HC Deb 27 November 1979 vol 974 cc1119-251

Order for Second Reading read.

4.2 pm

The Minister of Transport (Mr. Norman Fowler)

I beg to move, That the Bill be now read a Second time.

Mr. Speaker

Order. I am sorry to interrupt the Minister, but it is the wish of the House that I should announce at the beginning of a Second Reading debate whether I intend to apply to speeches the 10 minutes rule between 7 o'clock and 10 minutes to nine. Although it may not at the moment appear, from the number of hon. Members present, that any difficulty will arise this evening, there will be difficulty, and I therefore intend to apply that rule between the times I have stated unless I feel, when the time comes, that I can allow speeches to run a little longer.

Mr. Fowler

This Bill comes at an important point in the development of transport in this country. The fact is that policies of regulation, State intervention and ever larger injections of financial support have proved to be no more a solution in transport than in any other area. Regulation and protection for the bus industry have not prevented its steady decline or given the public the choice they seek. Intervention and State control of the National Freight Corporation have been irrelevant to the general health of the freight industry but have involved the public sector in a totally inappropriate mixture of activities.

This Bill sets a new direction. It aims to increase the freedom of choice for the public; it aims to provide a better range of transport services from which the public can choose; and it aims to take the State out of activities which it should not be in. It is a practical measure of reform. It dismantles many of the most excessive restrictions in the road passenger industry and it paves the way for bringing private capital into the NFC.

I will deal with both those policies in turn and lastly deal with the position of the historic liabilities of the British Rail pension fund.

First, let me be clear about the approach of the Bill. The starting point of transport policy is the interest of the passenger and the interest of the consumer. Others have a right to put their view, but in the final analysis the Government, in framing legislation, must decide what is in the interests of the user of transport and not be content simply to preserve the position of existing providers.

So in putting the user first in passenger transport this Government have checked and examined the restrictions and barriers which stand in the way of new services developing and new operators coming forward. The result is that this Bill contains the biggest series of reforms in road passenger transport for half a century. It makes fundamental changes in the road service licensing system which has survived since the Road Traffic Act 1930.

Let us remember what conditions that 1930 legislation was tackling. The Act was based on the recommendations of the 1929 Royal Commission on transport. Those proposals form the basis of the law which has lasted to this day. The position, then, is that the legislation which governs the provision of passenger transport in this country today was formulated in the decade after the First World War. It was a time when road signs, car headlights and third party insurance were novel ideas. It was also a time when bus services were expanding at an unprecedented rate. The Royal Commission described the five previous years as years of the most remarkable development in the industry of road transport". In evidence, bodies such as the North Yorkshire committee on traffic control spoke of the rapidly increasing omnibus services within the district—the congestion of traffic". They were the conditions that the 1930 legislation was designed to meet—an unprecedented growth in services and a legitimate concern about safety standards.

So a system came into being which provided for safety standards but which also protected the operator against competition. In protecting the existing operator, obstacles were deliberately placed in the way of the new operator for the very good reason that encouraging new services was the very last thing that the authors of the 1930 legislation wanted.

It is those obstacles and those restrictions in the way of new services developing which this Bill tackles. The Bill does not reduce in any way the safety requirements. They are basic. It tackles the protectionist legislation devised for a different age and for entirely different conditions. The first and most obvious difference is this. The 1929 Royal Commission reported at a time when bus services were expanding and expanding. That is not remotely the position today. The story of the last 30 years has been one of reducing bus services. In 1949 there were 17,000 million passenger journeys by bus. In 1959 the figure was 14,000 million and in 1969 it was 10,000 million. In 1979 the figure is expected to be 7,000 million.

Bus use has halved since 1959 while in the same period the total mileage of all forms of passenger transport has doubled. In other words, buses have been carrying a smaller and smaller share of a growing market. This does not challenge the proposition that bus services have and should have an important role to play. But it challenges the relevance of legal apparatus designed to check growth. The aim of the Royal Commission and of the 1930 Act was the creation not of competition but of a "controlled monopoly". The aim was not to encourage new operators but to prevent them.

So today there are fewer passengers and fewer services but increasing cost to the public not only through fares but through rates and taxes. In 1978 central and local government support totalled £291 million—compared with £23 million in 1969.

Faced with this position, some tentative moves have been made over the last few years towards reform. There have been attempts to encourage other kinds of services—such as post buses and community buses. But the heart of the problem has not been touched. The licensing system itself still discourages newcomers from entering the industry. It neither provides competition nor does it encourage innovation and adaptation to new circumstances. Some parts of the country—notably some of the rural areas—have clearly inadequate passenger services. Some services are controlled where there is no need for control. The Bill makes important changes to meet these different positions.

In a number of important areas restrictions on new operators entering or existing operators expanding are being scrapped altogether. Safety restrictions will remain, but provided the operator can meet these safety requirements there will be no restriction on his operating long-distance express services and excursions and tours.

We do not believe that the public interest is served by restricting the number of express bus services—defined as journeys of over 30 miles in length. This means that we will be removing the obstacles put in the way of operators who want to run inter-city bus services. It opens the way for developments like the Greyhound services in the United States. It opens the way for new services. It means that there will be free competition between operators who want to run intercity coach services between our major cities—London to Manchester or Birmingham or Exeter. The former president of the Confederation of British Road Passenger Transport referred patronisingly to that as encouraging Freddie Lakers into the industry. Let me say that if I did that, I would reckon this part of the Bill an outstanding success.

Mr. Michael Brotherton (Louth)

Is my right hon. Friend aware that if one wishes to travel from King's Cross to Grimsby one can get a train at 4 o'clock or one at 6 o'clock? According to the timetable, there is no hope of catching a train to Grimsby between 4 o'clock and 6 o'clock. A closer inspection reveals that the 17.05 leaves King's Cross and it is possible to change at Doncaster for Grimsby. British Rail says that one can go to Grimsby via Newark and catch a 16.10 or an 18.10 train—

Mr. Speaker

Order. I hope that the hon. Gentleman gets his train to Grimsby. However, the Minister is making a Second Reading speech and the hon. Gentleman's intervention does not seem to be relevant.

Mr. Brotherton

With respect, Mr. Speaker, if I wish to catch a train to Grimsby, surely I am entitled to talk about the inefficiency of British Rail. We are discussing the Transport Bill. I await your ruling.

Mr. Fowler

I accept my hon. Friend's point that there should be more competition in this area.

Mr. Brotherton


Mr. Fowler

I hope that my hon. Friend will forgive me if I pursue my speech.

If I am successful in attracting into the inter-city services people of Sir Freddie Laker's quality, that will be an outstanding success and an asset to Britain, because what Sir Freddie Laker is about is what all transport operators should be about—providing services that the public want, at a price they can afford.

The case on excursions and tours is self-evident. Even the most diehard protectionist must be somewhat daunted by the prospect of having to defend a system which requires that an operator who wants to run an extended tour to the castles of Britain should have to appear before the traffic commissioners, not once but on three or four occasions. Nor can I see any reason why an old people's tour to view the fields of Kent or the Blackpool lights should require the special blessing of the traffic commissioners. The restrictions on such excursions and tours will also be abolished.

A third area where restrictions are being scrapped is car sharing. The case in principle is clear. If we can persuade only a small proportion of motorists coming to work each day to share cars there will be enormous savings both in terms of energy and congestion.

It is for that reason that the United States is continuing to develop car-sharing programmes and why—as I learnt last weekend at the Paris meeting of European Transport Ministers—countries such as West Germany are now also urgently investigating the same idea. And, of course, let us be clear, in spite of the rumbles of Labour Members, that car sharing was not only backed but extended by the previous Government. We are simply finishing the job that they started.

The major change that we are making is to lift restrictions on advertising. At present it is lawful to advertise a car share on a works notice board, on a club notice board or on a church notice board. One cannot, however, advertise at one's local newsagent. It is an absurd position and one which the Bill will change. But the real thing that we will do, namely, encourage car sharing, is not in the legislation at all.

The position speaks for itself. At present, during the morning peak period in London about 130,000 cars come into the centre. Those 130,000 cars carry 176,000 people. If we succeed with only 10 per cent, of those car commuters, the gain will be enormous. Therefore, on express services, excursions and tours, and car sharing, restrictions will be lifted altogether.

Mr. Les Huckfield (Nuneaton)

The Minister has said that, having abolished express coach licensing, he would like to create a system similar to the Greyhound system in the United States. Does he realise what he is saying? Greyhound operates under the same sort of restrictive proposals as the Minister wants to abolish. In most of the United States, Greyhound operates under the same system as we have now.

Mr. Fowler

We want to encourage a service, similar to that of Greyhound, that is both fast and efficient. However, provided the terms of competition are fair, people should not be prevented from travelling by coach rather than by rail or air if lower fares are more important than speed to those people. I am sure that the hon. Gentleman will agree with that, because those are the sentiments expressed in the Labour Government's White Paper on transport. The hon. Gentleman may shake his head, but Labour's White Paper set out that sort of approach to inter-city travel.

Mr. Stephen Ross (Isle of Wight)

My wife always travels by coach because she says that it saves the Government a lot of money. Has the Minister been to Victoria coach station recently? Does he know that one can travel to Perth or to the West Country by coach and that there is a bus every day from Aberystwyth to London? Those buses already run on cheap fares.

Mr. Fowler

Is it the policy of the Liberal Party that because excellent services are already provided we should not encourage more? If, as the hon. Gentleman has said, there is a market for intercity services, we should allow those services to develop. I believe that there is a developing market for such services. We should not impose the apparatus and controls of the traffic commissioners.

Mr. Ross

I do not want to restrict such competition, but from the Minister's verbiage one would think there had been a vast new development and that a great new freedom had suddenly been given. The Minister will be very disappointed when the Bill becomes law.

Mr. Fowler

The hon. Gentleman cannot have it both ways. If he does not think that the Bill will have any effect, he has no need to worry. However, if he believes in freedom, he will back the Bill.

Mr. Ross

I shall back the Bill.

Mr. Fowler

I am grateful, and I shall withhold the comments that I was about to make.

If we want increased freedom for operators, we must dismantle the traffic commissioner regulations. The hon. Gentleman may like to study the reactions of some operators. I stand by our policy that express services, excursions and tours, and car-sharing restrictions must be lifted altogether. That is in the interests of the public.

In other areas the restrictions will be substantially modified. For local services—services of less than 30 miles—the traffic commissioners will be retained, but their terms of reference will be changed. At the moment, existing operators enjoy a privileged position. Traffic commissioners, although making their decision on an application on the basis of public interest, are obliged to pay special attention to the objections of existing operators. It is, after all, essentially a system to protect the existing operator.

In future the traffic commissioners—I quote from clause 5— shall grant…a licence on the application unless they are satisfied that to do so would be against the interests of the public". In considering those interests, the commissioners will take account of any representations that they think relevant and not just those from existing operators. The public interest in many areas will be best served by encouraging new services rather than seeking to prevent them. In particular, in rural areas small private operators with lower overheads may provide for the public interest in much better ways than can a big corporation. In other words, the presumption in the Bill is changed in favour of the applicant. The barriers to new operators are again brought down.

In London the system is changed, so that for the first time a new operator has a chance of appeal. At present the London Transport Executive operates, in effect, as its own traffic commissioners. No one else can run a service without permission from the LTE. In future, a prospective operator will be able to appeal to the traffic commissioners.

The last major change that I shall mention in the road passenger part of the Bill is the provision concerning trial areas. Under the legislation I intend to establish a limited number of trial areas—perhaps two or three—in different parts of the country. In those areas there will be a minimum of restrictions and no road service licences will be required.

Let me emphasise that the trial areas will come into existence not on the insistence of the Government but on the application of the locally elected county councils. The House will be pleased to know that a number of county councils have shown considerable interest in this scheme. It also means, of course, that local authorities that continue to give support to particular services will be presented with a better choice of options on whom they support and at what price. It will enable local authorities to get the best possible value for money.

Mr. Ted Leadbitter (Hartlepool)

The right hon. Gentleman mentioned a number of intimations from local authorities. Can he be precise and tell us how many?

Mr. Fowler

I shall ask my hon. Friend the Parliamentary Secretary to check the exact figure, but from memory the number is about 10. I shall investigate to see whether we can give further details in the winding-up speech.

Mr. Walter Johnson (Derby, South)

Will the right hon. Gentleman give way?

Mr. Fowler

No, I really cannot give way again.

All the provisions that I have outlined are positive moves to encourage the provision of new or better services for the public, but all those services must continue to meet rigorous safety controls. I have, however, considered the way in which those controls have been exercised and have concluded that a logical and useful step would be to replace the present system of licensing each public service vehicle with a much simpler system of licensing each operator.

A system of operator licensing is not new to transport. It is well tried and seen to work effectively in the freight industry. Passenger transport operators agree with me that it will work well in their industry. They welcome the saving in cost and time to them. The National Bus Company, for example, has to obtain each year a separate licence for every one of its 17,500 vehicles.

In the first part of the Bill, clause 2 takes cars and small vehicles out of licensing, thus paving the way for increased car sharing. Clause 3 redefines express stage and contract carriages. Clauses 4 to 12 provide for the granting of road service licences to stage carriage—or local services—only. Express services are thus delicensed. Trial areas are provided for in clauses 12 to 14. Next come three clauses securing that the stringent safety controls of public service vehicles are maintained.

Clauses 18 to 26 set out the operator licensing system. The last nine clauses of the first part of the Bill deal with a variety of other matters, including, in clause 28, provisions for the appeal procedure in London. Hon. Members may also wish to note that clause 29 abolishes licensing of bus conductors and clause 52 allows articulated buses to be used as public service vehicles.

The second part of the Bill deals with the National Freight Corporation. The NFC was set up in 1968 and under its umbrella there are about 50 subsidiary companies. They range from road haulage to removals, from cold storage to package holidays, from waste disposal to parcels delivery. The question that has to be answered is, what justification is there for a State-run removals company or a State-run cold store? No one can claim that the NFC is the sole provider or an essential public utility. It merely represents one small part—about 10 per cent.—of an industry dominated by the private sector. In every type of business the NFC is in competition with the private sector.

There are, however, two essential differences between the NFC and a private company. First, the NFC has not had the commercial freedom and opportunities open to private firms. Its management is subject to the review and intervention of the Government. It is absurd to believe that the Government should—or, indeed, are able to—get involved in a business as deeply competitive as road haulage. Secondly, the NFC has been shielded in the past from the full rigours of normal commercial disciplines.

Just as the NFC should be free to develop commercial opportunities, it should also be subject to the normal discipline of profit and loss accounts. Freight subsidies cannot be justified—that became the position even with the previous Government—and it must follow that the NFC should be put in a position in which it can take charge of its own future, in the knowledge that success or failure lies in its own hands and not in the hands of the Government.

The aim of the Bill is clear. It is to transfer control of the NFC firmly into the hands of the private sector. I set that out in my August policy document, but let me repeat that the Government do not want a majority or a controlling interest in the corporation.

The Bill simply provides for the NFC's legal form to be changed into that of a normal Companies Act company with an appropriate capital structure, including shares that can be sold to private investors. The change to an equity-financed company is strongly supported by the NFC board.

Mr. Walter Johnson

The Minister will recall that he met the trade unions on this aspect of the Bill a few weeks ago and, in answer to questions, stated categorically that he would take complete control of the whole of the NFC and would sell all the shares. Has he changed his mind again?

Mr. Fowler

The hon. Gentleman is wrong. I have written to one of his colleagues on that matter.

I quote from my principal private secretary's note of our discussion of 19 July. It says: The question of the Government's shareholding would be made clear by the time of Second Reading. No final decisions had yet been taken, but the Minister thought it only fair to tell the Group that he saw no compelling reason at the moment to keep the Government shareholding at 51 per cent. The hon. Gentleman and I have debated transport questions for a long time. He will understand that I have been frank about my intentions both in the policy document, published in August, and in speeches during the election and on the last occasion. I cannot accept what the hon. Gentleman says.

The decision on when the Government will sell shares in the company will depend on a range of factors, such as general stock market conditions and the track record of the company itself. But our overall objective is to sell, as quickly as market conditions allow, a controlling interest in the company to private investors. If we retain an interest, it will certainly be no more than a small one.

At the same time, we shall ensure that there is full opportunity for employees of the company to acquire shares, and I hope that as many as possible will want to do this. I have also made clear that we are not going to be selling off individual NFC subsidiaries to the highest bidder. The whole purpose of this Bill is to enable us to sell shares in the enterprise as a whole. We want it to go into private ownership as a single entity, without any major change in size or range of interests. As to the question of timing of the change, it is important to retain the maximum scope for flexibility, and I would not at present envisage a sale of shares taking place before 1981.

I firmly believe that our proposals will give the corporation a much better deal than it has ever had in public ownership. It will move away from its unsatisfactory position as a nationalised industry with no clearly defined role or objective.

Mr. Stanley Cohen (Leeds, South-East)

Does the right hon. Gentleman recognise that the comparison he is making between the public and private sectors is totally wrong in the sense that the public sector provides better conditions of service, rates of pay and pension funds? If the sell-out takes place, will he guarantee that the employees in the public sector will not suffer as a consequence?

Mr. Fowler

I cannot guarantee that. But the whole aim of what we are doing is to try to get a better future for the National Freight Corporation, which means for those people working for it. That is the whole aim of the legislation.

The National Freight Corporation will, as a result of the Bill, be freed from the intervention of the Government and civil servants who know little about the day-to-day requirements of running a major transport undertaking. [HON. MEMBERS: "What about Rolls-Royce?"] We can certainly argue about the history of the Labour Government on the issue of the National Freight Corporation. I would be happy to do so.

The corporation will be able to adopt flexible and realistic trading strategies and to make the most of whatever commercial opportunities the market place may offer. I am convinced that the NFC can look forward to a good future in the private sector. That is my aim.

Clause 54 provides for the abolition of the Freight Integration Council. This Government are committed to getting rid of so-called quangos where these do not serve any genuinely useful purpose. The council is a prime example of just such a body. Its purpose was dubious from the very outset. It has been dormant for several years. I cannot imagine that even the Opposition Front Bench will lament its demise.

Finally, let me say something about part III of the Bill. As time is pressing, the Parliamentary Secretary will say more about this in his winding-up speech. This covers the changes that I propose to make in the arrangements for providing support for the historic pensions obligations of the British Railways Board and of the rail-based part of the National Freight Corporation.

Pensions are at the best of times one of the more technical subjects with which this House has to deal. Railway pensions arrangements are complicated and technical even by the standards of pensions schemes generally. But I hope that I can summarise what it is all about in a relatively few words.

The various railway pension schemes are funded schemes—that is, there are trustees who hold the assets of the schemes and who manage the schemes' investments, collect and invest contributions from employees and employers and pay out the pensions. The problem arises because there are large deficiencies in some of the schemes. The origins of these deficiencies go back very many years. They arose from a combination of factors. Both before and after nationalisation, many of the assets of the pension funds had been invested in the railway undertaking itself at low fixed rates of interest. The financial problems of the railways in the 1950s and 1960s did not allow the sums so invested to be repaid, nor the rate of interest to be increased. This problem was compounded by inflation. Indexation of pensions became an established practice, even though past contributions had not been adequate to fund the cost of it.

In 1974, the Government of the day decided that something must be done about these deficiencies. But they were concerned then, as we are now, only with the historic deficiencies. As far as current employment is concerned—and let me emphasise this—the same problems do not arise, because contributions are being paid at rates certified by the actuaries to be sufficient to cover the benefits laid down in the rules of the schemes.

Part III, like the provisions of the Railways Act 1974 and the Transport Act 1978 which it will replace, is concerned with the so-called "historic deficiencies" in the railway and NFC schemes. These deficiencies relate to the historic obligations which are defined in clause 44. Broadly, these are the historic deficiencies which the board and the corporation were, at the beginning of 1975, under an obligation to make good.

The essence of the 1974 and 1978 Acts was that the Government were to fund the deficiencies. The deficiencies were to be assessed on a once-for-all basis and the Government would then pay over the very substantial capital sums necessary to eliminate the deficiencies. Even though the funding process was to have been spread over a number of years, the costs would have been astronomical. By the end of the current fiinancial year, £578 million will have been paid by the taxpayer under the 1974 Act. Under the funding orders so far made, a further £1¼ billion stood to be paid over the next seven years. I might say that the board has also argued that the funding payments provided under the existing funding orders are not enough to fund the deficiencies fully.

Concern about these arrangements has been expressed by a number of individuals and bodies, notably the Public Accounts Committee, which in the eighth report of the 1976–77 Session said that it was concerned at the very substantial sum needed to fund the Board's pension schemes under these arrangements. While the Government are not in any way questioning the general principle of funded schemes for nationalised industries, it seems to us that there is much force in the criticism expressed of the method adopted for dealing with the historic deficiencies in the railways' funds.

Part III of the Bill terminates funding under the Acts of 1974 and 1978. It places the Minister under an obligation to meet the emerging costs attributable to the historic deficiencies. An actuarial assessment will be made of the assets and liabilities of each scheme in which there are historic deficiencies. This will show what proportion of the pensions liabilities can be met out of the assets of the scheme. This proportion will continue to be the responsibility of the board. Responsibility for the remaining proportion—the unfunded proportion—will be transferred to the Government. As and when pensions corresponding to the historical obligations fall due for payment, the Government will meet that proportion.

What I am proposing is essentially a change in the method of financing the deficiencies that stood to be funded under the 1974 and 1978 Acts. I am not proposing any changes in the obligations which the Government are supporting. I can give the assurance that the pension entitlements of pensioners and serving members of the funds will not be affected by the changes. Nor will they entail increases in contributions.

So far as the British Railways Board itself is concerned, my proposals will tend to reduce the risk to which it is exposed, because the Government will be accepting total responsibility for a fixed proportion of the liabilities, rather than seeking to make a once-for-all actuarial assessment of the kind which the 1974 Act envisaged. At the same time, the changes will make very useful reductions in public expenditure in the years immediately ahead.

I have described the three parts of the Bill. I would add only that the Bill puts into effect two of our major pledges on transport during the last election. It scraps unnecessary restrictions in passenger transport. It enables there to be private investment in the National Freight Corporation. But what it does above all is to look to present-day conditions rather than conditions of the past. We shall now have legislation governing passenger transport designed for the conditions of the 1980s, not based on the position in the 1920s, and we shall enable the National Freight Corporation to have commercial freedom and to take charge of its own destiny.

If Labour Members want to fight the battles of the past, that is up to them. What we on this side of the House are concerned about is providing better transport today and setting free our transport industries. It is on that basis that I ask for the support of the House.

4.40 pm
Mr. Albert Booth (Barrow-in-Furness)

The Bill, if operated in the way that the Minister envisages, would pose a serious threat of damage, possibly irreparable, to bus services in many parts of the country. I believe that an expansion of bus services based on competition between private operators exists only in a Tory dream world. The reality of experience in this country is that when unregulated competition is tried it results in a serious deterioration of public services, to the point at which many parts of the country are left without any bus services at all.

It is not sufficient for the Minister to suggest that conditions have changed since the licensing laws were introduced. Of course they have changed—and the House has changed the legislation as new technology has made new vehicles possible, just as we legislated for the introduction of the hovercraft. The right hon. Gentleman has delved way back into history to find his justification.

The real test must be whether in modern conditions, with today's economy, social conditions and technology, it is necessary to do what the House did when it introduced licensing. What hon. Members did then was not what the Minister suggested they did. He is clearly suggesting that they were trying to keep operators out of the field. I do not believe that those who manned the Government and Opposition Benches in the 1920s and 1930s were keen to keep bus operators out of the field.

What the House was keen to do, as comes through in the debates and the legislation, was to ensure that the buses that provided public transport were safe, properly manned and properly maintained, and were operated by efficient and competent operators. That is what the licensing system required. I hope shortly to show that that is relevant to present considerations and is within the competence of our present licensing system.

To justify the part of the Bill dealing with public service vehicle operators' licensing, the Minister will have to show that the experience that led to those licensing considerations, to ensure those standards of bus operation, is completely irrelevant. I do not think that he can. I think that all the considerations that apply in modern times argue against the conclusions that he has apparently drawn.

The reason why so many miles of British roads, so many potential routes, have no buses upon them has nothing to do with the licensing system but everything to do with modern conditions, which are such that it is not possible for private or public operators to make a profit on them. That is why so many people living in rural areas, and some urban areas, have difficulty in obtaining a proper public transport service.

Many of the routes now covered by buses are covered not because they are profitable but because it has been possible for those running the services to work out ways of directly subsidising them or making cross-subsidising arrangements to ensure that the services are maintained. Those arrangements have involved licensing authorities, the Minister's own Department—as he well knows—the county and metropolitan authorities and the bus companies in complex arrangements to ensure that services are maintained where they would otherwise be withdrawn.

Mr. Terence Higgins (Worthing)

Can the right hon. Gentleman make clear his position on the question of subsidies and cross-subsidisation? We might disagree on whether one should explicitly subsidise this or that service that could not otherwise be run properly, but what argument does the right hon. Gentleman put forward in favour of a system of regulation that ensures cross-subsidisation, which means that some passengers are subsidising others in a completely arbitrary way?

Mr. Booth

I shall gladly come to that. I would argue that the present cross-subsidisation, which results in passengers on some routes meeting part of the costs of maintaining other routes, is an essential part of the existing system. If the Bill results, as it may well do, in the withdrawal of that sort of subsidisation, we shall see a diminution of our bus services.

I am not against—indeed, I very much favour—consideration of other ways of subsidising, particularly if they are proposed by people who object to the cross-subsidising principle. But we cannot envisage, on the basis of the Bill, a change that will render it impossible to cross-subsidise without one of two things happening—either that another form of subsidy will be introduced or that we must tolerate a drop in the number of bus services. I am very much opposed to the latter.

If the Bill results, as the Minister clearly envisages, in new operators applying for road service licences and succeeding because he has reduced the licensing requirement, or succeeding in the stage area if only because he has changed the presumption on which the traffic commissioners worked, we can be certain of one thing. It is that the applicants will seek licences to operate upon the profitable routes. They will not seek licences for the routes where the operators are losing money or are continuing to operate only because there is a subsidy. If licences are granted by the traffic commissioners, working on the Minister's new presumption, there can be only a limited number of results. One is that the new operators will operate at the same fares as the operators already on the profitable routes. The income of the existing operators will then drop, because the fares will be shared between two operators.

If the major operator already on the route is using it to cross-subsidise another route, he must then decide whether to continue to compete on his profitable route by reducing his fares and abandoning the route that he is cross-subsidising. He is almost certain to take this course. He will fight not to stay in the area where he is losing but to stay in the profitable area. Then district councils and metropolitan and county authorities will clamour for arrangements to stop what is happening. They will have to decide whether ratepayers' and taxpayers' money should be spent to prop up subsidies that would otherwise come from the existing cross-subsidising arrangement.

