British Railways Board (Increase of Compensation Limit)

HC Deb 10 February 1981 vol 998 cc806-34 8.31 pm

The Secretary of State for Transport (Mr. Norman Fowler)

I beg to move, That the draft British Railways Board (Increase of Compensation Limit) Order 1981, which was laid before this House on 28 January, be approved. The purpose of the order is to provide for the continuing payment of grant by the Government to the British Railways Board for the operation of its rail passenger system. At present the limit on total cumulative payments which may be made from the end of 1978 is £1,750 million, as provided for in section 14 of the Transport Act 1978. The order will increase that limit to £3,000 million.

It may help the House in its consideration of the order if I outline the background to the subsidy arrangements for British Rail. By far the most substantial grant—the public service obligation or PSO grant—is paid in accordance with EEC regulation 1191 of 1969, which provides that railways shall be operated on a commercial basis except where a public service obligation has been imposed. The Railways Act 1974 gave effect to the provisions of that regulation in Great Britain. Section 3 empowered the Secretary of State, as the competent authority, to impose a general obligation on the Railways Board. Accordingly, in December 1974 the then Minister of Transport, Mr. Mulley, imposed an obligation, which still stands, that the board shall provide a rail passenger service which is broadly comparable with the one existing at that time.

The subsidy for the board's passenger services has been paid in respect of that obligation ever since. In addition, a much smaller grant is paid to the Railways Board under EEC regulation 1192 of 1969. This grant is paid towards expenditure on level crossings.

When the House considered the 1974 Railways Bill, it agreed that the total subsidy payable to the board under these regulations, assessed on a cumulative basis, should be subject to an overall limit. That decision allows the House a periodic opportunity to consider the amount of public funds made available in grants to the board.

I believe the original limit of £1,500 million set in 1974 was intended to last five years. The House will not be surprised to learn that the inroads of inflation meant that, in spite of the board's success in keeping within annual grant ceilings, the limit was exhausted before that time. As a result a new limit of £1,750 million, applicable to grant paid from 1 January 1979, was set by the Transport Act 1978. It is that limit which this order seeks to increase.

I understand that grant covered by the existing limit totalled £1,089 million up to the end of 1980. There is still, therefore, some time before the existing limit is exhausted. Our expectation is that payments will approach the limit only towards the end of this year. We thought it right, however, to bring this order forward now so that the House's views may be known before my right hon. and learned Friend the Chancellor of the Exchequer presents his Estimates for the next financial year.

That is the background. But, of course, we also have the opportunity to debate briefly the position of British Rail. I welcome that. First and foremost, we should be clear about the position as regards British Rail and the finance going to it. I saw a story in one of the Sunday papers which referred to Government neglect of the railways. That is emphatically not so.

The truth is that, at a time of public expenditure restraint, the railways have been generously treated. That is the fact of the matter. There are no apologies to be made. Despite the current economic recession, the Government have maintained, and in some cases increased, support to British Rail. I give the House five facts about Government support for the railways.

First, in the current year 1980–81, we increased the total of grants and loans within which the railways board has to manage—its external financing limit—by £40 million to £790 million. In other words, we have given to the board the flexibility it asked for. The board has welcomed this policy.

Secondly, the board's external financing limit for 1981–82 is, at £920 million, £30 million above what had been provided for in previous plans. Of course, we have set it a tough target, but it is also realistic and I know that the chairman recognises it as such. The board has accepted that EFL.

Thirdly, within these increased external financing limits, the provision for the public service obligation grant in 1981 is £678 million, that is £23 million above the previously planned provision. That additional provision was made to help the board maintain a 12-month interval between fare increases.

Fourthly, I wish to make it clear that we have not cut investment. We have maintained it. There still appear to be some who do not understand the present position. I saw on television the leader of the Liberal Party freely asserting that the Government had cut the investment ceiling. That simply is not the case. We freed track renewal from control of the investment ceiling. When allowance is made for that, the investment ceiling remains at the same level in real terms as when we came to office, that is, £325 million a year.

Within that ceiling the board has been able to carry out a wide-ranging programme of improvements and renewals. It has been able to effect considerable improvements in its inter-city services, including the introduction of high speed trains, of which 95 are now in service or authorised. It also has authority for substantial builds of modern freight locomotives and wagons—1,500 of the latter. A number of major investments have been carried out, or are being carried out, to improve London commuter services—for example, electrification of the Bedford-St. Pancras line, and re-signalling projects at Victoria and on the London to Brighton line. In addition, there is a rolling programme for 220 EMUs a year, many of them intended for Southern region inner suburban services.

Mr. Donald Anderson (Swansea, West) rose—

Mr. Fowler

To that I have added proposals for major re-signalling on the West of England route costing about £28 million. I announced my approval on 28 January. I have also welcomed in principle the board's proposals for new train ferry services. That will be dependent upon the progress towards recovery of the freight business.

The next large investment issue is that of electrification. We shall publish tomorrow the final report of the joint British Rail and Department of Transport review. The review was set up some time ago. We do not intend to take instant decisions. The report presents several broad issues that the Government will need to consider. Electrification would require substantial extra investment, mainly for the benefit of the board's commercial rail businesses, intercity and freight. It will make cash flow demands well into the 1990s. I shall have to consider carefully with my colleagues the prospects of the board's commercial business and how the funds to finance electrification might be generated. That will be the next stage in our consideration.

Mr. Anderson

Will the right hon. Gentleman indicate what progress, if any, has been made between himself and his right hon. and learned Friend the Chancellor of the Exchequer on introducing a more flexible means of British Rail financing, especially lease and lease-back arrangements?

Mr. Fowler

That involves a number of issues. There is some flexibility behind what we are doing in the Transport Bill in bringing investment into the rail subsidiaries. That is one way of achieving flexibility. That is being debated at some length in Committee. We have also given the board the sort of flexibility that it wanted in the external finance limits at the end of each year—in other words, the increase in the carry-over for which the board, and especially Sir Peter Parker, have asked. We have gone a long way in trying to create flexibility.

Mr. Stephen Ross (Isle of Wight)

The right hon. Gentleman referred to track repairs and expenditure on track maintenance. Is it not a fact that the advanced passenger train, which is soon to be introduced on the Euston-Glasgow route, will not be able to travel at the speed of which it is capable because certain areas of the track are not up to standard? Is he prepared to advance some money for that to be put right?

Mr. Fowler

I am prepared to consider that. The hon. Gentleman should be under no illusion about what is holding up the advanced passenger train. Responsibility does not lie with Government policy. The advanced passenger train is behind time and there are still matters that have to be put right. We want to see the prototypes in service, and we shall make our decisions when that has taken place. The train is not in service, but we hope that it will be as soon as possible. The delays have not been caused by Government policy.

The fifth policy achievement of the Government is that I have given a clear commitment that there will be no new round of Beeching cuts. I am interested in ensuring that we have the most cost-effective service that is possible. I am especially glad that my commitment has stimulated the board to develop new solutions to what has clearly been a problem for many years.

I hope that the board will now be able to mount a demonstration project using low-cost, light-weight vehicles and radio signalling on one of its rural lines. It: is not enough for us to say that the present situation should be maintained. I want to see forward development. A demonstration project of the sort to which I have referred will be a useful way forward for the rural services, which undoubtedly and unquestionably are important for many members of the public. We should try to move forward here, and I am glad that the board is now seeking to do that.

Other measures that we have taken have been designed to assist the board to move with the times, to rationalise its business and to provide increased flexibility. The 1981–82 external finance limit includes an additional £53 million to cover the short-term costs of closing the collected and delivered parcels business, which has been losing nearly £1 million a week. I think that there would be agreement on both sides of the House that it would be sensible for the Government to make special provision for the closure and contraction of business of that sort. Track renewal has been free from the control of the investment ceiling. In common with other nationalised industries, the British Railways Board is now allowed some end-year flexibility in meeting its external financing limits.

In spite of those measures, we recognise the legitimate concerns that are felt by the public, both by those who use the railways and undoubtedly feel that standards are not keeping pace with fares, and those whose concern is the continuing demand for taxpayers' money. The Government share both those concerns.

If the present financial constraints are biting hard, we have to ask why. The board's income has increased in the last five years. A traveller has had to pay more, with real fare increases. Grant payments have also increased in real terms since 1975 by about 6 per cent., if both Government and local government payments are included. This year we expect British Railways to receive nearly £2 million a day in direct passenger grants.

here is a further area of concern—that of investment. The Board has made no secret of its view that more public money for investment is necessary. Its thinking has now been set out in its corporate plan for 1981–85, which I am now considering, and on which I shall make a statement when I have had an opportunity to consider it in detail. In the last few days I have had constructive discussions about various aspects of the plan with the Rail Council, which, as the right hon. Member for Barrow-in-Furness (Mr. Booth) knows, represents not only the board but the major unions in the railway industry.

