HC Deb 25 July 1979 vol 971 cc783-801

12.16 a.m.

The Parliamentary Secretary to the Ministry of Transport (Mr. Kenneth Clarke)

I beg to move, That the draft British Railways Board (Borrowing Powers) Order 1979, which was laid before this House on 17 July, be approved. The purpose of the order is to raise the ceiling on the total borrowing of the British Railways Board from £600 million, the level set by the Railways Act 1974, to £900 million. That represents a total aggregate indebtedness of the sort that the Railways Board incurs in the course of investing in parts of its activities. I assure the House that the order is not a symptom of any sudden worsening in the Board's financial position. We do not expect there to be any increase in the rate of its indebtedness. The order is designed to bring in line the overall limit on the aggregate indebtedness of the Board with the rate of inflation in recent years and to raise it to a more realistic modern limit.

The Board's total indebtedness has been increasing gradually since 1974 and it now approaches the £600 million ceiling. However, it has been increasing at less than the rate of inflation. Therefore, in real terms it has been falling. The 1974 ceiling corresponds to a £1,200 million ceiling at present-day prices. The order raises the ceiling to the maximum that is permitted by the Act. The indebtedness is incurred by the Board in the course of its operations as part of its continuing investment programme. The Board has a large capital investment programme to finance, much of which is in passenger services. Some parts of the system are eligible for public service obligation grant. The grant includes depreciation grant on capital assets and a special replacement towards the difference between the historic cost of assets and assets replaced at present-day costs. Much of the Board's infrastructure investment in track, signalling and so on is charged direct to revenue grant and is thus eligible for grant support.

Parts of the Board's operations are financed following its commercial remit, for example, the non-passenger freight business. It has long been the practice that that business should be run on commercial lines. Therefore, it would be inappropriate for the Board to be paid grant in respect of investment in that part of the business. In so far as investment cannot be financed out of internal resources—profits, depreciation charge and so on—finance must be raised by borrowing. That is the sort of borrowing that is incurred by the Board which gives rise for the limit to be set and to be raised at times in line with inflation. It would be worrying if the Board's borrowing were to increase in real terms with the corresponding increase in interest charges to be borne by the business. However, the overall borrowings have been falling in real terms. The increase in the money value of the borrowings reflects the increase in the value of the assets.

The borrowing ceiling applies to the Board's aggregate indebtedness, regardless of when the loans concerned were taken out. Therefore, it is an ongoing, cumulative sum, which will inevitably rise as inflation takes up the real value of the Board's assets which are being financed. On the other hand, the cash limit is an annual control and covers not only borrowing but also grants. It is only the net increase in the Board's borrowing in the year concerned that counts against the cash limit. In other words, the cash limit is a control on the rate of increase of indebtedness. The making of the present order does not imply any breach of the cash limit in the light of the recent modest cut in that limit that was imposed by the Government as part of the transport contribution to the present review of cuts in public spending.

If the Board were to borrow this year to the full extent implied by the recently revised cash limit, that would be sufficient to take it over the existing £600 million ceiling. Obviously that would be undesirable, and it is obviously desirable that we should move the limit to the full extent allowed by the 1974 legislation on which the order is based.

It is the Government's policy that nationalised industries should keep their requirements for external finance within the cash limits that have been set, but, equally, we are not seeking to prevent new borrowing to finance worthwhile investment within the discipline of cash limits. We accept that at the moment various problems face the Board, which require substantial investment in the business. We also believe that the present situation—certainly in the light of the recent increases in fuel prices and so on—gives the Board a considerable opportunity to improve its business and attract extra traffic, and it needs extra investment for that purpose. We entirely accept the need for investment, and this order is quite consistent with the investment it needs. The Government have not at the moment touched its investment limits, and the order is necessary if it is to invest even within the limits of the present cash limits.

Mr. Peter Snape (West Bromwich, East)

Will the Minister clarify for us the type of investment he has in mind?

Mr. Clarke

British Rail has obviously indicated to us the scale of the investment that it requires. We are currently reviewing that, and in due course we shall reach conclusions with the Board. But the investment limits laid down by British Rail have not been touched by the Government, and they continue at the present level.