Mr. Robert Adley (Christchurch and Lymington)

Is the right hon. Gentleman aware that he is advancing the same argument as British Airways used against Sir Freddie Laker? In fact, new traffic has been generated by new operators coming in, and British Airways, far from losing, have benefited from the new area of traffic that has been generated. No one makes a journey that he does not wish to make, but many people cannot make journeys that they want to make. If the Bill is enacted, one of the possibilities is that new traffic routes will be generated and a new arena opened.

Mr. Booth

I have not failed to envisage the possibility of an expanding market that would provide more employment for those in the bus industry. I have tried to find an area in which that has happened. I can find only one area in which there has been an expansion of bus services and an increasing number of bus passengers, and that is South Yorkshire. The expansion in South Yorkshire has been achieved by a subsidising arrangement that enables more routes to be operated, but those in that area are faced with one of the problems that confront public bus operators in a declining market.

The market can be expanded only if a more attractive service is offered. That can be done only by reducing fares or by giving a better service, which means increasing vehicle frequency. That means that the operator has to find more money to operate the service. There is no operator of buses who at any time in the past 10 years has been able to reduce his fares, increase the number of passengers and recover the additional cost of offering a superior service. That is not an experience that exists or can be found anywhere in the United Kingdom.

Mr. Roger Moate (Faversham)

Is not the right hon. Gentleman contradicting himself? He envisages fierce competition on what he has described as the good routes. However, he told us earlier that it is unlikely that anyone will come forward to compete. Presumably the competition will take the form of more buses, greater frequency and lower fares, otherwise there will be no competition. Bearing in mind his most recent remarks, does he presume that that will generate more traffic?

Mr. Booth

No, I am not contradicting myself. I shall restate the argument. I do not think that the hon. Gentleman will be able to flaw it. I am not denying that operators will come forward to compete. If licensing standards are reduced to a sufficient extent, operators will come forward to seek licences. I am saying that the licences that they will seek will be for profitable routes only. That is my first contention.

New operators will not seek road service licences for unprofitable routes. My argument is that the profitable routes are in many instances, if not all instances, providing income that allows bus companies to cross-subsidise or subsidise unprofitable routes. They do not provide all the subsidy for unprofitable routes. In England and Wales, part of the subsidy comes through the transport supplementary grant. In Scotland it comes through rate support grant arrangements.

If competition on a route results in more buses and lower fares, those who are operating on the route must do so with a much smaller income. I doubt whether many of them will survive, but those who do will survive at the cost of the support that has been given by profitable routes to the unprofitable routes that we need if we are to sustain our public services.

The Minister is envisaging a selective form of application. If I understand the right hon. Gentleman aright, he is envisaging that operators will not only have an opportunity to apply for a direct competition service-to-service licence but will be able to be selective about the times when they operate as well as the lengths of the routes. It seems that they might operate only parts of routes as opposed to complete routes. Such arrangements raise the same question—namely, how an operator is to maintain income on profitable routes to maintain a large part of the network.

How are traffic commissioners to judge what is in the public interest? Is the right hon. Gentleman suggesting that they should be able to take into account, in deciding what is against the public interest, the extent to which an operator is making a contribution to a part of the network other than the part on which they are faced with licence applications? What provision is the right hon. Gentleman prepared to make by way of transport support grant if he contends that the commissioners cannot protect cross-subsidisation as part of their duty to protect the public interest? What provision will the right hon. Gentleman make by means of the transport supplementary support grant or rate support grant in Scotland, to cover reductions of subsidy? Is he prepared to see the unprofitable routes in the network die?

The Minister must give us his justification for changing the traffic commissioners' criteria. His argument has been almost totally based on the idea that the commissioners' operation prevents other operators from getting in. That is not so. [Interruption.] If Conservative Members choose to laugh, I must quote the statistics and refer them to the source. I have read the reports of the traffic commissioners of recent years and I invite those on the Government Benches to do so. If they read them, they will learn how many new service licences have been issued by the commissioners under the present system. If the Minister will listen for a moment, he will learn that under the present system many new licences are being issued. During 1977–78 in the Northern traffic area 792 licences were granted, of which 176 were new licences. Only 15 applications for new licences were refused. In 1978–79, 685 licences were granted, of which 177 were new licences. Only five applications were refused. The Northern traffic area is by no means untypical.

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

Do not the statistics refute the right hon. Gentleman's argument that there are no routes on which new operators would be tempted to operate? I understood the right hon. Gentleman to contend that the present system allows for all the profitable routes to be covered and that no newcomers want to come in. Does he not accept that almost all new applicants are faced with objections, that substantial obstacles are put in the way of every new applicant, and that many would-be new operators are deterred from making application by the whole process and by the near certainty of failure unless substantial local authority and other support is forthcoming?

Mr. Booth

I take the hon. Gentleman's point. I shall modify my terminology. Instead of saying that no new applicants would be drawn other than in competition for the profitable routes, I shall say that no additional applicants would be drawn. No new applicants would be drawn other than those who would come forward under the present licensing system. The present system does not contain the enormous defect that the Minister contends. It is the Minister's argument, not mine, that the present system deters operators from coming forward for new licences. Presumably he has in mind those who would be competent operators and who would run safe, properly maintained vehicles.

In almost every traffic area a large number of new service licences have been granted over the past two years of operation. In the Eastern region, for example, 841 service licences were granted in 1977–78 and only three applications were refused. Of the 841 licences, 139 were new licences. The Minister cannot reconcile his contention that the present licensing system is preventing new licences from being issued with the figures.

There is a different position in London, where the Transport Executive determines whether new operators come in. Over the past five years, 99 new arrangements have been made for other operators to operate in the London area. There have been 23 refusals. I think that almost half of those related to applications for one route that raised some special, peculiar and interesting considerations.

The Minister proposes to change the position in London and to allow an appeal to the commissioners against a refusal by the Transport Executive. However, even in London the overwhelming number of applicants who have sought an agreement to operate within the London Transport Executive area have been successful in their applications. Therefore, the Minister's contention that the present licensing system deters people from competing can be right only if such people do not make the applications because they believe that the present licensing requirements are ones that they would not meet. That is the only basis on which the Minister's contention can be sound.

Therefore, I believe that we must consider whether the licensing requirements are ones that we should maintain. We should examine whether those who will operate buses upon British roads will have to maintain them, and ensure that they are manned and operated, by the method which has been used for a very long time with a considerable degree of success.

The Bill has within it some considerable implications for public expenditure. I challenge the Minister's contention that the cost of sustaining the existing bus services under the present licensing system is increasing. In fact, the most recent information that I can obtain shows that the National Bus Company—certainly the biggest operator, covering about 40 per cent. of the United Kingdom's public transport fleet—receives only 6.3 per cent. of its revenue from the transport support grant system. Bus operations in England and Wales—the municipal operators, the PTEs and the metropolitan counties—have reduced their operating deficit from about £22.2 million in 1975–76 to about £10.8 million in 1976–77. I do not contend that it might not rise again, or that it might not move up and down. I contend that based on those figures there is no evidence to show that the existing bus services operating under the existing bus licensing system are making an unreasonable demand upon the public purse.

For example, the subsidy that London Transport receives from the taxpayer is about 17 per cent. of its income. That should be compared with any other capital city in the world, because it will be found that in terms of public contribution we are getting our transport system in London very cheaply indeed. There are other capital cities with transport systems hardly equal, let alone superior, to the London Transport system that have subsidies of up to 70 per cent. I do not pretend that the present system is perfect, but it is not the case that the present system makes unreasonable demands on the public purse for the maintenance of public transport.

It is not the case that these licensing changes are significant only in what they do in the stage carriage area—in the area where the traffic commissioners must decide the licensing. As the Minister has indicated very fairly, he is taking a considerable area of transport out of the control of the traffic commissioners. He has devised this incredible provision for the minibus and the car-sharing arrangement, an arrangement under which vehicles with up to eight passenger seats can charge separate fares without public service vehicle licences and can be run by people without operators' licences—and this without any reference whatever to the traffic commissioners.

In order to justify that, the right hon. Gentleman puts a most exceptional power in the Bill. He asks the House to give him the power to lay down the fares that will be charged over this whole range of vehicles. The Bill suggests that he will be the arbiter who will suggest that the fare which can be charged is the proper cost of running and maintaining the vehicle as well as of providing it with fuel and petrol.

Many hon. Members are car owners, and they know that there can be some debate about the actual cost of running a car. I have even heard hon. Members question the adequacy of the car allowance for that purpose. It seems that the Minister will be so clever that he will set not only a car allowance that is suitable for cars operated by Members but also a range of car allowances that will cover everything from the Mini and "bubble" car to the Bentley or Mercedes. What will be the proper charge if one is brought in on the back of a 50 cc Honda motor cycle or if one takes a lift in a Rolls-Royce in order to come to work? That will be the range that will be covered by the directions that the right hon. Gentleman will make under clause 2(3), if it ever comes into operation.

I should like to ask a few elementary questions. Can the order be made? Can anyone envisage an order that accurately sets down running and depreciation costs as well as the wear and tear of the whole range of vehicles of from one to eight passenger seats that are at present on our roads? If so, how can such an order be enforced? I cannot envisage an enforcement scheme. What will be its effect on the bus services if, as the Minister suggests, it is extensively used? What will be the sense in energy policy terms of having five eight-seaters doing the job of one 40-seater? Of course, the sharing will be a sharing over routes that cannot make any energy sense. That is only a narrow area of the de-licensing. There is the far more serious problem of the operation of the contract carriage.

Mr. Fowler

I understand that the right hon. Gentleman is about to leave the subject of car sharing. He raised a number of questions of detail. However, I should like to ask him a question of principle. The previous Government, and the former Secretary of State, were very much in favour of the principle of car sharing. Does that remain the position of the right hon. Gentleman's party?

Mr. Booth

My party's position on car sharing was that we believed in maintaining the essential safeguards of a licensing system. We are opposed to using an acceptable principle on car sharing to justify a major expansion of licence removal. That is our position. In the case of the contract carriage—

Mr. Fowler


Mr. Kenneth Clarke


Mr. Fowler

Is the right hon. Gentleman saying that he is in favour of power sharing so long as it does not work? Is that really his position?

Mr. Booth

So long as it does not work in such a way as to make nonsense of licensing and public transport arrangements. That is a very different thing. No Labour Minister of Transport has ever come to this House and said that he could set up a scale of charges that was appropriate for all vehicles up to eight passenger seats on the basis which the right hon. Gentleman is suggesting. However, that is only part of the way in which the whole licensing concept is being attacked, and it is minor compared with the more serious issue of the contract carriage.

That part of the Bill is intended to enable people who do not have operators' licences to organise the running of bus services that will not be subject to road service licences. Under the Bill, these contract carriage services will be able to operate within or outside the carriage mileage limits. There will be no requirement to notify the commissioners that they are operating. What justification can there be for that provision? Within the limits of schedule 1, there is nothing to prevent the contract carriage from operating over sections of exactly the same routes as other operations that are subject to the road service licensing requirements.

Mr. Fowler

I think that the right hon. Gentleman is under a misapprehension. That is the position now.

Mr. Booth

It is not the position now, because there is no provision in present legislation that is anything like as extensive as schedule 1 to the Bill. If the Minister turns his attention to schedule 1, he will see that, particularly under part III, there are alternative conditions affecting status or classification which go much wider than anything that can be done at present. On the basis of setting a single fare for a journey, operators can pick up and set down at a number of places. That is not possible under present legislation.

Operators can advertise in places of worship. I had better declare an interest, Mr. Deputy Speaker, because I am a member of the Methodist Church. Operators can advertise in The Methodist Recorder or the Catholic Herald, for instance. They can advertise in works' magazines, in club premises, and in club magazines. They can advertise their intention to run buses from a certain date at a fixed fare. That is what the Bill provides. If the Bill receives a Second Reading, we will return to this matter in Committee.

Mr. Kenneth Clarke

I think that if the right hon. Gentleman studies the Bill he will find that there is no significant change from the present arrangements for the contract hire of coaches. As the Bill makes clear, all those on the contract carriage have to be carried to their destination or near to it. No previous advertisement to the public is possible if the operator is to remain within the contract hire arrangements. The Bill makes no significant change at all in the position of the ordinary hire operator who takes a group of old people to the seaside. The right hon. Gentleman is mistaken. I trust that he is not suggesting, in his defence of the present licensing system, that we would include the ordinary contract hire operator in that system.

Mr. Booth

I am not talking about the provisions of the Bill which are obviously designed to allow a tour operator to take old people to the seaside. Let me make it absolutely clear that clause 3 of the Bill is obviously not intended to be as narrow as that. Clause 3(5) states: A public service vehicle carrying passengers at separate fares shall be treated as a contract carriage, and not as a stage carriage or an express carriage, when used in circumstances in which the conditions set out in Part II or III of Schedule 1 are fulfilled. There is nothing there that restricts the provisions to buses carrying old people to the seaside. Anyone who can operate within the provisions of parts II and III of schedule 1 can operate a carriage service, but that is not my understanding of the way in which the contract carriage system now operates.

Mr. Adley

Will the right hon. Gentleman come clean with the House? Is it not a fact that the previous Government wanted to do this but were prevented from doing it by the pressure of the Transport and General Workers Union? The hon. Member for Ealing, Southall (Mr. Bidwell) is kindly nodding his head in agreement. That is the reality of the situation. This Government seek to allow people to run services without their necessarily being fully shackled by union membership which has not always been to the advantage of the travelling public.

Mr. Booth

As a member of the previous Government, I can assure the hon. Member for Christchurch and Lymington (Mr. Adley) that this issue was not considered in those terms by that Government. There has been no consultation about this issue. The consultative document circulated by the Minister did not give any indication of the scope he was envisaging for contract carriage. I have drawn this to the attention of a number of people whose lawyers have studied it, and they share my considerable concern about this provision.

I turn quickly to the question of trial areas before I deal with the National Freight Corporation. Will the Minister indicate to the House why he has two different criteria about who are the appropriate judges of the public interest? In the stage carriage area he obviously judges—subject to the new presumption which he is entering—that the commissioners are the appropriate people to decide what is in the public interest. In the case of trial areas there is only one judge which the Minister will recognise—namely, the county or metropolitan authority. Subject to its applying to him, he can go ahead. There is no provision here for commissioners or district councils or any other bodies to be consulted. This shows a rather strange attitude to arbitration in the public interest.

This Bill has enormous implications for the National Freight Corporation. The Government are proposing to transfer to private ownership an important public asset. It is an asset which has been created with public money and resources. The National Freight Corporation is at present putting about £8 million a year into the British Exchequer in return for the financial support which the British taxpayer contributed on the setting up of the corporation. The Minister now has the audacity to ask this House to pass a Bill which will enable him to fix a nominal value for the shares of the corporation by which he will sell off this public asset to private interests. He is asking the House for a blank cheque. He will find it difficult to carry this provision through the House.

The first £25 million brought in by the sale of the shares, at whatever nominal value the Minister puts on them, will, I assume, be made available to fund the pension scheme which the Minister has designed. The balance, I take it, will go to the Exchequer. The nation will lose not only the £8 million at present received from the National Freight Corporation but control of an important element of the freight transport system.

Mr. Moate

The right hon. Gentleman is clearly opposed to the idea of reducing the capital debt, but that in turn would reduce—or perhaps even eliminate—the amount of interest paid by a State industry to the State each year. If that is the case, why did the last Government substantially reduce the fixed debt of the National Freight Corporation?

Mr. Booth

I take the point and I shall come to it. I am not necessarily wedded to the present capital structure of the National Freight Corporation. Given the present construction, about £8 million of what would otherwise be trading profit is paid by the National Freight Corporation each year to the Exchequer. There is a danger that the National Freight Corporation will be broken up by this operation. If that happens, we shall see the break-up of an organisation whose performance has improved, against vigorous competition from a number of other organisations operating in this area.

I am certain that without the public funding that created the NFC certain parts of it would have disappeared long before now. The NFC was put together with considerable care and expertise. That is now likely to be lost. Who does the Minister think will buy the shares? Will they be sold to foreign companies? That is a fair question, because there is a power in the Bill to control the ways in which these shares can be sold. Will they be sold to foreign companies or to competing road haulage firms? Will they be sold to pension funds; and, if so, will the pension funds concerned have any guarantee about the continuing value of the shares?

The hon. Member for Faversham (Mr. Moate) may laugh. Why does he not give a big horse laugh at the other safeguarding provision of pension funds? If we recognise, on the proposition of his own Minister's Bill, that there is a special responsibility to sustain pensions set up as a result of a public operation, it is no laughing matter when other pension arrangements, which are dependent upon the sale of public assets, are put at risk by a proposition of his own Minister.

It will be interesting to learn whether the control on share sales applies only to initial sales or whether it applies to subsequent sales. I think that it does not apply to subsequent sales, but, if it does, what effect will that have on the Minister's ability to sell the shares?

I do not contend that the National Freight Corporation has a perfect structure. It is rigid and has a fixed high interest rate return to the Exchequer. I accept that it must be difficult for those who manage the corporation to have the same degree of flexibility as they would if they were managing a firm of the same size which was entirely public. However, that problem should be solved in a way that does not involve selling off the NFC to private interests.

With only 10 per cent. of the market, the NFC is still the largest operator of its kind. The industry has more than its fair share of small and dubious concerns. The Minister is not only throwing away a public asset, in the sense of losing a degree of control and a source of public income; he is losing a valuable ally. The Minister will not deny that he and his predecessors have had almost unlimited support and co-operation from the NFC in the introduction of regulations and practices to ensure that a higher standard is achieved.

If by some terrible collective misjudgment the Bill receives a Second Reading, many questions about pensions will have to be asked in Committee. We shall want to know why the Bill does not contain a clear requirement for the Government to meet any future deficit relating to the historic NFC and British Rail pension liabilities. We shall want to know why the Bill is constructed so that the pension liability is partly funded and why there is provision for an annual order to top up the difference between the actual payment of pensions required under historic liabilities and the funding.

Does the Minister have the sole discretion to decide the actuarial basis which determines what that top-up shall be? I understand that the present arrangements do not give the Minister such a discretion and that the actuarial basis must be agreed between the Minister, the British Railways Board or the NFC and the pension fund representatives. If the Government sell off all the shares, will the top-up come from general taxation? That appears to be the only source.

If there is to be a taxation liability in any degree, will those pensions which are index-linked to the cost of living continue on that basis? Alternatively, will they be restricted if there is a restriction on Civil Service pensions? I accept that those questions are not easy to answer. I do not claim to be an expert at reading the Bill. I read one clause five times before I understood it. I imagine that those who are studying the pension provisions are not yet ready to deal with them in detail.

I regret that the Minister has introduced the Bill. Whatever my opinion about the Minister's judgment on transport matters, I recognise his considerable interest in this sphere. There is scope for new transport legislation. However, unlike this Bill, such legislation should build. It should not seek to wreck our public transport system. It should build on the co-operation between the Minister of Transport, counties, metropolitan authorities, district authorities, private operators and public bus operators which have tried to sustain and develop new technology. Instead of building on that progress, the Minister has introduced a Bill which in its licensing provisions is a cowboys' charter and which in its provisions for the National Freight Corporation is a blank cheque to dispose of an important public asset. The House should refuse to endorse either of those propositions. I hope that it will reject the Bill tonight.

5.26 p.m.

Mr. Roger Moate (Faversham)

I shall return later to several of the arguments of the right hon. Member for Barrow-in-Furness (Mr. Booth).

I congratulate my right hon. Friend the Secretary of State on introducing the Bill at this time. It is a real pleasure to see policies that were promised in Opposition translated into reality so early in the life of the Government. I am sure that those policies will soon be translated into legislation and that they will be seen to make a genuine contribution to the consumer's lot.

We have judged these matters with the consumer in mind. It is not an ideological Bill in any sense. I hope that the Opposition will understand that. The right hon. Member for Barrow-in-Furness was rather milder in some of his remarks than one might have expected. I welcome that and look forward to a constructive and healthy debate in Committee.

The right hon. Gentleman said that we were living in a dream world, imagining that there will be a spate of new competition and that new entrepreneurs will come forward to serve the public. The right hon. Gentleman was living in something of dream world when he described the present system. Anbody would think that the most marvellous system is under threat. However, the reason for the legislation is that in practice throughout the country millions of people do not have a good public transport passenger service. That is a fact of life. We are debating today's measure in an attempt to improve the lot of those people.

Few people admit that any bus service is adequate, but perhaps in some urban areas buses are frequent and relatively reliable. However, in vast areas of the country there are no bus services, or the services are so infrequent and irregular that people are put off travelling by bus. How can we improve the lot of the consumer? I do not criticise the operators, because to some extent this position has been forced upon them by the motor car age. As we put in more and more subsidies, fewer people travel by bus There is a crisis point. One cannot carry on pouring in subsidies while the number of passengers diminishes.

We are arguing on a hypothetical basis to some extent. None of us can be absolutely sure that a new or relaxed bus licensing system will lead to a dramatic improvement in transport facilities. We cannot know whether it will. All we know is that at present the situation is unsatisfactory and that in certain areas there are people striving to offer a service to the customer who will come forward.

There is a contradiction in the argument of Labour Members. They are frightened that competition will destroy the passenger transport system but also say that there are few people who will come forward to offer those services. They cannot have it both ways.

Bus and taxi services offer an ideal opportunity for the individual entrepreneur or small business man.

Mr. Sydney Bidwell (Ealing, Southall)

And the spivs.

Mr. Dan Jones (Burnley)

Would the hon. Gentleman adhere to that opinion if it was proved greatly to prejudice the finances of local authorities?

Mr. Moate

That is a critical matter and I shall deal with it later. The crux of the matter is whether we can provide a better service and persuade more people to travel by bus. It is not an ideological point. It does not matter to me whether the bus that picks up a passenger is nationalised or run by private enterprise. We are concerned to get buses to areas where the service is infrequent or where there are no buses. We shall have to wait and see. The Bill will not turn the world upside down. After all, we are essentially talking of stage carriage operations, and although the licensing system will be in a slightly more relaxed form it will still exist. Right hon. and hon. Gentlemen should wait and see how the proposed system works. The licence control will remain within a 30-mile radius of towns. The position can hardly get worse and will probably get better.

Mr. Booth

From what the hon. Gentleman said, does he believe that the proposal to change the presumption that commissioners must use in judging stage carriage applicants will make a difference? The Minister thought that it made an important difference.

Mr. Moate

I said that there would be a more relaxed system of control within that area, and that is important. It will have to be proved that the new service will damage the public interest. However, many people who might wish to operate a service at present are deterred from doing so by the knowledge that, for example, British Rail would object to a competitive service, and it is improbable that any service would be allowed by the present licensing commissioners.

I do not believe that the public will make much sense of this debate against the background of worsening services. We believe that by relaxing the system we can encourage new people to come into the industry.

Mr. Dan Jones

I apologise for interrupting again but I do not think that the hon. Gentleman has taken my point. Cuts are being imposed on local authorities, and that could have an effect on the private entrepreneur at peak hours. If the local authorities go further into deficit, will the Minister be asked to subsidise these privately run services?

Mr. Moate

Greater competition on the good routes may diminish the profit of those operating the network at present, but that will only persist if more traffic is generated on those good routes. That would be a net gain to the community. More people would be travelling by bus on the good routes.

I concede that that could result in some of the poorer routes demonstrating that they are making a heavy loss and the cross-subsidisation factor could be lost. However, in practice I do not believe that the results would be as severe or dramatic as that. Society may then have to decide, through subsidy, whether for social reasons it wishes to maintain a route. I do not think that that is a bad thing, and no one is suggesting that the subsidy system will go. The result could be more people travelling on the good routes to the net benefit of the community and road users generally, and a decision would be forced on us about the other routes.

The licensing system has acted as a straitjacket in a rapidly changing world. I have a note from the Transport and Road Research Laboratory on a survey of 15 Western countries. It reads: Until a decade or so ago subsidisation of public transport operations was relatively uncommon, but since then, the practice has been growing at such a rate in almost all Western industrialised countries that Governments have begun to question whether they are getting value for money. In that sense public subsidies for transport are about 10 years old. With the changing energy situation and the changing pattern of road usage, we do not know what will happen in another 10 years.

We should not pursue the argument of despair that bus transport is finished. The hon. Member for Nuneaton (Mr. Huckfield) repeated that this was a declining market. If that is his only answer, we are faced with a situation of ever-increasing subsidies and ever-diminishing revenues. He appeared to see no solution to the problem.

Mr. Les Huckfield

I was simply trying to point out to the Minister that comparisons with Laker are not valid. There is a fast-growing market in air transport, particularly on the North Atlantic route, but that cannot be said of buses.

Mr. Dan Jones

It is a declining market.

Mr. Moate

If the hon. Member for Nuneaton is right, there will be little change in the present pattern of bus travel, in which case no harm has been done.

Mr. Les Huckfield

Total revenue stays the same.

Mr. Moate

That is the hon. Gentleman's argument of despair. My constituents complain that they cannot travel by bus although they would like to. I suspect that if there were better bus services many more people would use them. I believe that the system will help, and we should wait and see.

Mr. D. N. Campbell-Savours (Workington)


Mr. Moate

I do not think that I ought to give way, out of respect for other hon. Members who want to speak in the debate. I welcome the reduction in the considerable bureaucracy involved in the licensing system. I also welcome the fact that there will be more competition on the inter-city services. That must be a good thing for the user generally, and the consumer will be better off if prices are lower on those services.

I welcome the prospect of commuter coach services, which is an important feature that could develop. Commuters are angry and frustrated at the deteriorating services on British Rail.

Mr. Stephen Ross

If the hon. Gentleman is suggesting that commuters from his constituency will use the coach service to travel to inner London, what will happen when they reach, say, Earl's Court and are completely snarled up in traffic jams and it takes an hour to get further? That will surely only add to the problems on our roads.

Mr. Moate

The hon. Gentleman has his geography slightly wrong if he imagines that commuters from Faversham pass through Earl's Court, but that is a minor detail for a Liberal.

If a journey is inconvenient, people will not travel on the route. However, once fares become too high, people are prepared to accept inconveniences and travel in by various means. The Bill opens up certain opportunities, and I wonder why some hon. Gentlemen are against giving people the chance to develop new services.

I particularly welcome the greater freedom given to express tours and excursions. There is no justification for maintaining controls in those areas, subject to one proviso. The Government have said that there will be no reduction in safety standards, but there is evidence to suggest that safety standards should be improved. If people are to come into the business, including part-timers and weekend operators, the safety standards should be more strict. In other words, if there are tighter conditions about proper premises and regular inspection—a general tightening-up of the system—that will resolve many of the worries of existing operators and Opposition Members about cowboys undermining the current system. I hope that the country and the House will give a warm welcome to the long overdue relaxation of the bus licensing system.

I now turn to the question of the National Freight Corporation. Over the past few years I have seen much of the corporation, as have several of my hon. Friends. We have seen its operations and have come to admire them and be impresed by them. I do not believe that these proposals can be seen as an ideological commitment. The survival of the National Freight Corporation, or many parts of it, was in doubt, even throughout the years of the previous Government. The Labour Government provided the figures for the cost of closing down National Carriers. That was the atmosphere in which it operated. They told us how much it would cost to close it down. What a cheerful prospect for the employees.

