Scottish Transport Group (Hansard, 30 November 1988)

§ The Secretary of State for Scotland (Mr. Malcolm Rifkind)
With permission, Mr. Speaker, I should like to make a statement about the future of the Scottish Transport Group.
In my statements to the House on 27 January and 24 May, I said that I had decided to privatise the Scottish Bus Group and to do so in about 10 units. I also said that I would give further careful consideration to the implications for the future of Caledonian MacBrayne. As the House will know, it was announced in the Queen's Speech that legislation to privatise the Scottish Bus Group and make arrangements for the future of Caledonian MacBrayne would be introduced this Session. The Transport (Scotland) Bill is being laid before the House today.
I will deal first with Caledonian MacBrayne, which provides a wide range of shipping services on the west coast of Scotland. Many of these services provide a lifeline to the islands they serve. It is essential that these services should be maintained together with the greatly improved standards which we have built up since we came to office, with new ships and new piers. With this background very much in mind, we have looked carefully at a range of options in considering the future of Caledonian MacBrayne. Certain quite distinctive types of service are provided and different solutions might well be appropriate in the interests of both customers and taxpayers.
First, there are the services provided within the relatively sheltered waters of the Clyde; secondly, the services provided by major ships on the more difficult waters of the west coast; and thirdly, the short crossings to individual islands provided by smaller vessels. In the upper Clyde there is a clear anomaly in the case of the Gourock-Dunoon route, where Caledonian MacBrayne is running a subsidised service on a similar route to a commercial operation provided by Western Ferries. This route should be able to operate satisfactorily on the basis of private funding, as could CalMac's Wemyss Bay-Rothesay route which is provided by the same group of vessels. However, we fully recognise that for the remaining services operated by Caledonian MacBrayne, significant subsidies will for the most part continue to be needed in order to maintain the present level of service. Our examination of the present structure and methods of operation of CalMac, however, has led me to conclude that there is considerable scope for getting better value for the money which we—and the passengers—spend on these services.
In the light of the early dissolution of the Scottish Transport Group, of our examination of the options, and taking account of the many views expressed to us, I have decided that the best arrangement for Caledonian MacBrayne is that it should become a company owned in the first instance by the Secretary of State. A new board for the company will be appointed and will contain some people with commercial expertise, including some with first-hand knowledge of the islands served and their needs. I believe it is right for the headquarters of the new company to be nearer the centre of the area which it serves, and consider that Oban would be likely to prove the most suitable place from which to operate.
706 I will ask the new board to explore the possibility of transferring to the private sector the Gourock-Dunoon and Wemyss Bay-Rothesay routes. For the remaining services, I will ask it to examine existing practices carefully in order to find more efficient and cost-effective ways of delivering the present standard of service. No options for the longer term will be excluded, subject to the overriding proviso that they must ensure at least the present quality of service to the islands.
As far as the Scottish Bus Group is concerned, I have, with my financial advisers, Quayle Munro, given further consideration to the pattern of privatisation. I have decided that the Scottish Bus Group should be offered for sale as 11 units. Nine of those units are existing subsidiaries of the Scottish Bus Group. They are the seven existing geographical operating subsidiaries—Lowland, Eastern, Strathtay, Highland, Fife, Northern and Midland, the coaching firm Scottish Citylink, and the engineering subsidiary, SBG Engineering.
The other two units for privatisation will be created by the combination of two pairs of existing geographical subsidiaries, Western and Clydeside, which will be privatised as one unit, as will Central and Kelvin. That pattern of privatisation is designed to create viable companies and the basis for sustained and balanced competition within the Scottish bus market to the benefit of bus travellers. The combination of subsidiaries round Glasgow takes account of the competitive situation in that city.
I am keen that this privatisation should increase employee participation. I know that there is already considerable interest among employees in taking part in the privatisation. I welcome that. It will be encouraged by the provision of financial assistance to management-employee teams wanting to bid for their companies and offering the prospect of locally based management with real employee participation.
The arrangements that I am announcing today for both CalMac and the Scottish Bus Group will provide the basis for maintaining and improving services to the Scottish public, for creating vigorous new Scottish companies, with which local communities will identify, and for getting better value for money where public subsidy will still be required.

