§ Motion made, and Question proposed. That this House do now adjourn.—[Mr. Mather.]
§ 11.49 p.m.
§ Mr. Peter Snape (West Bromwich, East)Perhaps I may, first, congratulate you, Mr. Deputy Speaker, on your elevation to your present post. I know of no other Member of this House who could be transported, as it were, from the Mafia to the judiciary and receive only praise for having been moved so. It is a hallmark of the respect and affection in which you are held on both sides of the House that I give you my sincere congratulations this evening.
I congratulate also the Parliamentary Secretary on his appointment. I warn him that the National Union of Railwaymen will be a fairly strict watchdog over his and his Department's activities. I hope that he will give due consideration to our views. He must do that in respect of not only our views but the views of others. I hope that he will bear in mind that any criticism that we might make will, at least in these early days, be more constructive than obstructive. I cannot promise that that will continue. A lot will depend on the attitude of himself and his Department in the years to come.
Having got the polite stuff out of the way, I now move on to the meat of what I should like to say. I had better declare an interest straight away as the secretary of the NUR group in the House. Also, I concede that the railway industry gave me a steady, if not particularly lucrative, source of income for all of my former working life, as it did for my father also.
Many of us who work or have worked on the railways feel that we get a very raw deal from various commentators and various, sometimes self-styled, experts and that for too long we have been used as a music hall joke by the national newspapers and by others.
The NUR believes that Britain gets its railways on the cheap. By any international comparison, pound for pound of taxpayers' money, British Rail gives the best value for money in Europe. It is 400 often said that West Germany is an example for this country to follow. Again, pound for pound of taxpayers' money, British Rail does twice as well as does the Deutsche Bundesbahn. That ought to be acknowledged far more often than it is at present.
In real terms, over the past three years the cost of the railways to the British taxpayer has been reduced, because of frozen cash limits and investment levels, by 25 per cent. Not much credit is given for that by the Conservative Party or the national press, but it happens to be true. We believe that British Rail has done a magnificent job in the face of mounting financial difficulties. Those difficulties will continue to worsen if the situation is not changed. A change in Government policy is needed.
I am not saying that the present Government have actually laid down policy. Previous Labour Governments, of which I have been a member, ought to have faced reality concerning their financial attitude to British Rail, because in the long term the Labour Government's attitude to British Rail would have been extremely damaging.
I hope that the Parliamentary Secretary will do his best to see that his Department provides more cash, in the form of investment cash, if he wants the present success story—that is what it is with the railways—to continue. At present, the Railways Board is 15 months in arrears with its track renewal programme. Should such arrears continue and worsen over the next few years, the speed restrictions which are already affecting many main lines will be brought down lower and lower, and point-to-point timing will be extended further and further—a complete reversal of the situation over the past decade or so.
Many trains, on many lines, are still signalled and the bell codes are passed between signal boxes constructed at the turn of the century. Without the necessary investment, that will continue, and it is poor economy to allow that to happen. Not only are those signal boxes outdated and labour-intensive—and those signalmen are members of my trade union—but the cost of mechanical renewals gets higher every year.
Self-styled and occasionally self-appointed experts on the railway system say that the key is productivity and that 401 somehow we can wring more and more out of fewer and fewer railwaymen. I see a smile on the face of the tiger opposite, the hon. Member for Eastbourne (Mr. Gow). Over the past five years he has expressed his views on the railways and nationalised industry as a whole. I am surprised that he can tear himself away from his important duties. I noticed his picture in The Observer a couple of weeks ago—and he looked most fetching—as one of the men of influence surrounding the Prime Minister. I hope that he will tell the Prime Minister that I have had a good debate on the railway system and that all it needs is a little more cash, which might go against some of the hon. Gentleman's basic philosophies.
Turning to the locomotives, of the present fleet of about 2,000 the vast majority will be life-expired by the end of the 1980s. The present building rate of new locomotives is 20 a year, and at the present rate only 290 new freight locomotives will have been built by 1986. That does not give much hope for the great transfer of freight from one mode of transport to the other. It may not be what the present Government would like, but it will not happen, and nor would it under the policies of the previous Government.
It is said, more often than not by newspapers, that the railway unions are the big stumbling block to productivity. When one looks at the east coast main line, the old LNER—it is not a company for which I worked—one finds that it is hoped by the end of the 1980s to have the whole line controlled by no more than six signal boxes. That means the elimination of hundreds of existing mechanical, electro-mechanical and some fairly modern existing power signal boxes and an obvious vast reduction in the number of jobs for signalmen. My union welcomes that investment. We hope to redeploy those of our members who are displaced because of the closure of those signal boxes.