It was the Labour Government who took away some of the National Freight Corporation, having proclaimed it part of the Labour Party's integrated transport policy—the great inter-modal operator. The Labour Government took away the railway aspect, Freightliners, and passed it over to British Rail. Again, that did not do much for the morale of the National Freight Corporation. There has been no background of profitable contributions to the taxpayer. If the right hon. Member for Barrow-in-Furness looks back over the years, he will see that since the corporation was established the taxpayer has contributed about £150 million in subsidies. If the company had been privately owned, that money would not have been paid. The right hon. Gentleman will concede, as many of the operators in the business will concede, that, had it gone out of business many years ago, that business would have been taken up, in one form or another, by private operators.

I do not criticise the corporation—quite the reverse. Against that background of State intervention and State control—even today it is subject to cash limits—and an appalling inheritance of massive overmanning, old vehicles and irrelevant debts, it has succeeded. The corporation has pulled itself up by its bootstraps. The labour force has been reduced from about 66,000 in 1969 to 35,600 today. That represents a tremendous improvement in productivity for which the corporation deserves every credit. Against all recent forecasts, it has broken through to make a profit.

The proposition that is put forward is not total denationalisation but a partnership between the State and private enterprise, with the State retaining a slice of the equity—a BP solution. It is a tribute to the community and the National Freight Corporation and an expression of belief that, in the private market, it will be able to succeed and survive. Once the new structure is established, the employees and the management, all of whom have contributed so much to the corporation, will be able to look forward to a stable and prosperous future.

As long as it remains part of the State system, there will always be doubt. It will always be seen as a political football, subject to the whims and controls of the Treasury. That is an unhealthy position for a company which must survive on the basis of its competitive abilities and which has proved that it can do so over the past few years. I doubt very much whether that success can be sustained, in the public sector, for ever. However, it would be wrong to launch such a company on its rebirth with a debt of £100 million of fixed interest capital. It could not possibly succeed. The previous Government reduced the debt from—I speak from memory—£153 million to £100 million. I argued at that time that at least 50 per cent. of that should be public dividend capital. We do not know what the Government are proposing when the company will be launched but I urge them to take a generous look at the establishment of its capital structure.

Although it is not as large as the NFC, the transport development group has little fixed interest debt—it is nearly all equity capital. We should try to establish a similar position with the NFC. To put on the market a company that has to pay a debt of £8 million or £9 million interest would be a virtual guarantee of its failure. I hope that it will be launched in a way that will help to guarantee its success.

I appeal to Opposition Members that when this subject is debated in the coming weeks and months it should not be seen as throwing the NFC back into the political arena. We must make a genuine effort to take it out of politics and to provide a successful future for the benefit of the employees and the freight users alike.

This Bill is for the benefit of the user, whether it is the freight user or the bus or rail passenger. I warmly welcome the Bill and hope that it will get a Second Reading this evening and go through rapidly to Royal Assent.

5.46 pm
Mr. Walter Johnson (Derby, South)

The hon. Member for Faversham (Mr. Moate) has made out a first-class case which shows that the Bill is completely unnecessary. He spoke of the achievements of the National Freight Corporation. In recent years it has made real achievements, especially in staff reorganisation, out of which it has achieved a profitable position.

I declare an interest. I am the honorary president of the Transport Salaried Staffs' Association, one of the unions involved with the National Freight Corporation. There are about 4,000 members in that body. Therefore, I am particularly interested in the future of the corporation and the problems that the Bill will bring in its wake.

In its manifesto, the Conservative Party said that it aimed to sell shares in the National Freight Corporation to the general public in order to achieve a substantial private investment in the corporation. The Bill is in part devoted to achieving that aim. Of course, the NFC is a statutory corporation that was set up under the Transport Act 1968. It is organised as a holding company. It owns about 10 per cent. of the country's professional road haulage industry, excluding transport operations that are run by firms which carry their own goods.

During the 10 years of the NFC's existence, that proportion has altered little. However, there has been a steady shift in the balance of activities. General haulage and parcel operations have tended to be reduced while special contract work has been expanded. The NFC has also moved into new areas of activity related to but distinct from the traditional road haulage business, for example, cold storage, water disposal and travel.

We all know that the NFC incurred substantial losses during the mid-1970s. It underwent major financial reconstruction following the Transport Act 1978. The corporation's debt to the Government was reduced to £100 million and the 1978 Act provided for specific grants to assist National Carriers. That included an annual contribution of £4 million to make good deficiencies in the pension fund. The results showed a trading profit of £20 million and a turnover of £423 million. The net profit after interest and central charges had been paid was £300,000. That may not sound much, but it was a tremendous achievement, bearing in mind the problems of the NFC in its early days.

The Bill seeks to give the Minister powers to create a company with an appropriate capital structure, including shares which can be sold. The new company will inherit the assets and liabilities of the NFC, which will be abolished. It is quite clear that the Government propose to denationalise the NFC by the backdoor method and by the sale of shares. The Opposition are opposed to any hiving off of any section of the nationalised concerns in this country, and in particular of those nationalised industries such as the NFC, which made good from a bad beginning.

The Minister said that many NFC employees at all levels would welcome the challenge that independence and freedom from Government interference would give them. Frankly, he must meet different people from those whom I meet. I find them despondent, frustrated and seriously worried about their future.

Since 1969 the NFC has got into a profitable situation as a result of the good will of the staff, even in the face of substantial redundancies. To uproot the corporation now, all over again, in the furtherance of nothing more than political dogma will dissipate the good will overnight. I deal with these people and I know what I am talking about. That is the difference. From close contact with them, day by day, I know that they are seriously concerned about the outcome of the Bill.

Mr. Fowler

Does the hon. Gentleman accept, although he is entitled to put his point of view, that the NFC board supports what is being done?

Mr. Johnson

The right hon. Gentleman knows very well that if the board took a contrary point of view they might find themselves without jobs.

The staff cannot be sure of the Minister's intentions from one week to the next. The 1979 Conservative Party manifesto told us that a substantial private investment would be arranged for the NFC. Then in his policy document the Minister said that he intended to sell the majority of the shares to the private sector. Now we understand that he intends to sell off all the shares. I should like the right hon. Gentleman to clear up this point. I attended a meeting at which he gave information about the shares and the superannuation fund. He made it perfectly clear that the Government had changed their course and intended to sell off all the shares. If he does not believe what I am saying, I ask him to consult his civil servants sitting at the back of the Chamber. Perhaps they have a note of the meeting that took place.

The Minister is busy trying to give us an assurance about the future well-being and protection of the staff who will be transferred compulsorily for the second time in just over 10 years. I must tell him quite firmly that when he has disposed of 50 per cent. of the shares to the private sector he will have no control whatsoever, and his assurances will be worthless.

There is another aspect which has not been understood by Government supporters or the Minister. The loss by the Government of nationalised industries' control will seriously disturb the special relationship between the NFC and British Rail that was set out in the Transport Act 1968. British Rail's collection and delivery services will no longer be in the hands of the undertaking responsible to the country as a whole. When the Minister winds up the debate, I should like him to tell us how he proposes to deal with this aspect. He must know that British Rail contracts amount to virtually one-third of the national carriers' business.

Another aspect of the Bill that is worrying employees is the fact that it is proposed to eliminate the funding provisions of certain historical liabilities of the British Rail pensions funds in particular. I say "in particular" as there is also the historical problem of the liability relating to the NFC pensions. I understand that the Government propose to deal, by way of the use of proceeds from the sale of NFC shares, with some of the difficulties relating to funding the NFC scheme. Over the years many members of the Transport Salaried Staffs' Association have become more and more worried about their pension funds not being fully funded. The Minister spent some time discussing that point in his opening speech. The unions have been pressing successive Governments to provide the necessary finance to enable funding to take place.

Here I must make it clear that we are talking about the historical liabilities that were not funded because, when the British Transport Commission was set up, these superannuation funds were taken over by the Commission for use in helping to progress the work of the industry, especially the reorganisation. In fact that was the situation until 1974, as the Minister is fully aware. In fact, from 1974 the proper funding has been taking place and investments have been made as well. Nevertheless, employees who, each pay day, are contributing regularly their share to the fund are worried when the employers do not contribute their share regularly as well.

Government changes are made and promises are broken. Employees see no future whatsoever in being told that everything is all right and that the Government will meet the liability on a pay-as-you-go basis. The funding which gives peace of mind to employees means paying back to the pension funds the money that should have been put into them years earlier. The Minister knows very well about that. As the Minister indicated, it would mean £1¼ billion being paid into the funds to ensure that the funds were properly funded.

I ask the Minister, when drawing up amendments or new clauses to the Bill, to give a specific undertaking to the staff that their pensions are guaranteed. That is vital to the staff if we are to secure their co-operation in the future work of the new corporation.

The Bill is unnecessary and provocative and it panders to the worst possible elements of the Tory Party. The Government are hell-bent on selling off the national assets to their friends in the private sector. I ask them to think again and drop the Bill.

5.57 pm
Mr. Michael McNair-Wilson (Newbury)

I hope that the hon. Member for Derby, South (Mr. Johnson) will forgive me if I do not pursue very much of his argument except to say that I think that the Bill and the selling off of the National Freight Corporation mark a crucial turning point in the transport approach of our nation. Just as the National Freight Corporation was born at that moment when an integrated transport policy seemed to have quite a lot to commend it, I suspect that the National Freight Corporation sale marks the end of that philosophical concept—one of the two castles in the air of 1968 which I think are being considered again here in 1979.

Before I go on to the main burden of my remarks, I want to say that I regret that there is one notable omission from the Bill's many clauses. The Government have not felt that they can yet bring forward new legislation to regulate the training of young people who use mopeds and motor cycles. I am aware that the Government have had the advisory report on the subject in their hands for only one month. However, the truly horrifying casualty figures for motor cyclists, both in terms of injuries and deaths—and especially the fact that 50 per cent. of the 70,000 casualties in 1978 involved teenage motor cyclists—must make us all aware of the need for further legislation to insist that those who use motor cycles or mopeds shall have had some training before they are allowed to go on the road.

The recommendation in the advisory report that we should wait another three years to know whether the existing 15 per cent. of young motor cyclists who take training has expanded to 75 per cent. will give an interval of time during which. I suspect, we shall see more and more casualties. The very people who most need training will stay away from training establishments. Thus it may well be that at some stage in the progress of the Bill I shall seek to introduce a clause or amendment that might make it possible for further thought to be given to bringing in legislation to preserve the lives of motor cyclists.

Having touched on one omission, I want to say two or three things about the National Freight Corporation before turning to what I think are the rather progressive thoughts and ideas put forward for opportunity and innovation in public transport services. I have already suggested that the NFC was born out of a policy—that of the incorporated transport system—which is now dead. It is true that those who worked in the corporation gave of their best, and I pay tribute to Sir Daniel Pettit for the many years during which he steered it on its difficult course. I suspect that he was given an almost impossible task. From its inception the NFC was a rag-bag of companies thrown together. As so often is the case with State enterprises, it was under-capitalised and given a remit that was almost impossible to fulfil.

I am glad that the Select Committee on nationalised industries of which I was a member—I am sure we shall always look with kindly favour on the Chairman of that Select Committee, the hon. Member for Feltham and Heston (Mr. Kerr)—decided in its report on the corporation, and subsequently on British Rail, that Freightliners should go back to British Rail. We realised that Freightliners, an essentially railborne service, was not receiving the right treatment from the NFC because the remit of that corporation did not allow Freightliners to prosper as I believe it will under British Rail. It is probably true to say, moreover, that the decision to return Freightliners to British Rail marked the death knell of the corporation.

I am quite sure that the decision, announced by my right hon. Friend and contained in the Bill, to return the corporation once more to the private sector is the right one. Anything else would simply be to seek to cobble up an organisation that has no place in the State sector and of which, by any philosophical approach, it could not be argued that it should be in the State sector. I believe that the NFC should stand on its own and compete with any other freight company in this country, to live or die according to its abilities. I am pleased that the pensions obligation will be met, but once that has been settled the NFC, if it is to have a future, must live by its wits and ability.

The main burden of what I want to talk about is the relaxation in some of the regulations governing our bus services. When we discuss whether the bus services are a contracting part of the transport industry, we should not forget that the United Kingdom is one of the top three countries in Europe in terms of operating buses. There is still a very wide demand for these vehicles. In rural areas—I am a Member for a rural constituency—we are probably more conscious of the contraction in bus services than those who represent, or live in, towns and cities.

The contraction of bus services hits the elderly and the young very hard. I am sure that other hon. Members have, like me, received a paper entitled "Missed the Bus", prepared by the Campaign for Rural Youth for presentation to the Youth Parliamentary Lobby. If so, I am sure they have noticed section 2, where the young people say: Lack of public transport is the single most influential factor depriving young people of access to opportunities for employment, for educational improvement, for domestic requirements and for leisure … Recent research suggests that probably at least 10 per cent. of rural young people are from families without private transport of any sort. When public transport does not exist this seriously curtails opportunities—employment opportunities may be limited by bus routes, cultural and leisure activities may be limited by the running of the final bus at the end of the working day. Limited weekend travel and the lack of Sunday travel impose further limitations. What applies to young people equally applies to the elderly who do not possess any form of personal transport. Thus, anything that tends to stifle innovation in providing services for the people of our country—buses or any other form of community vehicle—must be seen as harmful to the public interest unless it contributes to safety, for that, clearly, is the one regulating factor in anything that is provided.

The Bill, in that it seeks to introduce a new measure of flexibility and to look afresh at the need to provide some form of public service in rural areas in particular, though only marginally progressive, is much more progressive in approach than anything we heard from the right hon. Member for Barrow-in-Furness (Mr. Booth). He seemed to be conservative in his attitude towards the enormous transport problems that face us.

If we believe that there is a need for innovation and a fresh approach, it follows that, by implication, we criticise the National Bus Company. That company has taken upon itself the task of providing the bus services of our nation, and one has to admit that, to some extent, it has failed in that job. A few moments ago I said that I was a member of the Select Committee on nationalised industries. Some hon. Members in the Chamber this evening may be aware that we produced a report last year on the rural bus services of this country. I like to think that our inquiry was of some value in airing this most difficult and complex subject. In that report there is a great deal about the National Bus Company and how it managed its affairs since its creation in 1968. If I say that I am critical of the National Bus Company, I do so because one of the procedures which that company demonstrated to us, as if it had found something brand new in bus management, was a procedure called the market analysis project—MAP.

When we examined this project we found it to be a very simple and rather ordinary marketing technique which at long last gave the National Bus Company and its subsidiaries some idea of where their passengers originated and where they wanted to get to and showed how one service could be blended with another to meet two demands with greater economy, efficiency and effectiveness. Of course that is to the good. But it seems strange that, although the National Bus Company was set up in 1968, it has taken 10 years to get round to that sort of approach.

My own constituency of Newbury—perhaps I should say West Berkshire—is served by the Alder Valley bus company, which has not yet completed its marker analysis project. Therefore we are waiting to see how our services can be improved, as improved they must be. We have to await the decision of the marketeers of the National Bus Company before we shall be in a position to see how our services can be improved.

Mr. John Prescott (Kingston upon Hull, East)

I recall that report by the Select Committee on nationalised industries on rural bus services. One of its recommendations was that the NBC should be assisted with its interest payments on its commencement debts. The Government have refused to give any help there, and presumably the NBC's position will be weakened in the rural areas. Will the hon. Member comment on that?

Mr. McNair-Wilson

The hon. Member ber is carrying me rather further forward than I care to go at this moment. I hope that in my later remarks I shall answer his point to some extent.

I have spoken of the market analysis project and the undoubted benefits that it has brought to this country's bus services. I am told that by 1981 the whole of the NBC's network will have been looked at through the eyes of this project. In the meantime other services, such as Alder Valley, will have to await its findings. My constituents will continue to complain about buses that do not run on time, buses that are withdrawn at a moment's notice, the fact that the company does not really care and the problems of passengers who are left standing in the rain wondering whether a particular bus will run. My constituents write to me about all these niggling problems and ask me how the service can be improved. It does not say much for the National Bus Company that it has taken so long to get down to marketing its services.

I realise that there are other reasons for these problems. There is the difficulty over the maintenance of vehicles and the shortage of supplies from some British Leyland factories. There is the problem of recruiting the fitters to look after the buses and the difficulty of getting drivers. All these problems are implicit in any organisation, whether it is a bus company or a machine tool factory. I do not think that any bus company can hide behind such excuses to apologise for a service which is so often criticised in West Berkshire.

Having said that, I would not wish to give the impression that those who drive the buses and those who seek to run the services are not giving to their best of their ability. All I am saying is that I do not believe that they are at present running the service in a way that fits in with the needs of people in my area. I hope that when the market analysis project gives its findings this will be rectified.

I must add that those words in the House of Commons reference sheet on the Bill which say the right to run a bus company is by no means a licence to print money are not far short of the truth. I have no doubt that the NBC would say that it was all very well for me to criticise the services but that to create a profitable service, albeit a local one, was a very different matter altogether.

We have already talked about cross-subsidisation of loss-making routes with profitable ones. Indeed, this is a most thorny problem. As we talk about flexibility, can we really say that we want to see loss-making routes simply ruled out because there is so much competition around that no one wants to run them? As we have already heard, there is the 30-mile limit for the traffic commissioners, so to some extent we are talking about coach services.

Let us look at this question of profitability together with the tricky one of subsidy—in other words, how one pays for the service. During the hearings of our Select Committee we were fortunate enough to hear Mr. G. R. Brook, who is the chief executive of the National Bus Company. He was asked whether he thought that higher fares were the only way to raise the necessary revenue. He answered: I think we ought to be a bit cautions about saying higher fares … in order to support the continued operation of loss-making services, the natural result, once it can be planned and implemented, is to take off or modify such services as are not any longer profitable. If you try to put up fares generally in the hope that there will be enough by way of profits to prop up the others, in fact it is not a very productive thing in the longer term to do. Putting up the fares to that extent drives passengers away and thereby eliminates such profits as there are. But if profits from the profitable routes are not to provide the money and if public money will not be available to subsidise the loss-making routes, what is the answer?

We are faced with the question of the minimum service that we expect and how best we can finance it. Again I quote Mr. Brook, who said: Of course, many councils have their own views as to what ought to be the minimum level of service and regrettably many of them seek to impose this minimum level of service without making the necessary financial provision for that service to continue: so the National Bus Company finds itself in the unhappy situation of being expected to provide the service by a county council without the means to do so. That is all well and good. But I wonder whether Mr. Brook is really right in arguing for subsidies as the only way of sustaining services.

It so happened that during our inquiry we also had the benefit of questioning Mr. P. P. Flynn, of the Gwent county council. He told us that his council, when told by its local subsidiary of the NBC that it would be required to find £1.1 million to subsidise routes in 1977–78, refused to accept that figure and introduced a route rationalisation programme. The council arrived at an anticipated loss not of £1.1 million but of £300,000. As Mr. Flynn was able to tell the Committee, This has not reduced the service by one iota in the County. What it has meant is that instead of having an empty bus following a half-empty bus—and I do literally mean that, one running five minutes after the other on some routes—and instead of keeping people to run school buses in school holidays, we have a system which is equally providing the service, the same standard, but better. Mr. Flynn added: There is such a thing as leakage of subsidy, of pouring in a subsidy which no longer provides any improvement in the service. Those last words about the leakage of subsidy are particularly important. We heard Mr. Brook of the NBC tell us that the county council must continue to find more and more money to maintain the minimum level. Then we heard a man who is running a county council, and is therefore more answerable to the taxpayer or the ratepayer than Mr. Brook, saying that when his council was asked to pay this large sum of £1.1 million, it thought it would have a look and see whether that money was needed. In fact, it found that only one-third of that amount was needed.

Two weeks ago I was fortunate enough to go to the Transport and Road Research Laboratory at Bracknell, where I was given certain figures. In that organisation's opinion, of every £1 of subsidy provided to a bus company, 60 per cent. is used to improve the service and 40 per cent. encourages a decrease in productivity, because those working in the company assume that they can put in for higher wages or better conditions of employment. If that is so, Mr. Flynn's case is being made out for him by this impartial organisation. One may well argue whether the vast subsidy which we are continually told is required if we are to have any level of bus service is something of a myth. Indeed, the subsidies which are being paid, and which have risen every year, have encouraged a loss of productivity in the bus services and therefore a poorer service for the community.

One might then argue that, if that is so, the smaller the subsidy the higher the efficiency of the organisation. When one starts talking like that, one is talking about the market forces which smaller bus operators must live with.

The right hon. Member for Barrow-in-Furness argued that the kind of competition that the Bill might allow will mean that we shall see a cut-throat war on the roads between various bus organisations and that in the end the consumer will suffer. There is a small bus operator in my constituency, Mr. Elgar of Inkpen, who runs a very successful small business and for some time has wanted to run a coach service between Thatcham, in my constituency, and Portsmouth, but he ran up against the traffic commissioners, who were so lobbied by the National Bus Company and its subsidiaries that he is still waiting to run that service. He would provide the public with a service that does not exist now, a service on which he is prepared to stake his money and expertise and which he believes can be profitable. Can anyone argue that such a service is against the public interest? Clearly it is not. Therefore, the new flexibility which my right hon. Friend introduces in the Bill will allow the Mr. Elgars of this world to use their ability to give people a better bus service.

As we look into the future—at midi-buses, mini-buses, community buses, and car-sharing schemes—we see that there are many new ideas that are not being developed. In a free society, human ingenuity gets to work to meet the public need. I have already said that old and young alike want better public transport. We must therefore give them the chance to get it. The only way in which we shall do that is by creating more flexibility, so that people like Sir Freddie Laker can put forward their ideas. In the end it is not buses, cars or trains about which we shall be concerned; it is the people who want to use those services. We must ensure that the services that they want to use are there.

6.22 pm
Mr. Les Huckfield (Nuneaton)

I do not wish to continue along the lines of the speech of the hon. Member for Newbury (Mr. McNair-Wilson), because I cannot imagine that Sir Freddie Laker would wish to run rural bus services in Berkshire, but I intend to impose a self-denying ordinance of a 10-minute limit on my speech. I wish to make one or two brief comments on what has been said by the Minister. I say that particularly in view of the fundamental revolution in transport that the right hon. Gentleman promised in the Bill. He knows that what he is asking for, particularly in the deregulation and relicensing of coaching, will take us back to the jungle of the 1920s—unbridled and cut-throat competition. In the end we shall be forced to reintroduce the restrictions that he is now trying to dispose of. They will be needed for precisely the reasons that those restrictions and that licensing were introduced under the legislation in 1930.

I am worried because it is patently obvious that the right hon. Gentleman does not understand what will be the effect of his own legislation, particularly in terms of contract services and work services. He does not seem to understand the effect of permitting contract services to pick up fare-paying passengers. That is the interpretation which has been placed on the Bill. If it is not the effect of the Bill, I hope that he will strongly deny it.

Mr. Fowler

It would be more convenient if the question of contract carriage were dealt with by my hon. Friend the Parliamentary Secretary when he winds up the debate, but there is only one essential difference between the contract provisions in the Bill and the law as it stands at the moment. It is the last condition, which means that a society can run an outing to, say, a historical building without needing a road service licence, but that cannot be organised by a travel agent on a commercial basis.

The change since the 1960 Act is that now there is no restriction to people who do not make the journey regularly. If separate fares are charged, a vehicle is a contract carriage only if all the fares are the same and the passenger destinations are the same and there is no general public advertisement. In other words, the essential difference between stage carriage and contract carriage has been maintained. If we can make that position any clearer to the hon. Member for Nuneaton (Mr. Huckfield) we will do so, but I do not think that he would like me to do so in the middle of his speech.

Mr. Huckfield

I hope that I will get a minute's injury time for that intervention. I am grateful to the Minister, but his words have confirmed my worst possible fears. He knows—and I am sure that anyone who knows about bus operations knows—that that kind of provision cannot possibly be enforced. Existing stage carriage operators are very worried about the interpretation that can be placed on what he said, because they know—and many of us know—that the kind of regular passenger concept that he described cannot in practice be enforced.

I am a sponsored member of the Transport and General Workers Union. I also have a close working relationship with the Associated Society of Locomotive Engineers and Firemen. I have never concealed in the past that I have a good working relationship with ASLEF. I have defended the union in the past in this House, and I hope that I will be able to continue to do so. I have been asked to raise a number of points on behalf of ASLEF, but, although I raise them on behalf of ASLEF, I raise them also on behalf of all transport unions.

An article that appeared in the business finance section of The Economist last week gave voice to the worst fears of the unions on pensions. Under the heading "Public-sector pensions—Unfunding?" the article states: Britain's new transport bill is an unlikely place to look for an event of significance for the financial markets. Yet it contains details—expressed in such appalling gobbledegook as to be almost incomprehensible—of a move to stop British Rail's pension schemes from funding members' benefits in full. This step towards a partial pay-as-you-go system in the nationalised industries seems to imply that the government does not regard the principle of pensions funding as sacrosanct. Is it the thin end of the wedge? … This does not amount to a full-scale rejection of the principle of funding public sector pensions. The article goes on to say that it comes pretty close to it. It continues: Pensions experts say the Bill is shoddily drafted and makes no allowance for the actuarial assumptions behind the new system being proved wrong. The article concludes—it is a little more biased towards the stock market, of course—by saying: if the public sector stops putting between one third and one half of its annual cash flow into equities, because of the switch to pay-as-you-go, who else will support the equity market? We can deal with the equity market at some other time, and I hope that we shall. I am a little more concerned about the pensions of ASLEF members and members of all transport unions, many of whom have given their lives to working in the transport industries. Their first suspicions were aroused by a press release which emanated from the Department of Transport in August 1979, in which it was stated that The funding approach has been criticised as being unnecessary and excessively costly, and the Government is examining alternative arrangements which will have the same effects from the point of view both of the Board and the members of the funds, but will defer much of the cost of the present funding I am a little concerned when I read press releases such as that, particularly when such releases are a foretaste of what the Government have in mind and are combined with the article that I quoted from The Economist. Last week I quoted The Economist as being in favour of the nationalisation of British Aerospace. I am pleased to be able to quote that journal again to support my case again tonight. Because of those fears, I should like to ask the Minister in his winding-up speech to be specific about some of the points that I shall raise. I have written to him about those matters and I would appreciate a more detailed reply at the appropriate time. I ask the Minister to take this question seriously because it is causing concern among the transport trade unions.

The first point that I must put to the Minister is to ask whether the Government will write into the Bill a firm guarantee that they will meet any future deficiencies relating to historic pension liabilities. If that were done, a great many doubts would be removed. Secondly, why should we allow the Minister sole discretion about the actuarial basis to be used when under the previous arrangements the basis was to be agreed by the Government, the board and the funds? This change in the basis of the determination of actuarial calculations worries transport trade union members, and it certainly concerns me.

