ISLE OF WIGHT FERRIES

HC Deb 20 December 1974 vol 883 cc2067-77

2.0 p.m.

Mr. Stephen Ross (Isle of Wight)

I am most grateful to you, Mr. Speaker, for giving me the opportunity today to raise a matter relating to the fare structure of the Isle of Wight ferries and the problems facing the commuters who use those ferries.

There is very considerable concern in my constituency about this matter. I believe that the crossing to the mainland is said to be the most expensive five miles of crossing anywhere in the world. That has been a long-standing grievance with us. But with the quite massive increases in recent months, we have every right to call upon the Department of the Environment to look more closely into the whole fare structure covering the ferry and other services linking the Isle of Wight with the mainland.

I deal first with the passenger ferries, and particularly the rates which the daily commuters are now having to face. I am sure that the Under-Secretary will be aware that the island has always suffered —as I suppose all islands are bound to suffer—from a higher unemployment rate compared with other parts of the South and the Midlands. I do not have the latest figures, as I gather that they are not being published this month and possibly not next month. But I seem to recall that the last time the figures were published they showed that unemployment was running at nearly 5 per cent. The rates rise in the winter months because we are in a seasonal holiday area, and quite a lot of the slack gets taken up in the summer.

Although it is true that we have managed to attract several new industries over the past 15 years—we are very grateful to previous Governments for their support in that and grateful to the firms which have come to what is a very pleasant environment—they have not, unfortunately, been able to absorb the very substantial number of the particularly skilled type of craftsmen who are very often trained in shipbuilding and aircraft techniques.

I remind the House of the very famous old shipbuilding company, John Samuel Whites, which unfortunately went out of business as a builder of ships—I think it was the oldest such company in Britain —in the mid-1950s. The company is still operating but it does not build ships now. Therefore, trained men, boiler-makers and others, now travel daily to Southampton, and some to Portsmouth, to work in the yards there.

Also, we were the home of Saunders Roe, which built flying boats. When those, unfortunately, finished on the scrap heap, the sort of experienced men employed there were not able to find jobs suitable to their crafts on the island. Others settled on the island during the Britten-Norman expansion for the "Islander" aircraft, but became redundant when that company had its financial troubles a year or so ago. Many of these people now have to travel to the mainland.

I estimate that about 2,000 people— mostly men and students—because much of the industry we have on the island employs female labour—travel to work daily on the mainland. Most of them go on the early boats to Portsmouth or Southampton. Others work at night or on day shifts at Lymington. There are three main routes to and from the mainland.

Another factor to be borne very much in mind is the lower wage structure which pertains on the island. I do not have any very up-to-date figures on this matter, but I have talked to the people concerned and I find that there is no question that in spite of the high cost of fares it still pays them to travel to the mainland to earn a higher wage than they would earn if they took a job on the island for which they were not fully skilled or a job which was below their capabilities. My guess is that the average wage is still something under £30 a week.

Most of those who travel daily to the mainland rise at about 6 a.m. Very often they do not get home before 7 p.m. During the recent election campaign I travelled over with many of them and we talked of their problems. I also travel with them sometimes when I come to the House. They all ask for action over the quite alarming number and size of increases in fares this year, and no doubt, with the recent fuel price increases, the fare increases to come.

I recently received a petition, containing 70 signatures, from regular users of the 8.5 a.m. boat from Ryde to Portsmouth. Three main commuter boats sail early in the morning, and that one is probably the least used of them. This has been commented upon in a letter from a Mr. Williams, of Bembridge, who puts the case so well that I should like to quote the most relevant extracts: Employment opportunities on the island are totally inadequate to cater for the number and the skills of the working population and consequently many residents are compelled to work on the mainland, in and around Portsmouth and Southampton. Since June 1974 there have been two major increases in British Rail ferry fares. A third increase of 12½ per cent. is promised in January or February 1975. We are fast reaching the ludicrous situation where many people will be unable to afford to work. Even the cheapest season ticket (an annual one) now costs over £100"— I think that the latest figure for the Red Funnel is £10380— which means an individual must earn £150 or £3 a week before tax to cover this. It is even more expensive for most of us who are unable to afford an annual ticket, the current rates for shorter periods are: 3 months, £29.15, 1 month, £11.46, weekly £3.30. The letter points out that Commuters in the London area are assisted in most cases by a special London allowance or higher pay to offset the extra cost of travelling and other higher expenses. In addition, the ferry fare is not the only expense to island residents, as the majority have to park their cars at the end of the pier, which is a most expensive exercise. One of the few privileges of a Member of Parliament is that he is able to do this free.

