British Rail (Hansard, 25 November 1981)

§ 22. Mr. Cowans
asked the Secretary of State for Transport when he expects to announce the new external financing limit for British Railways; and if he will make a statement.

§ Mr. David Howell
I refer the hon. Member to my reply earlier today to the hon. Members for Derby. South (Mr. Johnson) and for Goole (Dr. Marshall).

§ Mr. Cowans
Will the Secretary of State confirm that when he eventually decides to announce the external financing limits, it is his intention to offer no new money to British Rail? Will he also confirm that rail investment this year is already running at £90 million below the permitted ceiling? Will he further confirm that without relaxation of the EFL, British Rail will be forced into further distress selling of its assets and that the first of these, offered at bargain prices to the private sector, will be British Rail's hotel subsidiary in its entirety?

§ Mr. Howell
The hon. Gentleman will have to await the announcement of external financing limits for the nationalised industries. In regard to what he calls distress sales, he will be aware that the subsidiary groups as a whole do not contribute to the profits and, in some cases, add to the losses and, therefore, the pressures on British Rail. It is in British Rail's interest to make disposals that ease the pressures. The hon. Gentleman has got the issue upside down.

§ Mr. Cockeram
Will my right hon. Friend point out to British Rail that if it did not insist on continuing double-manning of diesel units it would generate more finance for its own investment?

§ Mr. Howell
On the general question of a change of working practices, British Rail is negotiating with the unions and making good and steady progress.

§ Mr. Bagier
Will the Secretary of State admit that he has stated this afternoon that he is awaiting proposals for several schemes from British Rail? Is he prepared to substantiate the assertion that he has had no proposals 885 along those lines? Is he not aware that he has had proposals for the electrification of the East Anglia line for some considerable time? With the break-up of the Balfour Beatty team, it seems little short of a scandal that the right hon. Gentleman will not allow this scheme to go forward.

§ Mr. Howell
I can only repeat what I said earlier. The Government asked in the summer for the rolling 10-year programme, to which a commitment in principle was made. I think I quote British Rail's attitude correctly when I say that it regarded the programme as "a fighting chance" to go ahead with electrification. Hopes were indicated that these programmes would come forward fairly soon in the autumn. They are not yet with us. We look forward to the programmes being put to the Government, when the necessary judgment and analysis will be made.

§ Mr. Iain Mills
Will my right hon. Friend join me in condemning the cavalier attitude of Opposition Members to the answer given to me yesterday in written form on the increase in subsidy for passenger transport? Will he confirm that this additional money to help British Rail will not permit wage claims to be granted that exceed the Government's indicated level?

§ Mr. Howell
I confirm that this is an increase in public service obligation grant in exceptional circumstances. Secondly, it is to meet the revenue deficit. It is not to meet any increases in costs. The pressure on costs of all kinds must be maintained with the utmost vigour.

§ Mr. Booth
Does the Secretary of State intend that the increased public service obligation grant that he announced yesterday should be contained within British Rail's existing external financing limit? If so, he must surely agree that British Rail's scope for borrowing to fund its investment programme will be greatly reduced. It will not be possible in those circumstances for British Rail to proceed with any substanial investment programme, even if the right hon. Gentleman were to approve such a programme.

§ Mr. Howell
The public service obligation grant runs from calendar year to calendar year. The external financing limit runs from April to April. The board has requested a readjustment of its EFL. I am considering British Rail's request within the present public expenditure totals.

§ 23. Mr. William Hamilton
asked the Secretary of State for Transport what plans he has for increased investment in the railway system, with particular reference to Scotland.

§ Mr. David Howell
Within the ceiling set by the Government, priorities for investment are a matter for the board.

§ Mr. Hamilton
Does not the right hon. Gentleman agree that the parlous plight of the Scottish economy is due in no small measure to the inadequacy of public transport in general and to that of British Rail in particular? Will he tell us what the gap is between what British Rail desires to invest in the railways in Scotland and the Government's determination figure within the cash limits?

§ Mr. Howell
I cannot give the hon. Member a specific breakdown for Scotland. The ceiling for British Rail is set at £325 million in constant money terms, and the ceiling is the same as it has been all the way through. It is correct that British Rail is not spending up to that ceiling in 886 investment because it is constrained by its business performance throughout the country. I am sorry that I cannot give the hon. Gentleman the exact figure for Scotland, but the ceiling is as it has been all the way through.