How can the members of transport trade unions be sure that further legislation—in saying this I am aware that no Parliament can bind its successor—will not make the position still worse now that a precedent is to be set in this Bill? It is a worrying precedent, and it could be even more worrying if further legislation were introduced. I should like a guarantee to be written into the Bill.

The Government might state their declared intention not to make things worse, but surely that could be undermined. The Minister has given us some kind of an assurance this afternoon, and I respect his sincerity in doing so. I think he genuinely believed what he said. Nevertheless, could not a deficit emerge in the pension fund which the Government of the day were unwilling or unable to meet? Public expenditure revisions are made from time to time—we have just had an appalling one. I can foresee a situation in which the Government might be unwilling to meet a pension fund deficit.

The Minister's declaration might be undermined if a lower surplus became available. Pension increases for civil servants might be restricted to less than the rise in the cost of living. Those sort of circumstances could emerge in future to undermine the Minister's personal undertaking. From time to time Ministers of Transport, Governments and circumstances change. Because of that, in spite of the Minister's positive declaration, the position that he thinks will be maintained could be undermined.

I do not seek to be unduly alarmist or to arouse fears or suspicions unnecessarily. I come back again, however, to The Economist, a journal of undoubted stature and status. The Economist shares these fears. The fears are not being put forward only by the transport trade unions on behalf of their members.

I hope that in replying to the debate the Parliamentary Secretary will be able to provide some kind of reassurance and will be able to go further than the assurance given by the Minister. I do not underestimate or doubt the Minister's sincerity, but I am still worried.

In passing this Bill we shall create enough worries for members of transport trade unions without giving them the added worry about their pensions. The Bill gives those union members enough reasons to worry about their jobs. It would be most unfair if, on top of worries about their jobs, their future security and their working conditions, the Government were to heap worries about their pensions. Many of these union members have spent their working lives serving the public. The Minister owes them some reassurance.

6.36 pm
Mr. Vivian Bendall (Ilford, North)

I begin by declaring an interest, in that I am the House's spokesman for the Licensed Taxi Drivers Association. I give the Bill a warm and strong welcome, but there are certain areas that require clarification because they are causing some concern. The concern arises mainly on the car-sharing provisions. In particular, that concern centres on the implementation of the provision to deal with advertising. Can action be enforced against those who may begin openly to advertise, and, if so, how?

There is also concern about the monitoring of costs. The Minister may provide for a given fare for a vehicle of a given horse-power over a given distance. How can the authorities monitor whether the correct fare is being charged? It is difficult to see how charging and running costs will be dealt with. They could vary from time to time. Does the Minister propose to deal with them by way of ministerial directive at specific intervals, so as to keep the position constantly up to date?

I should be interested to know how that area will be monitored. The police already seem overworked. Car sharing will create competition, and no one objects to that, but the degree of competition will be unknown. That is causing a lot of concern to the licensed taxi trade. If the competition is of an unknown quantity, it is likely to be unfair.

Car sharing could adversely affect British Rail. I am concerned here not with the outer areas but with the larger conurbations, which is where the difficulties may arise. In the outer areas car sharing will work very well, because often no service is provided by the public or private sector—the latter in terms of car-hire firms. However, if the provision applies in the larger conurbations, passenger traffic on British Rail could be affected. British Rail's highest passenger income arises in the South-East.

One wonders whether people will be persuaded to use their cars where they have not used them previously. If they can recoup some of the running costs for their vehicles, they may be encouraged to use their cars to travel into the large conurbations. I fear that if that happens the licensed trade might lose money. Taxi drivers suffered considerably until June this year because they had to await a Conservative Government before they were given an increase in fares.

I am concerned about protection for the public on car sharing. I do not know how the public will discover what is their contribution of a journey, or how it is devised. That is also of deep concern to the licensed taxi trade.

Under the Bill there will be no need to license vehicles containing up to eight seats. That will include many private vehicles that can carry large numbers of people into London. Competition within the taxi trade might therefore be affected. The Opposition unfairly tend to look only at the nationalised aspect of industry. However, the danger is that the new regulations could affect the private sector.

The licensed taxi trade plays an important and formidable part in the large conurbations, particularly in London. The Minister should consider the matter carefully, because taxi cabs are an integral and important part of our transport system—as are the railways, buses, and the London Underground system. The licensed taxi companies do not ask for monopolies or for protection; they ask for a fair deal in open competition.

There is a danger that operators of licensed vehicles could suffer considerably. If that happens, the people of London and other large conurbations will also suffer. I ask the Minister to look at this aspect closely and to give assurances about the way in which he will make it work.

6.42 pm
Mr. Frank Dobson (Holborn and St. Pancras, South)

I declare an interest, as I was sponsored as a parliamentary candidate by the National Union of Railwaymen. About 20,000 members of that union work on buses or for the National Freight Corporation. No Labour Member believes that bus transport is in an ideal situation. We are certainly not living in a bus Nirvana.

We need positive practical policies to improve the present standards. Experience shows that we can look only to the public sector to provide those policies. South Yorkshire provides a good example of such public sector policies. The Government's proposals are pure ideology. There is no practical basis for their proposals and there is no support for them within the management and staff of the bus industry—even among major private operators.

The better features of the present system are dependent on the licensing system. It controls fares and protects operators on the routes that pay, so that they can use some of those profits to subsidise the less profitable routes.

Licensing conditions on some routes often ensure that the operators continue to provide services on non-paying routes. As a result of the Bill, there will be less control of fares. No member of the British public is daft enough to think that less control on fares will mean that fares will come down. The reverse will be the case.

There will also be less protection for operators on routes that pay. The ability of the traffic commissioners to impose conditions will be reduced. It is likely that the conditions requiring them to operate on non-paying routes will disappear. In theory, the Government intend to bring in new operators, particularly in rural areas. However, there is scarcely any evidence that operators are falling over themselves in rural areas to provide such services. There is evidence that cowboys will come in on the paying routes and attempt to cream off profits. As a result, the less viable routes will go.

One message that must go out from the House to those in rural areas who have heard rumours about the possible disappearance of an existing bus service is that if the Bill goes through they can wave that bus service goodbye. If the control of fares is relaxed, some rural areas may end up with a private monopoly and no control of fares. That is a significant danger.

Mr. Kenneth Clarke


Mr. Dobson

I will not give way to the Minister. It is the prerogative of Back Benchers to intervene in the speeches of Front Benchers, and not the reverse.

Safety is an important aspect, yet the Bill will be a licence to the moonlighter express. The envisaged relaxations may allow people who work in a factory, or even in the House of Commons, to moonlight in their spare time by driving buses. We need control of bus drivers and of the circumstances in which they work.

The Bill proposes that certain small vehicles should be exempted from the public service vehicle regulations. Much has been said about various investigations by Select Commitees. The Select Committee that looked into rural bus services recommended that the National Bus Company, the Ministry of Transport and the Association of County Councils should take immediate steps to devise a form of training and testing for potential communty bus drivers broadly comparable to the existing public service vehicle test. However, it was proposed that that training would have a greater flexibility in order to meet local needs and it was intended for volunteers. There will be no such control over many of the cowboys. That should be changed.

The present circumstances do not provide for school buses to be subject to public service vehicle scrutiny. There is an omission in the present law that should be corrected. Those living in rural areas must be reminded that the Government proposals in the Education (No. 2) Bill will reduce the school bus provision available from public funds. In turn, that will reduce the number of school buses and will have a significant impact on rural bus services. Many operators, large and small, are dependent on the education authority cheque to provide their basic services. It allows them to provide other services during the day, when children are not on the buses. The Bill will reduce rural bus services, put up fares, and reduce safety. That cannot be good for anyone.

The Minister burbled on about the reasons for the measures that are supposed to bring about greater efficiency, and God knows what, in the National Freight Corporation. His position was summarised in a nutshell earlier this month, when he said: I have always tried to make clear that my concern is to get the National Freight Corporation into the private sector."—[Official Report, 7 November 1979; Vol. 973, c. 396.] That is an unqualified statement of the right hon. Gentleman's views.

Nothing in the Bill has anything to do with indicators of efficiency, safety, or performance of the NFC, either in the public or the private sector. We have before us the standard Tory Government rip-off. It starts with a write-off rip-off. There is to be a write-off by the taxpayers of £100 million, which is the debt of the NFC to the Government. If that debt were not written off, the Government would not have a hope in hell of selling the corporation to the private sector. No one would buy it with that burden round its neck. Despite all the Tory talk about reducing the public sector borrowing requirement, the Government intend to get the taxpayer to write off £100 million so that the private sector will not have to carry that burden.

There is a general philosophical point on which I should like the Minister's views. If the private sector uses all its money to invest in the NFC and other public sector industries that are to be sold—most of which are safe investments—where will the private sector get the money for its much-vaunted task of risk investment? There will be no money left by the time the private sector has ripped off the public sector. Perhaps the Secretary of State for Industry should review Government policy in that regard.

Under the proposed arrangement the taxpayer will lose a guaranteed £8 million a year interest from the NFC, but that is only the first stage of the rip-off. Asset stripping will come next. Once the corporation is sold to the private sector, asset stripping will be almost inevitable, and it may start when the shares of the NFC are vested in the Minister of Transport.

The last annual report of the NFC shows that the net book value of its assets on 31 December last year was £98.3 million and that of that sum £58.7 million was in land and buildings. The notes to the accounts indicate that the latter sum was considered to have, in aggregate, market values in excess of the net book value. A lot of property will be available for people to rip off.

We may safely expect that those assets will be stripped either by the Minister between now and 1981, when the Treasury realises that his proposed deal is losing money for the public sector, or by the private owners. There are several NFC depots in inner city areas. If the private owners could get the necessary planning permission for office development and so on, those depots would be a tremendous asset to strip. I should like an undertaking from the Minister—though I do not expect to receive it—that at least while the Government own the shares there will be no hiving off, liquidation of subsidiaries or asset stripping.

Having read the Minister's pamphlet on transport policy and various comments that he has made over the past few months, I get the impression that he takes a rather light-hearted attitude towards the future of some important industries. I remind the right hon. Gentleman that the NFC, with its 36,000 jobs, represents 10 per cent. of the freight transport industry. From now on, it is not a question of pamphlets and speeches. The right hon. Gentleman is suggesting a change in the law that will be to the disadvantage of those working in the industry and those who use it.

I am trying to be brief, but I should like to mention the question of pensions. We have a reasonable twofold demand to make to the Minister on the pensions proposals. They must protect pensioners and existing staff of the various freight transport industries, and the arrangements must not cripple British Rail or the NFC. We shall seek to ensure that the Bill achieves both those objectives.

Pensioners in the freight transport industries have good reason to fear Governments—perhaps of both political persuasions—messing about with their pension rights when the International Monetary Fund descends, the right hon. and learned Member for Surrey, East (Sir G. Howe) becomes Chancellor of the Exchequer, or other such terrible events occur.

Those working in the industry deserve copper-bottomed guarantees about their pensions. If we get those included in the Bill, it will be worth while. The rest of the measure is a waste of paper and will be a waste of the time that we shall spend considering it in the next few months.

6.57 pm
Mr. Peter Temple-Morris (Leominster)

The hon. Member for Holborn and St. Pancras, South (Mr. Dobson) addressed most of his remarks to the future of the National Freight Corporation. I wish to refer to the traffic commissioner licensing system and rural areas, but I cannot resist referring to some of the graphic terminology to which the hon. Gentleman treated the House.

Instead of talking about cowboys, moonlighter expresses, rip-offs and so on, the hon. Gentleman would have done better to congratulate the NFC on its outstanding performances in recent years and to ponder why the NFC has done well. It has not always done well; there have been losses in the past. The corporation has been doing well recently, primarily because it has a free enterprise style of management in an industry which is still overwhelmingly a free enterprise industry.

Many of us believe that if we liberate the NFC, which is what is entailed in the Bill, the British taxpayer will have a far better deal than he would get from any of the petty restrictions that the hon. Member for Holborn and St. Pancras, South has in mind in his Socialist thinking on the subject. Far from being a scrap of waste paper, the Bill is an important measure and I congratulate my right hon. Friend the Minister on bringing it forward so early in what I hope will be a long tenure of office for him.

Labour Members claim that the Bill is an ideological measure and suggest that it is extreme and far-fetched and a deathly blow from the far Right. The hon. Member for Newcastle upon Tyne, Central (Mr. Cowans), who looks as though he wants to interrupt me, has taken part in the many debates on transport matters in recent years. The Bill is a logical continuation of those debates. It is in no way an extreme measure. Time and again, in Opposition, my right hon. Friend made clear what we intended to do. It is fair comment to say that there was no battle but, increasingly, a merger between the two sides of the House. We were moving together, especially on matters affecting rural areas and traffic licensing.

There has been a change of Government. Nevertheless, the Bill is a logical step following various debates, a battle standard raised from our Front Bench over numerous miscellaneous provisions Bills, experimental areas Bills, transport Bills and all the rest. I am glad to see the old team back in action on the other side of the House.

I want to deal with the traffic commissioners and the rural areas. To continue what I have been saying, I would make the point that there is no great difference in principle between the thinking of the last Government and that of this Government. It is on the question of action that the difference occurs. That is graphically illustrated in the White Paper entitled "Transport Policy" which was published in June 1977 and which formed the basis of interesting debates in the House. It was not good enough, I think I am right in saying, for the Labour Party conference. But the document was good enough for many hon. Members to be able to agree with parts of it.

In paragraph 147 on page 32, the document deals with the problems of rural areas. It says: In the resolution of these problems, much must depend on local initiatives and decisions, involving the local community as well as local authorities. But they also need central support. This the Government will be providing, apart from the increase in financial assistance, in two main ways. Then comes the important part: by do-it-yourself advice "— whatever that means— and by legislation to adapt the existing bus licensing laws. The licensing system will be modified so as to make it easier for cost-effective local transport arrangements to be introduced. That is what the then Government were saying. I do not know who wrote that paragraph. But on page 34, bearing in mind that the then Government, it seemed, were going to take action on bus licensing, paragraph 157, beginning at the second sentence, says: The Government has considered the case for further relaxing the present bus licensing laws. But when the problem is that the main bus operators in most areas are carrying fewer and fewer passengers, it is just not sensible to allow competition to move in and cream off a few more. Judging by paragraph 157, so soon after paragraph 147, nothing was going to be done. That is why my right hon. Friend is bringing forward this measure. My point is that there is a certain continuity. At last, somebody is doing something about the obvious.

I wish to deal with the question of the rural areas. This is by far the most important matter that I want to raise. As a number of hon. Members know, I represent an intensely rural area—600 square miles of countryside. One problem is that it suffers from rural deprivation. In recent years, this House has tended to concentrate on inner city problems. Great problems exist in inner cities. At the same time, there has been a channelling of resources away from the rural areas.

The British public have not been reminded sufficiently of the fact that most inner city problems are very much present in rural areas. The problems are, of course, camouflaged. They are not so concentrated. There is a beautiful tree here, a beautiful field there. Housing crises are not experienced in a great terrace, but they are in an isolated cottage. In recent years, rural areas have suffered from rate increases, from school and shop closures and, most important, from the problem of transport. Opposition Members have spoken of tremendous and cut-throat competition and the law of the jungle. A fundamental fact known to anyone who has followed these debates or taken part in Select Committee studies like my hon. Friend the Member for Newbury (Mr. McNair-Wilson) is that there is no money in rural transport. That is the reality of the situation. I am glad that there is some agreement from Opposition Members. We differ about what action to take. We have to liberate the energy incentive and resource that exists to minimise the eventual subsidies that will have to be made.

My hon. Friend the Member for Newbury dealt with the matter of the subsidy. It was clear from what he said about the alternative approaches, the National Bus Company and the Gwent transport authority that subsidy viewed from the Government side of the House could be very different from the way that it might be viewed on the Opposition side. We have to maximise the ability of people to provide for themselves and then for public authorities to move in to make sure that not too many people are deprived. I am afraid that in the area I represent we are in many respects our own worst enemies. This applies also to the constituencies of other hon. Members.

Following on from one thing and another, basically the advent of the motor car, the countryside has become more urbanised. People commute long distances. Seventy per cent. of the population have motor cars. Because of the car and the ability of people to travel further, and the resulting closure of the village shop, the countryside becomes more isolated. It is tragic that those who suffer are primarily the old and the young. Those are the two sectors of the community that need protection. A difference exists over the methods of protecting them. We on the Conservative Benches believe that many people in rural areas, if given the chance by a liberal measure such as this Bill, will be able to contribute to solving their transport problems. It is not enough to be doctrinaire and to say that existing routes must be protected, that the National Bus Company is in some way sacrosanct and that there will be no change.

It is all very well for the hon. Member for Holborn and St. Pancras, South to say that existing private contractors were not in favour of these changes. They are not in favour overtly because they are on to a good thing due to the restrictive and highly conservative measures that have been protecting them since 1930 following the Royal Commission of 1928. They have been protected by the Opposition. It is high time for reform. I welcome the Bill. It is of vital importance for the rural areas. It is part of a much healthier approach to the realities of British life. It is another example of action by the present Government. I congratulate my right hon. Friend.

Mr. Deputy Speaker (Mr. Bryant God-man Irvine)

Mr. Speaker announced at the beginning of the debate that after 7 o'clock speeches would be limited to 10 minutes. I still have on the list eight hon. Members who would like to contribute. In those circumstances, it seems that I can afford to exercise my discretion on the question of when 10 minutes have elapsed.

7.8 pm

Mr. Stephen Ross (Isle of Wight)

I do not think, Mr. Deputy Speaker, that I shall incur your fierce looks. I doubt whether I shall exceed the 10-minute rule. I accept that the Minister has said that he had to leave. I have told him that I shall make some comments in his absence.

I should like to congratulate several of the Back-Bench speakers, particularly the hon. Member for Leominster (Mr. Temple-Morris). The hon. Gentleman was more realistic than his own Minister about the likely effects of the Bill. The speech by the right hon. Gentleman was bold in its description but unbelievably naive about the Bill's likely effect. I do not believe that this is an ideological Bill. I have been surprised by some of the comments that have been made from the Opposition Benches. Like the previous Government, this Government have enormous problems in deciding what to do to help people in deep rural areas. It may be that we will adversely affect existing bus services. In many areas, however, there are no such services. We have to try to remedy that situation.

My impression is that the Bill has been too rushed. I am sorry that the right hon. Gentleman has brought it forward so soon. The right hon. Gentleman is perhaps too anxious to display his virility to his leader. I gather that a number of good ideas, particularly relating to part 1, have apparently been ignored. Perhaps the Parliamentary Secretary will give the House some details about the Rutex experiment that is taking place in the deeper rural areas of North Yorkshire and the West Country. Given more time, some of the results of that experiment might have been included in the Bill.

I also suspect that the Cabinet—although I am sure not the Minister, for whom I have considerable respect—is still seized of the belief that in many areas private entrepreneurial operators are bursting to step in. That is a totally false concept, about which we continually hear from the Conservative Benches.

Many rural areas are now better served than can be commercially justified. Through cross-subsidisation of routes and the knowledge and understanding of county council transportation committees, there has been much greater co-operation between local bus operators and those committees. In recent years there has been a much greater understanding of the needs. I hope that the Bill will not have an adverse effect on that.

In my constituency we have a company called the Southern Vectis Bus Company, which is part of the National Bus Company. It was one of only two bus companies that made an overall profit until about three years ago. It now makes a loss, but the county council provided about £160,000 for it to be subsidised. In fact, it will take up only between £30,000 and £40,000 of that money this year. That is an example of a bus company that has introduced new ideas. New in-town routes have been introduced in Newport and Ryde. We have a half-fare voucher scheme. I dare say that other parts of the country are doing the same.

There has been a great realisation that there is a need to do such things. They have come about through greater co-operation between the county and the bus company. They use the same computer. It is a very close system, working to the advantage of my constituents.

In Wiltshire an experiment is going on in which the Wilts and Dorset Company has been cutting fares. It is continuing the experiment because it has brought many more people back on to the local buses. Perhaps we may hear from the Minister whether he has any figures.

If I were Minister, which is most unlikely to happen, I should put much more emphasis on rapid rail electrification and station interchanges. That is the direction in which we should be going, because rail transport not only saves energy but is safer. Hon. Members will be aware of the number of coach crashes in recent years. Rail transport also lessens inner urban traffic congestion.

People will perhaps be tempted to take a cheap, quick coach from Brighton or somewhere in Kent, but every time we leave the House we realise what absolute nonsense that all is. One suffers great frustration in trying even to leave Westminster. It took me an hour and a half to get as far as Earl's Court on a recent Friday afternoon. I wonder why no Government have had the courage to tackle the congestion problem. They seem to want to put off tackling it because they are frightened of upsetting the private car owner.

The Minister gave some objectives of transport policy. I believe that four matters should be paramount. First, we should try to identify and respond to the transport needs of society at all levels. Secondly, we should try to provide the maximum freedom of choice to the consumer, within the limitations of the resources available. Thirdly, we should seek to make the optimum use of scarce resources. Fourthly, we should ensure democratic control and accountability at all levels. There is a vital need for flexibility and local autonomy. In so far as the Bill moves towards that, it is to be welcomed.

We must not underestimate the importance of public passenger transport. People using it are not an underprivileged minority. It is no good quoting car ownership in terms of households. It is wrong to believe that because a majority of households have access to a car, a majority of the population have access. For example, nobody under the age of 17 has access to a car unless he also has access to a driver. That applies to most people over the age of 65.

I believe that 82 per cent. of women aged between 17 and 65 do not have a driving licence. Many private cars are company cars, and even if spouses are permitted to drive them they are not available during the working day, when most journeys are made. Most people have access to a private car at limited times or as passengers. The majority are dependent on public passenger transport for most of the time.

Part I of the Bill makes for greater freedom of operation. It retains the traffic commissioners, and that is very much in line with my own party's ideas.

The Bill is clearer on the operation of profitable inter-city routes and car sharing in rural fringes than it is on the in-between services, where a bus is needed and cannot be operated profitably.

Clause 7 (3) provides for the traffic commissioners to exercise their powers in the interests of the public". What is not clear is how that expression will be defined. Are the commissioners to decide what is in the public interests? Why not have a provision to publish any change in the conditions of a licence, to allow for objections from the public and public inquiries? I gather that that already happens in Leeds, although not on a statutory basis.

Clause 5 says that the commissioners shall have regard to the transport requirements of the area as a whole". Does that mean that they will be able to grant one profitable licence on condition that the operator runs another less profitable service? What potential conflicts are there between the transport requirements of an area as a whole and local authority plans? County councils may want to make the smallest loss, not plan to meet transport requirements.

Subsections (7) and (8) of clause 27 do not allow for members of the public to appeal to the Minister. Only local authorities and other bus operators may appeal to him. Yet the Bill aims to open up a freer market. Where that is not in the public interest, surely the public should have some protection and the same rights. What will be the effect on its rural services of breaking the NBC's monopoly on long-distance routes? Those rural services are to some extent cross-sub-sidised.

I constantly receive complaints about the number of mainland coaches coming to the Isle of Wight. The drivers do not know the, routes that coaches are supposed to take. There is an agreement with the county council about the routes that coaches based on the island are supposed to take. Bigger and bigger coaches are coming over, filling up our roads. I believe that one effect of the Bill will be to encourage more to come, and my constituents will not welcome that.

I very much welcome clauses 15 to 18, dealing with maintenance and repair. There is a need to tighten up on that matter, in the interests of safety. Some of the people who might be tempted to enter this business—the Freddie Lakers that we have been hearing about—may find the cost of maintenance so enormous that they will quickly be frightened off. Because we are now spending so much less on our road maintenance, the buses—certainly in places like the Isle of Wight—are being shaken to pieces. I recently met the local manager, Mr. Mike Wadsworth, who said that his maintenance bill after last winter was frightening. I am sure that that is also true of other rural areas.

I turn to part II. With the hon. Member for Bedford (Mr. Skeet), I worked for about two and a half weeks under the parliamentary and industry trust scheme with the National Freight Corporation. Therefore, I think that I know a little about that corporation. I agree with the remarks made today that it is nothing like the great ogre that it used to be depicted as by the hon. Member for Eastbourne (Mr. Gow), who introduced a number of Bills to do terrible things to it. I hope that he does not have too much influence on his present boss, the Prime Minister. Apparently, he has had no real influence on the Minister.

In recent years the NFC has struggled into profitability and become a pacesetter in a very competitive industry, of which its share is surprisingly low. We have heard the figure of 10 per cent. I thought that it was 6 per cent. I believe it to be somewhere between those two figures.

The NFC has set high standards, not only in its pricing but in the maintenance of its vehicles. I know that the trade has looked to it to set the pace. At local meetings it is always British Road Services, part of the NFC, that is expected to set the price structure for the area.

The NFC has produced some imaginative ideas—trailer and truck rental, BR rescue services, Pickfords Heavy Haulage, waste management, and specialised services such as Chinaflow. They have all been forward-looking ideas, which have shown imaginative management.

The Government would be wrong to split up the corporation, selling off profitable parts—Pickfords Travel Service would go quickly. They would leave only a rump. I do not think that anybody would want to buy British Road Services on its own.

I accept that the corporation needs access to private equity capital. Many of its premises are outdated. There are premises in Southampton that are appalling. Vehicles need to be replaced. Therefore, I see nothing wrong in selling shares on the open market, if subscribers can be found, which is doubtful. I believe that it is also doubtful in regard to the aerospace industry and the other industries where shares are being sold, but it is worth a try.

The Government must keep at least 51 per cent. I am sad to learn that the Minister is prepared to part with the lot. We need the BP answer that the hon. Member for Faversham (Mr. Moate) talked about. Provided that the NFC remains in State ownership, I see nothing against the sale of shares. It must remain in public ownership to preserve morale and keep the grout) together as a whole. We should not start breaking it up, as has been suggested and as could so easily happen.

I should like to give one of the reasons why I supported the National Enterprise Board. A firm in my constituency belonged to Fairey Marine. The management and work force of the company, an old firm called Groves and Gutteridge, which builds lifeboats and other small boats, wrote to me two or three years ago pleading "We do not want to be taken over by Rank or Trafalgar House. All that they will do is to shut us down and turn the place into a yacht marina. We want to go on building boats." That is one of the reasons why I supported the NEB.

I am still a supporter of the NEB. It has done a good job with Fairey Marine. One of the fears that the work force will again have is that if the company is put on the market it will ultimately be shut down. The company happens to occupy a prime site on the River Medina.

The same comments apply to the National Freight Corporation. I do not believe that the work force would object to the shares being marketed provided that the State maintained the principal shareholding. There is no mention in the Bill of the priority of employee participation. I know that the Minister said that it is his intention that employees shall be given an opportunity to purchase shares, but are any discounts to be offered to the work force? If we can get the work force in the industry buying shares—it should be given priority—I offer a cautious welcome.