There is one matter that I know the hon. Member for West Bromwich, East (Mr. Snape) will raise if I do not, and which he will no doubt raise in any event when he speaks. One feature of the long-term investment plans of the British Railways Board is the question of the electrification of a substantially increased part of the network. Every time we have a debate about British Rail this matter is, quite properly, raised. I have to repeat that the Government are waiting for the studies of the working party that is set up between the Department and the Board

However, things are moving on. I can tell the House that the working party's interim report has now been received by Ministers and by the chairman of the Board. They are considering the report and its publication, which will take place this summer. Although I cannot give a precise date, I can say that it will be weeks rather than months before it is available to the general public and, of course, hon. Members. A statement will be made at the same time as publication, and that will advance consideration of the long-term electrification plans for the network which British Rail is anxious to pursue.

Probably, eventual and long-term decisions will have to await the full report of the working party, which we hope to have by the end of this year. That will be the next stage in revealing the Board's hopes and the initial judgments of the working party on the problems. Everyone will then be able to see what the Government and the Board are considering and what we decide on the long-term investment programme.

I shall, with leave of the House, answer later any wider points that hon. Members may wish to raise. At this stage I have confined myself to dealing with the technical aspects of the order. It is a technical order but an essential one. It is obviously important that we raise the limits on aggregate indebtedness to enable British Rail to finance its business in the proper way and take advantage of the cash limits it has been allowed for this year.

12.25 a.m.

Mr. Albert Booth (Barrow-in-Furness)

The Parliamentary Secretary has given an excellent explanation of the technical mechanism by which the borrowing powers provision fits into the financial arrangements of British Rail, but a number of hon. Members who have come here at this hour because of their interest in these matters have come not to enlighten themselves on the technical mechanism but to learn of the real significance for its investment programme of British Rail's ability to raise its borrowing power from £600 million to £900 million and to hear something of the Government's thinking and policy in relation to British Rail's investment programme, which is an issue of crucial importance at this time.

The Minister very fairly offered to answer questions on other matters, but it would have been helpful at the start of the debate to have at least a broad indication of the implications for the investment programme of a 50 per cent. increase in borrowing limits. Indeed, the justification for the order requires that the House shall know why British Rail's borrowing power is being raised by that amount.

That information has not been given, but it is necessary that we have it because what is known as investment in British Railways is what is often known in other industries as replacement and maintenance. What British Rail calls its investment programme is to the extent of about 90 per cent, what would be called replacement or maintenance in other industries, and at this juncture it has assumed enormous proportions for British Rail's finance.

Over the next few years, even if British Rail were not to carry out any new developments at all but merely maintained the existing network and services, it would have to undertake considerable expenditure. Of the fleet of over 10,000 diesel and electric multiple-unit vehicles, 98 per cent. of the diesels are already over 15 years old, clapped-out, and 66 per cent. of the electrics are already past that age They will have to be replaced, or some change will have to be made in the rolling stock arrangements for the lines which they serve, out of what is called in British Rail's financial parlance its investment programme. For that alone, and doing nothing else, it would have to have a 30 per cent. increase in its current level of investment.

The House will therefore wish to know how far the Parliamentary Secretary sees this increase as being absorbed in that way and how much he sees as being left for other developments. It is impossible for us to calculate or deduce from the order or from what the hon. Gentleman said the extent to which British Rail will be able to make any new developments at all. We do not know the time scale over which this borrowing limit is to operate. Over a long enough time, it might not even be possible to finance the existing scale of operations within such arrangements. So this matter must be placed within the context of that method of finance being used by British Rail.

Moreover, given that sort of replacement requirement, as I call it, though I accept the Minister's term "investment programme" because it is technically correct within British Rail report terms, it will be necessary to have a clear indication of how this can be carried out over the next five years or so. What is the time scale? We cannot organise the efficient use of British Rail's workshops or the development of British Rail's capacity to service its own system unless it knows over a reasonable time scale what money will be available within the part of its programme named investment.

