but it is important to appreciate the hard-headed economic, environmental and technological factors which are driving this upsurge in rail, and which I am confident will take it a long way further in the decades ahead. In an age of growing traffic congestion, environmental concern and rising carbon emissions on the one hand, and steadily faster, more efficient, and more environmentally friendly trains on the other, the terms of trade in transport are changing fundamentally. The railways are coming back, not only because we like them but because we need them. Nothing exemplifies this better than one of the lesser reported ballot results in the United States on the day of Barack Obama’s election a fortnight ago. The people of California voted yes to a referendum proposal, backed by Governor Schwarzenegger, for a $10 billion bond to start building America’s first high-speed rail

20 Nov 2008 : Column 1208

line between Los Angeles and San Francisco, with the aim of reducing the 350 mile rail journey time to a mere two hours and 40 minutes on trains travelling up to 220 miles an hour.

The go-ahead for the Californian scheme followed a robust campaign which focused on the strong transport and environmental benefits of high-speed rail. Proponents argued that it would alleviate the need to spend an estimated $100 billion on new freeway and airport capacity over the next 20 years. So after decades when rail was virtually derided as a mode of passenger transport in the United States, California looks set to follow most of western Europe, China and Japan in pioneering high-speed intercity rail.

Beyond High Speed 1, we have not so far opted to join this international movement. However, I highlight the terms of reference of the Network Strategy Group I chair, set up by my right honourable friend the Transport Secretary last month, which include examining the need for new lines over the next 20 to 30 years, alongside the case for a rolling programme of further network electrification. Next week I go to Japan to see at first hand its high-speed network and its ambitions for a generation of still higher-speed Maglev trains. We hope to be in a position to indicate conclusions and a way forward on electrification and new lines by next summer.

I also point to the other modernisation programmes in train, including the £16 billion Crossrail project, which will take 24 trains an hour through central London on a line which connects Heathrow and the west of the capital, through the business and commercial heart of the City, into Docklands and to Essex beyond. In addition, the Thameslink project will take up to 24 trains an hour from Bedfordshire, Hertfordshire and the north of London through central London to Brighton and other destinations in the south. These are both transformational projects which will improve radically the network at its most congested and economically vital heart. We are also pioneering the next generation of express trains, which will take over from the ageing diesel 125 fleet and provide greater express capacity on the electrified network too.

The intercity express programme will provide a new generation of express trains capable of running by both diesel and electric traction, and switching between the two as needed, at speeds of up to 125 mph. This will offer greater capacity, flexibility, speed and reliability to existing intercity services. The introduction of the next generation of in-cab signalling towards the end of the next decade is also likely to have a significant positive effect on capacity and reliability.

Nor are we neglecting the interests of rail freight, a vital area of current and future growth. The planned £200 million investment in the strategic rail freight network will be capable of handling more and longer trains, carrying greater loads, and offering better connections with the UK’s international gateways and main transport hubs.

As Minister for Transport, it is my job to be relentlessly on the side of the passenger. I am well aware that despite these welcome prospects for the medium-term and long-term future, passengers have real concerns about the railway here and now, and I fully accept our duty to bring about improvements month by month.

20 Nov 2008 : Column 1209

Today’s commuters and other travellers care about the number of services available, performance and reliability, safety, capacity and overcrowding, and ticketing and fares. The £15 billion programme of investment in the network over the next five years, set out in last year’s rail White Paper, is focused on concrete improvements in each of these respects. Let me take each in turn.

In respect of the number of services, significant improvements will be evident from 14 December this year, when the new timetable is introduced. This will be particularly evident on the West Coast Main Line, where the £8.8 billion modernisation programme is drawing to a close. The standard London to Birmingham journey time will, from 14 December, be reduced to 82 minutes. The fastest services to Manchester will be just over two hours, and four hours 10 minutes to Glasgow. There will be a shuttle-style service every 20 minutes to Birmingham and Manchester, a further step-change improvement. In the early 1990s, there was not even a proper hourly service between London and Manchester.

Across the network as a whole, the number of train services will increase on 14 December by more than 5 per cent to 104,500 a week—the highest on the network since Beeching. This includes a 9.8 per cent increase in Sunday services, and a 6.5 per cent increase on Saturdays, as we seek to offer a reliable seven-day-a-week railway in place of the patchy weekend timetables of the past. From December 2009, the new domestic services on High Speed 1 will offer significant improvements for passengers from the Kent coast and Ashford into the Thames Gateway, east London and central London.