I fear that the Minister is too optimistic about the Bill and its likely results. I hope that I am wrong, but I suspect that I am not. Nevertheless, I agree that it offers help for those in the most rural areas. Most of my right hon and hon. Friends' constituents live in rural areas and I shall therefore be giving the Bill my support. I hope that it will receive a Second Reading.

7.21 pm
Mr. Iain Mills (Meriden)

The Bill affects much of our lives since transport is now the third largest item in the family budget next to food and housing. It controls many of the social and environmental patterns of towns and, especially, rural areas. About 10 per cent. of the population has moved from major urban centres to rural areas, where reductions in rail and bus services have created an irreversible shift and a complete change of travel patterns. This means that families and, as they grow older, pensioners become marooned by their less affluent state and by the decline in public transport. As the cost of motoring increases, there is a need for policies to reflect the changing conditions. There is no doubt that the time is ripe for a substantial change in the legislative framework that allows our social and environmental patterns to develop.

There is no doubt that the present situation is not satisfactory. We can hardly say that the Bill is about creating new markets. Do we have enough bus services? Do they serve the right locations? Do they have the right frequency? Are our constituents satisfied? The answer to all those questions is "No". I listened with some concern to right hon. and hon. Members on the Opposition Benches who implied that the bus system is adquate. In North Warwickshire and in the urban parts of my constituency, bus services are far from adequate. My mail on that subject is almost as frequent as it is on other perhaps more glamorous subjects.

One of the reasons for that background has been the historic role of the traffic commissioners. They try to fulfil a useful role, but in reality they cause excessive delay and a tremendous amount of bureaucracy. The figures presented by the right hon. Member for Barrow-in-Furness (Mr. Booth) revealed how many applications are made, how many succeed and how many fail. The underlying truth is that many operators are terrified even to get to the starting gate.

There were lengthy discussions in Committee when the Transport Bill of 1977–78, introduced by the Labour Government, was passing through the House. Many examples were quoted. One concerned a small bus operator who found that the process of applications to the commissioners for a new service cost as much as one year of his projected revenue from the service. There were endless delays, not of months but years. The process often results in total discouragement. Entrepreneurs talk and work, they do not merely study figures. If we said to an operator "Start a new service in North Warwickshire", the discouragement of going through the painful bureaucratic process would be considerable.

Surely the routes and the timing of services should be decided by the user, and ideally provided by a multiplicity of enterprises, not by some remote central control. It is the user, the people, for whom we are trying to provide. I should welcome limited changes to the commissioners' role. I should welcome, even more, total changes to their role. I welcome the experimental area clauses. Some of us would like to see the role of the commissioners dispensed with entirely.

The county councils, through their association, support much of the Bill. Indeed, they support almost all of it. They have made several helpful suggestions. Surely the county councils, with elected members, have responsibilities for carrying out the needs of their electorates. The traffic commissioners are not elected. The relaxation of controls would allow much greater competition and innovation. In my constituency there is a model exercise involving the use of a minibus. After a tremendous, lengthy struggle with the commissioners, the minibus is now operating. It is an example of what can happen and of the difficulties that are met.

Recent events have shown the need to maintain and strengthen many safety factors, especially for motorway coaches or coaches travelling long distances. I welcome the clause that sets out a system which should lead to much greater confidence being created. Therefore, I welcome the first part of the Bill. If we consider it objectively and in the light of what is good and what is bad, it must make a substantial contribution towards the good.

Part II of the Bill deals with the National Freight Corporation. The corporation seems an ideal candidate for denationalisation. I say that not for ideological reasons but because denationalisation and the setting up of the corporation as a Companies Act company would provide for everyone concerned a far more stable, successful, competitive and likely survivor over the next few years.

Several Labour Members have spoken of the feelings of the employees. It is my view that the employees would welcome such a move. Those who mentioned the reactions of staff are no longer in the Chamber. I wonder who they consulted. Was a secret ballot taken? If there had been a ballot, I suggest that the employees of the corporation would have placed their faith in a company working on private enterprise through the making of profit and not in a corporation that could so easily be altered by changes of Government policy of either Conservative or Labour Administrations.

If the corporation is to go public, that has to be done in the right way. If the aim is to get a decent price so that public funds materalise from the sale of the corporation, the sale of the equity must be timed extremely carefully and in a manner that will allow maximum confidence in the sale of the shares. I suggest three ways of proceeding.

First, I suggest that there should remain only a small Government holding. It is important that the Government should continue to be involved, but I suggest that a Government equity holding of about one-fifth would be ideal.

Secondly, I suggest that there should be a much more positive and more detailed role for employee participation through the purchase of shares by means of discount schemes, or some form of preferential treatment. That would be an additional and excellent way of ensuring that the interest of those who are investing their time and labour in the corporation is served well. The rest of the equity could go to the market to be received with a confidence that the market would not have if it were felt that the Government had the majority shareholding and could do what they wished at a subsequent date, I suggest that the prime necessity for a successful market for the shares is a small Government holding and a substantial staff holding. I suspect that the staff would react to that rather more positively than if it continued to be the staff of a Government corporation.

The third factor must be a resolution of the historic pensions problems. It is important for a potential investor—I should imagine that this will come more from the institutional areas—to be reassured that there is not some hidden amount of finance that will materialise and knock the value of the shares at some subsequent date. I should welcome a more detailed statement about that.

There is much in the Bill that will change the nature of transport in Britain. There is much in the Bill that will make a change, but it will not make a change at anything like the disastrous rate that several hon. Members have suggested. There are still controls. The traffic commissioners will still continue. Where there are experimental areas, there are volunteers. The Association of County Councils appears to support the measure. Surely we are taking into consideration all those institutional and elected factors in order to give the Bill the best chance of succeeding.

In the estates and villages of Britain, in all our constituencies, millions of pensioners, housewives, young people, men wanting to work and communities are becoming marooned by the lack of transport. In releasing the forces of private enterprise, and in using the ingenuity of private individuals, we have a responsibility to try to create more bus services. In trying to create a market for unexpected innovations, I suggest to hon. Members that one cannot say that no market exists, therefore no buses will be created because no private individuals will enter the market. The very genesis of innovation is in creating the framework in which people will find new solutions.

Please do not think of the Bill in terms of huge lorries lumbering down the roads, consuming quantities of diesel. There are a million innovations that should come out of the ingenuity of private individuals. If we can capture that through the clauses in the Bill, we shall indeed find some small but beneficial change I suggest that the alternative is the status quo, and that is not satisfactory to my constituents. I wonder whether it is satisfactory to anyone. I therefore support the Bill.

7.31 pm
Mr. Sydney Bidwell (Ealing, Southall)

Although the Minister of Transport is not present, I should like to apologise for not having heard the whole of his opening speech or, indeed, the whole of the opening speech of my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth). I was called away on a rather urgent domestic matter. However, I think that I picked up the substance of what was said from the Front Benches.

In a debate of this kind, it is quite obvious that not every aspect of such a wide-ranging Bill will be adequately dealt with. Much of the debate has taken place on the assumption that the Bill will receive a Second Reading, albeit in the face of opposition from the Labour Benches, because of the inbuilt Conservative majority, even though most Conservative Members will not have participated. We shall want to go through the Bill with a very fine tooth comb.

For example, we look forward to considering a few amendments from the hon. Member for Meriden (Mr. Mills) suggesting far-ranging proposals for employee participation in all the diversification of enterprise that the hon. Gentleman has in store for us, and we hope that he will make it a precursor to any other thoughts that he may have on the subject. That would be very welcome, but I suspect that the hon. Gentleman will be thinking more about shares on the stock market, if we take the tenor of his speech as an indication.

Mr. Moate

Will the hon. Gentleman give way?

Mr. Bidwell

Not at this stage. I remember the Minister as the home affairs correspondent of The Times, and subsequently I worked with him on the Select Committee on immigration. I much preferred the right hon. Gentleman in those two roles to his role as Minister of Transport. In his opening remarks, he said that the Government's predominant thought was to put forward proposals in the interests of the passenger and the consumer. I take it that by "passenger" he meant people who have to travel by public transport, and I assume that by "consumer" he meant those who consume commodities that are carried by the freight side of the transport system.

We must also consider two other quite important factors in Britain's transport problems. They are those who walk on the highways and who at present do not partake of the commodities for which transport is responsible, and also the young and the old. When those two aspects are taken into account, we should think of British transport not just in economic terms but as something that is indispensable to the well-being of our industrial nation as well as to the public as a whole I see nothing but peril in most of the proposals that are now before us.

We should also consider the failure to recruit people for transport jobs in some parts of the country. I speak as a former railway worker. In recent years, I have been sponsored by the Transport and General Workers Union. Therefore, I have had considerable experience in transport. I am a private motorist, but I hate the motor car. If I were provided with a decent public transport system, for the most part I would much prefer to use that. That is really what we are discussing—whether we should go backwards to the 1920s or forward towards better transport provision in all its forms.

I disagree with the hon. Member for Isle of Wight (Mr. Ross), who said that this is not a doctrinaire Bill. It is mostly that. Although there are great holes in it, it points the way rather than laying down hard and fast conditions. The Government in which the Minister of Transport serves are basically a doctrinaire Tory Government. It is one thing to have a pragmatic Tory Government such as we have had in the past—such as that which the older Churchill may have led or even Harold Macmillan—but it is quite frightening to have a doctrinaire one who are plodding on regardless of the threatened chaos that much of the Bill's provisions could produce.

Our national affairs allow for a decent Socialist transport policy, mostly from the centre. Instead, we get a Bill of this sort that points the way to anarchy in its crudest form if most of its provisions are taken seriously. It proposes to curtail public transport and to promote private transport, when every schoolchild knows that in the social and economic interest we need a switch to the public control of transport in all its forms if we are to serve the needs of our people, in the sense that the nation's freight, from point of production to point of export, should be carried on Britain's roads and railway network.

The Minister thinks that the strength of the Bill lies in the competition that it introduces and threatens. I say "threatens" because many of the clauses hint at rather than make it clear what the Government are likely to be able to carry out. To a great degree it is an enabling Bill with ugly features. Its miscellaneous provisions are enormous. Those of us who may play a part in Committee will debate it and contest it. In any case, no Transport Minister can carry out considerable changes and achieve betterment unless he has the good will of the nation's transport workers.

What is the reality? He has the hostility of nearly all the workers, including sectors of management, as he prepares to wreak havoc with the aid of the Bill, if he is not careful. It is my view that the previous Labour Minister of Transport was a bit half-hearted in many of his approaches to this problem. I remember smothering the previous Bill with safeguarding amendments in relation to car sharing, because the mind boggles at the extension of that provision.

What do the transport workers' leaders think about the Bill? One can understand the considerable interest of the National Union of Railwaymen. Indeed, the Transport Salaried Staffs Association in particular has a membership that straddles both the road and rail aspects of the transport system. Those bodies must have a very strong interest in the outcome of these measures.

I wonder whether the House would like to have the considered views of the two national officers of the TGWU, one from the freight section and one from the passenger section. The majority of Britain's transport workers are members of the TGWU. Mr. Jack Ashwell, national secretary of the commercial (lorry drivers) group of the TGWU, responded to the Minister of Transport and gave him the benefit of his views about the sale of shares in the National Freight Corporation. He said: They are politically doctrinaire, ill-advised and will lead to the break up of a Nationally owned enterprise that is currently making a profit, and providing an irreplaceable contribution to a vitally important sector in Britain's struggle for economic survival. It is the privately owned parts of the economy that require massive investment to promote the necessary growth, and the private capital that is available should be injected into Manufacturing industry, not used to buy State-owned assets or invested abroad. The economy of the country has nothing to gain from the piecemeal destruction of the NFC, which currently owns 10 per cent. of the country's professional road haulage industry and has rightly raised standards, and acted as a spur to the other 90 per cent. The last thing it needs now is to be saddled with even greater interference from those motivated by political dogma. The national secretary of the passenger services group until very recently, Mr. Larry Smith, had this to say about the effect on the bus licensing system: Public Service Vehicle licensing should not be relaxed. There would be no long-term advantage in putting a non-car-owning public at the mercy of car sharing schemes. There is already plenty of unlicensed competition to present services, both urban and rural, together with a licensed taxi trade"— in which the union also has considerable interest— from mini-cabs, transit vans used as 'worker' buses, to private hire cars and works-owned vehicles. There is no case for scrapping the quality control of conductors' licences. Standards must be kept in the public interest. Undermining the Traffic Commissioners' ability to control fares, will leave the public at risk to exploitation from cowboy maverick private operators on temporary excursion into the industry … They will, of course, cream off the most profitable section of the industry. Their early activities will destroy the weakened viability of the net-work operator. Because there is little, if any, profit to be made in bus transport … That is why we would be completely flabbergasted if Freddie Laker were to try to come in and take up the bits that might be going. the entrepreneurs will leave the bus passenger worse off than before. There is no substitute for public transport, which is an essential part of the economic survival of the country, and the support for it is reflected in its ability to transport workers cheaply and efficiently to their work. The bus, for half the population, is the family car …". The workers are, therefore, taken aback by the provisions of the Bill.

My advice to the Minister is to take the Bill away and screw its scruffy neck. He is not likely to do that. Therefore, we shall contest it in Committee. This Bill is doctrinaire to the marrow. It reminds many of us who lived our formative years in the 1920s and 1930s of the fly-by-night operators, the spivs and the drones. This Bill gives the green light to the spivs to operate in the transport system.

If one thinks of the extension of the car-sharing provisions—included in the Bill with the blessing of the Transport Minister—the mind boggles at the possibilities. We need well-paid, dedicated passenger transport workers operating an extended public transport system. Most civilised countries came to that conclusion long ago. With this Bill we are turning the clock back. It does not look forward as some right hon. and hon. Members in Government have suggested.

We need Socialist planning, and a Socialist Transport Minister, under a new Government of Socialist dedication in the round, to put the matter right. So it will be.

7.45 pm
Mr. Terence Higgins (Worthing)

The Bill dismantles excessive restrictions and puts the consumer first. I certainly do not agree with the arguments put forward by the hon. Member for Ealing, Southall (Mr. Bidwell). In particular, I do not accept that the provisions in the Bill are in any way likely to endanger safety standards in road transport, in either the freight or the passenger sector. There is a great difference of view between the two sides of the House, and I listened with great interest to the contrasts in style and in argument between my right hon. Friend the Minister and the right hon. Member for Barrow-in-Furness (Mr. Booth).

I would like to take up some of the points made and seek, if I can, to persuade the right hon. Gentleman that at least some of his arguments are not valid. The Bill, unlike Gaul, is divided into two and a half parts. There is a road passenger transport part, a road freight transport and the provisions for pensions. Before I speak about the pensions provisions, I formally declare an interest because for some years I have been economic adviser to a freight transport company.

The right hon. Member for Barrow-in-Furness raised two important points about pensions provisions. The first was that in relation to the provisions for the historic pensions arrangements it is proposed that we should adopt a pay-as-you-go scheme rather than a funded scheme. Having struggled with this problem some years ago at the Treasury, I can understand the arguments for doing this. In a wider context, we should consider whether there is not generally, in the public sector, a case for adopting a pay-as-you-go rather than a funded scheme. I accept that in the private sector the funded scheme is more appropriate. This is no doubt a point that we can pursue in Committee. However, that point is not just related to the transport industry. In controlling public expenditure it has much wider ramifications.

When he reads Hansard I think that the right hon. Gentleman will understand why there was some reaction on the Government Benches when he said, in discussing the proposal for selling National Freight Corporation shares, that he thought that if they were purchased by pension funds their value should be guaranteed. I think that on reflection he will accept that that is not a sensible proposition, because the point about equity shares is that they are, effectively, risk capital.

What I think the right hon. Gentleman intended to say—that is why there was a reaction—is that if this operation proceeded, though he opposed it, the price paid for the equity should be a fair price. I wholeheartedly accept that view. Perhaps we can pursue that point in Committee.

I do not want to concentrate on that part of the Bill because, in a sense, it is a separate entity and raises wide issues. I want to concentrate on the broad principles. In contrast to the view of the hon. Member for Southall about the National Freight Corporation, my view is that what is now proposed will greatly strengthen the corporation and make it more, not less, competitive in relation to the rest of the industry. As consumers, we would accept and encourage that strengthening of the corporation.

In spite of the reflex and Pavlovian reaction of the Opposition, the National Freight Corporation has always represented a strange part of the nationalised industries. Unlike most nationalised industries, it does not have a monopoly. It holds less than 10 per cent. of the market. It is not a natural monopoly or natural nationalised industry, if such an animal exists; it is an odd man out. It is more sensible to do what my right hon. Friend proposes and proceed on the lines in the Bill.

I am immensely impressed with the quality of the NFC senior management. My impression is that it will take the opportunity that is offered in the Bill, if it is approved by the House. My right hon. Friend is right not to break up the NFC. There is no difference between the two sides on that. If the NFC had been divided into more and less profitable parts and the profitable parts had been put on the market and the non-profitable left where they are, that would have had a traumatic effect on morale and discouraged senior management. The NFC would not have been given a fair chance. The Minister has the right approach. The organisation will take advantage of what is offered.

That is true not only of the management and those who buy shares but of those who are employed by the NFC. They are concerned about their long-term job prospects. Unless the organisation is efficient and profitable, the employees are likely to be jeopardised in the long term, and they are unlikely to receive the increases in real earnings that we should like them to have.

I turn to the road passenger transport aspect of the Bill. Proposals are made for increasing the level of freedom. The right hon. Member for Barrow-in-Furness, in his opening remarks and in response to an intervention, brought out the core of the debate—the distinction between subsidies and cross-subsidisation. That is fundamental to the argument. We all accept that in certain circumstances there may be a case for subsidisation of rail transport or road transport, or both. We recognise that the Government have a responsibility to certain communities which may be isolated or handicapped compared with others. They are entitled to expect a degree of public service transport, by rail or by road.

The right procedure is to say that the Government's duty is to pay a certain subsidy. The House then knows what is being paid out. We have a degree of accountability and we can vote for or against a proposal on its merits. However, cross-subsidisation is different.

There are too many subsidies involved in road transport. They have multiplied over the years. One has only to enumerate them to realise that that is so. For buses there is a revenue support grant, a special grant and a new bus grant—a rather ambiguous expression. When one talks of bad accident statistics, one is not sure whether the accidents or the statistics are bad. The same is true of the new bus grant, which is for new buses. In addition, there is assistance for rural bus services, a rail replacement service subsidy and a reimbursement of fuel duty. There are no fewer than six different subsidies. There is an argument for rationalising those subsidies to ensure that we have the right pattern of subsidies to achieve our objectives.

There is also a range of subventions for the railway services. We should weigh those two separate operations and decide whether the balance is right and whether the money that we are spending is achieving the objectives that we wish to be achieved.

Mr. Booth

Does the right hon. Gentleman accept that if the Minister were to change the Bill so that there were no cross-subsidy but only direct subsidy—whether from the Ministry of Transport or through the county and metropolitan authorities and transport support grant—the cost to the British taxpayer and ratepayer of maintaining the present services would be much higher and the profits of the bus companies correspondingly higher?

Mr. Higgins

I do not believe that the profits of the bus companies would be higher, because of excessive wage settlements, for instance. We should know who is receiving the subsidy and why, and the amount involved. That is not true of cross-subsidisation.

Given the changes that my right hon. Friend proposes, it is important to ensure that the National Bus Company's position is right. I was a little concerned at the Department's response to Cmnd. 774/3 and the recommendations of the Select Committee on nationalised industries. I refer in particular to the recommendation that The Government should write off entirely those debts to the National Bus Company attributable to the additional mileage operated in 1975 to London Country Bus Services. We should ensure that the National Bus Company does not carry loads that it should not carry. I do not say that that is a firm conclusion, but it should be considered. The position of the National Bus Company in relation to the proposed changes is important.

The right hon. Member for Barrow-in-Furness argued, on the one hand, that if one opened up the market and did not have the present system of regulations no additional operators would apply and, on the other, that if one allowed that to happen it would wreck the system. There was an inconsistency in that argument.

Mr. Booth

I said that operators would apply not for non-profitable routes but only for profitable ones.

Mr. Higgins

If the right hon. Gentleman reads Hansard, he will find that his argument is inconsistent. He also said that not many people had applied and that not many applications to the commissioners had been accepted. I shall be delighted to give way if the right hon. Gentleman disagrees with what I say. He seems to want to encourage debate when far too many people make set speeches. At present it is not surprising that not many people apply to the traffic commissioners for more routes, because they know that if they do British Rail will object and almost certainly succeed. Not many people had applied, because it had seemed a hopeless task. The right hon. Gentleman's argument is not valid.

I turn to the question of cross-subsidisation. If we have a close system of regulation, as we have at present—this is implicit in what happened in the 1920s and 1930s—there is bound to be a high degree of cross-subsidisation. The House does not make a definite decision. It does not know exactly what cost is involved, who benefits and who loses. Other passengers pay the subsidy. Those passengers who live on the unprofitable routes gain. That is a bad way of achieving the objective that the right hon. Gentleman wishes to achieve. That is entirely arbitrary and indiscriminatory. There is no reason why the people in built-up areas should subsidise those in rural areas. That cost should not fall upon them rather than on the taxpayer in general—if we agree that taxpayers in general should pay. Cross-subsidisation inevitably results in inefficiencies. It is a bad way of achieving a network, which has been objectively declared to be something that ought to be established.

I still hope to persuade the right hon. Member for Barrow-in-Furness that this is a valid argument. If there is a change to specific subsidies for specific objectives, and if one decides to go ahead with that—it is a big "if"—the cost in public expenditure terms will be larger. In the present circumstances one may well object to that, but at least a decision is being made and one knows what one is doing. Under the present restrictive licensing system one does not, and subsidisation is taking place on an arbitrary and unfair basis.

That having been said, under the system proposed by my right hon. Friend I believe that the companies in operation, particularly the National Bus Company, will be more competitive. We shall get a difference in the allocation of resources instead of a system of cross-subsidisation between one route and another, one class of passenger and another, one time of day and another, and so on. That is the core of that part of the proposal.

There are also specific proposals for removing restrictions. In particular it is suggested that express services should be given more encouragement, and that is right. There are proposals for encouraging small vehicles, and that is right. It is important to remember that these proposals are put forward on a trial basis. It is not proposed to change the whole system overnight and nationwide; the changes are on a trial basis and on application from local authorities.

The relationship between local authorities and transport operators is important. The right hon. Member for Barrow-in-Furness appeared to think that 10 local authorities was a small number, but it is 10 county councils and is therefore not all that insignificant.

Mr. Booth

The small vehicle provision is not suggested for trial areas. It is to run throughout the country from the day that the Bill is passed.

Mr. Higgins

I am sorry. I may have put the paragraph in the wrong place. The right hon. Gentleman is perfectly right. I was talking of the stage services. I had moved on to that point. It is not right to have the small vehicles provision on a trial basis. It is a straightforward provision, which I would support.

I do not know whether other hon. Members have had representations from the Association of County Councils, but county councils are anxious that there should be provision for consultation rather than mere notification between the operators and local authorities. They are concerned that there should be an obligation on the operators to consult them. Perhaps the Minister will clarify that point.

Every morning I find myself in a traffic jam, although that does not apply at 3 o'clock in the morning, when driving home. The car-sharing proposals will reduce congestion and speed up and improve bus services in many urban areas. It may enable us to abolish bus lanes, of which I should be in favour, with one or two exceptions.

There is concern among taxi drivers that their position is not also being relaxed. They are not allowed to pick up passengers en route and build up a full load. That restriction should be considered in conjunction with car sharing, as it would also tend to reduce congestion.

The proposals in the Bill increase the level of competition, and I believe that that is a better idea than the so-called integrated transport system, which is the highly planned system that the hon. Member for Southall appeared to be advocating.

We need to ensure that we have the right balance on these measures. We should move away from the protectionism of the past and encourage greater competition and more efficient allocation of resources. The Bill does that, and I welcome the proposed changes. My right hon. Friend described the Bill as the most radical change since the 1920s. I believe that that is true, but we should also regard it as a first step in a general reform of our whole transport system.

8.5 pm

Mr. Derek Foster (Bishop Auckland)

I am one of several hon. Members who wish to refer to the problems of rural areas, and it is good that those problems are having a hearing.

I have an excellent document entitled "Rural Deprivation", produced by the Association of County Councils, which makes it obvious that the problems of rural deprivation have become fashionable. On reading the document, it flickered through my mind that it was produced more to persuade the Secretary of State for the Environment to divert resources from inner urban areas to the shire counties than to home in on the problems.

It also passed through my mind that the problems of rural deprivation have been with us for many generations and that there has been little sign that the same county councils have concentrated their resources on areas of high social need in the same way as local authorities in inner urban areas. I hope, now that there is a prospect of resources being diverted to county councils, that they will concentrate resources on the deprived areas and not fritter them away in the more affluent areas, as in the past.

The Bill seems to hold out hope for a significant improvement in transport services in rural areas, but that could be a mistake. There is a danger that as a result of these measures there will be a worsening of services.

Bishop Auckland and Teesdale in County Durham consist of 600 square miles of some of the most beautiful countryside in England. Some of the problems that exist there are not typical of the more affluent rural areas represented by Conservative Members. My area has more than its fair share of the elderly.

low paid and physically handicapped. It has less than its fair share of cars, in common with the whole Northern region. Those factors give rise to considerable problems of mobility.

Over the past 20 or 30 years, along with other rural areas, we have seen a devastation of services. With the increase in productivity, agricultural workers have increasingly migrated to urban areas. The lack of new jobs coming to the rural areas has persuaded the young and more vigorous to drift eastwards towards the central corridor of Durham, leaving behind unoccupied houses, the destruction of local communities and the neglect of the important network of social support that is particularly necessary when people are isolated. Many hon. Members share these problems in their constituencies. Transport is vitally important in these areas, and there is hope in the Bill that we will be able significantly to improve the provision of transport.

We should look to the creation of work, housing policy and transport policy. Those three things will reinvigorate the rural areas and solve many of their problems. We cannot look to one policy area alone as the panacea for the rural areas. However, the argument is advanced that, because of the increase in competition, there will be an influx into the rural areas of operators anxious to improve the services. I can see the case for that argument in the more urbanised areas. Operators will be attracted by profitable routes. I concede that the present system is inadequate in urban areas, but it is especially so in rural areas. The advantage of the present service is that at least there is a service.

We have heard a great deal about the cross-subsidisation and the subsidisation arguments. We need a service that is prepared to operate within the uneconomic rural areas as well as in the urban areas, if there is to be a unified service. Conservative Members may well say that that is not the sort of service they seek. The right hon. Member for Worthing (Mr. Higgins) said that he did not look to an integrated pattern of services as being the answer.

Mr. Higgins

I was using a rather more technical expression which embodied the idea of an integrated transport policy carrying with it proposals about planning and so on. A degree of integration in the operation of the market and the sort of changes that are proposed is desirable. However, the central planning has been described by one of the hon. Gentleman's colleagues as a pipe dream.