§ Mr. Donald Dewar (Glasgow, Garscadden)
The statement on Caledonian MacBrayne represents a major retreat by the Secretary of State and a tacit recognition by even this prejudiced Government that privatisation is not a universal remedy, and certainly not the best way to provide essential public services. The decision is a tribute to the coherent case argued by the communities that depend on those services and by my hon. Friends who have taken a particular interest in the matter.
I welcome the retreat but, as the right hon. and learned Gentleman will recognise, many questions remain unanswered. We have been told that the bulk of Caledonian MacBrayne's operations will be transferred, in the first instance, to a company owned by the Secretary of State. Will the right hon. and learned Gentleman end the uncertainty and recognise the logic of his decision by ruling out the possibility of further asset stripping? Will he give an assurance that the board of the new company will be genuinely representative of the areas it serves and will not be burdened with a remit to sell out as and when possible?
707 The right hon. and learned Gentleman's statement struggled painfully to reconcile reality with his ideology. He knows that he cannot deliver what he wanted, so we are left with interference to very little purpose. Is he satisfied that the arrangements for Caledonian MacBrayne will allow the present level of European assistance to continue?
The Secretary of State referred to the new board exploring the possibility of the transfer of the Gourock-Dunoon and Wemyss Bay-Rothesay service. Does that mean that the company, having examined the options, can refuse? Will the board have the independence of action that will allow such a refusal?
Does the right hon. and learned Gentleman accept that there is no need to fragment Caledonian MacBrayne services in that way? Does he recall the last time that the Government tried to hand the Gourock-Dunoon route to the private sector in the form of Western Ferries? He should, because he was the Minister in charge of that disaster. In the light of that experience, will he guarantee that public opinion will be consulted on this occasion?
Many interests will regret that the Scottish Bus Group is to be split in the way described. However, I welcome the emphasis on employee participation. I hope that the financial support to which the Minister referred will be realistic. Does he recall that, of the 72 component companies of the National Bus Group in England, only two went to employee participation buy-outs? That underlines the need for financial help to be more than cosmetic—more than mere window dressing—if it is to be a success.
What protection will there be against predators from south of the border or, indeed, of the home-grown variety, of which Stagecoach is the most feared? Our interests will be to ensure that the conditions of service and the pensions of employees are secured and that the level of service for the travelling public is protected, especially in rural areas and during off-peak hours. The whole exercise is a political manoeuvre which has no public support. The Secretary of State should recognise that the realities that forced the Caledonian MacBrayne retreat apply, too, to the Scottish Bus Group as a whole. A further retreat would be very much in the public interest.

§ Mr. Rifkind
The hon. Gentleman never ceases to entertain the House. In response to my comments on Caledonian MacBrayne, he began by describing the statement as a triumph for the Opposition—and then proceeded to criticise every detail in it. He must make up his mind how he interprets the statement.
As the hon. Gentleman knows, the simple fact is that, when I spoke about Caledonian MacBrayne some months ago, I made it clear that the Government had no preconception as to whether the privatisation of Caledonian MacBrayne would be a realistic option. I challenge the hon. Gentleman or any of his hon. Friends to quote any statement, phrase or suggestion to the contrary. What I said was that the Government's overriding priority since 1979 has been to maintain—indeed improve—the quality of service to the islands. We have allowed the resources needed to improve that service to be provided. Where there are services, such as Gourock-Dunoon and Wemyss Bay-Rothesay, where a subsidy is not needed, then it is inappropriate for subsidy to continue.
The hon. Gentleman asked me whether the Caledonian MacBrayne company, having investigated the matter, 708 would be free to conclude that it did not wish to privatise those routes. It would be a curious line of argument that said that it would be appropriate to continue with one route being subsidised by the taxpayer in order to compete with another company which requires no subsidy and can make a profit on that basis. That is the basis upon which these proposals are put forward.
The hon. Gentleman asked whether European assistance will continue to be available to Caledonian MacBrayne. I understand that there is no reason why it should not be.
In reply to the hon. Gentleman's comments about the Scottish Bus Group, I welcome his rather late-in-the-day endorsement of employee buy-outs of public sector companies. It is not an issue with which he has been identified in the past. I was especially interested when he concluded his sterling comments by saying that the whole issue of the privatisation of bus services was "a political manoeuvre with no public support". If the hon. Gentleman believes that, will he explain why Grampian regional council—with the support of the Labour group on that council—is at present proposing to the Scottish Office that it should be allowed to privatise its bus service? I am informed that that has the support of all political parties on Grampian regional council.
Why is it that the Labour party in the Grampian region believes that the privatisation of its bus service is in the public interest, but the Labour party in the House believes that the privatisation of the Scottish Bus Group is somehow a completely different matter? I advise the hon. Gentleman and his hon. Friends to visit their Labour colleagues on Grampian regional council. They may not come away any wiser, but they will come away better informed.

§ Mr. Allan Stewart (Eastwood)
I join my right hon. and learned Friend in congratulating the hon. Member for Glasgow, Garscadden (Mr. Dewar) on at least a small step towards Damascus. I welcome, too, what he has said about the assistance to be offered to employee management buy-outs. Will my right hon. and learned Friend confirm the details of the assistance that may be available?
I shall ask my right hon. and learned Friend a more detailed question about the proposals for Western and Clydeside. My right hon. and learned Friend will know that I have made previous representations on behalf of a number of people in the industry, who considered that it would be better for those two companies to be privatised separately. Will he assure the House that those representations were taken seriously? Does he agree that it is important that the privatised companies should be able to compete fairly and effectively with Strathclyde Buses? Does he agree that the most effective way of ensuring that would be to privatise Strathclyde Buses?