On reliability and punctuality, the latest figures show that in the past year more than 90 per cent of trains arrived punctually under the public performance measure—that is, within 10 minutes of booked time for intercity services and Five minutes for suburban services. That compares with 75 per cent seven years ago. In the last four-week period for which figures are available, 14 September to 11 October, 91.7 per cent of passenger trains arrived punctually. But we need to see these figures continue to improve. We have set a higher benchmark for the future and, where performance is unsatisfactory, we are ready to take immediate action to improve services for passengers. That is why, for example, we insisted upon a remedial plan to improve reliability on First Great Western, where there was a serious breakdown of performance earlier this year. We also secured a package of passenger benefits worth £29 million, including discounted tickets and extra rolling stock on the crowded Cardiff to Portsmouth route.

To increase capacity further, we are working with the train operating companies and rolling stock companies to procure an extra 1,300 rail carriages by 2014; 423 of these are already on order, to be delivered between 2009 and 2011—92 for southern services, 217 for London Midland, eight for Chiltern, and 106 extra Pendolino carriages. I feel as though, during the past six weeks, I have answered Questions for Written Answer from the noble Lord, Lord Bradshaw, in respect of every single one of the remaining 877 carriages, and

20 Nov 2008 : Column 1210

I continue to assure him and the House that new orders will be placed soon and we believe that we are absolutely on course to meet our commitments. These 1,300 extra carriages will enable more trains, longer trains and more modern trains to be available in areas where there is greatest demand over the next five years. In addition, in order to increase capacity, Reading and Birmingham New Street, the two busiest stations outside London, will be redeveloped, along with the refurbishment of 150 mid-sized stations.

In respect of passenger safety, the Secure Stations Scheme is improving station security. Launched in 1998, the scheme accredits individual stations which work with the British Transport Police and partners to improve station security. Funding for the British Transport Police has more than doubled in the past six years to £271 million a year. There are now 2,800 BTP officers and 262 community support officers in the force, and the number of offences reported by the BTP fell by 12 per cent between 2006-07 and 2007-08. More than half of all stations, and more than 3,000 trains, are now equipped with CCTV surveillance systems, and more than 500 stations now have cameras that are centrally monitored. This means that not only will passengers be safe but they will feel safer, which is vital to building passenger confidence and tackling social exclusion.

In terms of ticketing and fares, we believe that the RPI plus 1 formula in respect of annual increases in controlled fares provides a fair balance between, on the one hand, the interests of the passenger and, on the other, those of the taxpayer, who provides the £4 billion in annual subsidy to the industry. Thanks to recent reforms, operators have introduced common names and standard terms for fares, and we are asking the industry to back the new structure with a “price promise” that will give passengers confidence that they have been sold the right ticket at the best price.

However, we need to do more to simplify the ticketing system and to enable passengers to buy tickets quickly and simply. I am sure I am not the only person who has missed a train at Victoria queuing for a ticket in a gated station and who has found it difficult to navigate the internet ticketing obstacle course. I am working on these issues with Passenger Focus, the passenger watchdog, which does an excellent job on behalf of passengers. I expect to have more to say about this in the new year.

It is also important that we make it easier for passengers to switch between different forms of transport. Better facilities for cyclists is one issue, and the recently published specification for the new South Central franchise sets out significant improvements for cyclists at South Central stations. Better interchange arrangements between rail, cars, buses and coaches are also necessary. Several of our train operating companies are also bus and coach operators and are seeking to integrate rail, coach and bus travel in novel ways. The new East Midlands Parkway station, opening next year, will be a significant step forward in this respect. There is great potential for the marketing of tickets and journeys which are part bus or coach and part train to meet the needs of passengers better. An expansion of park-and-ride facilities will also benefit car owners who wish to switch to rail for part of their journey.

20 Nov 2008 : Column 1211

As I used to say when at the Department for Education and Skills, “No Complacency” is my middle name, and I am certainly not complacent about the state of the railways. A lot more needs to be done, month by month, to improve the service for passengers and freight operators, and to improve the system’s efficiency and value for money for both passengers and the taxpayer. It is particularly important that Network Rail continues to improve the condition in which it keeps the track, the way in which it conducts maintenance and renewal work so as to cause minimum disruption to passengers, and the efficiency of its operation.

The Office of Rail Regulation has highlighted the scope for considerable efficiency savings in Network Rail’s operations in the next five years as the company seeks to achieve best international standards in track maintenance and renewal, which the ORR believes it is still some way short of. The memory of the West Coast Main Line breakdown last Christmas and new year has certainly not been forgotten by passengers or by the Government. Network Rail, for all the improvements of recent years, still has a big job on its hands, which I know it fully accepts. That is all the more important as we enter a period of greater economic uncertainty, when value for money is ever more crucial for hard-pressed passengers and taxpayers.

---