Mr. Foster

I certainly do not regard it as a pipe dream. I advocate an integrated transport system and much greater co-ordination and integration of planning within the shire counties. That would enable us to look at the problems in the round.

One of my worries is that the present mess in the rural areas is because of market forces. Conservative Members want to compound one error with another. They want to allow market forces to have sway within the transport system as well as in other aspects of rural affairs. What business man will wish to compete for acknowledged uneconomic services? Unless there is an answer to that question, I cannot see how we can look for significant or substantial improvement in rural areas.

I wish to encourage innovation within the transport services in rural areas. I do not condemn post bus schemes and community bus schemes, or even some aspects of car sharing in rural areas. We must look at those ideas because there is no easy answer to the problems of mobility within rural areas. However, if the Minister believes that we can get away from a heavily subsidised transport system within rural areas he is living in cloud-cukoo land. I point to experiences in the Common Market and elsewhere in the world where similar problems and experiences have occurred. Many countries have come to the same conclusion as we have—that a subsidised transport system is essential for the quality and safety of the service and the other aspects that have been referred to by my right hon. and hon. Friends.

I fear that the Bill will reduce the ability of county councils to manage a transport system within their orbit. If we are to look at the problems of rural areas in the round, and if there is to be an agency which will arbitrate among the social and economic forces which operate in rural areas and preserve the general interest rather than the private interest, that agency must be the county council. If the powers of the county council are diluted in any respect—it seems to me that the Bill dilutes those powers significantly—we shall be opting out of our responsibilities. The problem becomes fearful and market forces are allowed to hold complete sway in the rural areas. The very forces that we attempt to curtail will be encouraged. I plead with the Minister to think again if he feels that rural transport will be improved by the provisions of the Bill.

Several Hon. Members


Mr. Deputy Speaker

I remind the House that five hon. Members' speeches have to be accommodated within the next 45 minutes.

8.16 pm
Mr. Gerry Neale (Cornwall, North)

I thank you, Mr. Deputy Speaker, for the opportunity to play a part in the debate. I regret that I missed a small part of it because of a media interview. However, I have listened to the comments of the hon. Member for Bishop Auckland (Mr. Foster) with interest and I shall refer to them during the course of my speech.

I should like to say how much I welcome the Bill. I congratulate my right hon. Friend the Minister of Transport on bringing it before the House so soon. I echo the feelings of my hon. Friends who have indicated how unashamedly reassuring it is to be able to speak on a Bill which is consistent in its provisions with the views expressed by my right hon. Friend and others when they were in Opposition.

The purpose of the Bill is to put the user first and protect him against the vagaries of the system. I welcome the proposed changes in the bureaucratic provisions concerning public service vehicle operators' licences. It must be sensible to apply those provisions to vehicle centres rather than to the vehicles and to extend the currency period of the licence to five years. I welcome, too, the proposed exemptions on road service licensing. It makes sense to exclude tour excursions and express services over 30 miles, as defined by the Bill. Undoubtedly, that will help Cornwall to benefit from the increased tourism provided by tours and excursions as well as by the long-distance stage services. I hope that my right hon. Friend will resist pressure to amend that limit upwards.

I welcome most of all the reduction in restrictions on road service licensing. In particular I welcome the shift in emphasis on considering applications under clause 5. The transportation service must be healthier if there is a presumption in favour of the applicant who runs the service rather than the position that exists now. It is the height of nonsense that in the present situation the National Bus Company, as a nationalised concern, can be successfully challenged in an application for a new service before the traffic commissioners by an objection from British Rail. That point was brought out clearly as a result of an intervention by the hon. Member for Nuneaton (Mr. Huckfield).

The far-flung nature of many parts of this country makes the provision of conventional bus services unviable. The hon. Member for Bishop Auckland described his constituency. He indicated that it was less affluent than those of many Government supporters. However, he very ably described the nature of my own constituency, in which there are good numbers of elderly people and a very low pay average.

The demand for quick, convenient and cheap public transport in the rural areas must be met. The competitive convenience offered by the motor car is now enjoyed by many families. The lifts offered to relatives, neighbours and friends mean the potential creation of formal or informal car-sharing schemes that serve to enhance the expectation of convenient bus services.

Large buses run by the National Bus Company or subsidiaries, justified as they may be by peak-hour requirements, are just not suitable either in size, fare loading or routing in many rural areas. There are many examples in my constituency—the hon. Gentleman referred to examples in his—where private operators take passengers for more than twice the distance for nearer half the fare of the journeys offered by the Western National Bus Company.

The restrictive approach by the traffic commissioners in applying the present restrictions, as they must do, has made it impossible in many cases for private operators to run stage services in rural areas in conjunction with their other contract work. My hon. Friend the Member for Newbury (Mr. McNair-Wilson) referred to one example. I could mention others relating to Cornwall.

In Cornwall—North Cornwall in particular is no exception—the Western National Bus Company has virtually lost its role in providing a network of regular bus services to much of this area of Britain. It is interesting that the Cornwall county council public transport plan analyses the various services provided. It reiterates the point that the urban services are profitable. For the town services in Cornwall there is a ratio of 11 Western National routes to two independent operator routes. In the inter-urban routes there are 26 Western National-operated routes to 12 independent operator routes. The Western National Bus Company presumably operates 43 rural routes at a loss. On those routes there are 101 private operators on significant routes. In fact there are 58 less significant independent routes operated by private operators.

Predominantly the system in Cornwall is privately operated. Some say that that situation results from the historical refusal by Cornwall county council to put in greater sums by way of subsidy. Many hon. Members—especially Members of the Opposition—said that if subsidies were not available the services were just not provided. Cornwall proves the case that these services will be provided by private operators.

One important point was raised in an intervention—unfortunately I missed part of the hon. Gentleman's speech—by the hon. Member for Nuneaton, who said that there was a decline in public transport and in the number of people travelling on buses. He indicated that no route showed any increase in passengers.

It is unfortunate that the hon. Gentleman was not able to join the right hon. Member for Barrow-in-Furness (Mr. Booth) on a trip to my constituency. Had he seen the bus operator who runs a service from Bude to Exeter, he would have been privy to the information given to the right hon. Gentleman that the operator had run the service for 10 years, had not increased the fares and that every year the number of passengers had risen. In addition, I am told that in certain villages, by reason of the conditions imposed by the traffic commissioners, the operator is not permitted to stop his buses and pick up passengers, simply because that would conflict, according to the National Bus Company, with one of its services in those villages. That is ridiculous. The private operators provide flexibility of service and cheaper fares. They are able to offer greater flexibility and better services if they have more freedom from the licensing restrictions, as proposed by the new proposals.

Before turning to the provisions relating to the National Freight Corporation, I should like to voice my support for the setting up of trial limited licence areas on the application of certain local authorities. Such a measure would remove all the requirements in such areas for road service licences relating to stage carriage. It is a very courageous and encouraging move.

I take the point that was made about county councils. They should beware of being over-restrictive of National Bus Company subsidiaries trying, as they would then do, to operate in what would be a free market. County councils should not try to restrict those subsidiaries by getting them to maintain existing services which are unprofitable. It is often the attempts of county councils to co-ordinate all these services that set up the very bureaucracy and system of objection which prevents much of the spontaneity which I suspect my right hon. Friend wishes to obtain in creating more rural services. Bus transport policy has been subjected for too long to restrictive and bureaucratic control. Many hon. Members have moved towards this conclusion.

I turn now to the proposals in the Bill relating to the National Freight Corporation. I accept that this is an enabling Bill and that many of the practical aspects of it will be dealt with at the appropriate time. However, I should like to make one or two comments on it.

I accept that the Bill does not meet with the approval of many Opposition Members whose belief, no doubt sincerely held, is that a nationalised corporation is the right way to manage a national road freight transport service. My hon. Friend the Member for Faversham (Mr. Moate), in his—

Mr. Campbell-Savours

It has been the custom over the past few weeks during debates for hon. Members to confine themselves to 10 minutes. I have been particularly careful to do that, as have many of my hon. Friends and other hon. Members. I draw your attention, Mr. Deputy Speaker, to that rule, of which, no doubt, you are well aware.

Mr. Deputy Speaker (Mr. Richard Crawshaw)

I understand that my predecessor in the Chair indicated that speeches would be limited to 10 minutes. If the hon. Member for Cornwall, North (Mr. Neale) persists, many hon. Members who have been sitting here throughout the debate this afternoon will not have an opportunity to speak.

Mr. Neale

I apologise, Mr. Deputy Speaker. I was obviously incorrectly informed. I thought that the rule had been suspended.

Before I close, I should like to say a few words about the National Freight Corporation. I ask my right hon. Friend the Minister of Transport to adhere to the view that the corporation, presently consisting of 50 companies, is best denationalised as a whole, and that the policy of disposal of parts, or the acquisition of new companies, should be left to the new board. I also ask my right hon. Friend to adhere to the policy which will ensure that the procedure will be activated as soon as possible after the Bill has received Royal Assent, so that the new company may be formed with 100 per cent. Government-owned shares, to enable the readjustment of internal and external trading policies to be effected by the board well in advance of the sale of shares.

On the sale of shares, I ask my right hon. Friend to ensure that their disposal is not only timed to suit best the performance of the new company and the state of the stock market but that the disposal is not less than 75 per cent. of the shareholding. There has been talk of this becoming a "BP solution" with no Government majority retained in the shareholding. No prudent investor would be confident in the Government's intention to allow the new company to trade free from Government intervention if they retained any minority shareholder rights under the Companies Acts.

Finally, I would not shackle the company with an onerous structure of loans which, by the nature of any priority attaching to them, would inhibit its future trading. Surely it would be ridiculous to place the NFC back in the private sector but so to fetter its power to offer its assets to banks as security that it is impossible for that company to trade.

In the context of the Government's attitudes towards industry, I conclude with the comment that it must be demonstrated, without qualification or proviso, that the power to succeed and the responsibility for failure are placed firmly where they belong—with the management of the new company. That established, I have no doubt that the new denationalised company will become an excellent place for investment, provided that improved and more competitive services are guaranteed to its customers and a secure and worthwhile future is guaranteed for its employees.

8.31 pm
Mr. John Home Robertson (Berwick and East Lothian)

I shall try to be quicker than some other hon. Members have been this evening. This is the first full-scale Transport Bill that has been put before the House since 1968. One does not need to be particularly clever to be aware that there have been enormous changes of emphasis which have affected views on transport in the intervening years. We now have a full-blown oil crisis, a serious mobility crisis, which leaves millions of our citizens, particularly old people and those in rural areas, stranded in their homes, and a shocking and deteriorating level of pollution and congestion in our cities and on our main trunk routes.

The Government's track record on public transport up to now has not been particularly good. We have had sinister threats about the future of branch railway lines. The Secretary of State keeps telling us that he will not "do a Beeching". He could not really "do a Beeching" because that has been done, but we are worried that he will "do a Fowler" on branch railway lines.

We have also seen indiscriminate increases in VAT which impose a heavy burden on the cost of petrol. This means that people who must travel long distances in rural areas are most affected. Recently there have also been threats to the school bus service.

It is right that the Government should come forward with major legislation for transport in the 1980s. It is time for the House to subject the Bill to constructive analysis. Will it have the necessary effect of conserving fuel or increasing mobility? Will it penalise those who waste fuel and create congestion on our roads? Will it include encouragement for the provision of transport where it is most needed? I see precious little evidence of any of these qualities in the Bill as I read it.

I start with the question of wasted fuel and traffic congestion. I come from a quiet rural constituency. Every time I come to Westminster, I find the spectacle of traffic on the roads incredible. In London there is an excellent, fast and still reasonably priced public transport system. Yet still thousands of people insist on crawling around in cars, usually with three empty seats. I wonder whether there is an estimate available of the quantity of fuel burned by stationary vehicles in the metropolitan area, where people rev their engines madly while they are standing at stop lights. There is nothing in the Bill to discourage this wastage.

I pass from the horrors of the traffic in Westminster to the rather more civilised area of the little village of Westruther in my constituency. That village is 10 miles from anywhere. It is the centre of a very scattered and remote area with a population of only 300. Up to now, all the children in that area have had free bus transport to school, but I do not know whether that will continue for much longer. Most people in the area must have access to a car, otherwise they would be in dead trouble. If they could not get a lift in their own car or someone else's they would be lost, because there is no bus service to the area. They could not get to shops, to the doctor or the dentist. They would be literally stranded.

However, last May under the Rutex scheme which has already been referred to—the rural transport experimental scheme—and which was set up by the Labour Government, the Borders regional council and the health board got together to co-ordinate their internal delivery van operations. For years, publicly owned vans have been travelling around Berwickshire between doctors' surgeries and hospitals, between local authority depots and their offices, often duplicating each other's services. Under the Rutex scheme there is the same network of deliveries but without the duplication. Instead of travelling around in vans, the drivers are driving minibuses, which carry passengers. The scheme is called the Border Courier Service, which provides public transport in areas such as Westruther, the little village about which I spoke, which had not seen buses for a long time. That system is working. However, the grant which makes it possible for that experimental unconventional rural transport service to continue will come into question next May.

I should like to ask the Minister a specific question. I notice that the Under-Secretary of State for Scotland, who knows about this matter, has just entered the Chamber, so there is no excuse for his not giving a direct answer to my question. Will he tell us whether the grant will be continued after May to enable the Border Courier Service to carry on?

Having asked a specific question, I should like now to ask a general question. Do the Government intend to continue encouraging unconventional rural transport schemes? I see precious little in the way of provisions for this kind of scheme in the Bill. The only vestige of help that there seems to be for rural areas is in clause 2, which covers car sharing. I do not fully understand the effects of this clause, but I oppose any measure that would allow cowboy minibus operators to cream off business from the few remaining profitable public transport service routes in rural areas.

In many areas, particularly in my constituency, the private car is the only way in which to get around. There never can be a full rural bus service—no bus route will cover every farm cottage and farm. That is why it is wrong to penalise rural car drivers with excessive fuel prices. It might have been even worse if we had seen fit to clobber these people with the massive petrol taxes which would have been imposed had vehicle excise duty been removed, but I had better not offend my right hon. Friends on that issue.

We need positive discrimination in favour of car drivers in the countryside, and we need negative discrimination against car drivers in the towns. We need to encourage unconventional forms of public transport for the rural areas. If that is what car sharing means in the terms of clause 2, I am prepared to support it wholeheartedly, but I have a nasty suspicion that it is only a gimmick.

Speaking of gimmicks, I turn to clauses 12 to 14 and the so-called trial areas. This appears as one of those characteristically daft manifestations of the Prime Minister's dogma which have to be enshrined in virtually all legislation these days. They are blunderbuss freedom clauses which can be of little benefit to anyone except to the drivers of Ferraris who object to buses on the roads.

If any local authority were to be so rash as to take advantage of those clauses, the result would be that bus operators would charge sky-high fares on profitable routes and provide no services on other routes where there may be more need.

I do not want to sound over-enthusiastic about the status quo, about the National Bus Company or about the traffic commissioners. All is not well with bus services. Fares are often too high, services are erratic, and far too many buses are travelling around three-quarters empty. A new approach to public transport is needed at all levels.

I should like to remove the restrictive role of the traffic commissioners. The Minister spoke of that problem. Are we to give them a positive role which would encourage appropriate forms of transport for different areas? Too often the traffic commissioners are seen as a means of enabling the Scottish Bus Group to prevent a post bus service from being set up. That is not, however, entirely fair, and I think that my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) made it clear that that does not happen as often as some people might imply.

The commissioners should be concerned more with co-ordinating all services, including rail services, than with nit picking about proposed new developments. However, I see nothing in the Bill that will improve the role of the commissioners in this area. The Government are intending to draw the commissioners' teeth without giving them a set of new teeth to enable them to get on with the work they should be doing.

The National Freight Corporation is to be hived off. That will be a serious mistake. The corporation operates well in tandem with private hauliers, particularly on long-distance services. My constituency is well served by small general haulage firms. The hauliers run efficient, flexible services which suit local industries, particularly agriculture. The long-distance operations, however, tell a different story.

I refer here to the transport development group, an outfit that the hon. Member for Faversham (Mr. Moate) has already mentioned. The group encompasses a number of big names in Scottish road haulage such as Charles Alexander of Aberdeen and Russell of Bathgate, as well as a number of English firms. The group actually encourages its constituent subsidiaries to compete with each other. That can lead to the situation in which five of the group's lorries leave Aberdeen for London loaded while another five set out loaded in the opposite direction. They all belong to the same firm, even though they have different names on them. The following day they will all turn around and head home empty, clattering along the A1 in my constituency.

That seems to be a complete waste of fuel. It causes unnecessary congestion. There are far too many empty lorries on our trunk roads, which demonstrates one of the fundamental errors of Tory economic thinking. This sort of idiotic internal competition is apparently profitable, but the corporate profits generated by this kind of exercise must be seen as a massive debit to the community, in terms of wasted fuel and overloaded roads.

The NFC does not operate on those lines. It co-ordinates the movements of its vehicles around the country. I therefore believe that it should be maintained in its present form.

If the Bill is supposed to be a framework for transport for the 1980s, it just will not do. It does nothing to save fuel or encourage public transport. With one tiny exception, it does nothing to help rural areas. It is full of missed opportunities. In the circumstances, the right thing would be for the Minister to take it away and come back with proposals suited to public transport and freight transport in the United Kingdom for the 1980s.

8.43 pm
Mr. Patrick McNair-Wilson (New Forest)

I congratulate my right hon. Friend the Minister on producing the Bill. He knows perfectly well that it accords with the views of most Conservative Members, because we know of the deficiencies of the present system. It is not entirely surprising that they exist. We are faced frequently with historic problems, and with the end of the thinking that big is beautiful and that an integrated transport system can solve all our problems and with the end of the thinking four of the past 15 years, but it failed to make that system work. It does not work, because market forces prevent it from doing so.

The right hon. Member for Barrow-in-Furness (Mr. Booth) knows perfectly well that about 80 per cent. of freight in this country is moved by road. Short of directing that it should be put on to trains, there is nothing that the right hon. Gentleman and his supporters can do about that.

We now need transport legislation that is flexible, and this Bill is flexible. It will not provide the right answer, but we hope that it will supply an answer that is slightly less wrong.

Forecasting transport needs is not an exact science. It is more of an art, as we have discovered since the last war. The advent of the commonly used motor car together with the contraction of passenger rail services has meant that many parts of constituencies such as my own are not served by any bus service or other form of transport. The hon. Member for Berwick and East Lothian (Mr. Home Robertson) said that he would like to see positive encouragement given to the use of cars in rural areas. He is flying in the face of the energy crisis that is about to burst upon us.

We have been living with a rumbling crisis since 1973. We shall soon see supplies drying up, and the price of fuel for the ordinary motorist will rocket. The provisions in the Bill will encourage car sharing and the flexible operation of road passenger services. In my constituency one often sees a juggernaut bus, with three old ladies sitting in the back, creeping down the country lanes of the New Forest. That cannot be right.

Routes that are currently being covered by the private motorist, at great expense and on an uneconomic basis, should be made available to small operators. They can carry passengers more cheaply and at a more cost- and energy-effective rate. We must forget the "big is beautiful" argument and the policies of centralisation and integration. We must move back towards the days of the cottage industry—whether we like it or not. The small business is flexible and can look after the customer. There lies the way ahead for profit and enterprise.

Since the war we have tried to emulate others, such as the Americans and the Japanese. That does not work in Britain. The Bill is a courageous first step towards releasing the enterprise and energy of small business men and others in order to tackle some of the problems facing transport in Britain.

8.47 pm
Mr. David Marshall (Glasgow, Shettleston)

I declare an interest, as I am sponsored by the Transport and General Workers Union. It is difficult to avoid repetition at this stage in the debate, as many of my points have already been made by my hon. Friends.

If the Bill becomes law in its present form, it will destroy half a century of advance and progress in public transport. For what? For pure Tory Party political dogma. It will provide no benefit to half the population of Britain for whom the bus is a family car. It will lead to reductions in services and in many instances to the total disappearance of services. It will also lead to higher fares. The Bill is a recipe for disaster.

In five years' time nothing will remain of the existing public transport system. There will be a substantial loss of jobs in the transport industry. The Bill will also lead to greater dangers to public safety, both on and off the vehicles.

I do not make such statements lightly, nor are they made as routine opposition to a Conservative Bill. I make them because I am deeply interested in public transport and its future. From 1960 to 1969 I was a tram and bus conductor with the then Glasgow corporation transport department. For five of those years I was an active shop steward with a keen interest in the working of that undertaking. From 1972 until July of this year I served as a councillor on Glasgow corporation transport committee, on the Greater Glasgow passenger transport authority and on the highways and transportation committee of Strathclyde regional council.

For half of my life I have been interested and involved in public transport. I am utterly dismayed at the proposals contained in the Bill. The Road Traffic Act 1930 was designed to regulate passenger transport in the chaotic circumstances then prevailing. Legislation contributed to the provision of more equitable and stable services and improved the use of available resources. It overcame the unsatisfactory situation arising from unrestrained conditions. Hon. Members who are older than me will probably remember that situation. Do they want to turn the clock back 50 years?

There is no case for relaxing public service vehicle licensing. Viable bus services are an essential prerequisite for life in both urban and rural areas. Playing about with bus licensing laws will only create new problems; they will do nothing to help commerce or the public in the present difficult circumstances confronting the entire industry.

There is nothing to stop new or existing independent operators coming in on rural services, but they do not, because there is no profit in it. But there is profit in many urban routes, which is what they will go after. The resulting loss of income to existing operators will put at risk the vast network of cross-subsidisation of non-profitable routes by profitable ones which has taken years to build up.

That, in turn, will lead to higher fares, reduced services or no services in certain areas. I hope that if that happens it will be in the rural areas represented by Conservative Members.

The change in the balance of presumption in the granting of licences is likely to produce a situation in which a local authority, irrespective of whether it is an operator or not, will have less ability to control the provision of services in fulfilment of its statutory responsibilities. Any relaxation of stage carriage licensing could result in higher subsidies being needed by operators, due to a further loss of the benefits of cross-subsidisation.

The undermining of the traffic commissioners' ability to control fares that is proposed by the Government will leave the public at risk to exploitation by the cowboy and maverick operators—they can be described in no other way—on temporary excursions into the industry. Their activities will destroy the weekend viability of the network operators. The cowboys will leech on to the best services at the expense of the others. That must be prevented as being against the obvious public interest.

It appears fundamental to the fulfilment of statutory responsibilities that there should be some power over the setting of fare levels, but it could be claimed that the local authority with statutory responsibility for transport could hold that power.

Fare control is essential to the implementation of plans for co-ordination and integration. It is difficult to see how practical stage carriage licensing can remain without the control of fares to be charged on such services.

It is vital that uncontrolled express and tour services do not have an adverse effect on local networks. It must be remembered that workers' direct services and local trips to leisure activities may come under that definition and unrestrained competition could have an adverse effect, as many stage carriage operators cross-subsidise local bus services from their licensed coaching activities.

Car sharing may adversely affect public transport by attracting passengers from services that are already subsidised, resulting in further financial demands or reductions in services. Individuals will be free to advertise that they will carry passengers in their vehicles on a cost-sharing basis. What about the possible risk to women and children who could find themselves at the mercy of men with dubious motives? What about school bus contracts that go to the lowest tender, leaving the way open for moonlighters using any old vehicle that comes to hand and employing drivers who perhaps leave much to be desired? What about the safety of schoolchildren?

There is a genuine danger that the availability of public transport will be reduced, while the cost of maintaining a reduced network could increase. That is likely to result in a loss of mobility in area that are depressed or deprived and for those, such as the elderly and socially disadvantaged, whose needs are greatest. The role of a local authority as a co-ordinator of transport in its own area could be seriously affected.

I am extremely concerned about the effect of the Bill on the concessionary fare systems for the elderly, the handicapped, the disabled and schoolchildren, which encourage people to use public transport and enable operators to provide better services, or even just continue existing services which would disappear otherwise, and help to create or preserve jobs in the operating, maintaining and construction of the vehicles involved. Anything that affects the operation of concessionary fare schemes affects the operation of public transport.

The area of the country with which I am most familiar is the Strathclyde region, which covers 5,000 square miles and serves 2½ million people—one-half of Scotland's population. It is a diverse region, encompassing the huge conurbation of the Greater Glasgow area, many large and small burghs and some extremely rural areas, such as South Lanarkshire, South Ayrshire and Argyllshire, as well as a goodly number of islands.

The main transport operators are the Greater Glasgow passenger transport executive, the Scottish Transport Group, British Rail and a small number of independent operators. On 1 October 1976, Strathclyde regional council introduced a travel concession scheme which had taken more than a year to prepare and replaced almost 60 different schemes.

The new scheme, recognised to be one of the best in the United Kingdom, applied at the time to 230,000 elderly people, 35,000 handicapped and disabled people and 5,000 blind people. It cost the council £7¾ million in the first year and will cost £11.7 million in the current year. It has been probably the greatest success locally since local government reorganisation and is widely acclaimed by the public. The long-term effects of the Bill could mean that such schemes would become almost impossible to operate and certainly extremely expensive, if not totally impractical, to administer.

Strathclyde will pay out £23.9 million in the current year in transport subsidies. Does anyone believe that private operators will come in and eliminate the need? There are problems in the public transport industry, but the answers are not contained in the Bill. Central and local government must recognise the importance and the necessity of a good national public transport system and allocate resources and subsidies accordingly, especially in view of the increasing cost of, and problems of supply of, fuel and energy. No industrial nation can make public transport supportable through the fare box. Britain attempts to do with less public grant-aid than any of its European partners and against a background of 50 per cent. car ownership.

Severe lessons are to be learnt from the American experience. The same kind of policies as are being proposed here were adopted in the United States and decimated the bus transport system. Billions of dollars are now being spent to rebuild public transport by popular demand. Do we need to go through that expensive exercise? I would say most definitely not.

My hon. Friend the Member for Ealing, Southall (Mr. Bidwell), in quoting Mr. Jack Ashwell, of the Transport and General Workers Union, has mentioned all that I want to say about the National Freight Corporation. Those remarks sum up the situation admirably.

Many positive policies could be put forward. They will no doubt be proposed from the Opposition side in Committee if the Bill receives a Second Reading.

8.56 pm
Mr. Tom Bradley (Leicester, East)

When the Minister issued his press notice on 22 August which foreshadowed the proposals we are discussing, I had the basic feeling that this would be an unnecessary Bill. That feeling was reinforced when the Bill was published and confirmed again by the Minister's speech this evening. I have been much impressed by contributions from hon. Members representing rural areas in relation to the changes projected in bus licensing. Despite the Minister's justification for those changes, I still do not believe that this is the moment to scorn the regulations introduced in 1930 to avoid the kind of intense competition that would end cross-subsidisation and let loose a price war leading to a decline in certain essential services. We should recollect that London Transport was first created to prevent that kind of development. The Bill puts back the clock for rural areas.