§ Mr. Rifkind
I hope that Strathclyde regional council will follow the good precedent set by Grampian regional council, and do what is in the public interest.
We gave serious consideration to the flotation of Clydeside as an individual company, but the advice that we received suggested that the best prospect for the economic viability of Clydeside would be to combine it with Western. That is something that appeared to be in the interests both of those who work in Clydeside and those who use the bus services in that locality.
709 I am glad of my hon. Friend's welcome for employee participation. We shall be happy not only to give advice and assistance to those employees or those in management wishing to acquire their company, but, in line with similar previous privatisations, we hope that there will be some preference for a management or employee buy-out when this matter is finally dealt with after the passage of the necessary legislation.

§ Mrs. Ray Michie (Argyll and Bute)
It is appropriate that, on St. Andrew's day, I am able to welcome most of the Secretary of State's statement on Caledonian MacBrayne.
The fact that the Government have listened to representations made, have seen the light and have decided to back off on the privatisations is welcome. Will the Secretary of State also accept my thanks for arranging, at short notice, for his colleague the Minister of State to meet a delegation of islanders to hear their views. I am delighted that he was prepared to listen.
Will the right hon. and learned Gentleman also accept that I fully endorse his idea that the management and headquarters should be moved to Oban?

§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley)
Why did the hon. Lady not think of that?

§ Mrs. Michie
I assure the hon. Gentleman that I suggested it several times. I am delighted that the Secretary of State agrees that the headquarters should be moved to the centre of its operations.
Will the Secretary of State guarantee that, if anything is done in the future about Caledonian MacBrayne, any proposals will be referred first to the House? We must have primary legislation. [Interruption.] I just want to ensure that the Secretary of State will guarantee the future of Caledonian MacBrayne.
As for the Dunoon and Rothesay routes, will the Secretary of State promise that the board will listen carefully to the representations of the local people, remembering the anger and frustration expressed the last time the Government tried to interfere?
Briefly, if the Scottish Bus Group is to be privatised, we are glad that the Government are considering a staff-management buy-out. I hope that the Secretary of State will be able to guarantee the service—

§ Mr. Speaker
Order. Briefly, please.

§ Mrs. Michie
—the service in the rural areas.

§ Mr. Rifkind
I am grateful for the hon. Lady's welcome for the statement. It is important that, just as we often want the centre of corporate activities moved to the north of England, Scotland or Wales, so too, within Scotland, it is desirable, where appropriate, for companies' headquarters to be moved to the communities they serve. Hence the decision to move the headquarters to Oban.
We shall encourage a management and employee buy-out of the Scottish Bus Group, but we cannot guarantee that that will be the end result, because that will depend on the proposals eventually put before us for the flotation of the individual companies.
There is an anomaly that needs to be resolved regarding Gourock-Dunoon. It should be unnecessary to use taxpayers' money to subsidise a service to compete with 710 another service that does not require a subsidy. Therefore, it would be proper and sensible to explore a way in which we can continue to ensure a proper service for those who use the route without the unnecessary subsidies of recent years.

§ Sir Nicholas Fairbairn (Perth and Kinross)
To cure the dementia of the hon. Member for Glasgow, Garscadden (Mr. Dewar), after he has spoken to the Socialist members of the Grampian region council perhaps he should, on his way south, call on those who run Strathtay Buses. Some 60 per cent. of that work force, to demonstrate that there is no public demand or interest, are presently putting £7,500 a week into a bank account to fund a management and employee buy-out. Will he ensure that their enthusiasm not only for running a successful bus group but for ridding themselves of the shackles of Socialism and union domination for ever is rewarded?

§ Mr. Rifkind
Not only do the employees of the Strathtay company think that way, but bus drivers in Bannockburn—that well-known centre of Scottish Conservatism—have appealed to the Government to allow employee participation in the acquisition of companies. In a survey of Scottish Bus Group employees in April, no fewer than 72 per cent. stated that, given the opportunity to invest in the company for which they work, they would like to do so. That is a splendid situation and one that flies in the face of Opposition attempts to deny them that opportunity.