I accept that it is technically correct to say that the cut in the cash limit upon which the Government decided does not necessarily affect the investment programme, but if the investment programme is unaffected it must mean that the other port of the programme that must have a bearing on the level of service is to be reduced in the period that we are discussing.

It will help the House to know whether the increase in borrowing powers of about £300 million is expected to deal with the part of the capital programme of British Rail that is clearly necessary, namely, the terrible inadequacy of services to rural areas. I quarrel with some of the parlance that is used. Having read some of the dissertations on British Rail's network, one would imagine that anything not an inter-city express line was a rural service. If that is so, a number of industrial towns and centres are dependent for rail links on rural services. They include Barrow-in-Furness, in my constituency, on the Preston line, and much more so further north—for example, Workington and Whitehaven up to Carlisle. These are lines that are largely served by the multiple units that are now desperately overdue for replacement.

The Minister has anticipated fairly and correctly a concern of the House in considering an extension of borrowing powers. The hon. Gentleman has referred to his expectation of questions about investment in electrification. Bearing in mind the current oil shortage and the discussions that are taking place in the EEC, in Britain and in many other countries about how major industrial nations can cope with less oil at much higher prices, a major strategic decision is needed on electrification. Only 21 per cent. of British Rail's network is electrified, much less than in most developed countries with national rail systems. No doubt that is so for good historic reasons, but that is the position. By that token have much greater scope to make an enormous saving on oil by developing a good and large electrified system. The House would benefit if the hon. Gentleman gave us a little more information about the joint report.

The hon. Gentleman referred to the joint report of his Department and British Rail. It is in the hands of the Minister and the chairman of British Rail. However, this is not a cosy club business it is a major matter of political interest and public policy. As public representatives elected to the House, we would appreciate an opportunity to study the report.

I understand that the Minister might want to take time to study the report. I also understand that it might suit his interests not to publish the report until he has formed a view that he wants to put before the House. However, the nature of the problem is such and the implications are of such importance—they go wider than immediate British transport financial considerations—that we should have a public debate on the issue and consider the issue carefully throughout the Summer Recess that we are soon to enter. We should consider its implications for the environment, for the maintenance of essential transport links with a number of industrial centres as well as the maintenance of rural services and how in the longer time it can fit in with a sensible fuel strategy through a decade or two decades of oil shortage.

I am sure that the Minister understands—I should be insulting his intelligence if I did not so credit him—that the factors surrounding the major decision to go for large-scale electrification are not ones that the British Railways Board can decide on its own. The factors that it will have to take into account in coming to that decision are very much within the scope of Government policy. It will have to have Government guidance, to put it no higher.

The railways are at present using 800,000 tons of fuel oil a year. We do not yet know, because we have not seen the report, what options it suggests for savings. But, to judge from some of the submissions made to the Ministry in earlier studies, that figure of 800,000 tons could be reduced to a small fraction—probably even to 100,000 tons—by a full-scale electrification programme. Therefore, it is certainly a major issue. I know of no other industry that promises such a potential oil saving.

The order has a wider significance for British Rail. In addition to the matters that I have mentioned, there are no doubt other issues that hon. Members will raise tonight. There are enormous bene- fits to be gained—benefits in the service to the travelling public, to the performance of the whole system, fuel saving and a number of other advantages. In order to secure them, British Rail requires a commitment by the Government to sustaining a sensible and continuing role for our railway network within our transport system.

I think that it is proper on an order of this scope for the Minister to indicate how the network fits into the sort of investment programme that can make that contribution. I hope that he will do so.

12.37 a.m.

Sir Brandon Rhys Williams (Kensington)

In his helpful but complex statement, my hon. Friend the Parliamentary Secretary did not succeed in enlightening me, at all events, on a subject that he knows is of particular interest to me—the possibility that British Rail may before long announce the completion of negotiations with the French railway system for the building of a link between the two across the Channel.

I wonder whether the increase in British Rail's borrowing powers has anything to do with the discussions that we believe have been going on, and that appear to be achieving success, or whether it relates purely to plans within this country. If I am right in guessing that this increase of £300 million makes no provision for the possibility of a Channel link, will my hon. Friend tell the House what steps might be necessary to provide finance for that project?