The Minister will recollect that in the last Parliament I attempted to rectify a situation in my constituency which applies in many county boroughs throughout Britain, where a corporation bus service is not able to operate on certain estates within the borough boundaries because of the effect of archaic pre-war licensing regulations that govern the thinking of traffic commissioners. If my understanding is correct, clause 5 of the Bill, which creates a presumption in favour of the applicant in future, may relieve the type of absurd situation to which I was drawing attention in the last Parliament. To that extent, I very much hope that the opportunity will be taken by authorities like the Leicester city transport department to intervene successfully in future and provide services to those areas that have been deprived of them in the past.

I turn quickly to the National Freight Corporation, which an hon. Member on the Government Benches described as the odd man out and not a natural nationalised undertaking. That may be so. Hon. Members should, however, be reminded that this was a different attempt in 1968 to introduce a new type of integration. It was an experiment that some of us—I must be candid—did not welcome fulsomely or with enthusiasm at the time. Certainly, the concept of integration within the National Freight Corporation and between its operations and those of British Rail never achieved total fulfilment.

Nevertheless, we must put on record that the corporation moved from a massive deficit into surplus, which included a surplus on its problem child, National Carriers Ltd. I should like to add my expression of admiration to the expressions of admiration by other hon. Members for the type of management that has led the corporation management, with which I once had the honour to do dealings on behalf of the trade union that I led at the time. I join in the tributes paid to Sir Daniel Pettit this evening. At one time I thought that he would be canonised, so regularly and fulsomely did the tributes pour in.

Integration is central to the Labour movement's approach to transport problems, and will remain so. That is why we are unhappy about the selling-oft arrangements. I heard the Minister say that it was not the Government's intention to sell off bits and pieces. But what is to stop a new private owner who acquires the undertaking through private equity capital from selling off the NFC in bits and pieces, leaving the rest for liquidation? We have been waiting for the answer all the evening.

I should like to take up two points made by the hon. Members for Newbury (Mr. McNair-Wilson) and for Meriden (Mr. Mills), who said that they could not understand the anxiety that we on the Labour Benches alleged was felt by the corporation's employees. They said that surely the future of those employees would be better in private hands.

Mr. Moate

Hear, hear.

Mr. Bradley

Let the hon. Gentleman listen to what I am about to say. The basic point is that many of the NFC's employees were once employed by British Rail and other undertakings. At a stroke by legislation in 1968, the House created a new employer for those people. The unions in the industry had to conduct new negotiations to create entirely different conditions of service. We are now putting many of them in the position, for the second time in their working life in transport, of having yet another new employer, with all the problems that that will pose for them and the unions that represent them.

I know the time requirements of the Front Bench speakers, so I shall conclude. I regard the Bill as doctrinaire and dangerous. It makes no provision for better use of scarce resources. On those grounds it deserves to be resisted.

9.2 pm

Mr. John Prescott (Kingston upon Hull, East)

It has been a very good debate. Many hon. Members on both sides of the House have reflected the concerns expressed in urban and rural areas about the changes—radical changes, as the Minister called them—to be made by the Bill. There is major concern about what may happen to our present transport system.

A number of hon. Members have criticised the system's comprehensive nature and its weaknesses. As one of my hon. Friends said, we are not saying that it provides a perfect service. I do not think that anyone would say that about any kind of transportation system. But we feel that what the Bill proposes is a direct threat to our present service.

The debate has shown major differences in philosophy and approach. A number of hon. Members said that there was no fundamental difference between us, but I believe that there is.

As I have said, the Minister claimed that the Bill represented a radical change. I should certainly say that it made a fundamental change. I have no doubt that it constitutes a considerable threat to the existing transportation system, particularly on the roads.

A number of hon. Members have said that there has been a steady decline in the number of passengers and the number of buses available. That is true in total, but it is not the true picture in different parts of the country. I shall refer later to a particular part where a different policy is pursued. The Government may wish to consider that policy a little more before they develop the policies in the Bill.

Many speakers, particularly Conservative Members, have said that the user needs to be put first. We believe that the best way to protect the user is to guarantee a comprehensive, integrated system of transport. We believe that by pursuing that principle we shall give people the opportunity to use a proper, comprehensively developed transport system. Our record is quite good. I do not seek to apologise for any intervention in the economy. I am a great believer in intervening. The Labour Party is a party of intervention. The Road Traffic Act 1930 came from a Labour Government who, as the House will knew, were in office for only a short time. That Government sought to introduce regulations to overcome the chaos that had been created by competition in transport. That is why that piece of legislation, supplemented by others, came into effect.

Since then we have extended our thinking. Two major Transport Acts have been introduced, by Labour, one in 1947 and the other in 1968. We have developed our concept of the network and integration in transport. In some areas there have been some successes while in others there have been fewer successes. However, the three pieces of legislation achieved a fundamental change in transport. The Minister was correct when he claimed that the Bill is a major change in transport thinking and should be treated as such.

Much has been said about the National Freight Corporation. In the 1968 Act we developed the National Freight Corporation concept with Freightliners. There was also the development of passenger transport authorities and the National Bus Company. All these developments will be affected by the Bill.

Labour Governments have been motivated by a wish to integrate road and rail passenger services and freight services in the interests of the community. The Conservative Party is a disintegrator, not an integrator. The Tory Acts of 1953 and 1979 had common factors. Both pieces of legislation provided means for selling off profitable State sectors developed by the community and invested in by the taxpayer. They were shown to be profitable organisations, and profit-seeking people wished to have the advantage of a developed, profitable State sector for themselves. Of course, Conservative Governments have never sold off unprofitable sectors of public enterprise. I have never heard about their selling off the losing sectors. It is the community that always picks up the tab for them.

The general approach of Conservative Governments has been to assume that competition produces the best in the public interest. The Labour Party disputes that principle. It thinks that the evidence tends to show that the opposite is true. It feels that competition between private and public sectors, especially in past legislation, has not necessarily left public and private companies competing equally. Previous pieces of legislation have tended to leave the State sector disadvantaged. The financial obligations of nationalised industries have contributed to that, as the right hon. Member for Worthing (Mr. Higgins) mentioned or insinuated.

I contend that the financial obligations that we have imposed on nationalised industries are wrong and that they should be thought through again. It may be that the Bill and the Government policies will force some rethinking of our approach to the financing of nationalised industries.

An important consideration that arises from the Bill, taken with other pieces of legislation, is the manner in which public sector companies are to be disadvantaged. I have especially in mind the National Bus Company. It has become clear from those who speak on behalf of their constituents and of trade unions which reflect the views of many workers in the industry that the effect of the Bill will be to disadvantage the public sector and its workers. This has been shown both in the reduction of the licensing arrangement provisions and in the pension provisions. We shall try to develop those arguments more fully in Committee, because they are genuine concerns. However, I am sure that the points have been taken on board.

In looking at the different Tory approaches, I noticed that in the past few days of the previous Tory Administration a Transport Bill was presented by the right hon. Member for Yeovil (Mr. Peyton). I believe that it included these licensing proposals.

Mr. Fowler

indicated dissent.

Mr. Prescott

I was under the impression that some of these licensing ideas were included and that they were eventually dropped.

Mr. Fowler

That is a peculiar redrawing of history. I think that the hon. Member for Leicester, East (Mr. Bradley) will confirm that it was not we who dropped those provisions but the incoming Labour Government in 1974.

Mr. Prescott

We did not include those provisions in any of our legislation. However, I thought that there was a difference between the consultative document and the Bill. I withdraw that point if it is wrong, but perhaps I can reserve comment until later stages of the Bill.

Mr. Bidwell

I happened, accidentally, to bump into the right hon. Member for Yeovil (Mr. Peyton) on my way here today, and I reminded him that we were debating the Bill today. He told me "I am not playing today". He was explaining that he would not be here to take part in the debate. However, I well remember the correctness of what my hon. Friend has said.

Mr. Prescott

As I said, we shall wait until Committee to see what the exact position is. The important point about integration, which is a fundamental part of our approach to transport policy, is one that needs to be understood. The Minister said that no one would regret the demise of the Freight Integration Council. I was a member of the Select Committee on nationalised industries which questioned the operation of the Freight Integration Council. Clearly, it did not work very effectively. As a quango, I believe that it met once and then could not get together for its final meeting.

What must be borne in mind is that the Transport Act 1968 envisaged the establishment of both the National Freight Corporation and the Freightliner concept and developed the possibility of quantity licensing. By doing so a great deal of the heavy traffic may, with the use of quantity licensing, have been directed in some form to rail, so that the Freight Integration Council could be used for intervention where there were difficulties between the nationalised sectors. The fact that we did not introduce quantity licensing has largely to do with the fact that we went out of power in 1970, and one understands that the incoming Conservative Government did not take the same view with regard to the development of that policy.

It could, of course, be argued that when we came into power in 1974 we could have carried out that proposal had we wanted to. However, it is fair to say that the momentum of integration between the National Freight Corporation and the Freight Integration Council had been lost. That was somewhat unfortunate, because I believe very much in the integration of our transport policies and I do not think that the FIC has been given an adequate chance to show what it can do.

Nevertheless, I have heard a great deal of praise from all hon. Members of the National Freight Corporation. Surprisingly, we are talking about a nationalised industry. It is interesting to hear that constant praise, not only by hon. Members but also by the Select Committee. I also understand that the Price Commission said that it was "a market leader". Correct tribute has been paid to Sir Daniel Pettit, who introduced to me the concept of the inter-modal systems. Whatever it was called, he was, with his management and workers, certainly successful in integrating these companies.

I find it difficult to understand why the Minister should feel that State industries as such—in this case, the National Freight Corporation—should not participate in removals and cold storage, because it was a profitable niche to develop. Why should they not? After all, private companies may wish to develop in areas that they consider profitable. That is the very ethos of the capitalist system as I understand it. Therefore, why is it so wrong if State sectors perhaps seek to cross-subsidise some of their more unprofitable activities, which this House asked them to carry on its behalf, with a profitable sector?

Much of the praise we have heard for the National Freight Corporation is to the credit of the former right hon. Member for Blackburn, Mrs. Barbara Castle. The NFC concept was at one time referred to as "Castles in the air". Mrs. Castle saw the National Freight Corporation as a major element of the integration policy. Some of the praise that we have heard today reflects the foresight of 10 years ago. That foresight made the corporation so successful that now the Government propose to sell it off to the private sector as an attractive proposition.

Concern has been expressed about the denationalisation of the National Freight Corporation. Several Members were rightly worried about whether the integration of the transport system would continue. The Minister doubts whether a nationalised industry should be involved in such a profitable sector as removals. His doubt raises further anxiety about whether he will sell off those profitable sectors and leave the industry with the unprofitable parts. At the same time, I take the point that the Minister has said that he wishes to sell the National Freight Corporation as a whole unit.

What will happen to the corporation's obligations to British Rail? It was thought that the National Freight Corporation would look after the road transport needs of British Rail. What will now happen if the corporation passes into the private sector? Will British Rail have to depend upon the private sector to provide the road transport element in its operations? What will happen in these circumstances since the National Freight Corporation has a statutory obligation to British Rail?

Mr. Fowler

The hon. Gentleman is seriously overstating his case. There is no obligation upon the National Freight Corporation. Nor is British Rail obliged to enter into a partnership with National Carriers. There is an agreement between them and it is perfectly feasible for that agreement to continue, but there is certainly no obligation upon them to be in agreement.

Mr. Prescott

I thank the Minister for that statement, but the rail unions were concerned, at the establishment of the NFC, that they would have to place much of their transport with a company over which they had little control. Even after the statement that the Minister has just made, their anxiety will be heightened. We shall follow that point in Committee.

The terms of transfer to the private sector embodied in the Bill raise certain questions. The Minister made much of the fact that the National Freight Corporation welcomed equity capital. It does. Every nationalised industry would prefer to be financed on an equity basis rather than on borrowings from the Government. There are good reasons for that preference. Complaints by the National Freight Corporation led to successive Governments—particularly the last Administration—reducing its capital commencement debt obligation. Let us examine what the corporation now pays. This year the payment back of £8 million is achieved by borrowing a further £8 million. The difference is that the initial £8 million was raised at an interest rate of 4 per cent. That rate is now 13 per cent. The increase on that one tranche of interest payments which the corporation has to make rises from £400,000 to over £1 million.

The corporation would not face such an obligation under equity financing, so it is no surprise that it welcomes the idea of equity financing. British Rail has made the same argument. It would like some form of equity financing, but Labour and Tory Governments have in the past refused to give it. Too much should not be made, therefore, of the fact that the management of The National Freight Corporation welcomes this development. It is Government policy and was contained in the Conservative Party manifesto. Equity financing of the National Freight Corporation can be achieved without selling off its shares to the private sector. The corporation could simply be given private equity financing. There would be no major legislative problem there.

I turn to the problems related to the selling off of the assets of the National Freight Corporation. The hon. Member for Faversham (Mr. Moate) said that £115 million has been paid in grants to the NFC. I do not know whether that figure is right, but a certain sum of money has been paid in grants. That is the taxpayers' money and their investment. When considering selling off—and we are opposed to that—we should consider whether it is in the taxpayers' interests.

My right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) said that we were receiving, on average, £8 million in interest payments from the NFC. If one multiplies that sum by a number of years and takes into account the discounts and interest and inflation rates, one can reckon that we should receive a guaranteed £170 million back from the corporation for the taxpayer. One must consider whether the taxpayer has a fair deal.

If the Government sell off and they are left with a surplus after looking after pensions, why do they not give that surplus to British Rail to help with the replacement of its diesel units? Capital is desperately needed for them. That might help British Rail to retain routes. Those routes cannot be retained without capital. The Minister admits that. If he has a few bob left over, perhaps he should give it to British Rail and help passengers who travel by train as well as those who travel by bus, serving the user interest which he claims to protect.

These are problems of principles in a mixed economy. I shall not debate that issue now. They were mentioned by the right hon. Member for Worthing, who talked of how the nationalised industries are treated differently. He referred to the National Bus Company. I intended to say one or two words about that. For example, if one believes, as I do, that the National Bus Company was designed to develop the network system, one must accept that cross-subsidisation is involved. Even if there was one route and we knew the true cost, peak traffic travellers would still subsidise non-peak travellers. There is always a degree of cross-subsidisation involved. The suggestions by the right hon. Member for Worthing are not the right way to deal with the network transportation problem and its financing.

The present regulations force the National Bus Company to borrow in the same way as the National Freight Corporation. According to last year's accounts, the National Freight Corporation borrowed again to pay back its borrowed commencement capital. That corporation is paying £10 million this year in interest payments to the Government. That corporation would like to have equity financing. What did the Minister say when the National Bus Company asked to be given a fair chance? The Select Committee suggested that the Government should make a loan by way of a grant to assist, but the Government refused.

What are we doing? We are to increase competition—which the Government welcome—but we shall leave the nationalised company disadvantaged by imposing the same onerous terms as were imposed upon the National Freight Corporation. If the situation can be made attractive for the private industry, why cannot it be made attractive for the nationalised industry—the National Bus Company—by giving it the same consideration? Are the Government differentiating between what should be done for the private sector and what should be done for the public sector? There is a clear differentiation which reflects the bias in the Government's approach. No doubt it will help make NFC look more successful in private hands.

We press for a form of equal treatment for the National Bus Company. The Bill assumes that the number of passengers have fallen because of price rises but that when the Bill is passed there will be a reduction in prices. That is a wrong assumption.

There are many factors that will increase costs. There has been a cutback in the Government's public expenditure programmes for transport and the transport supplementary grant. There is to be a cutback in bus grants. The National Bus Company is receiving a grant of £21 million this year, and when the grants are phased out money will have to be found, presumably from fares, to re-equip with buses. The amount of money that local authorities make available for those services will clearly be reduced. Under EEC regulations the average 56-hour week will be reduced to 48 hours, and that will mean an inevitable increase in costs. There will be an explosion in costs. I am not arguing about who accepts or does not accept that regulation, but it will inevitably increase the cost of operating buses. The big operators, particularly the National Bus Company, will be at a disadvantage against the private, pirate operators.

We believe in a network of operations, and cross-subsidisation is necessary to maintain a public service. Higher fares result in fewer people using the transport, and that is known as the "fares trap". Fares have increased and the number of passengers travelling with the National Bus Company has gone down while the number of routes has decreased. That is the story in most parts of the country.

When we look at the passenger transport authorities, we see the same there. Only two passenger transport authorities have increased the number of their passengers and they are both Labour-controlled. It is interesting to note that they are the only Labour PTEs. The remainder are Tory-controlled PTAs, and their number of passengers has decreased while prices have increased.

My hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall) mentioned his area, but I wish to refer to Tyne and South Yorkshire to demonstrate the difference between PTEs. In South Yorkshire there has been a 2 per cent, growth in the number of passengers each year. More buses and more men have been put to better use, which has increased productivity. It can be clearly demonstrated that the service has improved. On the South Yorkshire bus a passenger can travel nine miles for 16p, when the average throughout the PTAs for that distance is 34p. More people travel on buses in South Yorkshire than anywhere else in the country—and that includes more people in greater need. There are people who do not have cars, the disabled, old-age pensioners and all those who have concessionary fares.

Mr. Fowler

If the hon. Gentleman is claiming that as an achievement of the previous Labour Administration, why did they oppose the South Yorkshire policy at every turn?

Mr. Prescott

I am not necessarily here to justify what might have gone on in the past. It is a fair point which I cannot fully answer. I have made inquiries, and when the Government made that decision a couple of years ago they were more concerned with Oxfordshire Tory councils that were claiming all sorts of money for transport supplementary grant and not giving it to the bus operators. The Government were in difficulty about that approach. But the difficulty was for one year only, with a Labour Administration making their support clear.

In the four years' experience of South Yorkshire, there have been cheaper fares and better utilisation of the system, which is one that people are demanding. If fares are increased by 10 per cent, the number of passengers decreases by 3 per cent., and in order to recover that loss fares have once more to be proportionately increased. South Yorkshire county council, and I am grateful for the help it has given me, wanted a cheap-fare policy which would produce an expanding and comprehensive bus service. South Yorkshire gets greater income from its rail services than British Rail envisages that it achieves by its cheap fares policy.

Another important principle developed by South Yorkshire is that it found that an ordinary family with two children would pay out £9.50 per year from an increase of 1p in the fares. One penny on the rates cost that family £2—a difference of £7.50. Of course, the cost is not invisible; it is put on the rates. South Yorkshire believes that a public service should be available to all, financed by all and by a rate system which is somewhat progressive. It is a simple principle—from each according to his means to each according to his needs. That is in important Socialist principle, in which I have always believed. If it is embodied in a Socialist policy, I accept it. If that policy is successful, there is all the more reason for it to be taken account of in the House.

Mrs. Elaine Kellett-Bowman (Lancaster)


Mr. Prescott

No, I shall not give way to the hon. Lady—I have had enough of her in the European Parliament.

We oppose the Bill because it sells off valuable public sector assets and reduces the possibility of transport integration. It disadvantages the remaining public sector industry, which competes with the private sector. In its proposals for bus services it will seriously undermine the provisions of a network bus service, both in urban and rural areas. It is an ideological concept, which will reduce the mobility of those who are most needy and disadvantaged in our society. We shall oppose it through all its stages.

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

If the debate has served one valuable purpose this evening, it is that we have discovered, for the first time, from two fairly silent—I accept that is because they are new—spokesmen for the Labour Party exactly what Labour Party transport policy is. It is a dramatic transformation from that which prevailed before May of this year.

We have not heard from the right hon. Member for Stockton (Mr. Rodgers) or from the hon. Member for Gateshead, West (Mr. Horam), who for many years were the Ministers in the previous Labour Government. They are not in the Chamber and I do not blame them for seeking a change. Not one word of defence for their policies came from the hon. Member for Kingston upon Hull, East (Mr. Prescott), nor have we heard anything that remotely resembles that. I am astonished to hear the name of Mrs. Barbara Castle conjured up from the past. There has been talk of bringing back quantity licensing for road traffic. There has even been defence of the Freight Integration Council, which we are abolishing. As the hon. Member for Kingston upon Hull, East said, that council has not met for years—apparently, it could not even assemble for its final farewell meeting.

The right hon. Member for Barrow-in-Furness (Mr. Booth) referred to a tax on car sharing, which is a sensible energy saving arrangement which the previous Government supported, as do this Government. Finally, in his peroration, the hon. Member for Kingston upon Hull, East wound up with a defence of the South Yorkshire PTE and its approach to buses. For six years, Labour Ministers—increasingly towards the end of their period in office—were locked in open warfare with South Yorkshire about the disgraceful waste of resources which the PTE put into subsidising buses at an incredible rate, thereby taking up a huge proportion of the rate burden. Certainly, it acheived some increase in utilisation, but the evidence seems to suggest that people who use buses anyway ride on them more than new passengers who might be attracted to them. All that was achieved at an incredible cost.

My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) tried to make a challenge about the consequences for rate bills if the same people carried on using buses. Because of the subsidy, they would receive increased benefit at the expense of the ratepayer. My hon. Friend tried to challenge the hon. Member for Kingston upon Hull, East about the incredible cost that that would represent to ratepayers She was told that rates are a progressive tax. She was told that that is a fair way of supporting one mode of public transport—buses—to the extraordinary and eccentric degree that South Yorkshire, and South Yorkshire only, has been doing for several years. It takes a far greater proportion of national transport resources than its entitlement and drives out any possibility of other expenditure on transport to any worthwhile extent in the area. However, that was merely the peroration.

From the speech we discovered that, although this legislation was entirely in line with the commitment of the Conservative Party when in Opposition, the present Opposition have done a complete U-turn on everything for which the previous Government stood. It is no surprise that the Opposition have taken several steps to the Left in the area of transport policy. They have also taken several steps backwards to the discredited transport policies of the last years of the Wilson Government from 1968 to 1970.

Before returning to some of the more extraordinary propositions put forward in the debate, I turn to the part of the Bill with which my right hon. Friend the Minister said that I would deal and about which various questions were asked. I start with the least controversial part—that is, the arrangements we are making for British Rail's historic pensions liabilities. What we are doing is in line with the criticisms expressed for some years about the funding arrangements, not least by the Public Accounts Committee. I say that this should be non-controversial. I trust that that will be the case when I have reassured the fears expressed by the hon. Member for Nuneaton (Mr. Huckfield) and others about the present position of the pensioners.

We are putting right a curious anomaly in the present arrangements and the unsuccessful atttempt to sort out the historic obligations. I say "historic obligations". They are always called that. They go back to pre-nationalisation days. They are defined in clause 44. They result from past curious practices in the railway industry, which I would not defend any more than the hon. Member for Derby, South (Mr. Johnson) did, whereby payments of pensions were made on an ex-gratia basis, a practice of inflation proofing was adopted, but no proper funding was ever provided for this liability. As a result, by 1975 huge unfunded liabilities had been built up which the board could not possibly meet out of its assets.

The Railways Act 1974 and the Transport Act 1978 were enacted to change that position. An attempt was made in those Acts to fund only the historic liabilities. By those means the assets were steadily purchased by the board. The trustees, compensated by the Government with taxpayers' money, purchased assets which would eventually create a fund to meet all the liabilities as they arose. Unfortunately, that involved huge public expenditure. The sum of £412 million will have been paid into the fund by the end of this year and about £40 million is owed. As matters stand, unless we make a change, £1,325 million must be paid between 1980–81 and 1986–87 and still there is no guarantee at the end of that time that the historic liabilities will be properly funded. The Public Accounts Committee, among other bodies, pointed out that that was quite unacceptable.

As my right hon. Friend the Member for Worthing (Mr. Higgins) said, what we are doing with these historic liabilities is changing to pay-as-you-go for the unfunded part of the liabilities. That means that the Government will be placed under an obligation to meet the unfunded part of the costs as they emerge; that is, as the liabilities arise.

I was asked by the right hon. Member for Barrow-in-Furness why we did not guarantee all the liabilities, including those funded. I see no point in that. Obviously the fund is the fund. The board remains liable for that part of its liabilities and may even top up a deficit if there is one. The unfunded part will be met as those costs emerge. There will be substantial savings in public expenditure next year alone of about £81 million.

Two main points were raised by my right hon. Friend the Member for Worthing and the hon. Member for Nuneaton. This is no kind of general precedent for the funding of nationalised industries' pensions. I know that my right hon. Friend has always been of the opinion that there was a case for the non-funding of public sector pensions. I have never agreed with that. Perhaps we may discuss that in Committee. However, as of now there is no general precedent being set. The article in The Economist to that extent is undoubtedly wrong. There is no equivalent in the public sector of which I am aware to these historic liabilities. What was taken over in 1975 was a totally unfunded past obligation. We are trying to cover inflation-proofed pensions at the moment by funding, and it is quite impossible. That does not mean that throughout the public sector there is any question of non-funded pensions.

Mr. Higgins

If my hon. Friend reads my speech, he will see that that was not what I said. I said that various people argued this and it is an open question.

Mr. Booth

I am led to believe from the explanatory and financial memorandum, under "Financial and Manpower Effects", that a considerable part of the proceeds of the sale of the shares will be used for funding under the provisions of clause 40. If that is so, will they be funded in the areas of pension liabilities other than historic debts? If I have understood the hon. Gentleman correctly, he said that the topping-up or other provisions for payment are on the pay-as-you-go basis. Is the pay-as-you-go for the historic debt?

Mr. Clarke

They are two quite separate issues. What I have been talking about is what we propose for the historic pension liabilities of British Rail in particular. What was referred to was what would happen to the ordinary pension fund of the National Freight Corporation when it was denationalised. At the moment, there are actuarial deficiencies in that fund and it would be quite wrong to sell the company when that fund is in that position. So the first call on the proceeds of sale of the equity will be to put the pension fund in order. The NFC's pension fund will then go ahead as a perfectly ordinary occupational pension fund. As regards British Rail, it is only the historic pensions we are covering. That pension fund will continue as an ordinary pension fund. It will be funded. I keep calling them historic obligations. They are really a complete anachronism. An enormous amount of money will be saved by meeting emerging costs.

As I say, this is, oddly, the least controversial part of the Bill, and I shall deal with a couple of the points raised by the hon. Member for Nuneaton. The actuarial basis is being considered and we hope that it will eventually be agreed between the Government, the Board and the unions. But we cannot guarantee that. Someone has to decide, and actuarial judgments involve a matter of opinion in the final analysis. Certainly at present we would hope to reach agreement, if we can, on the actuarial basis. The other important and broad matter is that there is absolutely no threat to the pension rights of the railwaymen who are affected by these historic rights provisions.

I was asked by the hon. Member for Derby, South and other hon. Members to give varying guarantees about the position of present pensions. The proposals in the Bill do not adversely affect their position at all compared with present arrangements. There is no change whatever in their position. The Government are guaranteeing that they will meet those pension liabilities on an emerging cost basis.

The hon. Member for Nuneaton also asked what would happen if we abandoned index-linking for civil servants. Certainly we do not propose to do that at the moment, but the circumstances could arise if there were inflation and economic collapse; so the funding provisions that the Bill replaces would be no guarantee to private or public occupational pensions. That is not a policy or a risk at the moment. The Bill does nothing, vis-à-vis that risk, that places pensioners in any weaker position than they are at present. The hon. Member for Nuneaton quite rightly asked a number of questions on behalf of ASLEF. Perhaps I can deal with those points in correspondence.