§ Dr. Norman A. Godman (Greenock and Port Glasgow)
The so-called desirable shifting of Caledonian MacBrayne's headquarters may not be considered so desirable by those of my constituents working in Gourock. The Secretary of State may laugh at this moment, but it is a deeply worrying concept for many of those constituents and I should like him to show some seriousness. What is to happen to those people? Will some of them be made redundant? If the headquarters moves to Oban, will employees receive financial assistance towards the cost of transferring to Oban or some such place?
Given that the company will be owned by the Secretary of State, can we safely assume that any replacement orders for vessels will be placed with Scottish yards?

§ Mr. Rifkind
I have said that Oban seems to be the likely and sensible place for Caledonian MacBrayne's headquarters, and that seemed to have the general approval of the House as a whole. I have no doubt that the company will be responsive in a sensible and sensitive way to the questions that the hon. Gentleman has legitimately raised about the interests of those currently working for the company. I certainly hope that arrangements will be made to meet his points.
As to his final question, whether the company is formally owned by the Secretary of State or is part of the Scottish Transport Group, as it has been for the past few years, will not in itself influence the decision on where contracts for the construction of new ships will be awarded. Those matters will continue to be determined on the same basis as in the past.

§ Mr. Ernie Ross (Dundee, West)
As to real employee participation on the privatisation of the Scottish Bus Group, the Secretary of State must know that attempts by his opposite number in England were a singular failure and that employee participation did not come into existence 711 when privatisation took place there. The only way of achieving it in Scotland will be by imposing such financial conditions as will allow employee participation.
The hon. and learned Member for Perth and Kinross (Sir N. Fairbairn) mentioned that Strathtay is well advanced in the matter of employee participation proposals. He must also know that a whole host of predators made a very fast buck from English privatisation and have already clearly stated that they will come into the Scottish market. How does the Secretary of State intend ensuring that there will be genuine employee participation by Scottish employees of the Scottish Bus Group?

§ Mr. Rifkind
The hon. Gentleman is correct to say that experience south of the border was that, while there was great success with management buy-outs of individual companies, the number in which employees were fully involved was far fewer. We hope to see a different pattern, with a much larger proportion of employee as well as management interest in the acquisition of Scottish companies. I cannot predict the outcome today, because a guarantee cannot be given to any one potential purchaser that they will be bound to succeed irrespective of the price offered. The companies are public assets, and Opposition Members would be the first to complain if they were disposed of for less than their true value. We must be sure that the ultimate purchasers of the bus companies pay a price commensurate with the value of the assets.
That having been said, of course we wish to give preference—as I have said—to management and employee proposals. The precise way in which that will operate has still to be concluded, but it is certainly our objective, and one with which I am sure that the hon. Gentleman would concur.

§ Mr. Bill Walker (Tayside, North)
This has been a memorable St. Andrew's day. Scottish Members have been entertained to lunch by a Scottish brewery, and my right hon. and learned Friend has made a welcome statement.
Will my right hon. and learned Friend confirm that, because it is our intention to ensure maximum employee participation and hence to encourage ownership in Scotland, in the event of unsatisfactory proposals that cannot be reconciled, Scottish companies with employee share participation schemes will also be considered as possible owners of the new independent operations?

§ Mr. Rifkind
No one wishing to bid for these companies will be prohibited from doing so. We have said that we hope for successful bids from companies with management and employee schemes, and that we hope to be able to give them preference in considering applications. We cannot, however, give any guarantee to that effect, because we must be sure that we can account for the disposal of public assets in a way acceptable to the normal standards of the House.

§ Mr. Alexander Eadie (Midlothian)
The House will recall that the right hon. and learned Gentleman refrained from answering the question asked by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) about preserving the public interest in rural areas. Will he tell us what proposals he will put to the House for ensuring that those in rural areas will not suffer as a consequence of 712 privatisation? Or will they be left out of the Government's considerations, as usually happens when they decide to privatise?

§ Mr. Rifkind
As I told the hon. Member for Glasgow, Garscadden (Mr. Dewar), the Labour party in Aberdeen does not seem to believe that privatisation will damage the interests of consumers. Many private sector bus companies operate very successfully in rural areas. The idea that a bus company will stop serving its rural populaces simply because it moves from the state to the private sector does not relate to the experience of the public as a whole.

§ Mr. Nicholas Bennett (Pembroke)
rose—[Interruption.]

§ Mr. Speaker
Order. This is a United Kingdom Parliament.

§ Mr. Bennett
Thank you, Mr. Speaker. Perhaps I could point out to Opposition Members that I am the secretary of the Back Bench Conservative transport committee.
When considering the privatisation of the Scottish Bus Group, will my right hon. and learned Friend bear in mind the comments of Opposition Members on privatisation of the National Bus Company some years ago, and the success of deregulation of bus services in Scotland, which has provided more independent operators there since 1986? When Opposition Members talk about predators coming to take over Scottish bus companies, should they not bear in mind the fact that the most successful takeovers of bus companies in this country have been by the Stagecoach group of Perth, which has taken over many companies in the south of England?

