BRITISH RAILWAYS

HC Deb 28 November 1973 vol 865 cc397-407

The Minister for Transport Industries (Mr. John Peyton)

With permission, Mr. Speaker, I will make a statement about future provision for British Railways.

In July last year, I told the House of a significant deterioration in British Railways' finances. This led me to conclude that the financial provisions of the 1968 Act, like all previous attempts to solve the railways' difficulties, had proved inadequate and that new legislation would be needed. Since then, the Railways Board has at my request, in close consultation with my Department, been conducting a series of thorough studies on the prospects and needs of its industry. In considering the conclusions, I have taken account of wider transport policy considerations.

The board's studies showed no prospect in the foreseeable future of a railway network of anything like the present size being viable. Three possible options were therefore considered against the background of social and economic needs, the preservation of the environment and the conservation of energy supplies. The first is wholesale withdrawal from large areas, achieving savings in the long run, but with high transition costs. The second is piecemeal closure of a significant number of individual loss-making passenger services. The economies would be relatively small, since most of the system costs would remain while revenues fell. The Government do not believe that either of those alternatives would be in the country's interest.

The third and, in the Government's view, the right course is to maintain a railway network of roughly the present size, and to improve it. Unremunerative passenger services should be kept in being as long as they are justified on social and environmental grounds.

The Government broadly accept the strategy recommended by the Railways Board. This will mean substantially higher investment in four key areas.

Fast inter-city services will be improved, beginning with the introduction of the high-speed diesel train on the London-Bristol-South Wales route. The board will also press on with the development of the advanced passenger train, which is ahead of comparable systems elsewhere.

Secondly, conditions will be made more tolerable for the long-suffering commuter. Improvements will include electrification of some suburban services, and there will be new rolling stock, better interchanges and modernised passenger terminals.

Thirdly, rail freight and parcels services will be rationalised and made more efficient; with computer-controlled wagon movement and high capacity wagons to give faster turn-round times and greater reliability. The Government and the board are seeking to identify suitable freight traffics which could be attracted from road to rail. I am accordingly approaching 100 of the largest firms, in consultation with the Freight Transport Association.

Fourthly, increased investment in track and signalling on the key parts of the system will provide even higher standards of safety and efficiency, at the same time reducing operating costs.

I therefore propose a switch of resources within the transport sector, mainly from urban road to rail, to provide the necessary investment for the railways. This will increase over the next five years from some £140 million in 1973–74 to £225 million in 1977–78, which includes provision for the initial stages of a rail link to the Channel Tunnel. The Government will also continue to provide substantial revenue support to the railways. All this is consistent with the determination of my right hon. Friend the Chancellor of the Exchequer to contain the growth of public expenditure, figures for which will be laid before the House next month in the Public Expenditure White Paper.

The Government's proposals for the railways will mean a continuing programme of work both for the railway workshops and for manufacturing industry over a period of years. They will enable all concerned with the railways industry to plan ahead more realistically than in the past. The Government believe that the policies they propose are necessary in order to achieve an adequately equipped industry. They will expect all engaged in it to ensure that the opportunities offered by this increased investment and by the high-speed developments in particular are exploited to the full.

The necessary powers to provide appropriate financial support will be taken in a Bill to be presented to Parliament shortly. This will be supported by a transport White Paper, which will underline the greater emphasis the Government are giving to railways and other forms of public transport.

Mr. Bradley

The House will be obliged for this long-awaited statement. We shall want to study it carefully. Is the right hon. Gentleman aware that it represents a remarkable reversal of what he and his colleagues were saying a year or two ago? We acknowledge that conversion to the cause of railway development is due to the pressure of public opinion, but why has the commitment fallen short of the Railways Board's requirement which was put to him in June of this year? The board asked for a nine-year programme amounting to £1,800 million worth of investment. The right hon. Gentleman has given it only four firm investment years, unlike the British Steel Corporation, which received endorsement for 10 years. Does the right hon. Gentleman's statement represent only an interim plan? Does he agree that the board, for effective planning purposes and to create confidence among its customers and staff, needs a longer-term guarantee of resources?

What account has been taken of the present situation? If we are to have recurring fuel crises, surely it is of paramount importance to develop the railway system on a long-term basis as part of an integrated transport and energy policy? Will the Government themselves answer the questions which they put to the board? Is there a viable network and what is the Government's definition of a necessary railway? How is it proposed to finance this programme? What proportion of it will come from infrastructure grants? Will those grants be more generous?

It is certain that the board will not be able to service the loan debt without running up huge deficits on account of interest charges. What explicit proposals has he for dealing with that problem? Does he envisage a return to deficit financing? On social grants, can he say what effect the EEC regulation 1192/69 will have?

What proportion of the investment programme can be attributed to the Channel Tunnel? [HON. MEMBERS : "Too long".] The right hon. Gentleman made a long statement and I am making one which is half as long. The right hon. Gentleman will bear in mind that the board's proposals exclude costs related to the Channel Tunnel, which is part of a separate Government decision.