It is the high cost for the short journey across the Solent which is causing the greatest concern and hardship. Some form of subsidy or concession is the only answer to this problem.

The petition ends: We, the undersigned, respectfully ask you to do all in your power to alleviate the situation. Those figures relate to the British Rail operation to Portsmouth and Lymington. Red Funnel, whose structure is similar —the fares are almost exactly the same— operates between Cowes and Southampton and is increasing its fares from 1st January next to a single fare of 70p and a return of £1.40. Its annual season ticket will cost in excess of £100.

This service takes nearly an hour to make the crossing from Cowes to Southampton, while the British Rail routes, which cover the shorter crossings of about five miles, take a mere 25 minutes—yet the fares are similar. In fact, the cost of Red Funnel's annual season ticket was slightly lower until the latest increase was announced.

For those wishing to make a quick crossing by hovercraft, the situation is just as bad. A book of 80 tickets cost £40 a year ago. It now costs £52 and as from 29th December it will cost £64. This is an increase of over 50 per cent in just one year.

I turn quickly to the commercial side Factories and businesses on the island will, on the Red Funnel, have to cope with some very substantial rates as from 1st January. They range from £16 for a vehicle not exceeding 30 ft. overall and weighing 4 tonnes, to some £60 for vehicles exceeding 45 ft. overall. In addition, they have to pay—it has always been a sore point with people driving to the island—not only for the vehicle but for the driver and passengers. It is true that there is a concession for island-registered vehicles. We are grateful for that concession, which was granted some years ago. There are certain contract rates for regular lorry users.

I pay tribute to the operators, both British Railways and Red Funnel, for the way in which they manage to assist commercial users, particularly during peak holiday periods when pressure is intense. However, I fear that if rates continue to rise like this many firms when they come to make savings, which in present circumstances seem quite likely, will feel that the island is becoming too expensive a place for them to operate. That would be disastrous after all the hard work which has been put in to attract people to my constituency.

British Railways are not very forthcoming about the receipts from their operations to and from the island. In fact, when we were fighting the case to preserve our railways we had great difficulty in getting any breakdown of the figures. That is a story in itself and I recommend the Under-Secretary to read the story of the great Isle of Wight train robbery because it gives some interesting facts which have never been denied.

One thing is certain. British Railways do not make a loss on either their private or their commercial traffic. I suspect that they make a very handsome profit, particularly on the commercial side, although in fairness I should state that I have been told by the manager of the Ryde-Portsmouth steamers that that particular ferry service is only just back in the "black". No doubt this operation was affected by a very successful private enterprise concern—Hover Travel—which runs a hovercraft service from Portsmouth to Southsea and which consistently turns in significant profits. Perhaps some additional enterprise such as occurred with Western Ferries in the Clyde might be a very healthy tonic. Here I gather that British Railways fares have dropped substantially since that company went into operation.

I have taken these matters up with both operators and with the Under-Secretary by letters. The Under-Secretary replied to my letters. He confirmed that a substantial subsidy is paid at the moment under Section 39 of the Transport Act 1968 to keep the Ryde-Shanklin railway in operation. One of the greatest mistakes ever made was to cut that line off at Shanklin. It should have gone on to Ventnor, in which case there would have been no need to subsidise it, but that is another story. So it is a substantial sum which is being paid. The latest estimate is £228,000.

The Under-Secretary refuted my request for help to be extended to the ferry services. I suggest that perhaps British Railways would like to hand over the ferries between Ryde and Shanklin to private enterprise and then perhaps that £228,000 could be devoted to keeping the fares down.

As for roads, it has long been a matter of contention on the island that we have never benefited from the 100 per cent. grant for trunk roads, because trunk roads terminate on the mainland. We have no trunk roads on the island. For the principal roads which we have on the island we get a 75 per cent. grant. It has always been an argument in the past— things are changing next year—that the ferries were a continuation of the trunk roads on the mainland.

What about tax concessions on the cost of travel to work? Is not this another thing that the Minister might be prepared to consider and talk over with the Chancellor of the Exchequer? I know that this opens up wild spectres in other areas, but surely we on the island are a special case.

I ask the Minister seriously to consider what I have said—I have not had much time in which to put it over—and to look with greater sympathy on the claims of those who I am certain need help, because they are very deserving cases, but whose case I fear I have put very inadequately.

2.13 p.m.

The Under-Secretary of State for the Environment (Mr. Neil Carmichael)

The hon. Member for Isle of Wight (Mr. Ross) was too modest when he said that he put the case inadequately. He put it most forcefully. The fact that he did not put it at greater length does not mean that the case was not put adequately and that it is not accepted as being worthy of consideration and an answer from the Government.