Many people would welcome Government support for the project, support which might fruitfully be voiced at this time. But we need to see the matter in the context of the national investment programme and to have a clear idea of the sort of money that is likely to be involved and when it may be required to be spent.

I presume that the order refers to Britsh Rail's borrowings within the context of the Transport Act 1962, which presumably never envisaged the availability of loans from the European Investment Bank or other sources of finance that did not exist at the time. Perhaps my hon. Friend will be ready to give at any rate some hints about the Government's attitude to the possibility that loans for the Channel link might be raised by reference to the powers of the European Investment Bank, or possibly even on the open capital market, to some extent.

These are points that I think it is proper to raise in the debate on this borrowing powers order. I hope that we may be enlightened by my hon. Friend as to his thinking and the trend of the Government's thinking on that important project.

12.40 a.m.

Mr. Peter Snape (West Bromwich, East)

I did not intend to intervene in the debate, but, having heard the Minister's full explanation of the order and having listened to the coherent reply by my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth), I should like to make two points.

The first and most obvious concerns electrification. I do not want to repeat what I said in the Adjournment debate to which the Minister replied a few weeks ago. However, I hope that he will consider the necessity for a quick and urgent decision on the study group's interim report on the future electrification of the railways.

I am grateful to the hon. Gentleman for what he said about his desire that, as soon as Ministers and other interested bodies have studied the interim report, it should be published so that hon. Members may have an opportunity to study its findings. I hope that the hon. Gentleman will be prepared to listen to the views of at least one railway union on electrification.

Like my right hon. Friend the Member for Barrow-in-Furness, I am concerned about the future not only of the main lines but of rural and commuter lines into and out of our major towns and cities. The British Railways Board, because of the commercial remit under which it has to operate, is somewhat obsessed with its inter-city services—that is understandable, because they are the profit-making lines—and is apt to neglect or, at best, to forget the necessity to convey commuters into and out of our major towns and cities.

Conservative Ministers seem to regard the commuter problem as applying exclusively to London and the South-East. That is not so. The commuter problem in many of our towns and cities is apt to be overlooked. Some Conservative Members complain about the standard of service on the Southern Region. In view of the rolling stock available and the fact that the peaks on the Southern region are virtually confined to three hours out of 24 hours, commuters in that region do better than some hon. Members give the railways credit for and certainly much better than commuters travelling to and from other major cities.

It says a great deal for the foresight of the former directors of the old Southern Railway that in the 1930s the greater part of that railway was electrified and the more intensively used lines were lit by multiple-aspect coloured light signals well before the Second World War. It is difficult to demand that the British Railways Board should replace those admittedly outdated signalling systems in the late 1970s when it still has a great problem in replacing semaphore signals installed at the turn of the century on lines into and out of our major cities. I think that some credit should be given to the management and unions for the efforts that they have made to help commuters in London and the South-East.

Again, on the vexed question of investment, there are problems not only on commuter lines but on main lines. I hope that some of the funds being made available will be used in other directions on other main lines.

A programme has been started to improve the quality of service on the East Coast main line between King's Cross and Edinburgh. If British Rail is to compete for passenger traffic on its inter-city network, it must be able to rival its competitors.

The line between Euston and Birmingham was electrified and modernised in the mid- to late 1960s, but problems remain—a legacy, perhaps, of the old London and North Western Railway days—and it will take a large amount of money to resolve them. They will not be resolved overnight.

For example, there is the first of the major electrified lines, that between Euston and Liverpool and Manchester. We can have a train that will travel as fast as it is conceivable to build one, but there is the bottleneck at Crewe through which a train cannot travel at more than 20 miles an hour. Even the advanced passenger train, no matter how far it leans on the curves, will hardly break any records—certainly not if the comfort of the passengers is to be maintained. Unless there is considerable investment in the Crewe area, that bottleneck will remain.

One must bear in mind also that the airlines are anxious—justifiably, I suppose—to attract traffic between London and Liverpool and Manchester. That in itself is indicative of the fact that greater investment is required in the railways, not only for rural and branch lines, not only in London and the South-East, but in many of our main lines, even some of those modernised as recently as 12 or 13 years ago.