We note that the right hon. Gentleman is to consult 100 firms with a view to identifying suitable traffic transference from road to rail. Does not that show how premature he was to withdraw the quantity licensing provisions in the 1968 Act as long ago as July 1970? Finally, when can we expect the right hon. Gentleman's promised White Paper? The Opposition believe that the railways' rôle can be properly assessed only as part of the entire transport problem.

Mr. Peyton

I am sorry that the hon. Gentleman should have been led to expect such different things as a result of the foolish statements made by so many of his right hon. and hon. Friends. The only noticeable reversal has been the reversal of his and their expectations

I have a good deal of sympathy with the request for a nine-year investment programme. We have produced a five-year investment programme which will roll on year by year as a continuous process. Nobody is more conscious than I am of the need for the railways to see as far ahead as possible. The Government want to see progress made and they will judge their future policies in the light of that progress.

The hon. Gentleman referred to support. I can assure the hon. Gentleman that that matter will be dealt with in a Bill which I hope to present to Parliament before Christmas. The hon. Gentleman asked me whether there would be a return to deficit financing. One of the difficulties which he and I must face is that we have never completely got away from deficit financing. The hopes which were laid upon the 1968 Act were soon dashed and seen to mean nothing.

I was more than surprised to hear the hon. Gentleman ask about quantity licensing. The wisdom of his right hon. Friends, who had a perfect chance to use the quantity licensing system if they had wanted to do so, led them to turn away. I am sure that they were right to do so. The adoption of the system, which is still on the statute book, would constitute a bureaucratic spider's web which would frustrate transport and help no one.

Mr. J. H. Osborn

My right hon. Friend knows that his statement will have a warm welcome from those of his hon. Friends who have worked with him. It will be recognised as being realistic. Will my right hon. Friend indicate to what extent there will be a change from diesel to electrification and to what extent there will be further investment in electrification? Second, he mentioned some of the commuter lines. What improvements can be expected on the London-Midland line north of St. Pancras, which has very slow inter-city times?

Mr. Peyton

I do not doubt that those responsible have heard my hon. Friend's observation. I am grateful to him for his kindly welcome of what I said. There will be further progress made in electrification. That is allowed for in the programme.

Mr. Buchanan

Will the right hon. Gentleman answer the question put by my hon. Friend the Member for Leicester, North-East (Mr. Bradley)—namely, how do the Government propose to raise the money? Is the board to be involved again in interest payments and deficit financing?

Mr. Peyton

British Rail will have full access to the national loans fund as it has always had under successive administrations. I have already told the House that I shall be introducing detailed proposals.

Sir R. Thompson

Will my right hon. Friend say whether his plans for improving the viability of the railway system will include a positive freight policy to encourage heavy freight off the roads, where it is so unwelcome, and on to rail? Does he realise that public sentiment against juggernaut lorries has reached such a pitch that if he does not adopt such a policy he will be compelled to confine the juggernaut lorries to certain trunk roads? Once he does that he will remove the argument for using such lorries because he will have destroyed their flexibility. Will he address himself seriously to the problem of getting the heavy freight off our congested roads to where it belongs—namely, on the railway system?

Mr. Peyton

I constantly and seriously address myself to the problem referred to by my hon. Friend. It is beyond my power to change things to the extent that every factory, warehouse and farm, for example, will suddenly be provided with a railhead. The majority of freight hauls in this country are comparatively short. No scheme has yet been devised which will provide the degree of flexibility by rail which is available by lorry.

I know that people dislike the lorry very much, but they should remind themselves of their great dependence on it. I have always said that we must move towards a system of designated roads. I am sorry to hear that my hon. Friend does not agree. Such a system would permit large vehicles to move freely on roads where there is a rôle for them. The idea that vehicles should be free brutally to force a passage down any road without regard for the size of the road or the size of the vehicle is out of date. It takes time, of course, to produce roads, particularly bearing in mind not just the limited resources available but the length of our procedures. The roads are always very acceptable "there" but they are not always acceptable "here".

Mr. Hooson

Is the right hon. Gentleman aware that his decision must be welcomed throughout the House, particularly in view of the present energy supply crisis? Is he further aware that there has been a considerable rundown of personnel services, rolling stock and so on, on the railways over the last two years, particularly in some areas such as my own in Mid-Wales? What does he intend to do about that? Finally, will the White Paper contain arguments for developing and extending the railway services to include perhaps the accommodation of far more freight than is accommodated today?

Mr. Peyton

I am grateful for a Liberal welcome, even if it is rather diminished by its tail. I would very much like to attract freight from road to rail, and I have put forward today some proposals as to how we might proceed in that direction.

Mr. Maude

Will my right hon. Friend bear in mind, in his welcome progress towards a more rational transport policy, that it is necessary not only to get freight off the roads back on to rail but to prevent more freight coming off rail on to the roads, and that one of the most desirable ways of doing this is to stop building ever larger and larger motorways over more and more of the country, which creates new road freight traffic and takes it off rail? Will he also bear in mind that this would also help to save Government expenditure?

Mr. Peyton

I can only say that, with respect, I note what my hon. Friend said. If he were to give me advice on how it is to be achieved in practical terms, no one would be more grateful than I.