I congratulate the hon. Member on the forceful way he has raised the problems of his constituents. I accept that there are problems in relation to ferries. Indeed, such problems always arise when any change in mode of transport is involved.

As a Scot who is much concerned with transport matters, I am constantly reminded of problems of this nature— that is, the ferries—which my fellow Scots face in the outer communities which are dependent upon ferries for their links with the rest of the country. It is salutary to be reminded that there are also English communities which face the same difficulties.

However, although the Isle of Wight shares those problems with the Hebrides, the Orkneys, the Shetlands, and even the Isles of Scilly, we must not forget that the Isle of Wight enjoys certain other amenities. Unlike the other communities which I have mentioned, the Isle of Wight is part of South-East England. Even when the other communities have used their ferries and reached the mainland, they are still remote from the centres of economic and social activity. The Isle of Wight suffers the difficulties of an island community, but these are not of the same order as the problems of the constituents of the hon. Members for St. Ives (Mr. Nott) and for the Western Isles (Mr. Stewart) and of the right hon. Member for Orkney and Shetland (Mr. Grimond). I think the hon. Member for the Isle of Wight will accept that there is this obvious difference. It is against this background that we must consider the transport services which link the island to the mainland.

We are concerned basically with two operators—British Railways, which provide two vehicle and passenger ferries, one passenger-only ferry, and a hovercraft service, and the privately-owned Red Funnel Line, which provides another vehicle and passenger service and a hydrofoil link. Thus we do not have a situation where the nationalised industry has a monopoly, although the hon. Gentleman tended to suggest that there was such a close link on the fares that there was an understanding. I think that the understanding is almost certainly the commercial one that the operators are aware of, and probably watch very carefully, each other's services and fares.

Mr. Stephen Ross

The tickets are interchangeable. A ticket for the British Railways Ryde-Portsmouth service can be used on the Red Funnel service.

Mr. Carmichael

This is good commercial practice by both companies. I think the hon. Member will agree that the fares are not always exactly the same. Sometimes they are out of step.

The hon. Member mentioned the ferries on the Clyde. It may seem rather ridiculous since I use the ferries a lot, but I should need to check on this. I believe, however, that there is and always has been similarity in the fares charged on the ferry services from Gourock to Dunoon.

However, what we must look at in the case of the charges made by British Railways is the basis upon which Parliament has decided that British Railways should operate and provide a service. The Transport Act 1962 laid down a framework which required the British Railways Board in general to act commercially and charge prices which would ensure that, to use the jargon, taking one year with another the revenue was adequate to meet the costs properly chargeable to revenue. This is the standard basis upon which nationalised industries are expected to operate where there are no special factors.

In the case of railway passenger services Parliament has made special provision, most recently in the Railways Act of last Session. This ensures that where the Secretary of State requires passenger services to be provided the Railways Board receives compensation for the costs which it incurs in providing services which are not commercially justifiable. The important thing is that Parliament decides that these services shall be provided. Therefore, it is accepted that Parliament will provide the moneys to pay for any deficiency in these services.

These special arrangements have never been applied in general to the board's shipping services, because these services have not presented the same type of social problem as the railway passenger service. In Scotland there have been shipping services where special arrangements have been justified on social grounds, but the British Railways shipping services in the Solent have never encountered this type of difficulty. For this reason, there has been no cause to disturb the arrangement, settled by Parliament, whereby the level of the fares within the Government's general price policy has been a matter for the commercial judgment of the Railways Board. The fares structure on the British Railways ferries is, therefore, not a matter of direct ministerial responsibility. Nevertheless it is legitimate to look at the general problems posed by this question.

We must first look at the costs which affect the services. The House does not need me to tell it that there have been large price rises over the past two years. But there are some costs where those not in day-to-day contact may not appreciate the scale of the rise. For example, fuel costs are largely determined by factors outside the operators' control. For the hovercraft service, fuel costs have gone up by about three and a half times between 1973 and 1974.

In his Budget Statement my right hon. Friend the Chancellor of the Exchequer made it clear that part of his overall strategy for the economy would have to be the elimination of the support to nationalised industries which consisted of compensation for price restraint. I think that this to some extent deals with the problem which the hon. Gentleman raised—the possibility of my asking the Chancellor of the Exchequer to consider special tax concessions for travel. In other words, while there is no suggestion that there will not be subsidies for special and social needs, the Chancellor undertook in his Budget Statement to eliminate any subsidies which were intended to hold back prices; otherwise nationalised industries would get into a false situation.