§ Mr. Rifkind
My hon. Friend is quite correct to say that Opposition Members apply double standards. They seem to believe that it is right in principle for Scottish companies to be able to expand south of the border, but we hear squeals of righteous indignation whenever the reverse applies.
As Opposition Members realise, we are part of a united kingdom and a single economy. Attempts to produce barriers of the kind that one or two of the more emotion al of them seem occasionally to suggest would be against the interests of the people of Scotland as a whole.

Several Hon. Members
rose—

§ Mr. Speaker
Mrs. Ewing.

§ Mr. Harry Ewing (Falkirk, East)
When the Secretary of State mentioned the possibility—[Interruption.]

§ Mr. Speaker
Order. Carry on.

§ Mr. Ewing
Did I mistake what you said, Mr. Speaker? I thought you said, "Mr. Ewing." I should have known, with my record of being called, that that was a mistake.
When the Secretary of State refers to moving the headquarters of any organisation to the centre of activity, he ought to tell the House where it is now proposed to move the headquarters of the Scottish Conservative party. I am advised by the husband of a director of Grampian regional transport that, although the Grampian regional council is bitterly opposed to privatisation, it has entered into negotiations with its employees. Could I squeeze from the Secretary of State an absolute guarantee that he will not interfere in the negotiations? If Grampian regional council considers that it has no option, because of the Government's dogmatic approach, but to go ahead with 713 privatisation, I hope that the Secretary of State will not sell the company to a private company instead of to the employees. Finally, could the Secretary of State tell me when he last travelled on a bus?

§ Mr. Rifkind
I understand the hon. Gentleman's embarrassment about the position of his party in the Grampian area. Grampian regional council is not legally obliged to privatise—

§ Mr. Ewing
Not yet.

§ Mr. Rifkind
The fact is that Grampian regional council, with the support of all political parties, made proposals to privatise its bus company. In doing so, it has responded to the clear wishes of the management and employees of that company. If the hon. Gentleman does not like it, he should at least not misrepresent what is happening.
If a local authority wishes to privatise its public transport company, the statutory position is that it has to apply to the Scottish Office—

§ Mr. Ewing
No.

§ Mr. Rifkind
That is what Parliament requires and has insisted upon. We must ensure, as with the disposal of any public asset, that that is done in an appropriate way. If Grampian regional council wishes to privatise its bus company, I have no power to insist that it should sell it to other than those that it chooses. However, I can ensure that the terms under which it seeks to privatise the company are consistent with proper financial responsibility.

§ Mrs. Margaret Ewing (Moray)
Thank you, Mr. Speaker. I realise that it is St. Andrew's day, not necessarily St. Harry's day. I agree with the hon. Member for Falkirk, East (Mr. Ewing), on the basis of my conversations with representatives of Grampian region, that a pragmatic decision has been taken and that Grampian is attempting to safeguard the livelihoods of those who are employed in the bus group.
What do the Government mean by "financial assistance"? Has the Secretary of State written a clear sum for next year into his budget? If he has, it would show how willing the Government are to support initiatives that will guarantee jobs for those employees. Is the Secretary of State able to assure me that the road equivalent tariff has not been ruled out for ever for the islands and that it will continue to be considered as a vital element in providing effective transport for the island communities?

§ Mr. Rifkind
I hope that the Grampian region's pragmatism is infectious and that Strathclyde, Lothian and Tayside will reach similarly pragmatic conclusions. The employees in the bus companies of those regions also seek a similar initiative from the local authorities. I assure the hon. Lady that resources will be provided for those who wish to contemplate employee or management buy-outs.

§ Mrs. Ewing
How much?

§ Mr. Rifkind
We shall discuss with those who put forward proposals what their requirements are in order to ensure that they have proper access to advice and 714 assistance. If the hon. Lady consulted Mr. Donald Stewart, who was the Member of Parliament for the Western Isles, he would no doubt tell her what he told me about the road equivalent tariff: that he fully appreciated that it might be undesirable for the islands. It might lead to a reduction in fares on some routes but it would lead to an increase in fares on others. I assume that that is not a policy that the hon. Lady is encouraging me to adopt.

§ Mr. Dick Douglas (Dunfermline, West)
Many hon. Members on this side of the House very much regret the thrust of this privatisation measure and the destruction of a co-ordinating mechanism in Scotland. It will harm the interests of the rural communities and tourism. I do not welcome the Secretary of State's decision on Caledonian MacBrayne; he is confusing ships and routes, particularly in relation to the Clyde ferry service. What guarantee can he provide about safety of operations? What guarantee is there that ships of the proper design will be ordered? The real fear is that privatisation will mean that the part which remains in the public domain will be run down, to the detriment of the people who live in the Western Isles and in the other island communities.