A signal box that opened at Kings Cross in October 1977 and replaced 57 former mechanical signal boxes. It covers 83 route miles of track and 260 track miles, and signals in the peak hours 94 trains in the course of an hour, all with six signalmen, a supervisor, an assistant and two station announcers. That is a fine example of productivity for which 402 the railway unions get no credit, and it is about time that they did.
The central issue on investment is the renewal of the diesel multiple unit fleet. For many people in this country they are the only trains that are available. There is so little electrified track that the DMU fleet is the workhorse of the commuter system outside the South of England. Every one of the 3,400 diesel multiple units was built during a short period in the 1950s, and all are now nearing the end of their lives.
Under the fairly small refurbishment programme—and it may not even be carried out under present cash limits—no matter how refurbished, these vehicles cannot survive for more than 10 years, yet there is nothing in the offing to replace them. British Rail's current estimate is that the cost of renewing that fleet is about £300 million. That money is not available to BR under the present investment ceiling and, to be fair, would not have been available under the previous Government's philosophies.
On 28 March the present Minister of Transport, in posing a question to the then Secretary of State for Transport, said:
there is absolutely no justification for another Beeching round of cuts".—[Official Report, 28 March 1979; Vol. 964, c. 434.]In fact, the Minister has already spelt out the first spending priority of the Ministry of Transport, because without the investment for which I am calling—that £300 million—another round of Beeching cuts is inevitable. There is no point in maintaining the lines if trains cannot be run on them. The fact is that there will not be any trains after a 10-year period because the diesel multiple unit fleet will then be condemned to the knacker's yard, or its mechanical equivalent.British Rail assesses the investment that it needs at £380 million a year for the next 15 years, and after that at £360 million a year. Indeed, just to replace the worn-out assets the Board would need an investment level about 30 per cent. higher than it is at present over the next decade. What proposals do the Government have to provide the Board with the investment that it requires to sustain the railway at its present size and level of activity? I would appreciate some indication of this from the Parliamentary Secretary.
403 It would be unwise to look at railway investment without comparing the investment poured into its main competitor—the road haulage industry. I am not one of those who say that we should abolish every heavy lorry, although occasionally, when I find myself driving a car behind one, I wish I were. There is a great deal of unfairness about the respective investment in the two modes of transport. If one analyses expenditure within the railway system, one finds that 47½ per cent. of it goes on day-to-day maintenance, another 47½per cent. on renewal of existing assets and a mere 5 per cent. on improvements. A similar analysis of the road system shows that the story is very different—6 per cent. on maintenance, 11 per cent. on renewals, and a massive 83 per cent. on improvements. Of course, at present the roads investment is based on a rather specious method of cost-benefit analysis, while investment in rail and other forms of transport is generally taken on the basis of normal commercial criteria, so beloved of the hon. Member for Eastbourne and his good friend the former director of the International Monetary Fund. Dr. Witteveen.
This situation surely biases investment in favour of roads and against railways. Recently the Leitch committee in its work on trunk road assessment looked at these two methods in detail. It took a sample of five railway schemes using both cost-benefit techniques and commercial criteria. It found that in each case the benefits projected on the basis of cost-benefit analysis exceeded those projected on the basis of normal financial appraisal, and the benefits ranged from 39 per cent. more to a staggering 1,770 per cent. more. Not unnaturally, the Leitch committee concluded that cost-benefit analysis would normally be greater than normal financial appraisal benefit, and that the system should be given a try on the railways. At the very least, the two modes of transport should be compared in a similar way, because the present system militates against railway investment.
No debate of this kind would be complete without some mention of electrification. Given the present fuel situation, it is shortsighted, to say the least, to have reductions in public transport, particularly the railways. 404 Indeed, the Secretary of State for Energy came out with something very worrying during questions on Monday. He implied that those railway services that had been cut were not essential anyway and were lightly used. Of course they are. But they are not peak-hour services, which are most expensive—another revelation perhaps for the hon. Member for Eastbourne and the good doctor, too. They are off-peak services, which cost very little because the fixed assets and the staff are there anyway. Those are the very trains which are now being withdrawn.
It is a strange energy policy to pursue if it is said "Let us leave it all to the free market". If the Department of Energy feels that it should all be left to the free play of market forces, perhaps we can save some money right away by abolishing the Department of Energy. That Department does not appear to wish to play any part in the management of the country's resources. If we do not go in for greater railway electrification, we are abdicating our energy responsibilities.