The Chancellor recognised that it would be necessary to continue to help with expenditure which is necessary for primary social reasons, but he emphasised that where prices were being held far below their true cost it would be necessary to make price increases, in accordance with the Price Code, to rectify the situation. Equally it is necessary to ensure that where cost increases are occurring there is an appropriate increase to offset them. No users of the national transport services can regard themselves as being privileged to escape all cost increases.

How, then, does all this affect the case put forward by the hon. Gentleman? In the first place, all the increases which have been made, both on British Rail ferries, and on the hovercraft, have been vetted by the Price Commission in accordance with the Price Code. Secondly, there can be no complaint that commuters on this service are more harshly treated than commuters elsewhere in the South-East.

I agree that this may seem a bold dismissal of the hon. Gentleman's case, even allowing for London weighting, and I would point out that there are parts of the South-East where London weighting does not apply and costs are very high.

Mr. Stephen Ross

May I point out that people who travel to London enjoy a substantially higher wage structure? I do not think that the wage rates in the Portsmouth area bear any comparison with those in the South-East. The two do not compare.

Mr. Carmichael

I do not want to become involved in a discussion on London weighting, but many people who live on the periphery of London buy season tickets which cost them up to £250 and more a year. This is a matter which perhaps we can discuss in more detail later. But the purchase of a season ticket obviously makes travel cheaper, and the conditions which apply to travel between Portsmouth and Ryde are much the same as those which apply between Waterloo and Portsmouth. British Rail obviously wants a guaranteed usage of the line and it is willing to give concessions in order to get it.

Finally, while there have been three fare increases this year on the ferries, we must remember that these came after 14 months in which there had been no increases.

In the past the hon. Gentleman has argued that British Railways should have subsidised the passenger services from the profits made from the vehicle traffic. This is not the time to go into the pros and cons for cross-subsidisation in detail. I content myself with saying that while this practice may give some relief in the short term, it is not a system upon which we can build a sensible and permanent structure of finance for nationalised industries. Artificially low prices will stimulate demand, and the operator is then faced with a need to expand a loss-making service. This may enable him to put it on to a satisfactory basis, but where the low price is intended as a hidden subsidy it is more likely simply to result in a bigger loss. When it comes to replacing capital assets too, there is the problem that the loss-making service may make it impossible to justify reinvestment. Cross-subsidisation is not the answer, therefore, to any problems which there may be.

Another argument which the hon. Member for Isle of Wight has put forward is that there is a need for low-cost transport to the mainland for commuters, to ensure that workers who cannot find jobs on the island do not have to leave the island and thus worsen the imbalance in the age of the population. The hon. Gentleman has raised this matter in correspondence with me. I do not doubt that this is a serious consideration for the island and all who are concerned about its future. Neverthless, it is not in the first place a question for the Department.

The hon. Gentleman referred to Saunders Roe and other companies, but successive Governments have placed the prime responsibility for this kind of problem with local authorities, who have the necessary first-hand knowledge. The county council has a duty, as part of its planning function, to consider the transport requirements of its area. To deal with problems of this kind there has been the possibility of grants for rural ferries, and there is now the possibility of including support for ferry services in a county council's proposals for transport supplementary grant. In this way we have created a method whereby the county council, if it sees a need for support for the ferry services, can enable ferry operators to provide the services which it thinks necessary. If there is real concern in the Isle of Wight about this problem, this is the way by which it should be solved. The people on the island will have the benefit of transport supplementary grants.

To sum up, therefore, the level and structure of fares on the Solent services of British Rail are a matter for the commercial judgment of the management of British Rail within the Government's general policy on prices. The Chancellor has emphasised that general economic policy requires nationalised industries to increase their prices to meet increases in costs. The increases in fares on services on the Solent have been vetted by the Price Commission. There have been three fare increases in 18 months. Perhaps it would have been better had they been introduced in a more regular pattern. However, that is a matter for discussion at some other time.

Commuters on these services are no worse off than commuters on the railway system generally. Cross-subsidisation is no long-term answer to any problems which may exist. If there are any social problems for the island which mean that special treatment is needed, this is a problem in the first place for the county council, which can include any special measures in its proposals for transport supplementary grant.

The hon. Gentleman and certainly the local authority in the Isle of Wight are aware of the possible advantages which can be taken of the many schemes to help industry on the island. With the transport supplementary grant the local authority can build roads and a proper transport infrastructure to suit the requirements of any industry which it can entice on to the island.