§ Mr. Rifkind
The rules governing safety apply with equal force, irrespective of whether a vessel is in the private or the public sector. Island communities in other parts of Scotland are well served by the private sector. One thinks of P and 0 in Orkney and Shetland and of many other island communities where bulk carriers to those islands are provided by the private sector. The hon. Gentleman cannot sensibly reach the conclusion that there is a need for a state-owned company.
However, I acknowledge that, such is the nature of the economy of the Hebridean islands and the size of the population, it will continue to be necessary in the foreseeable future for a significant level of taxpayers' funds to be used to ensure that the islanders have a service, which for them is a lifeline of contact with the rest of the United Kingdom.

§ Mr. Calum Macdonald (Western Isles)
The Secretary of State used snide and mean words about considerable scope for increased value for money and for increased cost-efficiency, but did not praise the savings that have already been achieved by Caledonian MacBrayne. The Secretary of State is having to eat humble pie, but he ought to praise the work of the crews, the employees and the management of Caledonian MacBrayne for the services that they have provided. The Secretary of State's words were based on a half-baked report by the Planning, Industrial and Economic Development Advisers group. Will he undertake to publish the report so that the public and hon. Members can examine it and ask questions about it? Furthermore, how much did the PIEDA group report cost the Exchequer? If the Secretary of State had been looking for cost-efficiency, he would have abandoned this farcical exercise.

§ Mr. Rifkind
I am very conscious of the fact that in many respects Caledonian MacBrayne has provided a good service to the islands. However, I have received from islanders many comments which suggest that they believe that there is considerable scope for improvement. I suspect that the hon. Gentleman has not hesitated to make clear to Caledonian MacBrayne various ways in which its service could be improved. The hon. Gentleman parrots, "They 715 need more resources." Is he aware that Caledonian MacBrayne has been the recipient of more resources under this Conservative Government than it received under any previous Labour Administration? I am referring not to EC funding but to the support given by the Scottish Office. Caledonian MacBrayne received £3.7 million to support its services in 1979. Today, it receives £6.5 million to support its services. Because of that extra help it has been able to increase its services to island communities quite significantly. During the past five years, the number of passengers carried has increased on virtually all routes, as has the number of commercial vehicles and cars.
We are conscious, however, of several ways in which the service can be improved. For example, Caledonian MacBrayne cannot interchange its crews between routes serving the Hebridean islands and those on the Clyde as they belong to different trade unions and have different restrictive practices. If the hon. Gentleman believes that such restrictive practices are in the interests of the company, I do not believe that his constituents agree with him.

§ Mr. Roger King (Birmingham, Northfield)
Although I welcome the privatisation of Scottish Buses, will my right hon. and learned Friend pay particular attention to employee participation and the operational requirements of existing companies and their English counterparts? I have in mind Scottish Citylink and its closely integrated operational relationship with the Birmingham-based National Express Group.

§ Mr. Rifkind
There are many such links, and it is important that, to ensure the best quality of service for consumers, such an integrated approach is encouraged through co-operation between the companies involved.

§ Mr. Gavin Strang (Edinburgh, East)
Can the Secretary of State assure the House that the pension rights of current and past employees of the Scottish Transport Group will not be adversely affected by privatisation?

§ Mr. Rifkind
I anticipate that any acquisition of a company would involve the continuation of existing rights. There may be areas on which there are later negotiations if any changes are proposed, but it is the normal practice, on acquisition of a company, to inherit pension obligations towards those who work for it.

§ Mr. William McKelvey (Kilmarnock and Loudoun)
The Secretary of State accuses us of employing double standards towards the flogging off of Scottish assets, but is he not in danger of being similarly accused when he gleefully sells off public housing, giving generous discounts to tenants who have occupied homes? It cannot be beyond his wit to devise a scheme under which workers, many of whom have given a lifetime's service to Scottish industry, get generous discounts and an opportunity to buy into the industries in which they work.

§ Mr. Rifkind
I am delighted to welcome the hon. Gentleman as a convert to the principle of encouraging share ownership among employees and privatisation leading to greater ownership by those who work in companies. The hon. Gentleman has until now been an unqualified opponent of all privatisation. He seems now to be saying that he is in favour of privatisation if it can lead to management-employee buy-outs. He is working in the right direction, and we happily acknowledge that.