I appreciate that I am encroaching on the Minister's time to reply to this debate, but I hope that he will forgive me. However, I wish to mention the vexed question of Southern region commuter services. I see in their places not only the hon. Member for Eastbourne, but the hon. Member for Faversham (Mr. Moate), both of whom have expressed concern about the plight of commuters. I do not want either hon Gentleman to think that the NUR is anti the Southern region commuters, despite their unfortunate propensity for voting in the wrong direction every five years. The NUR is certainly not anti those commuters. If the hon. Member for Eastbourne wants to denationalise the whole of the public sector, let him find me a few enterpreneurs in Eastbourne who want to buy and run the Southern region commuter service. It is one of British Rail's biggest loss-makers.
Hon. Members who represent constituencies in that part of the country should remember that every day millions of pounds of capital assets, paid for by the taxpayer, do nothing at all for 20 hours out of 24 so that Southern Region commuters can start work in London at or about nine o'clock in the morning and return home at or about 5 p.m.
405 I do not blame those constituents, or the hon. Gentlemen, but I appeal to them to display a little fairness in future. If normal commercial criteria are to apply, and if the doctrines and philosophies of the hon. Member for Eastbourne and the good doctor are to apply, we know that, on British Rail's own figures, freely available in the 1979 annual report, the rate of fare increases required from Southern region commuters, particularly those in the inner areas, is about 25 per cent. Therefore, if the free market philosophy is to prevail, the two hon. Gentlemen to whom I have referred should pop back to their constituencies and say "Sorry, folks, but the philosophy for which you voted means that you will have to pay an extra 25 per cent. for your rail tickets". Those are the facts, and I hope that both hon. Gentlemen will temper their criticisms by respecting them.
I shall resume my seat almost at once, but I wish to conclude by saying that there is a new spirit in our railways. The railway unions and most of those who work in the railway industry feel that in Sir Peter Parker they have a chairman who is concerned, involved and hoping to bring forward a new railway era. Certainly the railway unions are prepared to do their bit in co-operating. I hope that the Government and their Transport Ministry are also prepared to do their bit.
§ 12.9 a.m.
§ The Parliamentary Secretary to the Ministry of Transport (Mr. Kenneth Clarke)I wish to begin by thanking the hon. Member for West Bromwich, East (Mr. Snape) for his kind words. I wish to thank him also for raising the subject of railway investment. He is always assiduous in the House in his interest in railway matters, and I look forward to debating this subject frequently with him over the next few years. This is a good opportunity for the Government to give some idea of their approach to the problem.
The hon. Gentleman will appreciate that, as yet, the Government have come to no conclusions on the investment problems of British Rail, because we have been but a brief time in office. Indeed, the pattern of investment decisions in the nationalised industries is such that no Government could come to decisions at this stage of the year. But I emphasise 406 that this debate gives an opportunity to give an idea of our approach.
I wish to assure the hon. Gentleman that there is no question of the Government treating the serious matter of railway investment as a party political foot-ball. I am not sure that we shall always achieve maximum agreement, but we shall certainly do our best to achieve an understanding on a sensible approach to the problems of railway administration.
I begin by taking up what the hon. Gentleman said about cash limits and the position of commuters in the context of what has been announced today about the Government's pattern of spending and the cash limits of the railways. Today it has been announced that the previous cash limits of British Rail have been reduced by £15 million. I am sure that all hon. Members appreciate that in the context of restraint in public spending it would be unreal for transport not to take its share. British Rail has to consider its contribution in the light of the revised cash limits.
I should like to make clear and reassure the hon. Gentleman that today's announcement has no effect on the investment ceiling set for British Rail. It also has no effect on the grant to passenger services and will not necessarily affect the level of passenger fares. In his response to my right hon. and learned Friend's Budget Statement, the Leader of the Opposition referred to the effect of the Budget compared with previous Budgets and suggested that it might affect the level of commuter fares. That is not the case. The Board will consider the situation, and it and the Government hope to manage without further increases in passenger fares this year. The Leader of the Opposition's comments were inappropriate and misleading.
The Government have been formed for only a few weeks, and it will be some time before a considered view on British Rail investment is reached. Every Government have accepted that, while investment priorities rest ultimately with the Board, investment plays a fundamental role in determining the railways of the future. No Government can ignore the cost to the nation of the investment decisions of British Rail. Successive Administrations rely on statutory powers and have always imposed a ceiling on the 407 Board's total investment. That policy shall continue.