I understand the board's concern about the level of investment, but the future of the railways is not simply a matter for the Government. It is a matter for the whole railway industry, including the unions. There is no doubt that there must be an increase in productivity. In its corporate plan, which it published in November, the board drew attention to the fact that it could run the railways with 38,000 fewer posts. That does not mean a smaller railway. It may be slimmer and leaner, but it will not be smaller. It is planned to increase output in terms of passenger and freight tonne miles. By increasing productivity and efficiency British Railways can generate the funds that could enable them to afford the investment that will secure the long-term future of the railways. The Government believe sincerely in that long-term future.

Mr. Stanley Newens (Harlow)

The Minister talks about increasing productivity on the railways, but does he recognise that steps such as closing stations in the evenings and at weekends are part and parcel of the process? Does he approve of the recent proposals to close 150 stations in the South-East of England? Surely that is depriving people of a service that could easily be provided by those who are otherwise likely to be on the dole.

Mr. Fowler

I am sure that the hon. Gentleman will make his contribution on that point and the question of services. I shall be glad to respond when he does so. The general point that I make to him is basically that we say to British Rail that this is the cash limit within which it has to live, and clearly it must be right for us to give to British Rail the discretion and the decisions on how it comes within that. I should not have thought that any Government—whether I or the right hon. Member for Barrow-in-Furness was Secretary of State—would contemplate a system which was totally unchanging, year in and year out. Therefore, it is fair to say that this must be a decision that the chairman and the board of British Rail must make. I am quite prepared to deal with that argument in more detail if the hon. Gentleman wishes me to do so.

By the actions that the Government have taken to help British Rail through its current and, I hope, short-term difficulties, they have shown that they believe in the future of the railway industry, but that future must be earned. Current trends must be reversed. The board's costs have been increasing in real terms, and there has been no satisfactory explanation of why that has been so.

Underlying all the efforts of the British Railways Board must be the issue of increased productivity. The chairman of British Rail, Sir Peter Parker, has said—and I agree with him—that productivity is the rock upon which we must build the future of the railways. The board has recognised that in its corporate plan, which provides for substantial productivity improvements in the next few years. The experience of the past 10 years has not been as encouraging as that of the previous decade. During the 1960s, output per man rose by about 97 per cent. In the 1970s the net productivity gain, according to the Monopolies and Mergers Commission, was about 5 per cent. The commission noted in its report on the London commuter services the relatively low rate of productivity improvements over the last 10 years and said that had been a significant factor inhibiting improvements in pay levels.

I believe that improvements are necessary and possible on both sides of the industry. I know that British Rail's management is tackling the criticisms made by the Monopolies and Mergers Commission. For example, one area was that of maintenance costs, where the commission found that, with the present system of controls, British Rail had not immediately been able to explain with any certainty the reason for varying rates of increase in rolling stock maintenance costs, nor give any reliable figures for the effect on maintenance costs of ageing rolling stock. The Monopolies and Mergers Commission also commented on a lack of direct material cost control.

I am concerned also about overall cost control. The commission commented that the board's planning system had probably not been effective in building cost reduction targets into its plans. The commission's general view was that the board had made major efforts to reduce costs only at times of financial crisis. It is fair to say that the commission also found evidence that British Rail was taking steps to correct those failings. We must all hope that those succeed. I think that action lies with the board. The setting of cost targets and progress towards them is something that I shall pursue vigorously with the board.

The House will expect to hear how I see the future of the obligation and of the different parts of the passenger business. There is no question but that the obligation will have to be revised. We cannot for ever expect the general service levels that were appropriate in 1974. The board must have better objectives. I do not propose to amend the extent of the obligation. As long ago as 1979 I ruled out any substantial reduction of the passenger network. I am glad that the board is actively investigating more cost-effective ways of keeping the rural services going. I trust that it will give proper priority to maintaining the track.

The London commuter services represent one of the most important areas. We certainly need clearer accountability and clearer objectives. I shall make a fuller statement later on action to follow up the report of Monopolies and Mergers Commission. Meanwhile, I have asked the board to let me have a clear statement about its plans for commuter services and about the options for improving the quality of service to the customer.

I am bound to tell the House of my concern over the business performance of the inter-city services. Last March I announced an interim financial target—which had been agreed with the board—as a step towards a full commercial objective. The board's corporate plan says that this interim target will not be reached, even on a very rosy traffic forecast and even with all the expected productivity improvements. It is clear that this situation, at the heart of the railway, presents serious problems of investment and business planning that will have to be tackled.

Finally, the Government recognise the importance of the railways. We accept the need to support passenger services. We have given British Rail a fair deal this year. Indeed, we have given as much support as the Labour Government thought adequate. But we must continue to look for cost savings, increased productivity and better performance in the commercial business. The future of British Rail will be secured in this way, through a constructive partnership between the board and its staff. The order provides for a continuation of this policy and of the realistic arrangements for Goverment revenue support. I urge the House to endorse that view.

8.57 pm

Mr. Albert Booth (Barrow-in-Furness)

Under this order the limit of the public service obligation will be subject to increase. The obligation was introduced in 1974 and was intended to enable British Railways to maintain their network. It was the way that the House had of saying "No more Beechings. We do not want railway services cut. We have had too many cuts. We want to maintain our railway services."

Like those who are concerned about keeping the network, the Secretary of State should realise that it is increasingly apparent that the network of 1974 cannot be maintained by the present level of public service obligation. The strain of attempting to maintain it has created serious problems for British Rail. I am not saying that there has been a dramatic change in the Government's concept of the public service obligation. As we wish to have a constructive debate, I hope that hon. Members will accept that the public service obligation has, in real purchasing power terms, been roughly maintained at the level set when it was introduced. It may have fallen a bit, but it is about the same.

It is my contention—supported, I think, by most people who have studied the railway service—that this PSO will not sustain the network. There is evidence of that on every hand. If I give a few examples from Cumbria, not because I maintain that Cumbria has a worse service than any other part of the country—of course, it is a more important part of the country because my constituency is there—but because they show that there are a number of lines in difficulty.

I shall start with the main line from Euston to Carlisle. On that line, there are arrears of track work in Cumbria which require the relaying of 2¼ miles of track, reballasting for several miles and some earthworks. Because of the condition of the track, from June next the timetable will have a 10 minutes addition placed upon it. In spite of that, I am told by British Rail that, even with that additional time, the punctuality targets will be revised downwards.

The signalling system on the coast line—serving the constituencies of Barrow, Workington, Whitehaven and Carlisle, and the constituency of the Home Secretary—which is contended to be still safe—dates back to 1879. They must have built good signalling systems in 1879, because they still work today. Indeed, 60 per cent. of the boxes date back to the early 1900s. Obviously they are labour-intensive. Perhaps that casts some reflection on what the Secretary of State said about productivity. On that line, there are arrears of track work which now require the relaying of 13 miles of the track, and reballasting of four miles, to say nothing of the work that needs to be done on the sea defences.

Let us consider the rolling stock on the lines that serve my constituency. The diesel multiple units, which were built to last for 10 to 15 years, are now over 23 years old. I cannot believe that an estimate cannot be given of how much it would cost to keep these diesel multiple units on the track. I have been to the workshops where the DMUs are refurbished. The cost must be known because so much of that work is done.

It is not unusual in the Preston division, which operates from the south into my constituency, to start the morning with seven out of 40 units short. It is a wonder that there is so little severe disruption in the service. I imagine that the only reason is the very skilled manipulation by the BR controllers of the very outdated DMUs.

About 3,000 miles of the 12,000 miles of the country's network are at risk of being put under speed restriction and ultimate closure because there is not enough investment. Signalling systems such as the one I mentioned on the coast line are not hard to find. They will soon be incapable of repair and will need replacing. Viaducts which carry vital rail links are in need of replacement, and some are in danger of collapsing. Carriages are threadbare, and in many areas rolling stock is at the end of its useful working life.

All these facets of the system are calling out for investment. They reached their peak of service years ago. What will the future be if we maintain the same PSO regime, using the powers of this order to keep it going for another few years? In other words, why has the situation developed?

I contend, first, that it has developed, in part, because the cost of replacing railway equipment has increased since the PSO was set while the PSO has not increased. It is not for want of increases in fares. There have been substantial increases in fares. We have probably the highest fare levels in Europe. But the proportion of the cost borne by fares in maintaining social lines, even if they maintain their fare income, still leaves that remaining proportion more expensive to finance in terms of replacing the equipment on those lines.

Of even greater significance has been the postponing of investment by British Rail to keep within its PSO and external financing limit. The Secretary of State was unfair when he quoted an occasion on which British Rail went outside the limit, because its record of staying within its PSO and financing limit is extremely good. Generally speaking, it keeps within the PSO limits by a margin which shows that it is a careful cost controller. However, it has kept within the PSO margins only by delaying work. It has said "If we are to keep within the limits this year, we cannot afford to carry out this or that investment project or this or that piece of track maintenance. We shall not be able to replace this signalling system or these DMUs."