Mr. Bagier

The right hon. Gentleman says there has not been a change of policy. Does he remember that the previous Conservative Government, of which he was a back-bench supporter, gave instructions to Lord Beeching which hopelessly slashed the railway system to the size it is now? While we welcome these proposals, they are not enough. What is the right hon. Gentleman's excuse for saying to the board that it cannot fulfil the 10-year programme for which it asked him?

Does not the present situation show clearly the need to go in for widespread electrification? Does not the Middle East situation underline that fact? How is the amount of money the right hon. Gentleman has agreed to grant to be spent by the board?

Mr. Peyton

That is a question I would rather leave the British Railways Board to deal with in detail rather than attempt to answer it in a question and answer period. The hon. Gentleman asks for more. I am bound to say that that is predictable, but always in such circumstances I find the memory of Oliver Twist asking for more rather more moving than the spectacle of the hon. Gentleman imitating him.

Mr. Edward Taylor

Did my right non Friend's studies lead him to the conclusion that many of the problems of the railways have arisen because they were starved of investment, particularly during the term of office of the Labour Government? Does he realise that his new deal for the railways will help not only the railways but also the morale of those working on the railways? As he is responsible for Scotland as well as England, and referred to the concentration of spending on certain growth points, what does my right hon. Friend envisage as the future of the Scottish railway system, with particular reference to investment?

Mr. Peyton

For once, I was bold enough to couple Scotland with England. I assure my hon. Friend that since I have been in office some of the Scottish services which have survived would have been unlikely to survive in England. That is the extent of the prejudice which exists. I am grateful to my hon. Friend for what he was kind enough to say. He has rightly drawn attention to the investment figures for which the Labour Government were responsible. The Opposition have had sufficient delicacy not to raise the matter themselves.

Mr. Spriggs

What does the total investment figure include? Does it include the initial cost of the Channel Tunnel? What other matters are included?

Mr. Peyton

I am sorry that I did not answer that question when the hon. Member for Leicester North-East (Mr. Bradley) asked it, and I apologise to him. The amount included for the Channel Tunnel will, in 1976–77, be £17 million, and in 1977–78 it will be £24 million.

Mr. Ridsdale

I welcome my right hon. Friend's statement, especially for those who, like myself, represent areas with large commuter traffic and whose commuters have had to strap-hang for long periods, covering 90 miles or so. Can my right hon. Friend assure me that investment in the Haven ports, which now constitute almost the second largest port in the country, will not be starved because of the Channel Tunnel and Maplin? What percentage increase in annual investment does this represent for the railways compared with the last 10 years?

Mr. Peyton

I entirely agree with my hon. Friend's comment about commuters. Their services have been crying out for rejuvenation for a long time. His question about ports goes rather wide of the subject of railways. I should like to write to my hon. Friend about his question on proportions and give him the figure then. But my statement represents a very considerable increase not only in the quantity of investment but also—very important indeed—in the length of look it gives to British Railways for the future.

Mr. Elystan Morgan

I congratulate the right hon. Gentleman on now having been seduced by the very principles of the 1968 Act which he so successfully spurned in Opposition. In view of his more benign attitude, will he give an assurance to Welsh Members that no further closures will be considered in Wales until the Government-sponsored Graham Rees survey is finished, that the Cambrian coast line, which is about to be closed, will remain open, and that the Teify Valley line, the closure of which a few weeks ago has brought great hardship to that area, will be re-opened forthwith?

Mr. Peyton

Considerations of prudence and economy of time suggest that I would be wise not to deal with individual services today. But no services will be closed without being very carefully looked at in the light of this statement. I do not wish to deride in any way the 1968 Act, which was a genuine attempt to solve a most difficult problem. No one would have been happier than I if it had not been necessary to make this statement. Unfortunately, there has been here a problem which, over many years since the war, successive Governments have attempted to deal with, but none has yet been totally successful.

Mr. Bruce-Gardyne

What expected addition to public expenditure in 1974–75 will ensue from my right hon. Friend's statement?

Mr. Peyton

None at all.

Mr. Leslie Huckfield

The Railways Board's submission to the right hon. Gentleman was based on the assumption that it would be carrying less freight in 1981 than it carries now. How much of the investment which he has announced will go into freight? Apart from that, in view of the energy situation, how much of the investment will go into electrification? Also, since most European countries have embarked on investment programmes almost 10 times as big as the right hon. Gentleman has announced, how much is he prepared to give the board under the normalisation regulations of the EEC?

Mr. Peyton

I understand that the Community regulations represent no interference at all in any of the proposals I have made or would like to make for British Railways. If the hon. Gentleman will forgive me, I will not go into too much detail about freight. I very much doubt whether British Railways at the moment could give an accurate forecast as to the quantity of freight which the railways hope to carry in future. I hope that the quantity will be roughly the same, though it will not be of the same character.

Several Hon. Members rose—

Mr. Speaker

Order. Obviously these matters will have to be debated, but since this is an Opposition Supply day I must try to protect Opposition time.