§ Mrs. Maria Fyfe (Glasgow, Maryhill)
I hope that the Secretary of State has noted that two potential recruits for the Scottish Select Committee have sprung up to take part this afternoon. The right hon. and learned Gentleman failed to answer my hon. Friend the Member for Falkirk, East (Mr. Ewing), who asked how often he has travelled on a bus. How often has he struggled on to a bus with a collapsible pushchair, a toddler and an infant? [HON. MEMBERS: "Like Forsyth?"] Indeed. How often have any of his Front Bench colleagues done that?
What will be the consequences of privatisation for the safety and comfort of women and children passengers? Even when a family does have a car, the women and children of the household often have to use public transport because the husband uses the car for work. Did the safety and convenience of women and children passengers feature in the Secretary of State's discussions with Quayle Munro? If so, to what effect?

§ Mr. Rifkind
I have probably travelled on a bus as often as the Leader of the Opposition in the past six months. Although the other matters which the hon. Lady raised are important, I do not believe that the design of buses and their convenience for passengers with carry cots and other similar objects is likely to be affected significantly by ownership.

§ Mr. John Redwood (Wokingham)
I congratulate my right hon. and learned Friend on managing to establish cross-party support for privatisation in the form that he has outlined—employee buy-outs and participation—but will he say something about how his plans will affect the growth of competition in the industry, which is vital to improve services for the customer?

§ Mr. Rifkind
Under existing arrangements, the Scottish Bus Group, which owns all the companies that we are to privatise, if not a monopoly, is in a very dominant position. The replacement of that group by no fewer than 10 or 11 separate companies, each of which will compete with existing private sector companies and public transport companies, including the soon to be privatised PTC in Grampian, will undoubtedly give a substantial boost to real choice and real competition, very much to the benefit of the travelling public.

§ Mr. D. N. Campbell-Savours (Workington)
May we have—[HON. MEMBERS: "He is English."]

§ Mr. McKelvey
He is a Campbell.

§ Mr. Campbell-Savours
Can we have an assurance that the highway hoodlum, Mr. Souter of Stagecoach, will not be allowed to buy any part of the Scottish Bus Group? Is the Secretary of State for Scotland aware that Mr. Souter dumped nearly 50 buses in the bus station in Keswick, having bought Cumberland Motor Services earlier this year? In effect, he blockaded the town to tourists and cost shopkeepers in my constituency millions of pounds because of his foolish actions, which he took only because the planning authorities refused to give him a planning permission? Is that the kind of man who will be allowed to run the Scottish bus industry in the future?

§ Mr. Rifkind
If Stagecoach makes proposals for the acquisition of any of these companies, they will be considered in the same way as proposals from any other applicant.

§ Mr. John McAllion (Dundee, East)
What evidence does the Secretary of State have for his statement a few moments ago that employees of the Tayside public transport company support privatisation of that company? There is no such support among workers in the Strathtay company. There is simply a recognition that they would prefer a management-employee buy-out to a takeover by a cash-rich predator from the south. Will the Secretary of State help those workers by giving them an assurance that, if their management-employee bid is realistic and commensurate with the value of the public assets involved, he will accept it and not sell out to a higher bidder elsewhere?

§ Mr. Rifkind
I have already explained the basis on which bids will be considered. I have said that, subject to these general criteria, we want to give preference to employee and management buy-outs. I cannot at the moment anticipate what the difference might be between proposals from the management and employees and from other applicants. We will apply exactly the same criteria as the regional council of which the hon. Gentleman was once a member.

§ Mr. Kenneth Hind (Lancashire, West)
I congratulate my right hon. and learned Friend on this announcement. Does he agree that, by breaking down the 3,000 buses into 11 units, he has avoided the predatory pricing which could have arisen? The likely outcome of my right hon. and learned Friend's proposals is an increase in services to rural areas, not a decrease. What plans does he have for privatisation of depots?

§ Mr. Rifkind
Depots are part of the individual companies and will be privatised as part of the larger privatisation. There were some suggestions from certain quarters about whether it would be desirable to privatise individual depots. We have to bear in mind the likely viability of a depot. It is probably in the interests of employees and all who use these services for us to use the companies to which I have referred as the units on which privatisation is based.

§ Mr. Bob McTaggart (Glasgow, Central)
The Secretary of State has said more than once that it is unacceptable for subsidised routes to be the same as unsubsidised ones. It is often the case, however—especially with the Scottish Bus Group—that subsidised routes are partly the same as unsubsidised ones. That fact has been reported to the traffic commissioners, who have found in favour of the private sector. Can we have an assurance that the same strict criteria will not apply to Caledonian MacBrayne or to any subsidised ferry routes to the islands, bearing in mind the severity of what could happen as a result?

§ Mr. Rifkind
As the hon. Gentleman knows, with regard to ferries, at Gourock-Dunoon there are two routes that are identical, for all practical purposes. The terminals are a few hundred yards apart on both sides of the route, and that is the point that I was making. I was saying not that there would be a law to prevent that, but that as a matter of policy it seemed an unnecessary use of public money to provide a subsidy so that such a situation could continue. The hon. Gentleman mentioned bus services. I share his view that it is not desirable in principle for a subsidy to be used to enable a company to compete 718 effectively with another that is not subsidised. We shall have to find a way in which such abuses—if they are abuses—can be resolved properly.