Increasingly, British Rail is facing higher operating costs because it is using outdated stock. It is obviously more expensive to operate an old life-expired DMU than its modern equivalent. Therefore, that adds to the cost.

It is not inappropriate to draw an analogy between British Rail and a man who is deciding whether to replace his car. In making a decision whether to replace one's car, one estimates how much it will cost to keep it on the road for another year or two years. One considers what major repairs will need to be carried out and whether the tyres will have to be replaced. One may come to the conclusion, having made such an assessment, that it will be cheaper to buy a new car than to retain the old one, even if one has to borrow money at present high interest rates to buy a new car. British Rail is very much in that position. It is clear that British Rail is determined that there will be no reduction in safety standards as a result of these arrears of track maintenance and because it is operating with outdated life-expired stock.

Mr. Anderson

I suggest that the analogy drawn by my right hon. Friend has an even stronger effect on rail transport, because it provides services for others. Investment in new stock is likely to increase revenue, because it will attract passengers.

Mr. Booth

I take my hon. Friend's point. The analogy could have been better chosen. I should have referred to the replacement of a bus rather than a car. The bus operator would know that he would be likely to attract more passengers if he provided a new bus. Therefore, he would make his calculations in that light.

The point is that there is a cost over and above this financial cost to the railways. It is a cost to passengers in terms of services which are being cut. My hon. Friend the Member for Harlow (Mr. Newens) referred to a massive cutback in services to South-East commuters. But throughout the country one is seeing cuts in the frequency of services.

There is a further cost to be borne by passengers in speed reductions and the extension of journey times unless there is a change. Some reductions have already taken place. There is a further cost to be borne by passengers in railway operation reliability.

I am sure that British Rail will not deliberately reduce safety margins. But if British Rail has to put an old piece of rolling stock on a not so well maintained track with an outdated signalling system, its chances of being able to maintain scheduled services must be reduced. Indeed, there must be a greater possibility of breakdowns.

The longer we delay the decision—I say "we", because I accept that the problems have not arisen since the election of the Government—the greater will be the cost to the public of dealing with it. It will not only be greater cost up to the point when the decision is taken, but the greater cost of running outdated stock and the higher cost of new investment. I assume that a greater public service obligation will be required in the future for feeder or social lines, if only to pay the higher interest on the new heavier investment. On the main lines, where one can reasonably hope to gain a full return on the investment, that factor does not bear. It will affect the public service obligation which is largely related to feeder lines where it is understandably held that there must be a social contribution to maintain the services.

If one judges British Railways—by that I mean all those who work in the railway unions as well as members of the board—by their ability to meet their costs against any other railway system in Europe, one finds that they have performed remarkably well. They are the best in Europe measured by the yardstick of their ability to meet the costs from fares and freight charges. They are nearer to being self-financed than any other system. No railway system is self-financed, but the British Railways system has the highest self-financing ratio in Europe. That is why it is unfair of the Secretary of State to imply that there are some great productivity improvements to be made by cutting out stock.

Part of the productivity improvement that can be brought about depends on the ability to invest in more modern equipment. On the Cumbrian coast line a modern signalling system would reduce manning requirements by decreasing outdated signal boxes. Part of the productivity gain will come only with the decision to invest. I maintain that British Rail has achieved a higher self-financing ratio than any other railway system in Europe. In addition, it gained passengers up until 1979. Any loss of passengers reflects two changes that could not have been avoided by any action by British Railways. It would be tragic if we were to allow our railway system to rattle into decline because we did not face up to the question of the inappropriateness of the concept of public service obligation which maintains it at that level.

I turn to an issue which directly relates to public service obligation. It stems from the views of the EEC Commission and the role of the EEC in railways. In a debate about public service obligation, that is appropriate. The EEC Council regulation 1191/69 obliged us to introduce the 1974 Act provision for public service obligation. We have to bear in mind that Britain is not alone in wrestling with financial prospects for railways. The EEC recently has published a document entitled "Community Railway Policy: Review and Outlook for the 1980s". The document is a communication from the Commission to the Council. The document refers to the potential increased demand for railway transport both for freight and passengers, and indicates that between 1973 and 1977 State financial intervention in EEC railways increased by more than 60 per cent. We should see our maintenance of a level PSO against an increase in the EEC of 60 per cent. in financial obligation.

The document states: The railways therefore may look forward to a growing market, but their potential to realise a greater market share is a function of internal management decisions and Government-railway decisions regarding investment and restructuring. The basic objective must be efficiency, both in the production of high quality social and commercial services for users, and in marketing these services. Those are sentiments with which I suspect the Secretary of State agrees. I do not suppose that he will object to them, and neither would most hon. Members.

When I first read the document, I assumed that, having expressed such views, noted the massive intervention and realised the potential for expansion of the railways, the Commission would go on to state that EEC policy should reflect those factors. Strangely, almost perversely the second chapter of the document, headed "Community Railway Policy", comes to almost exactly the opposite conclusion. It states: Community railway policy has two basic objectives: elimination of distortions in the inland transport market—improvement of the railway service performance and financial situation. The document sets out the basic principles on which Community legislation has been built in order to attain those objectives. It says: these objectives are"— and this is the first— reduction of public service obligations". It outlines other reductions of aids, but I have no need to go through them. I want an assurance from the Secretary of State that he will resist any move by the EEC to suggest that we should have a reduction in the PSO, following a period when the general rise in intervention in Europe has been about 60 per cent., while our PSO has been maintained at a virtually flat level.

The public service obligation must be sustained. It is our society's payment for the service that it needs now and which, when we exhaust the oil stock of the planet, will be increasingly needed. I hope that we can look objectively and realistically at a serious problem for the United Kingdom and be prepared to recognise that we cannot use an instrument that appeared to be right in 1974 as though no changes had taken place and as though it had been completely successful. The reality is that it is not up to the job that has to be done in the 1980s, and accordingly we must change it.

9.18 pm

Mr. Bob Cryer (Keighley)

The rubric on the Order Paper stating that the order has not been considered by the Statutory Instruments Committee is not correct, because it was so considered this afternoon. The Committee asked for a memorandum from the Department of Transport on the instrument and felt that the explanatory note was less than adequate in explaining the purpose of the instrument. For example, there is no indication of the cumulative nature of the total expenditure that the instrument authorises, and the Committee has commented to that effect. We have not held up the instrument and we were pleased that the Department co-operated in providing an explanation.

On the general purpose of the instrument, the subsidy, of course, is entirely separate. The Committee does not deal with the merits of an instrument, as I shall do. It deals purely with the powers of the Minister and the scope of the instrument under the primary legislation, to see whether the instrument is within the scope of that legislation, and reports any inconsistencies to the House.

I turn briefly to the merits of the order, which are of great importance to me and to other hon. Members. The subsidy paid under the regulations is clearly extremely important, and the raising of the limit in anticipation of expenditure is certainly very welcome.

There are, nevertheless, areas of concern. The Minister said that the track renewal programme was freed from the investment ceiling. Can he tell the House, first, whether this is the result of the railway inspectorate's last annual report? Paragraph 30 of that report contains a clear implication that the financial limits on British Rail are resulting in a lowering of track maintenance standards, to the point where some kind of danger is lurking, or would be lurking, but for improvements. I hope that the Minister can give an answer to that very important—and very rare—comment by the railway inspectorate. There is no question but that British Rail's safety standards are extremely high.

Mr. Fowler

Perhaps I can help the hon. Gentleman on his first question. The fact is that action there pre-dated the report to which he has referred. It was action that was taken a year previously.

Mr. Cryer

That makes it even more serious, because the implication in the report is that there is a need for yet greater investment in order to raise the standard of track maintenance to account for the services—the increased speeds being maintained by the HS 125s, and so on. The hon. Member for Isle of Wight (Mr. Ross) raised the question of track speeds of the APTs under existing maintenance standards. I therefore hope that the Minister will bear the inspectorate's report very much in mind because it is an important element.

With regard to productivity, British Rail, by and large, has an enviable safety record. While an increase in productivity is clearly desirable, it cannot be undertaken by lowering safety standards. There are situations in which productivity cannot be increased except at the expense of safety standards. There must be people, for example, to maintain scrutiny of passengers on curved platforms. One cannot dispense with guards unless there are straight platforms so that drivers can look out to ensure that all passengers have boarded.

The railway unions have co-operated with alterations in practice. They have, for instance, abandoned the practice of the guard always riding at the back of the train. After long internal argument they have allowed the guard to be carried on the locomotive. But that was only possible as a result of investment in continuously braked trains. So long as there is lack of investment, allowing loose-coupled freight trains to travel at 40 miles per hour, there is a risk of a breakaway and there must be somebody at the back to put on the hand brake and pin down the wagon brakes.