I want to turn now to the denationalisation of the National Freight Corporation. That is a substantial part of the Bill and has caused a great deal of controversy. I am grateful for the support of many of my hon. Friends, not least that of my hon. Friends the Members for Faversham (Mr. Moate) and for Leominster (Mr. Temple-Morris), both of whom did a considerable amount of work on this part of the Bill when we were in Opposition.

My right hon. Friend the Member for Worthing put the matter in context when he quite rightly referred to the Pavlovian reaction of the Labour Party to any talk of denationalisation. The NFC cannot be equated with those traditional political battles that have been conducted in the House over some of the great statutory monopolies and larger nationalised industries. The NFC has a quite exceptional position. There is something of historical survival from former days of widespread public ownership of road haulage. It is in competition with the private sector now. It has only 10 per cent, of the total road freight market.

What on earth are Ministers and civil servants doing, having a stake in the removals business, in cold storage and running part of a parcels business? [HON. MEMBERS: "Making money."] Making money very slowly. The idea of the National Freight Corporation winning money for the taxpayer is one of those massive rewrites of history that the hon. Member for Kingston upon Hull, East goes in for. Fortunately, the corporation is in a strong position for recovery, and its recovery certainly will be hastened by the Bill and by the commercial freedom that it must be allowed to have. One cannot have a public sector company operating in this fiercely commercial field without the commercial freedom of all its rivals.

Some derision was expressed by Labour Members about the fact that the board of the corporation is in favour of what we are doing. The employees should be interested, too, because only the wellbeing of the company and its ability to compete can safeguard their wellbeing. During nationalisation there has been a huge reduction in the number of jobs in the NFC. It has not led the way in pay and conditions; the private sector has. In fact, only the threat of schedule 11 applications has kept the NFC in line. I cannot see how anybody whose livelihood depends on a corporation in that position could want to stay inside the public sector. The NFC is in a fiercely competitive world, and as a public sector corporation all its investment decisions are likely to have political reactions, with Government interference—though not from this Government.

At present the NFC constantly must look over its shoulder. Its investment plans must be fitted within the public sector borrowing requirement and cash limits have been put on it. The last Government had cash limits, as do any Government, for the nationalised sector. This is an unfair way for the corporation to have to compete.

Mr. Peter Snape (West Bromwich, East)

I am grateful to the Minister for the pause in his tirade. Will he accept that the only Pavlovian reaction from the Opposition Benches to these denationalisation proposals was entirely due to the fact that the only part of the NFC that the Government wish to denationalise is that which makes money? They do not want to denationalise the inner suburban commuter services of Southern region, because no one would want to buy them. As usual, a Conservative Government, for dogmatic reasons, are selling off a profit-making part of a nationalised industry. As a member of the National Union of Railwaymen, I warn the Minister that we shall oppose him in every legal way possible.

Mr. Clarke

The hon. Member denied a Pavlovian reaction, but my tirade, as he called it, was obviously the ringing of the bell which brought him out with a vengeance.

I have been trying to explain that it is the commercial position that affects the jobs, security and well-being of those who work in any nationalised corporation that is merely a part of a fiercely competitive commercial market. One of the immediate effects of our proposals is that the company's capital structure will be very much more attractive. It will become largely an equity-based company. At first the Government will be a 100 per cent, shareholder, but, as we have always said, we shall then divest ourselves certainly of a majority holding. We have not decided to what extent. We have been accused of back-door denationalisation but this is front-door denationalisation. We have made our position quite clear, and we believe that the NFC can thrive in the market place. There is no reason why, as a private sector company, it should not expand the successful parts of its business. It is absurd to say, given that the NFC will be free to operate under commercial restraints and using commercial judgment, that this is a "sell-off" to the City, or asset stripping.

The hon. Member for Holborn and St. Pancras, South (Mr. Dobson), who made a great deal about assets stripping, should bear in mind that because the NFC will become a private sector company it will not come under the constraints of the Register of Land. He fears land sales. Because we are returning it to the market, we shall not put it through the process through which we are having to put other nationalised industries—quite rightly—to make them divest themselves of large amounts of unused land upon which they are sitting.

Mr. Harry Cowans (Newcastle upon Tyne, Central)

Will the Minister explain how he can categorically state that the industry will be retained as a whole when there will be a separate board which presumably will make its own decisions and may well decide to sell off parts of the corporation? On occasion after occasion the Minister said that it would be one body, but once it is sold off he will have no control over it.

Mr. Clarke

That intervention enables me to conclude on what ought to be a non-controversial feature, a feature which all hon. Members have welcomed. We are not hiving off separate profitable parts of the corporation. We believe that the corporation makes sense as a whole. We are therefore selling it as a corporation and we are resisting pressures to sell off Pickfords and so on.

If I am being asked to say that as a private sector company we can guarantee that for all time it will keep its present shape, we cannot.

I do not have the time to go back over the 10-year history of the corporation, which resulted in the reduction of its labour force to about 60 per cent, of its former size and has involved substantial changes in the nature of the business, changes which should have been made quicker and could have been made better had it been in the private sector. That is the basis of what we are doing. We see no reason why this corporation should not be returned to the private sector as soon as possible. We shall certainly sell the majority of the shareholding, and the timing of the sale will have to be judged by the Government in order to get the best price for the taxpayer. In the light of the condition of the corporation, and subject to the advice we receive, we shall sell it at the appropriate time in the market.

I should like to turn to bus licensing, which, I discover, is the really controversial part of the Bill. In view of the needs of public transport, it is difficult to resist the changes that need to be made. I was delighted when the hon. Member for Leicester, East (Mr. Bradley) pointed out that changes in the archaic bus licensing system would have enabled the bus operators in Leicester to remove a difficulty in their operations which they had been trying to remove for some years.

Opposition Members have said that this measure will foretell the ruin of public transport. We are modernising an archaic system that has frozen our public transport system into a pattern of decline. The real message from the other side is one of despair—as it was called during the debate—that decline is inevitable in the passenger transport business and that the fall in business that has halved the number of bus passengers in the period 1959 to 1979, when passenger journeys generally were doubling, was also inevitable; that it is in the market and is it dangerous to change. A typical Labour Party defence of the status quo is "Never mind if it is declining. We like it to be as we have always known it, because the Transport and General Workers Union and the traffic commissioners prefer the system as it is."

We are going to take out of quantity control express tours and excursions. There will be an express carriage service for journeys above the 30-mile minimum, where we see no reason for quantity controls.

I shall deal briefly with the point on contract carriage. As now, there will be contract carriage. The schedule was bitterly attacked as making great changes in the present arrangements, but the only change of substance is that regular contract carriages will now be permissible. I do not think that that point justified the heat generated about it by the hon. Member for Nuneaton and the right hon. Member for Barrow-in-Furness.

I wish to deal now with the stage carriage services, and the effect of the two major changes which we intend to make. The major change that will apply all over the country is that when an applicant comes before traffic commissioners for a new road service licence to operate a stage carriage service the burden of proof will be shifted. At the moment he has to go against the united hostility of all existing operators and somehow try to prove a need. Under the Bill the commissioners will be told that they must grant a new licence unless they are satisfied that the public interest demands otherwise.

That will mean that there will be great changes in the applications that come forward. The right hon. Member for Barrow-in-Furness said that such new applicants as were coming forward were doing so in adequate numbers and that they were not being deterred. He quoted figures from the Northern region of new applicants who were having licences granted. However, the right hon. Gentleman was selective in his figures. He did not refer to the much greater number of new applicants who abandon their applications because they realise that under the traditional rules of the traffic commissioners it is hopeless to seek to bring in a new service.

As well as people abandoning applications, many others are put off by the expense, the time, the difficulty of bringing an application forward, and the traditional rules applied by the commissioners, which discriminate against any kind of innovation.

The right hon. Member for Barrow-in-Furness said that applications would be made only for profitable routes. That begs the question of what is profitable, and to whom. The profitable routes are not necessarily those that carry the largest number of passengers. The worst losses in the country are suffered by some of the appallingly inefficient municipal and PTE services in the big cities. [HON. MEMBERS: "The Tory ones."] No, they are not the Tory ones. I am referring to the inefficient ones, which lose a great deal of money. Some of the most successful and profitable operators are running in comparatively sparsely populated areas.

Mr. Gordon A. T. Bagier (Sunderland, South)

Name one.

Mr. Clarke

"Profitable" is defined according to the number of passengers carried, the fares charged, the level of costs and efficiency, the sort of vehicle that is operated, and the timetables that are kept. The present system protects the existing operator, who may be losing a lot of money, and excludes someone who might come in to operate a service much more effectively, save money and even derive less revenue support from the county than the present operator.

I shall deal briefly with the position of the counties. I should like to reassure the hon. Member for Isle of Wight (Mr. Ross) and my hon. Friend the Member for Meriden (Mr. Mills) that the role of the counties, and the shire counties in particular, is preserved in the Bill. They will still have an absolute right to revenue support, the existence of which the

right hon. Member for Barrow-in-Furness at one point almost ignored. Now, however, in dispensing their revenue support, which is essential for some services, they will have an alternative in people who will provide the service. They will have the benefit of service at lower cost.

Revenue support at the moment tends to work on the basis that the existing operator loses money steadily, with half-empty buses running through country lanes, and then goes to the county council and presents the bill at the end of a year. That is paid from revenue support, which is largely financed by the Government. In the rural areas this bold change should open the way to more innovation and more flexible forms of transport.

The problems of the rural areas were dramatically described by my hon. Friend the Member for Newbury (Mr. McNair-Wilson). The answer to their problems will not be provided by a half-empty National Bus Company operating on the basis of a subsidy. The answer lies in having community buses, post buses, and car-sharing arrangements. That is the way to respond to rural needs. We need the reform of the traffic commissioner system in order to achieve that.

That is only a part of our Bill. I reject completely suggestions that safety is threatened. That is absolute nonsense. If anything, the Bill will improve the safety arrangements. Car sharing ought to be encouraged.

The whole Bill is a worthwhile change in the pattern of transport provision, and I commend it to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 314, Noes 250.

Division No. 114] AYES [9.59 pm
Adley, Robert Beith, A. J. Bowden, Andrew
Alexander, Richard Bell, Ronald Boyson, Dr Rhodes
Alison, Michael Bendall, Vivian Braine, Sir Bernard
Alton, David Bennett, Sir Frederic (Torbay) Bright, Graham
Amery, Rt Hon Julian Benyon, Thomas (Abingdon) Brinton, Tim
Ancram, Michael Benyon, W. (Buckingham) Brittan, Leon
Arnold, Tom Best, Keith Brocklebank-Fowler, Christopher
Aspinwall, Jack Bevan, David Gilroy Brooke, Hon Peter
Atkins, Rt Hon H. (Spelthorne) Biffen, Rt Hon John Brotherton, Michael
Atkins, Robert (Preston North) Blackburn, John Brown, Michael (Brigg & Sc'thorpe)
Atkinson, David (B'mouth East) Body, Richard Browne, John (Winchester)
Baker, Nicholas (North Dorset) Bonsor, Sir Nicholas Bruce-Gardyne, John
Banks, Robert Boscawen, Hon Robert Bryan, Sir Paul
Beaumont-Dark, Anthony Bottomley, Peter (Woolwich West) Buchanan-Smith, Hon Alick
Buck, Antony Heddie, John Onslow, Cranley
Budgen, Nick Henderson, Barry Oppenheim, Rt Hon Mrs Sally
Bulmer, Esmond Heseltine, Rt Hon Michael Osborn, John
Burden, F. A. Hicks, Robert Page, Rt Hon R. Graham (Crosby)
Butcher, John Higgins, Rt Hon Terence L. Parkinson, Cecil
Butler, Hon Adam Hill, James Parris, Matthew
Cadbury, Jocelyn Hogg, Hon Douglas (Grantham) Patten, Christopher (Bath)
Carlisle, John (Luton West) Holland, Philip (Carlton) Patten, John (Oxford)
Carlisle, Kenneth (Lincoln) Hooson, Tom Pattie, Geoffrey
Carlisle, Rt Hon Mark (Runcorn) Hordern, Peter Pawsey, James
Chalker, Mrs. Lynda Howe, Rt Hon Sir Geoffrey Percival, Sir Ian
Channon, Paul Howell, Rt Hon David (Guildford) Peyton, Rt Hon John
Chapman, Sydney Howell, Ralph (North Norfolk) Pink, R. Bonner
Churchill, W. S. Hunt, David (Wirral) Pollock, Alexander
Clark, Hon Alan (Plymouth, Sutton) Hunt, John (Ravensbourne) Porter, George
Clark, Dr William (Croydon South) Hurd, Hon Douglas Prentice, Rt Hon Reg
Clarke, Kenneth (Rushcliffe) Irving, Charles (Cheltenham) Price, David (Eastleigh)
Clegg, Walter Jenkin, Rt Hon Patrick Prior, Rt Hon James
Cockeram, Eric Jessel, Toby Proctor, K. Harvey
Colvin, Michael Johnson Smith, Geoffrey Pym, Rt Hon Francis
Cope, John Jopling, Rt Hon Michael Raison, Timothy
Cormack, Patrick Joseph, Rt Hon Sir Keith Rathbone, Tim
Corrie, John Kaberry, Sir Donald Rees, Peter (Dover and Deal)
Costain, A. P. Kellett-Bowman, Mrs Elaine Rees-Davies, W. R.
Cranborne, Viscount Kershaw, Anthony Renton, Tim
Critchley, Julian King, Rt Hon Tom Rhodes James, Robert
Crouch, David Knox, David Rhys Williams, Sir Brandon
Dickens, Geoffrey Lamont, Norman Ridley, Hon Nicholas
Dorrell, Stephen Lang, Ian Ridsdale, Julian
Douglas-Hamilton, Lord James Langford-Holt, Sir John Rifkind, Malcolm
Dover, Denshore Latham, Michael Rippon, Rt Hon Geoffrey
du Cann, Rt Hon Edward Lawrence, Ivan Roberts, Michael (Cardiff NW)
Dunn, Robert (Dartford) Lawson, Nigel Roberts, Wyn (Conway)
Durant, Tony Lee, John Ross, Stephen (Isle of Wight)
Eden, Rt Hon Sir John Lennox-Boyd, Hon Mark Ross, Wm. (Londonderry)
Edwards, Rt Hon N. (Pembroke) Lester, Jim (Beeston) Rost, Peter
Eggar, Timothy Lewis, Kenneth (Rutland) Royle, Sir Anthony
Elliott, Sir William Lloyd, Ian (Havant & Waterloo) Sainsbury, Hon Timothy
Emery, Peter Lloyd, Peter (Fareham) St. John-Stevas, Rt Hon Norman
Eyre, Reginald Loveridge, John Scott, Nicholas
Fairbairn, Nicholas Luce, Richard Shelton, William (Streatham)
Fairgrieve, Russell Lyell, Nicholas Shepherd, Colin (Hereford)
Faith, Mrs Sheila McAdden, Sir Stephen Shepherd, Richard(Aldridge-Br'hills)
Farr, John McCrindle, Robert Shersby, Michael
Fell, Anthony Macfarlane, Neil Silvester, Fred
Fenner, Mrs Peggy MacGregor, John Sims, Roger
Finsberg, Geoffrey MacKay, John (Argyll) Skeet, T. H. H.
Fisher, Sir Nigel McNair-Wilson, Michael (Newbury) Smith, Dudley (War. and Leam'ton)
Speed, Keith
Fletcher, Alexander (Edinburgh N) McNair-Wilson, Patrick (New Forest) Speller, Tony
Fletcher-Cooke, Charles McQuarrie, Albert Spence, John
Fookes, Miss Janet Madel, David Spicer, Jim (West Dorset)
Forman, Nigel Major, John Sproat, Iain
Fowler, Rt Hon Norman Marland, Paul Squire, Robin
Fox, Marcus Marlow, Tony Stainton, Keith
Fraser, Peter (South Angus) Marshall, Michael (Arundel) Stanbrook, Ivor
Freud, Clement Mather, Carol Stanley, John
Fry, Peter Maude, Rt Hon Angus Steel, Rt Hon David
Galbraith, Hon T. G. D. Mawby, Ray Steen, Anthony
Gardiner, George (Reigate) Mawhinney, Dr Brian Stevens, Martin
Gardner, Edward (South Fylde) Maxwell-Hyslop, Robin Stewart, Ian (Hitchin)
Garel-Jones, Tristan Mayhew, Patrick Stewart, John (East Renfrewshire)
Gilmour, Rt Hon Sir Ian Mellor, David Stradling Thomas, J.
Glyn, Dr Alan Meyer, Sir Anthony Taylor, Robert (Croydon NW)
Goodhew, Victor Miller, Hal (Bromsgrove & Redditch) Tebbit, Norman
Goodlad, Alastair Mills, Iain (Meriden) Temple-Morris, Peter
Gorst, John Mills, Peter (West Devon) Thatcher, Rt Hon Mrs Margaret
Gow, Ian Miscampbell, Norman Thomas, Rt Hon Peter (Hendon S)
Gower, Sir Raymond Mitchell, David (Basingstoke) Thompson, Donald
Grant, Anthony (Harrow C) Moate, Roger Thorne. Neil (Ilford South)
Gray, Hamish Monro, Hector Thornton, Malcolm
Greenway, Harry Montgomery, Fergus Townend, John (Bridlington)
Grieve, Percy Moore, John Townsend, Cyril D. (Bexleyheath)
Griffiths, Peter (Portsmouth N) Morgan, Geraint Trippler, David
Grylls, Michael Morris, Michael (Northampton, Sth) Trotter, Neville
Gummer, John Selwyn Morrison, Hon Charles (Devizes) van Straubenzee, W. R.
Hamilton, Hon Archie (Eps'm&Ew'll) Morrison, Hon Peter (City of Chester) Vaughan, Dr Gerard
Hamilton, Michael (Salisbury) Mudd, David Viggers, Peter
Hampson, Dr Keith Murphy, Christopher Waddington, David
Hannam, John Myles, David Wainwright, Richard (Colne Valley)
Haselhurst, Alan Neale, Gerrard Wakeham, John
Hastings, Stephen Needham, Richard Waldegrave, Hon William
Havers, Rt Hon Sir Michael Nelson, Anthony Walker, Rt Hon Peter (Worcester)
Hawksley, Warren Neubert, Michael Walker, Bill (Perth & E Perthshire)
Hayhoe, Barney Newton, Tony Walker-Smith, Rt Hon Sir Derek
Heath, Rt Hon Edward Normanton, Tom Wall, Patrick
Waller, Gary Whitelaw, Rt Hon William Young, Sir George (Acton)
Walters, Dennis Whitney, Raymond Younger, Rt Hon George
Ward, John Wickenden, Keith
Watson, John Wiggin, Jerry TELLERS FOR THE AYES:
Wells, Bowen (Hert'rd & Stev'nage) Wilkinson, John Mr. Spencer Le Marchant and
Wells, John (Maidstone) Williams, Delwyn (Montgomery) Mr. Anthony Berry.
Wheeler, John Wolfson, Mark
Adams, Allen Fitch, Alan Marks, Kenneth
Allaun, Frank Flannery, Martin Marshall, David (Gl'sgow, Shettles'n)
Anderson, Donald Fletcher, L. R. (Ilkeston) Marshall, Dr Edmund (Goole)
Archer, Rt Hon Peter Fletcher, Ted (Darlington) Marshall, Jim (Leicester South)
Armstrong, Rt Hon Ernest Foot, Rt Hon Michael Martin, Michael (Gl'gow, Springb'rn)
Ashley, Rt Hon Jack Ford, Ben Mason, Rt Hon Roy
Ashton, Joe Forrester, John Maxton, John
Atkinson, Norman (H'gey, Tott'ham) Foster, Derek Maynard, Miss Joan
Bagier, Gordon A. T. Foulkes, George Meacher, Michael
Barnett, Guy (Greenwich) Fraser, John (Lambeth, Norwood) Mellish, Rt Hon Robert
Barnett, Rt Hon Joel (Heywood) Freeson, Rt Hon Reginald Mikardo, Ian
Benn, Rt Hon Anthony Wedgwood Garrett, John (Norwich S) Millan, Rt Hon Bruce
Bennett, Andrew (Stockport N) Garrett, W. E (Wallsend) Miller, Dr M. S. (East Kilbride)
Bidwell, Sydney Gilbert, Rt Hon Dr John Mitchell, R. C. (Soton, Itchen)
Booth, Rt Hon Albert Ginsburg, David Morris, Rt Hon Alfred (Wythenshawe)
Bottomley, Rt Hon Arthur (M'brough) Golding, John Morris, Rt Hon Charles (Openshaw)
Bradley, Tom Gourlay, Harry Morris, Rt Hon John (Aberavon)
Bray, Dr Jeremy Graham, Ted Morton, George
Brown, Hugh D. (Provan) Grant, George (Morpeth) Moyle, Rt Hon Roland
Brown, Robert C. (Newcastle W) Grant, John (Islington C) Mulley, Rt Hon Frederick
Brown, Ron (Edinburgh, Leith) Hamilton, James (Bothwell) Newens, Stanley
Buchan, Norman Hamilton, W. W. (Central Fife) O'Halloran, Michael
Callaghan, Rt Hon J. (Cardiff SE) Hardy, Peter O'Neill, Martin
Callaghan, Jim (Middleton & P) Harrison, Rt Hon Walter Palmer, Arthur
Campbell, Ian Hart, Rt Hon Dame Judith Park, George
Campbell-Savours, Dale Hattersley, Rt Hon Roy Parker, John
Canavan, Dennis Haynes, Frank Parry, Robert
Cant, R. B. Healey, Rt Hon Denis Pendry, Tom
Carmichael, Neil Heffer, Eric S. Powell, Raymond (Ogmore)
Carter-Jones, Lewis Hogg, Norman (E Dunbartonshire) Prescott, John
Clark, Dr David (South Shields) Holland, Stuart (L'beth, Vauxhall) Price, Christopher (Lewisham West)
Cocks, Rt Hon Michael (Bristol S) Home Robertson, John Race, Reg
Cohen, Stanley Homewood, William Radice, Giles
Coleman, Donald Hooley, Frank Rees, Rt Hon Merlyn (Leeds South)
Concannon, Rt Hon J. D. Horam, John Richardson, Miss Jo
Conlan, Bernard Huckfield, Les Roberts, Albert (Normanton)
Cook, Robin F. Hudson Davies, Gwilym Ednyfed Roberts, Allan (Bootle)
Cowans, Harry Hughes, Mark (Durham) Roberts, Ernest (Hackney North)
Craigen, J. M. (Glasgow, Maryhill) Hughes, Robert (Aberdeen North) Roberts, Gwilym (Cannock)
Crowther, J. S. Hughes, Roy (Newport) Robertson, George
Cryer, Bob Janner, Hon Greville Robinson, Geoffrey (Coventry NW)
Jay, Rt Hon Douglas Rodgers, Rt Hon William
Cunliffe, Lawrence John, Brynmor Rooker, J. W.
Cunningham, George (Islington S) Johnson, James (Hull West) Ross, Ernest (Dundee West)
Cunningham, Dr John (Whitehaven) Johnson, Walter (Derby South) Rowlands, Ted
Dalyell, Tam Jones, Rt Hon Alec (Rhondda) Ryman, John
Davidson, Arthur Jones, Barry (East Flint) Sandelson, Neville
Davies, Rt Hon Denzil (Llanelli) Jones, Dan (Burnley) Sever, John
Davies, Ifor (Gower) Kaufman, Rt Hon Gerald Sheerman, Barry
Davis, Clinton (Hackney Central) Kerr, Russell Sheldon, Rt Hon Robert (A'ton-u-L)
Davis, Terry (B'rm'ham, Stechford) Kilroy-Silk, Robert Shore, Rt Hon Peter (Step and Pop)
Deakins, Eric Kinnock, Neil Short, Mrs Renée
Dempsey, James Lambie David Silkin, Rt Hon John (Deptford)
Dewar, Donald Lamborn, Harry Silkin, Rt Hon S. C. (Dulwich)
Dixon, Donald Lamond, James Silverman, Julius
Dobson, Frank Leadbitter, Ted Skinner, Dennis
Dormand, Jack Leighton, Ronald Smith, Rt Hon J. (North Lanarkshire)
Douglas, Dick Lestor, Miss Joan (Eton & Slough) Snape, Peter
Douglas-Mann, Bruce Lewis, Ron (Carlisle) Soley, Clive
Dubs, Alfred Litherland, Robert Spearing, Nigel
Duffy, A. E. P. Lofthouse, Geoffrey Spriggs, Leslie
Dunn, James A. (Liverpool, Kirkdale) Lyon, Alexander (York) Stallard, A. W.
Dunnett, Jack Lyons, Edward (Bradford West) Stewart, Rt Hon Donald (W Isles)
Dunwoody, Mrs. Gwyneth McCartney, Hugh Stoddart, David
Eadie, Alex McDonald, Dr Oonagh Stott, Roger
Eastham, Ken McElhone, Frank Strang, Gavin
Edwards, Robert (Wolv SE) McGuire, Michael (Ince) Straw, Jack
Ellis, Raymond (NE Derbyshire) McKay, Allen (Penistone) Summerskill, Hon Dr Shirley
Ellis, Tom (Wrexham) McKelvey, William Taylor, Mrs Ann (Bolton West)
English, Michael MacKenzie, Rt Hon Gregor Thomas, Dafydd (Merioneth)
Ennals, Rt Hon David Maclennan, Robert Thomas, Jeffrey (Abertillery)
Evans, Ioan (Aberdare) McMahon, Andrew Thomas, Mike (Newcastle East)
Evans, John (Newton) McMillan, Tom (Glasgow, Central) Thomas, Dr Roger (Carmarthen)
Ewing, Harry McNally, Thomas Thorne, Stan (Preston South)
Faulds, Andrew McWilliam, John Tilley, John
Field, Frank Magee, Bryan Torney, Tom
Urwin, Rt Hon Tom White, James (Glasgow, Pollok) Woodall, Alec
Varley, Rt Hon Eric G. Whitehead, Phillip Woolmer, Kenneth
Wainwright, Edwin (Dearne Valley) Whitlock, William Wrigglesworth, Ian
Walker, Rt Hon Harold (Doncaster) Willey, Rt Hon Frederick Wright, Sheila
Watkins, David Williams, Rt Hon Alan (Swansea W) Young, David (Bolton East)
Weetch, Ken Wilson, Gordon (Dundee East)
Wellbeloved, James Wilson, Rt Hon Sir Harold (Huyton) TELLERS FOR THE NOES:
Welsh, Michael Wilson, William (Coventry SE) Mr. Joseph Dean and
White, Frank R. (Bury & Radcliffe) Winnick, David Mr. Austin Mitchell.

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).