§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
Will the Secretary of State accept that his statement, insofar as it concerns the Borders region, will be warmly welcomed, for two reasons? First, Lowland Scottish will be offered for sale as a free-standing entity. Secondly, his comments about the provisions for employee participation will be welcomed. That reflects the broadly based representations that were made by the trade unions, the local authorities and my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel). Will the Secretary of State now return to the question of the financial assistance that will be available to management-employee teams? He would help them to prepare their bid better if he gave more explanation about the financial assistance involved.

§ Mr. Rifkind
I am grateful for that welcome for the terms of my statement. In reply to the second part of the question, we envisage that we may be able to give—although we cannot quantify it—financial assistance to employees and managers who are contemplating a bid. That financial assistance will enable them to obtain professional advice on how to put together a proposal, what is required to make a credible proposal and what the parameters should be, to ensure that they are not disadvantaged through lack of experience in the necessary mechanics for competing with companies or others who may wish to put in a bid.
The second form of assistance will apply to the time when the bids are being considered from the various applicants. We have said, although we cannot yet quantify it, that we shall give preference to management-employee buy-outs. The scale of that preference has yet to be determined.

§ Mr. John Marshall (Hendon, South)
When is the first unit of the Scottish Bus Group likely to be privatised? I congratulate my right hon. and learned Friend on his emphasis on employee participation in the privatisation of the group. Does he accept that many regard that emphasis as the acceptable side of devolution in Scotland? As a former convener of Aberdeen municipal transport committee, I congratulate the Socialists of Aberdeen on securing the objective that I failed to achieve—privatisation of that service.

§ Mr. Rifkind
I pay tribute to my hon. Friend's generous compliment to his one-time political opponents. I am sure that he never expected to live to see the day when the Socialists of Aberdeen would join those of other parties in support of privatising the local bus service.
I cannot give a specific timing for these disposals, but the Transport (Scotland) Bill, which provides for the flotation, is to be tabled today and, subject to Parliament's approval, we hope that the necessary legislation will be enacted during the current Session.

§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley)
Does the Secretary of State recall his weasel words about rural routes at the time of deregulation? Is he aware that many communities in my constituency have lost services, particularly at the weekends and at off-peak times? It is no use for him to rabbit on about route mileage when all the buses are running on the same urban routes, 719 with different operators. We want to talk about rural routes. Can the Secretary of State give any guarantee that services will not be decimated under privatisation as they were at the time of deregulation?

§ Mr. Rifkind
The hon. Gentleman knows perfectly well that there are two relevant points here. First, route mileage by bus services in Scotland has gone up since deregulation.

§ Mr. Foulkes
I said that.

§ Mr. Rifkind
There is no need for the hon. Gentleman to become apoplectic. The route mileage has gone up, not down. If the hon. Gentleman becomes upset when I agree with him, God knows what he will be like when I disagree with him.
As he knows, Strathclyde regional council is perfectly able to provide public funds to support the continuation of routes that individual companies do not want to provide. The regional council is the appropriate authority to decide whether there is a social need for a bus service on a particular route.

§ Mr. Brian Wilson (Cunninghame, North)
As far as Caledonian MacBrayne is concerned, will the Secretary of State accept my welcome for 80 per cent. of his statement, which represents retreat? Perhaps in this context we can magnanimously and temporarily forgive him the 20 per cent. that is an ideological figleaf. Will he confirm that his rather patronising remarks about value for money do not suggest a further cut in the CalMac subsidy? Will he accept that a move to Oban should be a matter for debate rather than diktat?
Will the Secretary of State accept that, if the status quo is not an option for buses, an employee buy-out is the best means of common ownership, which will maintain jobs, standards and services? Will he assist that option with substance, rather than mere hope? Will he note our apprehension about predatory bids and will he note that there are plenty of Scottish cowboys, some of them on board stagecoaches?

§ Mr. Rifkind
I welcome the hon. Gentleman to the Dispatch Box for his maiden appearance. I am glad that he has used the occasion to welcome the Government's statement—or at least 80 per cent. of it. I hope that that is a useful precedent that he will follow in the weeks and months to come.
The hon. Gentleman spoke about the level of subsidy for Caledonian MacBrayne. Naturally, we shall ensure that the subsidy is at the level required to ensure a lifeline to the islands and that the good quality of service that there has been—particularly in the past nine years—is maintained.
As for employee buy-outs, the hon. Gentleman heard what I had to say on the matter and I am glad that he too seems to be joining those who, under certain conditions, are delighted to welcome privatisation.