All this may seem terribly old-fashioned. Indeed, it is. But until there is investment in new wagons with continuous acting brakes, so that if there is a breakaway the brakes go on automatically as they do on passenger trains, one cannot risk a lowering of safety standards by moving guards from the rear of the train. The railway unions are keenly aware of this matter. They want to help, but they are not prepared to lower standards, and quite properly so.

Mr. Robin F. Cook (Edinburgh, Central)

My hon. Friend has made a number of useful and interesting points concerning productivity in British Rail. He will wish to acknowledge that recent figures show conclusively that British Rail's productivity in terms of men per locomotive or men per track mile is substantially higher than that of most other European networks.

Mr. Cryer

I was about to make that point. Productivity compares extremely well on an international European basis in spite of a lack of investment in British Rail to achieve the modernisation that I have outlined.

The cries from the Conservative Benches that it is the fault of overmanning and the unions simply are not true. The Minister has not made that claim tonight, and I do not want to be unfair to him. However, that is a claim which is often made by Conservative Members in an entirely unknowledgeable and superficial way.

The railways are bearing the brunt of the recession. The freight side of the business carries basic commodities for the iron, steel and coal trades. As a result of the difficulties in those industries, exemplified by the announcement of the proposed closure of 50 pits, where will the bulk of the coal be carried for those 50 pits if those closures ever come about? I do not think that they will, because of the attitude of the NUM. However, if they do take place probably around 90 per cent.—certainly the top percentage—will be lost to rail. Therefore, the railways will be hit yet again. I hope that the Minister takes that point seriously into account when providing support for the railways. They are taking the brunt of the recession because they carry these basic services.

The right hon. Gentleman also mentioned parcel closure. That is a loss of traffic for British Railways. However, the decline in parcels is another reflection of the recession. There is a large parcels depot in Bradford because there are a number of mail order firms, such as Grattan Warehouses. I understand that the decline in parcel traffic will mean about 200 redundancies.

My hon. Friend the Member for Harlow (Mr. Newens) asked what the achievement would be in cutting railway jobs, forcing people to go on the dole, with support being paid by the Department of Employment. The closure of the parcels service will lead to redundancies. Again, that is a consequence of the recession.

The Minister said that he wants to see better objectives. I hope that that does not mean any reduction in the railway passenger network in the future. We have about 11,000 miles of railways and they are extremely precious. I hope that the right hon. Gentleman will define more precisely what he means by "better objectives".

He talked about a reduction in railway manpower of 38,000. We should like more information about what British Railways have in mind and what they have explained to him. Railwaymen tell me that on a service such as the Morecambe-Keighley-Leeds service, which uses 20-year-old diesel multiple units, the manpower available for maintenance is simply inadequate to keep those old units in operation, even though they have been refurbished, up to the level of service which is necessary. They explained to me that a locomotive-hauled train often arrives late because of the lack of maintenance facilities for the diesel multiple units, which in any case is more expensive.

Have British Railways advanced any proposals—I know that a plan will be announced tomorrow and I hope that the Minister is sympathetic to it—for replacements for the DMUs? I doubt whether they will last another five to 10 years without a significant increase in maintenance facilities.

If we are to attract passengers on to the railways, we must have an efficient, speedy, punctual service. That is what British Railways want. Such services are provided more often than general comment supposes. However, as the multiple units must undertake this task, and as the years pass, it is increasingly difficult for British Railways to achieve such a service. Keighley station is attracting many passengers. It wants to improve the passenger figures to provide a viable railway service.

Some of the investment figures mentioned in the Armitage report on heavy road vehicles refer to massive sums of money—up to £1.2 billion to strengthen bridges to comply with EEC heavy vehicle standards. When we talk about investment for British Railways, we are talking about relatively modest sums of money.

The Minister said that the inter-city services did not generate the expected amount of passenger traffic. That is a reflection of the recession. British industry is grinding virtually to a halt, and that must be reflected in fewer passenger journeys. Engineers are not travelling to carry out outfitting, and salesmen are not travelling to sell their goods or services, simply because the demand is not there.

The service from Leeds to London on the HS125 is excellent. From observation—although I know that that is not totally reliable—it runs to time, has good investment and runs smoothly. Of course, I do not know the exact percentage of efficiency. The Minister must bear in mind that when his right hon. Friend the Secretary of State for the Environment announces that the Government will spend £25 or £30 million on a Leeds-Bradford airport runway extension, that money must have some effect on the excellent British Railways service. If that investment improves the availability of aeroplanes flying to and from Leeds-Bradford, that will divert passengers from British Rail. It does not make sense to have an excellent railway service and, at the same time, to divert resources to a rival air service that will detract from our publicly owned transport system.

I hope that the debate will bring home to the Minister the need for an increase, in real terms, in investment in British Railways. It is an important network which the British people own and appreciate.

9.32 pm

Mr. Ted Leadbitter (Hartlepool)

I shall speak only for four or five minutes because I spoke about transport not long ago.

The debate gives us the opportunity to ask, once again, a number of questions and to pinpoint the concern of British Rail and the trade unions. It is clear that Sir Peter Parker, the chairman of British Rail, is deeply concerned. That man, whose judgment is not to be questioned and who has available to him the expert knowledge of his officers, has described the position as being corrupt not at the skin of the apple, but at the core. He is extremely worried because British Rail will have reached the point of no return unless we make a commitment to invest considerably larger sums than those we are discussing.

It has already been pointed out that we cannot measure the significance of the order because the explanatory note refers simply to an increase from £1,750 million to £3,000 million. We do not know the significance of that figure within the total ceiling of the powers of the Secretary of State in relation to the public service obligation.

A recent visitor to the House of Commons was the divisional manager of the North-Eastern division of British Railways. He was so concerned with the present position that he brought with him his technical officers. I was surprised to find that, in his judgment, some part of his region had more than a year's backlog of track maintenance. He referred to another part of his area where trains were subjected to more than 50 varying speed limits to take account of the track conditions.

Recently, at Question Time, I asked about safety in relation to investment and cash limits. I was glad to hear that British Rail standards are such that accidents are minimal. British Rail has a proud record. However, British Rail officials believe that they are reaching the point of overstretch. Track maintenance and the condition of some rolling stock and in particular the diesel multiple units on feeder lines are causing anxiety. The Secretary of State would be wise to consider whether there is an imbalance between the proposals for roads and the proposals for British Rail.

I wonder to what extent the unions can react. The general secretaries of ASLEF and the NUR have publicly announced their anxiety about the physical conditions of the track and support systems. The House must respond to the judgment of Sir Peter Parker and the unions. They are worried about British Rail's efficiency and the safety of workers and passengers. A large reduction in the work force is not acceptable unless the highest standards of investment and safety are observed.

An ominous note was sounded when the Secretary of State referred to better objectives within the programme. The objectives must be made clear. If they are not, suspicions will be aroused about the consequential implications.

A divisional manager in my area is visiting all the authorities and all the bodies interested in the railways in order to whip up a campaign and to impress upon hon. Members the need to underline the erosion of efficiencies as a result of the Government not providing the wherewithal to meet the target demands.

The order says little. We should reflect, nevertheless, on the larger questions and the implications of cash limits and investment. I apologise to the Secretary of State for not being able to be present to hear what he said. I am sure that he will understand if I have referred to matters with which he has already dealt. I am interested in transport and I am sure that he will accept my apology.

9.39 pm

Mr. Stephen Ross (Isle of Wight)

I shall not delay the House for more than a few minutes. I am sure that the Minister is genuine in his support for the railways. I welcome his total rejection of any Beeching-type operation. The troubles in the railways have certainly not arisen only in the last 18 months, and the Minister should not take responsibilty for them. They have built up over many years.

I hope that the Minister's undertaking on the Beeching cuts will apply to the Isle of Wight, where we have the most decrepit underground system overground in the country. When British Rail, at great expense, decided to electrify our lines with the third rail systems, it could not find wagons which would go through our tunnels, so it bought up Piccadilly Line stock of 1927 vintage. We are keeping the lines repaired, but it is quite a run between Ryde and Shanklin, as the train shakes the daylights out of the passengers. The lines will have to be replaced. Therefore, I am making a plea that the promise that the Minister has given tonight will extend to my constituency.

It is sad that the British Rail Board has been advised to raise its fares to the present extent. Tonight I was at a meeting at which someone who had come up especially from Cornwall told me that the return fare was about £100. It is about £20 for a first-class return fare to Southampton. I know that those are weekly returns and that day returns are much cheaper, but they are huge sums. My son is studying at the agricultural college in Aberdeen. Even with his student rail card, it is cheaper for him to go back on a coach to Aberdeen than by train—although he would have to suffer a long journey. That is not right when the service is so good north of London.