The dilemma will not be resolved overnight under any Government, but I hope that the Minister will bear in mind that it is a problem that should be looked at. There are various other lines in the United Kingdom where the passenger-carrying potential is immense, but the potential will not be realised unless the vexed question of investment is resolved.

It is not merely a question, on any line, of freezing fares and attracting more passengers. More aspects of the package have to be put before the travelling public before we can convince them that the railway is indeed the right way—for example, cleanliness and reliability of service. I hope that the hon. Gentleman will agree that since Sir Peter Parker became chairman of the British Railways Board there has been an improvement in both. There has certainly been an improvement in the morale of the railwaymen.

We have had peaks and troughs on many occasions in the history of the railways, both before nationalisation and since. If there is to be an improvement in morale and service, if the cutting edge of quality is to be refined and honed, there must be greater investment of public funds. I hope that the Minister will indicate that the Ministry is prepared to look sympathetically at some of these factors.

The energy crisis will not go away. I think that Ministers are perhaps apt to take a short-term view of many of these problems, that they are apt to say "For the next 12 months perhaps there are no more ayatollahs on the horizon and things might improve". But they cannot guarantee that. No one can guarantee that the situation will improve.

If we are to have a better railway in the long term we need more investment in the short term, and if the progress that has been made under the Labour Government and Sir Peter Parker is to be maintained, the railways need Government support. I hope that Ministers will bear that in mind. The railways do not get the support that their main competitors, the road hauliers, in particular in the private sector, are given. Those competitors have the privilege of using public funds without, in many cases, making an adequate contribution towards them.

Those of us who have worked on the railways hope that the improvement that we have seen over the past few years wit' be maintained in the future.

12.49 a.m.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

I support the order, but while so many people are keen on talking about the need for a Channel tunnel or bridge, I can never see the justification for such a project when hundreds of millions of pounds have been spent upon an excellent service which will get one over there on a much better schedule than British Rail will ever be able to put up.

The question is whether we are going to spend this money wisely. People say that British Rail is obsessed with the inter-city services. I have travelled on quite a few British Rail "obsessive" services. The only thing that it seems obsessed with is telling the passenger that the journey will take 1 hour and 40 minutes when we all know that it will take 2 hours 20 minutes, if we are lucky and the wind is with us.

I hope that we are to do something about inter-city services. The one between Birmingham and London produces so many complaints, addressed to me, that it might be thought that I run British Rail. If a train is half an hour late, I believe that that is worth a congratulatory walk to the engine driver to say "Well done, we are on time." If British Rail insists on running a service, why cannot it at least say that it will be half an hour late? If it wants to encourage the use of the railway service, the trains should run on time. The intercity services should be paying. They are often packed—so much so that one is sometimes lucky to get a seat, about which I do not complain. I would rather see the service well used. Let us see the services properly run, properly manned and on time. In that way we shall encourage people to use the railway, which we all want them to do.

Mr. Snape

Both the hon. Member and I use the same service. Is he aware that the punctuality rate on the Euston-Birmingham service averages 90 per cent.—that is, 90 per cent. of trains arrive on time or within five minutes of booked time? Does he realise that it is difficult for railway staff to disseminate information in the event of a delay when they are confined to the delayed train? It the service is so bad, how is it that the hon. Member has sold his Rolls-Royce?

Mr. Beaumont-Dark

It is obvious that British Rail sees me coming and decides that my trains are to be late. Figures are supposed not to be able to lie. The most important thing is to judge these matters for oneself. I have travelled on that service for many years, at least two or three times a week. Now it is often more frequently than that. The service has more often been late than not. I do not believe the statistics handed round. It is kind of the hon. Member to take an interest in my Rolls. I have sold it because, even on what we are supposed to get, I still find it difficult to run a bicycle.

Let us see this money in question used properly. Let it be used in improving those services which pay. In that way there will be money available to provide the other necessary services.