I should like to return to what the Board has achieved within the ceilings imposed. At times, the hon. Gentleman was playing down the Board's achievements in the modernisation that has taken place beneath the ceilings that have operated. The hon. Gentleman referred to the peaking of investment that is tending to occur largely because of the peaking in investment in new equipment on the railways which took place in the late 1950s and early 1960s. That will have an important influence on the renewal needs of the railways in the 1980s.
The Government have taken careful note of Sir Peter Parker's remarks in the Board's annual report and accounts for 1978 about the renewal needs. The hon. Gentleman mentioned the earlier peaking of investment and said that the Board wishes to aim for an investment level of 30 per cent. higher than at present to replace worn-out assets.
Much is being done to renew rolling stock, locomotives and other assets which require replacement in the earlier investment peak. The Board has authority to renew 25 freight locomotives and 1,550 wagons per year. It has similar authority for the construction of 220 electric multiple units a year—largely for commuters, especially in the London area. Substantial programmes are in hand for renewing track, signalling and other infrastructure assets, which amounted last year to £165 million.
The hon. Gentleman asked whether these already large programmes of renewal need to be increased and whether the increases can be accommodated within the Board's existing investment ceiling. He particularly mentioned diesel multiple units, so I shall take them as an example of the present position and the point that the Board's planning has reached. I understand from the Board that replacements for the current fleet have not yet been developed. They are still in the design stage, although considerable work has been done. The Board expects to complete a prototype of a new diesel electric multiple unit by the end of the year. Testing has now been completed of an experimental unit based on body parts from the Leyland National bus, to- 408 gether with a modified freight wagon underframe. The research on this project was jointly funded by my Department and British Rail.
The Board has now authorised the construction of a two-car prototype rail bus based upon the principles embodied in the experimental vehicle. It aims to begin trial runs in 1980. If successful, such a rail bus might be suitable for providing services on lightly used local lines. It will be some time before the Board submits any proposals to my Department for replacing its diesel multiple unit fleet, either with the new vehicle that I have mentioned or with some other design. When proposals are submitted they will be urgently considered, together with the implications that they will obviously pose for the investment ceiling. Meanwhile, the Board is undertaking a major programme of refurbishment of existing diesel multiple units in order to improve their reliability and the level of comfort for passengers.
Let me now turn to the main and overall problem. It is helpful in considering the Board's future investment programme to divide the business into two main groups. Let me begin with the large network of commuter services in London and South-East England, the local stopping services in many parts of the country and the services operated under agreements with the passenger transport executives in the main conurbations outside London. These services are all those which receive support for social reasons—often called the social railway. Obviously there will be a continuing requirement of support of some kind, although the railways must contribute to the Government's public expenditure policies, and support for these services—those in the social railway—must be kept as low as possible.
In this area, where we accept the basic case for continued support, the Government will wish to hear from the Board what is the lowest cost way of renewing assets required for those services. The Board will need to assess the likely traffic and the least expensive way of providing a reasonable service. We shall need the Board's estimates of the extent and timing of renewal needs of these services. When we get those estimates, we shall give careful consideration to the Board's view that they will need investment funds 409 devoted to them above the level advocated in its present programme.
Let me turn to the Board's other businesses. These are the aspects which, in the Government's opinion, should be and are operated on commercial lines. These are the intercity, freight and parcels sides of the business.
The Board's investment ceiling obviously covers all its activities, including not only the ones that I have mentioned but subsidiary businesses such as Sealink UK Ltd. and British Transport Hotels Ltd. All those businesses there-fore have a bearing on the level of investment ceiling required. There is no social or economic case for subsidising any of these commercial businesses. It is the Board's policy, as well as the Government's, that they should be operated on commercial lines. Many of them are large by any standard, and a substantial part of the Board's investment programme is devoted to commercial development and renewal of their assets.
This means that investment in them must show a satisfactory commercial return. When assets are worn out, it must not be assumed, as it cannot be assumed in any other business, that they should automatically be renewed A careful 410 assessment must be made of where the market opportunities justify renewal, and, if so, in what form. Nor is it enough for investment simply to improve the quality of service and technical performance. It must cover any extra costs of doing so and show that they can be justified by an adequate return. Businesses must also be able to finance the investment within public expenditure limits.
The result is—and this has been repeatedly accepted in the Board's statements, particularly in respect of inter-city traffic and freight traffic—that the case for increased investment in the commercial sector must depend upon sound evidence that plans for better commercial performance are working. We are looking forward to the Board's own work in setting proper financial targets to these aspects of the business, and the investment programme for those aspects will be judged against those commercial targets.
§ The Question having been proposed after Ten o'clock on Tuesday evening and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at nineteen minutes past Twelve o'clock.