I, too, make a plea for track maintenance. It is a worrying matter. I cite the example of the United States, where they wish that they had maintained their tracks. Now they are paying the penalty for not doing so. That is not an example that we should follow.

I make a plea for the London commuter service. The Minister said that he would study it as a special report and that he would make a statement to the House. Those who travel in the Southern Region have had the worst end of the bargain on investment in recent years. The services north of London—out of Euston, Paddington and Kings Cross—are superb. They are not better anywhere in the world, including Japan.

However, south of London the services are not superb, particularly the South Coast services to Southampton, Portsmouth and Brighton. We have a marvellous one hour, 10 minute service between London and Southampton, but we are rattled to pieces by the train. That cannot continue much longer. I fear that the service will be slowed down, because it will be impossible to maintain it with the present stock. The Portsmouth service has not been improved for 30 years and the trains are dirty. Travellers on those trains deserve better.

Morale on those services is at a low ebb. I was lucky to travel on one of the HSTs when they were first introduced. The morale of the passenger manager and the staff on the train was sky high. They were proud to be on a new train, to have new stock and to be doing a good service. Many people were flocking on to the trains. The staff felt that at long last there was a new era when it was worthy to be on a railway that worked.

However, the staff on trains to Portsmouth and other places have lost heart. I am not criticising them in particular, but this is a typical example. Last Friday week I arrived at Portsmouth Harbour station, which is not the best place in the world to arrive, and it was mobbed. There was no boat to the Isle of Wight. I asked if the car ferry was running and I was told that it was not. I then asked if the hovercraft was and the reply was "Don't know, mate". In fact, the hovercraft was running and it is a pity that the opportunity was missed to provide a service to the passengers with a mini-bus to run them to the hovercraft, either paid for by British Rail or subsidised by the passengers. That service does not exist because the staff is demoralised. That is what happens when facilities run down.

I ask the Minister to look with sympathy at the report that will be coming to him about commuter services and to see what finance he can find. He will have a battle. The Cabinet does not like spending money these days. The Minister will continue to fight a good battle. He believes that our railways are worthy of investment. I ask him to direct particular attention to the services south of London.

9.45 pm

Mr. Donald Anderson (Swansea, East)

From my experience of the railway in South Wales I confirm the point made by the hon. Member for Isle of Wight (Mr. Ross) about the increase in morale when investment takes place.

I should like to take up two points made by my hon. Friend the Member for Keighley (Mr. Cryer) in his most valuable speech. They concern labour productivity and the effects of recession. The Minister overstressed the possibility of improvements in productivity. He compared this decade with the previous decade and said that our productivity was greater in the previous decade. That goes without saying. The previous decade was the era of Beeching. Track mileage was reduced in a draconian way in the 1960s that productivity gains inevitably resulted.

The Minister also failed to place his point on labour productivity in the European context. The booklet that I have here "European Railways Performance Comparisons" covers the major EEC and Scandinavian railways. In the period 1971 to 1976, comparing changes in traffic, train kilometres and staff, British Rail labour productivity per man was above average, bettered only by Sweden and the Netherlands.

In the Western region roughly three-quarters of the receipts from freight come from the coal and steel industries. We know what has happened with the slim-line operations on the major steelworks in Port Talbot and Llanwern. We are aware of the threat to so many pits from today's announcement. The railways can hardly be penalised as a result of Government decisions in other areas. The recession generally is affecting the use of the rail network by passengers.

The Minister stated that, although the order appears to be within a fairly narrow compass—the increase in the PSO to £3,000 million—it has a wider application. The finances of our rail network are interdependent. Within the context of the order we are bound to consider wages, investment and fares. The debate gives us an opportunity to examine the totality of public funding of the rail network.

The order arises from an EEC regulation, and it is instructive to compare the public financial support for British Rail with public financial support for railway undertakings inside and outside the Community. I have referred to the performance comparisons published in March last year. The booklet reaches the significant conclusion that the main reason for the different level of usage of the passenger railway is the difference in Government policies over the support level. More public money is spent on the Paris Metro than on the whole British Rail network. That is remarkable. With SNCF—the French national railway company—support from public funds is double that of British Rail.,British Rail is 71 per cent. self-financing. That is more than any of our neighbouring rail networks.

The message is clear. If it is a national objective of the Government, whether for energy conservation reasons or for environmental reasons, to encourage the use of rail passenger services, the way to do so is to increase public investment in the railways. The order deals specifically with the public service obligation grant that relates directly to investment in track and signalling. My right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) has already referred to the cumulative effect of the neglect of investment over the years in track and signalling. British Rail's recently published corporate plan refers to massive arrears in signalling and predicts the closure of 3,000 miles of track by 1990 on present investment levels.

No one on the Labour Benches has claimed that the deterioration in investment began in May 1979. It has been accumulating over a large number of years as Governments have taken short-term investment decisions. It is fair to say, as my hon. Friend the Member for Hartlepool (Mr. Leadbitter) remarked, that there is bound to be unreliability caused by engineering breakdowns as a result of lack of investment. As the reliability of the service becomes more unpredictable, the railway service itself becomes more unpopular and passenger receipts are reduced.

My right hon. Friend the Member for Barrow-in-Furness mentioned some of the outdated signalling stock in his area. According to figures that I have, over 7,000 miles of track are covered by signal boxes that are over 50 years old. It is generally recognised that the diesel multiple units, built largely at the end of the 1950s and expected to have a short life, are likely to be with us until at least the late 1980s and the early 1990s when, presumably, they will fall apart. They have far outlasted their expected life when they were originally built, during the phase of investment that occurred in the late 1950s.

I shall not dwell on the safety factor which has already been dealt with. If there is less investment in track renewal it is bound to have an effect on the safety record. At the last transport Question Time the Minister mentioned that there have been no passenger deaths in three of the past five years including last year. He failed to note the alarm contained in the McNaughton report in September 1980—the report of the chief inspecting officer of railways—which talked of the risk of the situation deteriorating and part of the reason for the increase in accidents arising from the direct or indirect effects of the continuing financial problems facing railway management". How do threats of closures on this scale arising because of constraints and because of the increasing obsolescence of stock and the increasing need to invest to patch up that stock, square with the continuing commitments made by the Minister about there being no reduction in the overall network? He made those commitments initially in November 1979 and confirmed in a letter to The Guardian, following a report in that newspaper, that there would be no substantial cuts in the passengr rail network". Many of us have asked "How substantial is substantial?" The Minister talks about there not being another Beeching. No one seriously expects the cuts to be on the scale of the Beeching cuts in the early 1960s, but to what extent will the Minister allow a reduction in the present passenger network of roughly 11,000 miles? Unless there is investment on a far larger scale there will, as the chairman of the board has said, be 3,000 fewer track miles in the network by the end of the decade.

British Rail has said that if the cash crisis continues there will be widespread line closures. These are inevitable, and large areas will be threatened by having no rail communications. No doubt the Minister saw the map of vulnerable lines that was published in The Sunday Times on 30 November 1980. I need hardly say to the right hon. Gentleman that some of the country lines, especially, are in politically sensitive areas. The closure of these lines will have an effect on outlying areas such as Wales.

If there is a reduction on the scale envisaged there is bound to be an effect on the Cambrian coast line and the Central Wales line. That will mean that there will be no lines in Wales between the North Wales coastal line and the South Wales coastal line, except, rather curiously, British Rail's last steam service in Wales, the Aberwystwyth to Devil's Bridge tourist route.

The chairman of British Rail said in November in a speech at Cardiff—which the right hon. Gentleman will no doubt remember because the chairman called him "courageous" among other things—that he could not direct cash from the core to the edges and that there was not enough money available to him for what he called essential repairs let alone the modernisation of the rural railway. The Minister will know about the problem of the Barmouth viaduct because of the eating away of the timber piles by the common shipworm. The £2½ million that is needed for the repair of the viaduct compares with the £265 million for 20 miles of the North Wales motorway. The fear in Wales is that British Rail is unable to meet the repair costs, which are estimated in excess of £2½ million, and that if the Government will not help specifically to overcome the special problems of the viaduct, the line will close, followed by the closure of the Machynlleth to Aberwystwyth line and eventually the Machynlleth to Shrewsbury line also.

Following the budget settlement of 30 May last year, the Minister will know that the first tranche of payments to the United Kingdom in December 1980 from the EEC meant that 30 per cent. of public investment in our rail network in Wales was covered by EEC grants. It is worth asking whether the Minister will consider increasing that proportion of assistance from the EEC. What consideration, if any, has been given to that?