12.52 am
Mr. Kenneth Clarke

By leave of the House, I begin by saying that I trust that the right hon. Member for Barrow-in-Furness (Mr. Booth) realised why my opening remarks were fairly technical. I had to put on record the basis of the order. Plainly it is right that there should be a wide debate, as there has been. Before it began I had no idea whether the subject of the Channel tunnel or the Woodhead tunnel would be rised by hon. Members. It seemed more appropriate to wait and see what was to be canvassed and then reply to the debate.

This order has no effect on the investment programme. I will not repeat my earlier remarks, except to say that all we are doing is revaluing the limit on the aggregate indebtedness of the Board in line with inflation. That would have had to be done, whatever the investment programme was this year. It is a fairly technical matter.

Within the borrowing limit is the investment programme. Like all nationalised industries, British Rail works within an investment ceiling, set annually by the Government as part of their public expenditure review. British Rail's investment ceiling was set by the previous Government. That remains the investment ceiling. We have not changed it. It is £326 million in 1978 survey prices, which is about £370 million in 1979 prices. The previous Government set that as a static level for the next five years. We have not touched it. Obviously the Government are reviewing the investment ceiling of British Rail, as they review that of every nationalised industry, as part of the PESC review.

This is not the stage of the year at which Governments come to conclusions as part of the annual review, but we shall in due course, and fairly soon we shall reveal the future investment ceiling and any alterations, if any are to be made. So far we are acting within the investment ceilings set down by the previous Government, and there need be no alarm on that score.

The Government accept the need for continuing investment. Investment in this business, as in any other, involves, to a large extent, replacement of old capital stock, and so on. One also appreciates that British Rail faces special problems if it is to maintain the level of service that is required and, indeed, to achieve it in those areas where it is not giving satisfaction at the moment.

British Rail has particular problems because, for instance, there was such a peak of investment in the 1950s and early 1960s that there is now a lot of stock that is getting out of date all at once and has to be replaced. However, we have to make sure that it is replaced in such a way that fresh investment peaks are not created for the future by a sudden rush of replacements now. Also, one needs to have the ordinary investment in the modernisation of the service and in new and improved services, and that leads one on to electrification, the Channel tunnel and so on. Those are all matters that have to be borne in mind in all working within the investment ceiling.

British Rail, both now and in the future, will not work within investment ceilings that will constrain excessively the ability of the Board to take advantage of the opportunities that it has because of the change in petrol prices, which has improved the Board's competitive position, and in the Government's opinion the present investment ceilings are not imposing any real restraint.

One has only to look at what is being achieved by British Rail by way of investment at the moment to realise that. The high-speed train project has been brought along by heavy investment in the rail system. There are already 27 of them on the London-Bristol route, 32 have just come into service on the East Coast main line and more are planned for the London-Edinburgh and London-West of England routes.

Again, commuter services are not being left out of the investment programme, nor will they be so. Electrification of the Great Northern route into London has gone ahead, and electrification of the London, St. Pancras-Bedford route is proceeding. There is substantial investment in new electrical multiple units for the Southern Region—250 of them are being ordered. There is a substantial refurbishment programme for the existing electrical multiple units to extend their useful life and to improve the cleanliness and suitability of the stock for passengers. On the freight side, 30 locomotives and 1,000 airbrake wagons are being produced, and a rolling programme has been authorised for 25 locomotives and 1,550 wagons.

Furthermore in response to the energy crisis more coal traffic will have to be carried by the railways to the power stations. Arrangements are in hand to invest in new rolling stock to cover that. There already were arrangements for new merry-go-round stock for that traffic. In fact, additional arrangements are now in hand by the Board to invest in stock for that purpose.

All these investment decisions are, of course, taken by the Board according to the remit within which it operates, and it is entirely for the Board to make its management decisions on where this investment is best placed. The Government's role is to consider what is the proper ceiling within which to set some restraints on the Board's ability to invest at any one time.

This is a nationalised industry, and one of the difficulties that nationalised industries face is that it is impossible for them to operate without the Government—any Government—having to take a view on the overall extent of the investment in them. Obviously Labour Members will not complain about the fact that that restraint is inevitable in the relationship between a nationalised industry and the Government.