I know that the railway unions are especially concerned about whether Wales is receiving a fair share of the PSO grant. The Minister will know that since the passage of the Railways Act 1974 it has been impossible to know what grant is attributable to any particular line. In the past, because of the receipts from steel and coal, we were able to live with a situation which cannot be maintained now because of the deep recession in those industries. The rail unions in South Wales feel that there is a real possibility—although there are no data to justify it or otherwise—that we are not receiving our fair share of the PSO grant.

I shall not discuss the cuts in London and the South-East because I know that my hon. Friend the Member for Harlow (Mr. Newens) will take up that point, which effectively concerns his constituency. The British Railways Board admitted that the leaked documents about 150 station closures were authentic, but it said that in some cases the closures constituted timetable improvements. That must have come from the same joker who, when fares are increased, says that the fare structures have been reviewed. They are always reviewed upwards.

The Minister will know that for too long the country has been getting its railways on the cheap. Certainly for my father's and grandfather's generation work on the railways was the aristocracy of labour and very much at the top of the league table of wages. By contrast, the Minister will be aware of the Low Pay Unit report showing the extent to which railwaymen have to rely on family income supplement to bring up their wage levels. It also shows how low our railwaymen's wages are in comparison with international levels.

The Minister has now been presented with the corporate plan for 1981–85. British Railways are proposing a programme of investment which they say will mitigate in the 1980s and 1990s the past under-investment and meet the overall aim of the board to become viable on a long-term basis, increasing the investment from about £330 million to £450 million in the mid-1980s. That incorporates an extension of the electrification network. At present we are seventeenth in Europe in the percentage of electrified network. In the current year, only £11 million was spent on electrification. The Minister will have seen that there is a growing consensus in this country on the under-investment on railways in the past. We concede that he has kept the level of investment stable at a time of reduction in total Government expenditure. There is virtually unanimous press that consensus has been built up, so the Minister would be moving with public opinion if he now reacted positively to the corporate plan.

The Minister will also make the distinction between wasteful subsidies to the public sector and so-called creative investment. Investment in electrification will have a considerable return and the reaction of the Government to the electrification proposals will be a litmus test of their commitment to railways. It will be perceived by people in the railway industry as such, as the Minister was no doubt made aware when he attended the meeting of the Rail Council on 29 January. If there is a positive response to the electrification proposals, I assure the Minister that it will raise the morale in the industry and have a considerable effect on the climate of industrial relations in the industry. It will also make people realise that they are working in an industry of the future.

10.4 pm

Mr. Stanley Newens (Harlow)

My purpose in intervening is to raise the question of cuts in the rail services that are used by people who travel between the large number of stations in South-East England and central London. I am astonished that of all the Conservative Back Benchers who represent constituencies around London, not one has sought to intervene in the debate. This is a contentious issue because commuters in the London area feel that they are being severely penalised at present.

We have heard from the Secretary of State that investment has not been cut and that various projects have gone ahead. Despite this, we in the South-East are faced with an extensive range of economies which will represent a substantial reduction in services available to rail users. Many of those affected will be rail commuters. However, many others who do not use the railways daily will be affected—those who wish to visit their relatives, to go on shopping trips or to go to the theatre or some other form of entertainment. Many of them will be hit hardest by the sort of cuts which are proposed.

I am, naturally, particularly concerned about my constituents in Harlow and the surrounding villages. They have banded themselves together in a commuters' association to voice their grievances over a considerable period. They have done this with dignity, raising many issues concerning the Liverpool Street to Cambridge and Liverpool Street to Bishop's Stortford lines. The frustrations to which they have been subjected have been enormous. Trains have been cut out. There has been overcrowding of subsequent trains and failure to meet connections. In addition, these people have been faced with ever-increasing fares, which have now reached a very high level indeed. The latest proposed cuts will inflict yet another blow not only on my constituents but on commuters who use these services around London.

I do not think it is fair that the British Railways management should reap the primary blame for this. The restrictions on cash provided by the Government are ultimately to blame. In these circumstances, the Government must accept that it is their fault that commuters are being obliged to accept these reductions in services.

The Secretary of State made clear that he believed that the answer was basically one of increasing productivity and becoming cost conscious. I would not deny for a moment that a high level of cost consciousness is desirable, but we must recognise, as my hon. Friend the Member for Keighley (Mr. Cryer) pointed out, that productivity improvements have their limits and they certainly ought not to be embarked upon if they threaten safety standards in any way.

The fact is that in other respects, in my view, one cannot achieve increased productivity without causing a severe deterioration in services. I have already raised the matter of the proposal to close 150 stations, as was said originally, at weekends and in the evenings. I have now been told that it may be only 120 stations. Many of these stations are not in rural areas; they are in inner London. It is quite deplorable that we should be allowing this to take place in our day and age when in previous ages, when undoubtedly the community was less wealthy than we are today, it was possible to provide a very much better service. Every cut increases the incentive to use the roads and other forms of transport. If passengers defect from the railways, there will be a reduction in the number of fare receipts. That would provide a pretext for another cut in services. We face a vicious circle. We shall attract passengers to the railways only if British Rail provides a good service. That means that the Government must recognise that investment should be greater.

I have cited the hardships faced by my constituents. However, the proposed cuts will affect lines that serve terminals such as King's Cross, Euston, Paddington, Victoria, Charing Cross, Waterloo, London Bridge and Liverpool Street. Further investment is needed if some alleviation is to be provided.

Savings in labour costs will probably be balanced by an increase in the number of those unable to find employment and by a reduction in the earnings of others. The cost will ultimately fall on the public purse, even if British Rail and the transport system may not have to bear it. The Government should recognise that the level of support is inadequate. If the Government stick to these proposals, they must bear responsibility for the inconvenience and hardship caused to commuters and to the general travelling public.

It is no good trying to pass the buck. It is no good trying to blame the management of British Rail or the trade unions. The trade unions involved have an excellent record—I am glad that the Secretary of State is nodding in agreement—of supporting proposals to improve the quality of service that British Rail provides.

I turn to another issue that particularly affects West Essex. The Secretary of State will be aware that Essex county council has refused to give financial support to the Epping-Ongar stretch of the Central Line. As a result, London Transport has brought forward proposals for closure on the grounds that the Government should financially support all commuter services. A Conservative-controlled local authority is pressing the Government to take on greater financial commitments and to support commuters. I hope that the Secretary of State will clarify that issue.

The present level of investment in our railways is inadequate. The travelling public will be increasingly subjected to hardships and to deteriorating standards. The spirit of revolt will inevitably spread. The Government should realise that they will be responsible. Once again, I appeal to the Secretary of State to recognise the problems faced by commuters. In particular, the right hon. Gentleman should accept that more support and investment must be given if our services are to be maintained at a reasonable level in the years ahead.

10.15 pm

Mr. Allen McKay (Penistone)

I shall not detain the House long, but it would be sad to miss an opportunity when the Minister is here to answer questions regarding the railways in my area.

The Beeching cuts in the 1960s coincided with the closure of collieries. Now, we read of the possibility that 50 collieries may close. One wonders whether it will percolate down to the railways and whether there will be more cuts than we at first envisaged.

I want to raise three matters. I hope that one of them will be answered in tomorrow's report about the electrification of the line between London and Sheffield. Sheffield has received disturbing news during the past few months about cuts in local government grants, loss of assisted area status and as an enterprise zone. It will be a boost for the city if tomorrow's news is that the electrification of the line between London and Sheffield is to go ahead. I hope that the Minister will see that sufficient money is made available for this purpose.

The second matter concerns the passenger link between Sheffield and Penistone. It was the subject of a public inquiry. The need for the service in that area was demonstrated by the number of letters and petitions that were received by British Rail. It was one of the greatest outcries against a passenger service closure for many years.

The main item concerns the Woodhead line. I have written to the Minister on this subject on many occasions during the last two years. The answer that I usually get is that it is a matter not for the Minister but for British Rail. However, the time has to come when the Minister can no longer hide behind his ministerial cloak, and a decision has to be made. On this occasion, the decision is one of national importance because it involves the main line between Huddersfield, Manchester and Sheffield. The links on either side are complete passenger services, and the Minister says that the middle section is a freight service.

I wrote to the Minister on this subject on 6 January. As yet, I have received no reply. My letter asked him to meet a deputation of the main railway unions, representatives of the South Yorkshire county council and the cities of Barnsley and Sheffield and the Members of Parliament concerned with the line. That was over a month ago. I believe that it is a slight on the trade unions and the bodies involved that the Minister has not yet seen fit to reply. I do not ask him tonight for a specific date, but I asked for an assurance that he will see us within the next few weeks. I shall then be able to tell the people involved that the Minister has not forgotten them. I am sure that that would help to ease the situation.

Before I leave the matter, there is a further question. The Minister said in a letter that he has nothing to do with the section of the line from Penistone via Woodhead because it is a freight line. But it is not only a freight line. During six months of the year on Sundays, and as is published in the public timetables, it is a passenger service. No doubt, the right hon. Gentleman will say that that is only temporary. But what does "temporary" mean? To me, it means that something has gone wrong with one line, as sometimes happens, and, therefore, the other line is used as a temporary measure. But I am talking about a regular passenger service on a Sunday. It should therefore be subject to the same procedure as normal passenger lines—namely, a public inquiry, if the public so wish.

I hope that the Minister will reply on this subject, because precedents have been created in the past on such a point. In the case of summer-time services to certain seaside resorts, trains have run for four months of the year on Saturdays. When it was proposed to close the line, the Minister directed that a public inquiry should take place, and an inquiry was held. If it is right to run one service on a Saturday for four months of the year, it is equally right to run a service on a Sunday for six months of the year. I should like the Secretary of State to reply to this.

10.20 pm

Mr. John Prescott (Kingston upon Hull, East)

I should like to react to some of the remarks that have been made by hon. Members—all from the Opposition side of the House, with the exception of the Secretary of State. It is somewhat amazing when one considers the heat generated by Conservative Members at Question Time regarding railways in the South-East. One could hardly call this late at night, even for South-East Members who are near home and, unlike Northern Members, do not have to stay here anyway. Presumably they were dashing for their last trains, which, according to the latest cuts, leave at about 7 pm. It is a dereliction of duty on their part that they are not here tonight when we are considering important investment matters—the public service obligation. The European Community says how much money will be available for unprofitable lines. We are concerned with social commitment and expenditure. Therefore, it is a bit much to hear protests at Question Time by Conservative Members about lack of money and deplorable services in the South-East only to find that they are not here to make their views known at the appropriate time.

All who have taken part in the debate have given examples of the deterioration of rail services in their areas. I do not intend to repeat their comments. However, it is interesting to take on board the argument about railways in the South-East, because the Monopolies and Mergers Commission was asked specifically to look at the quality of railway services in London and the South-East.

The Secretary of State referred to a number of points in that report. He informed the House of deficiencies in management, particularly in productivity and proper costings which the commission revealed, and said that the British Railways Board would be making a report to him on these matters with recommendations on how to improve them. Any improvement in these areas is to be welcomed.

However, the Secretary of State did not tell us about the investment constraints on the quality of services in the South-East railway system—a matter that was specifically excluded from the commission's inquiry. Anyone reading the report would have to agree that the management of British Rail comes out of it pretty well. The belief that poor services in the South-East are due to incompetent management and to labour exploiting its strength and not co-operating in productivity deals is not borne out by the report. Indeed, the report makes it clear that the quality of service will not be sufficiently improved by savings brought about by productivity gains.

The commission pointed out that it was specifically prevented from looking at the investment constraints. As the report makes such a strong point on this matter, it behoves the Secretary of State to say that his Department is considering the constraints on the services. If, as the report seems to indicate, there are other reasons for the poor quality of service, what is the Secretary of State doing to correct the investment deficiency in the South-East railway services?

In these less hurried circumstances, the Secretary of State will have plenty of time to address himself to these points. Outside the heat, push and pressure of Question Time when he has been asked these questions, perhaps he will outline the Government's view on investment constraints in the South-East.

A number of hon. Members, including my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth), have pointed out that the problems of investment in the rail system did not start in May 1979. We want the Secretary of State to hear us say that. We do not believe that the inadequacies of investment in the rail system, which are evident to all, started in May 1979. They go back further than that. Having said that, I hope that the Secretary of State will shut up saying that investment is at the same level as the investment provided by the previous Government, thereby implying that it is sufficient. We hope that he will cease ducking questions about the quality of investment by arguing that it is the same as the amount provided by the previous Government.

It is clear that to put off investment six or seven years ago was much easier than it is now. The investment cycle has reached a dangerous stage. Not only is the investment expensive to British Rail and inadequately maintained, but, as my hon. Friend the Member for Keighley (Mr. Cryer) pointed out when he reminded us of the safety inspector's report, we face serious considerations of inadequacy of investment, even in maintaining trains on tracks. The number of accidents and incidents of trains coming off tracks have been increasing considerably, and there is a correlation with the lack of proper maintenance investment in track.

The Secretary of State says that investment in track is outside investment constraints, but it still comes within the problems of the external financing limits. That causes problems for British Rail in deciding whether it can make investment that is commensurate with the speeds that it wants on certain lines. The problem of investment is crucial. It did not start only two years ago, but it must be solved.

According to The Observer at the weekend, the Secretary of State is fighting hard in the Cabinet for increased public expenditure. I assure him that we will not attack him if he announces £1,000 million investment in the railway system, picking up the call of my right hon. Friend the Leader of the Opposition in the North-East. My right hon. Friend pointed out that it is not an arid argument about whether one is for or against public expenditure but a question of spending money to keep engines on the lines with fewer accidents and a proper public service. That is what public expenditure means. If the Secretary of State comes to the House for £1,000 million of investment in any transportation system, whether for electrification or the maintenance of track, he will have our full support.

We welcome the Secetary of State's announcement that he intends to produce the report on electrification tomorrow. We shall be pressing him hard on that. We hope that an announcement of Government policy will follow shortly.

The Secretary of State referred to the parcels service, in which the losses are about £1 million a week. In our debate on the Armitage report, I asked whether the solution to the problems of the parcels business might have been to rationalise and integrate that section. Unfortunately, that was not done. The Secretary of State has made great play of the fact that the nationalised industry chairmen could not agree in the Freight Intergration Council. Apparently, that was not true. Perhaps the Minister will confirm that.

Although he was not the Secretary of State at that time, I am sure that the right hon. Gentleman has access to the reports of the council, which make it clear that the chairmen of the postal industry, British Rail and the National Freight Corporation reached agreement on the rationalisation of the parcels sector. If that solution had been implemented by the Tory Minister in 1972–73, we should not now be facing the losses that the right hon. Gentleman spoke of tonight.

The Minister also informed the House of a further restriction in railway activity, with its consequential effect on railway business. I do not know whether he took time to look at the report. I hope that he will do so, if only to accept the arguments that integration is a workable and feasible project and should not be seen as a measure that people may refuse to implement. In that regard, he should take into account the Armitage report development and energy requirements.

The Tory ideology has undermined the rail system in its concept of integration because the direct beneficiaries of the parcels trade will be the private sector. There will be a growth of companies such as Securicor. That trade could have provided traffic for British Rail, but instead it will benefit the highly specialised private sector. That is true also in relation to inter-city services. It is the latest example of how Tory policy is beginning to undermine the policy of British Rail.

The Secretary of State told us tonight—we want to hear more when he replies—that he is somewhat concerned about the economics of the justification for inter-city. I may be wrong, but I was left with a distinct impression that investment in high-speed trains and inter-city was not producing the expected return. Was that a suggestion that he was considering whether he should continue with the present level of investment? I see that the right hon. Gentleman is shaking his head. I understand him to be saying "No."

I shall give him one reason why inter-city is not profitable. The Secretary of State has introduced the de-licensing of bus services. We have seen a tremendous growth in the express services. There is competition between the National Bus Company—a nationalised concern—and British Coachways. Fares have tumbled, to great acclaim by the Secretary of State. He even opened one of British Coachways' first services. The reality is that British Coachways has not survived well against the National Bus Company, which is expanding at a far greater rate and is running British Coachways off the road. Unfortunately, British Coachways has run itself off the rural bus services also—exactly as we predicted.

From information that we have received, it appears that on the inter-city network, especially some of the routes to the North-West, the National Bus Company has increased its ridership by about 200 per cent. They are not new passengers travelling to the North and South but passengers who were previously travelling on British Rail. They have changed to buses because of the cheaper fares to which the right hon. Gentleman referred. The bus service is producing more buses on our motorways on the national network, fewer services in the rural areas gaining more money from routes, and achieving a profitable return. But British Rail is feeling the effect of that policy. No doubt it will now have to knock on the Minister's door to suggest that the taxpayer should give it more money, or it will have to use much of the money that is needed for investment in the rail system.

That is the sort of Government policy that we said would undermine the integrated transport system. It will certainly undermine the rail system. I want to know exactly what the right hon. Gentleman thinks about that redirection of traffic from rail to bus and whether he is prepared to provide compensation for that difference.

We have already heard tonight that the Secretary of State feels that the economics of inter-city services have not proved to be good. What will be the consequences of those remarks? I have made a hurried and rather unexpected summing-up, but I hope that the Secretary of State will take the ample time that is available to him to answer all our questions.

10.35 pm

Mr. Fowler

It is tempting to take the 56 minutes available to me to reply, but the House might not believe that I need such a long time in view of what I said earlier.

The debate has been constructive. It has not been on party lines. Only in the speech of the hon. Member for Kingston upon Hull, East (Mr. Prescott) did the old political problems and issues come up. For some reason, the hon. Gentleman has a thing about the Freight Integration Council, although no one else noticed its demise. He asked me about the de-licensing of buses. About 200 new services have developed as a result. Now, new bus services operate between cities and fares have come down.