The present position is not one of a network being allowed to go to waste. It is not one where the investment needs are being neglected. It is not one where the investment ceilings that we have inherited have so far been touched. In reviewing those ceilings the Government are anxious to make sure that the railways are put in the best position to take advantage of their competitive position, to get a proper return on their freight services and their inter-city services, which we believe should pay and make a contribution to the financing of the business, and to operate their rural and other services within the level of PSO grant, and so on, which the Government accept they have to pay to maintain less profitable services for social reasons where the Government and the public so decide. With that background, hon. Members need not fear that there is any lack of scope for investment to improve and maintain the service.

Electrification is probably the biggest single issue but by no means the only one that we have to consider concerning the investment needs of the railways. The right hon. Member for Barrow-in-Furness and the hon. Member for West Bromwich, East (Mr. Snape) rightly pressed for the maximum information on electrification. There was no commitment to publish the working party reports but we are anxious to do so. The Minsters and the chairman want a preliminary view, but we are not delaying publication until deciding what action to take. There are restraints whenever a Government try to publish any document, particularly for the use of the House, but within a few weeks we hope to have a published interim report that can be looked at by hon. Members and people outside who are interested. It will allow us to take a preliminary view, although I emphasise that the long-term decisions on electrification will not be taken until the full report is published at the end of the year.

In taking that long-term view, the Government accept that electrification is a serious matter that has to be considered. The present energy problems are an important factor in reaching a decision. We should not, however, exaggerate the energy-saving potential. British Rail consumes only a small proportion of the country's oil resources, so electrifying the service will not make huge savings. However, it has other advantages. It is more reliable and cleaner, and has attractive operating advantages for British Rail when it is considering future investment in its service.

Almost the only difficulty is the substantial capital cost involved in every mile of electrification carried forward. The Government, together with the Board, must make a decision on that, and that will be done in the light of the report of the working party. There will be full disclosure to all those interested.

Another major issue of interest is the Channel tunnel, which my hon. Friend the Member for Kensington (Sir B. Rhys Williams) raised. It has been a persistent issue since I have been in the House and will continue to be so until a final decision is taken. It is once more a live issue that is being considered by the Government. British Rail has produced—it is available to hon. Members—a proposal for a modified Channel tunnel, and that proposal is being considered by the Government. It has not been in the hands of this Government or the previous one for more than a few months. The major problems are feasibility and finance. The previous Government cancelled on financial grounds the project that they inherited, and any Government will have to consider carefully the financial feasibility of proposals and how the money will be raised. These are early days in considering those serious problems.

There is a prospect that European sources will be interested in the Channel tunnel as it would be an important transport link between two European countries. The EEC is carrying out studies of the Channel tunnel project. No doubt in due course we shall have a view from the EEC that may touch on such matters as the possibility of European Investment Bank finance. It is a controversial matter, and at present the Government can be expected to do no more than study the proposal that is being put forward. When that proposal has reached a more polished and considered form, the Government can take a more definite view.

I am grateful to my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) for mentioning a problem with which I am familiar—the Euston-Birmingham line. I am delighted to hear my own Member of Parliament urging an improved standard for a line on which I spend a substantial part of my life. In defence of British Rail, I must say that I have found the service to be adequate. Delays come and go in patches, for operating reasons which are well beyond the understanding of Ministers. I hope that my hon. Friend's election to the House does not coincide with a period when the service is going through a bad patch.

I hope that my hon. Friend will agree, and endorse in part what the hon. Member for West Bromwich, East said, that the electrification and modernisation of that service and the high-speed stock resulted in substantial advantages to those who had suffered from the old, inadequate service for many years. It also had an effect on the morale of the staff. The modernisation led to an improvement in the service. It was an investment that attracted traffic. It was a worthwhile investment.

Hon. Members will be able to cite other areas which require equivalent investment and improvement. I hope that I have reassured the House that the Government are alive to the problems and are examining the investment prospects of British Rail in a constructive way. We do not seek to inhibit the proper development of the system.

This order has next to nothing to do with the investment programme. It is a necessary technical step to enable this year's cash limits to be used.

Question put and agreed to.

Resolved, That the draft British Railways Board (Borrowing Powers) Order 1979, which was laid before this House on 17th July, be approved.