I was speaking at a lunch today, and everyone there came from Exeter to London. The return fare between Exeter and London is £4. That illustrates the difference between the Government and the Opposition. We believe that the public should have the right to choose how they travel between cities. They should not be directed. Our information is not that which the hon. Member for Kingston upon Hull, East receives. Our information is that cheap fares and good service are attracting new people to the coach services. Most people would welcome that. New services and lower fares do not happen often.

Collect-and-deliver parcels have been mentioned. I must remind hon. Members that, although the figures might be regretted, on revenue of £40 million a year British Rail made a £40 million loss. The costs were £80 million and the revenue was £40 million. That is not the type of business that is in the interests of British Rail. It is not a business for the future. British Rail is right in its decision, and I hope that the House will agree that we were right to give it special transitional aid.

I apologise to the hon. Member for Keighley (Mr. Cryer), who was wearing his other hat, because the wording of the explanatory note is not as clear as it might be. The wording is exactly the same as that used in the 1977 order which was introduced by the right hon. Member for Stockton (Mr. Rodgers). I accept that improvements could be made.

I also apologise to the hon. Member for Penistone (Mr. McKay) because he has not received a reply to his letter about the Woodhead tunnel. I cannot promise to see a delegation, but I shall consider it. However, I promise that the hon. Member will receive a reply to his letter by the end of this week. Important policy issues are involved. British Rail is making that decision as a result of its judgment on the needs of its business and because of the expense of reinvesting.

I should like to make one general point about the debate. Whatever questions have been asked about the order and whatever points and criticisms have been made about myself or British Rail, no one has challenged the purpose of the order. Its purpose is to provide continuing payment of grant by the Government to the British Railways Board for the operation of its rail passenger system.

I believe that the hon. Member for Hartlepool (Mr. Leadbitter) missed the whole of my speech, but that did not prevent him from intervening. I listened to him with my customary attention. However, I remind him of what we are doing in the order. The limit on total cumulative payments which may be made from the end of 1978 was £1,750 million as provided for in the Transport Act 1978. The order will increase that limit to £3,000 million. That is what the debate is about. Unless I have misundersteed the intention of any hon. members who has spoken, no one denies that the order has to be made and no one wants to vote against it.

Mr. Leadbitter

The Secretary of State said that I missed his speech. His memory must be rather short. When I spoke, I apoligised to him. I thought that he would have been gracious enough to bear that in mind. I am surprised that his exuberance took him so far.

Will the Secretary of State comment on the Woodhead tunnel? This matter has been contentious, and he knows that it is serious. I am not aware of the conditions for a public inquiry, and there may not be the conditions to support one. However, the concern in the area is such that that is the mood of the people who are affected. Perhaps the Secretary of State could briefly say whether there is any possibility of considering a public inquiry or whether he does not have the powers to call one.

Mr. Fowler

In the letter which I shall write to the hon. Member for Penistone, I shall seek to set out the answer to that question and shall also deal more fully with other issues. We are dealing with a freight line. If we were dealing with a passenger line, there would be an inquiry, which would be taken by the transport users' consultative committee, which would report to me. The same rules do not apply on train services. That matter is up to the discretion of British Rail. Therefore, if the hon. Gentleman asks me whether there is a precedent for conducting an inquiry, the frank answer is that there is not.

The subject of productivity was raised by a number of hon. Members, including the hon. Members for Keighley, for Swansea, East (Mr. Anderson) and for Harlow (Mr. Newens). I agree with them that there has been a dramatic improvement over the last 20 years in the productivity of British Rail. I have always paid tribute to that. I pay tribute not only to British Rail but to the co-operation of the unions involved. That is important and genuine.

However, we must also face the fact that wages and salaries account for more than 60 per cent. of the cost of running the railways. There is a premium, and the greatest value must be placed on high productivity. That is what we are saying and what British Rail is saying. When it is said that over a period the railways could do with 38,000 fewer posts, I am quoting the figure in British Rail's corporate review, not from a departmental paper.

I repeat that the future of the railways is not only a matter for the Government. Every Government must have the future of the railways in mind. I hope that we have made it clear that we do. However, everyone who works in the railway industry must play his part. I do not want to put words into anyone's mouth, but at a meeting of the Railways Council, when leaders of important rail unions were present, I sensed that they understood that message. It is the message put forward by the chairman of British Rail. It should be supported on both sides of the House.

I believe that the memorandum from Commissioner Burke was issued for discussion. It has not come to the Council of Ministers. On Monday I shall be discussing the matter and other transport matters with my colleagues in Europe. I in no way feel committed by the expression of opinion in the memorandum. I believe that it refers more particularly to other EEC countries.

I remain totally opposed to substantial cuts in the passenger rail system. How can we safeguard the future of rural rail services? The best way is by seeking to reduce costs. I therefore welcome the board's recent initiatives in developing low-cost operation techniques. With my hon. Friend the Member for Eye (Mr. Gummer), I travelled on the railbus service on the East Suffolk line. The service impressed me. It sets an example to other rural services. We should not for ever look backwards. We should look to the future to see what opportunities there are for achieving a better, more cost-effective rural service.

Mr. Anderson

When the chairman of British Rail makes dire predictions about the effect of low investment on the network, he surely has in mind possible improvements.

Mr. Fowler

With respect, that is a slightly different point.

I am aware of the board's concern about the condition of its physical assets. Some of the assertions have serious implications. I have only just received the board's assessment, and I want to discuss it with the board. I stress two points. First, the board has consistently made plain that the very high safety standards for rail travellers will be preserved. Secondly, the board has brought no information about specific services to my attention. It estimates that it needs to increase its annual expenditure on track and signalling. However, the additional sums that it is talking about are relatively small in railway terms. The estimate is less than £20 million to maintain the infrastructure on the fringes of the network. Clearly, the corporate plan will be one of our most important considerations when looking to the future.

I understand the concern of the hon. Member for Harlow about the reduction in rail services. No one likes such reductions. However, they have to be kept in proportion. Brititish Rail has suffered a loss of traffic and must, therefore, respond by making some changes in services. Clearly, some passengers will find the service less convenient. This is, however, a far cry from some of the predictions that are made about the effect of cuts in services. The service cuts are in line with one of the main recommendations of the Monopolies and Mergers Commission that the board should take action to adjust services to changes in demand. As a general policy, it is a policy that we should support. I think that the chairman of British Rail deserves support in putting that forward.

The hon. Member for Hartlepool raised the question of the external finance limit and finance generally. I mean no discourtesy to the hon. Gentleman, but I should like to reiterate the important point that the Government have recognised that British Rail has had financial difficulties over the last year. No one can argue—few have tried to argue—that we have not been flexible in our approach to these problems. I announced last September that the external finance limit for 1980–81 would be increased by £40 million to £790 million. We provided flexibility at the end of the year concerning the external finance limit that the board had been urging not only on this Government but on the previous Government. It was this Government who gave it the flexibility.

The external finance limit for 1981–82 has been set at £920 million—again, an increase over previous plans. I believe strongly that we have sought to recognise the problems that British Rail has faced. The chairman of British Rail may feel the 1981–82 external finance limit to be a tough limit. That is undoubtedly the case. It is, nevertheless, a limit that British Rail accepts as something within which it can work.

I believe that the Government's record on investment is good. I understand what the right hon. Member for Barrow-in-Furness (Mr. Booth) and some of his colleagues have been saying. As they have also fairly stated, the investment problems of British Rail have not emerged overnight. We are putting £28 million into West of England signalling. Some of the signalling being replaced is 70 years old. That is the problem that the Government have inherited. It is the problem that we have had to tackle. At a time when restraints on public spending are severe, I believe that British Rail has been treated extremely fairly, not only in terms of the support going to it in passenger support but in terms of investment.

I have been asked about the objectives. The reason why we want to set new objectives is that we aim to improve. services. I agree with the hon. Member for Isle of Wight (Mr. Ross) that one of the problems has been Southern Region. One of the aims of setting new objectives—we may have to set targets and think of new ways of doing this—is to try to improve the service on that region. We are making no reductions in the passenger network. We need, for example, clearer accountability and clearer objectives for the London commuter services. That is what we are trying to develop.

This has been a good and constructive debate. The order provides for a continuation of the policy, which I believe is welcomed on both sides of the House, of realistic arrangements for Government support to British Rail. I believe that the railway system in this country has a great future. I do not believe that hon. Members need to take different sides on the issue. It is a future that the Government, the unions and the board want to see and to ensure. I urge the House to support the order.

Question put and agreed to.

Resolved,

That the draft British Railways Board (Increase of Compensation Limit) Order 1981, which was laid before this House on 28 January, be approved.