HC Deb 19 December 1989 vol 164 cc214-33 4.32 pm
The Secretary of State for Transport (Mr. Cecil Parkinson)

With permission, Mr. Speaker, I should like to make a statement about British Rail's objectives for the period 1990 to 1993.

I have today written to the chairman of British Rail, Sir Robert Reid, setting out the objectives that I have agreed with him. Copies are available in the Vote Office and will be published in Hansard.

Since British Rail was first set three-year objectives in 1983, the management has had a clear framework for planning its business. It has achieved undoubted success in working to the objectives that my predecessors set in 1983 and 1986. Railway investment has risen sharply. BR is now investing twice as much as in 1983, and the result is that investment in 1989–90 is the highest for some 25 years. It is to go up by a further 75 per cent. over the next three years. At the same time, British Rail's need for subsidy has been falling steadily, as BR has improved efficiency and has attracted many more passengers. Over the next three years I want to see substantial further progress on safety, quality and financial performance.

Providing a very high standard of safety must remain the railways board's top priority. We allowed for £125 million for specific new safety expenditure over the next three years in the recent public expenditure round. BR is acting positively and quickly on the report published in November on the Clapham junction accident. I repeat the assurance that I gave at that time that finance will not stand in the way of implementing the report's recommendations. I shall look at what further measures may be required once the board's assessment is available in the new year. We are committed to ensuring that BR will continue to have the necessary funds for safety. I give the House the assurance that there will be no economising on safety. British Rail has also begun work in consultation with the Health and Safety Executive and the railway inspectorate on a comprehensive safety plan. I have asked the board to submit this to me by October, and to update it annually thereafter.

British Rail's three commercial businesses—InterCity, freight and parcels—have made good progress towards the financial objectives set in 1986. InterCity has achieved a major turn-round into profitability. The objectives I am setting call for further progress towards earning a proper commercial return on their assets. Intercity's objective for 1992–93 will be a current cost profit of £95 million at today's prices.

The overall objective for rail freight will be a profit of £50 million, and the board will be preparing plans for bulk freight to earn at least an overall 8 per cent. return on its assets by 1994–95. I also want to see improvements in the financial performance of the rest of the freight business, with still greater involvement of the private sector, so that it is ready to seize the new opportunities presented by the Channel tunnel.

On British Rail's parcels business, I have endorsed the £9 million profit target which the board has set.

On the two remaining businesses—Network SouthEast and the Provincial sector—I am very conscious of the need to strike a balance. I want to see continuing but carefully phased reductions in subsidy, which should be possible without excessive fares increases.

I hope that, by the mid-1990s, Network SouthEast will start earning a commercial return on its assets, and I am asking the board to produce plans for that. Meanwhile, I am endorsing the board's own objective of reducing the grant requirement to zero in 1992–93. I am satisfied that by then Network SouthEast should not need a revenue subsidy. It is carrying so many more passengers now, and the high and growing level of investment is improving quality and reducing running costs. Increased revenue from a higher number of passengers, and lower running costs from more modern equipment, reduce the needs for subsidy from the taxpayer.

On the Provincial sector, I am again endorsing the board's objective, which is to reduce the grant from about £400 million this year to £345 million by 1992–93. It is clear that large subsidies will be needed for Provincial for the foreseeable future, although there should be scope for some further savings and I am asking the board to examine ways of achieving further improvement of the order of £20 million by that year.

Neither reductions in subsidy nor the huge increases in investment will lead to large fare increases. These objectives are based on BR's own forecasts included in its corporate plan, which it will be publishing today. The plan assumes only modest real fare increases. I shall be looking to the board to continue to improve productivity to minimise the direct pressure of costs on fares.

I share the board's determination that quality of service should improve. Demanding quality standards for provincial services were set last July. The board has now agreed to a tougher Network SouthEast punctuality standard. These are tough targets, but the benefits of the investment already authorised will be building up over the next three years and will enable BR to give passengers a better service.

Demand for Network SouthEast and Provincial services is expected to continue to grow and BR will need to decide how best to accommodate it. Where, exceptionally, new capacity cannot pay for itself, a cost benefit evaluation will be carried out to enable me to decide whether capital grants would be justified on wider social and economic grounds.

The achievements of the past six years are a tribute to the hard work of the BR board and all railway staff under the leadership of Sir Robert Reid. With the opening of the Channel tunnel, the next decade will bring new opportunities. The Government are committed to securing a safe, efficient and high-quality modern railway network. The new objectives set out a clear framework for further progress towards these goals. I commend them to the House.

Mr. John Prescott (Kingston upon Hull, East)

Does not the Secretary of State understand that today's announcement continues the disastrous penny-pinching approach that the Government have adopted towards British Rail since they came to office? Is it not the case that in the 10 years from 1983 to 1993 the Treasury will have denied British Rail £3.5 billion in financial support by reducing the 1983 levels of support? Would it not have made sense to spend that money on ensuring that Britain could play its full part in the railway revolution that is now sweeping through Europe? Is it not the case that, instead, safety, quality and reliability have suffered, fares have rocketed and we are missing out on the major opportunities offered by the Channel tunnel?

When will the right hon. Gentleman realise that there is no point setting tougher targets for quality of service unless the resources are there to implement them? Why has he ignored the views of the passenger body, the Central Transport Consultative Committee, which only two weeks ago told him that there was a direct link between the cuts in Government grant over the past decade and the poorer quality of service?

The right hon. Gentleman's grasp of detail does not always match his considerable public relations skills, but he will now have to answer the question about fares that he ducked last week in the House. I ask the right hon. Gentleman again: does he now accept that today's announcement that Network SouthEast must have a commercial rate of return by 1995 means fare increases of at least 4 per cent. above the rate of inflation every year for the next 10 years? Is not that the exact figure in the assumption, used by the Department of Transport in assessing the options in the road assessment studies, on which he reported to the House last week? He seemed to be somewhat confused about the matter last week and promised to write to us. We are still awaiting his letter.

Does not the right hon. Gentleman understand that today's target will be greeted with outrage throughout Britain, especially in London and the south-east? Does he not realise that passengers are fed up with paying the highest fares in Europe for a dirty, overcrowded, unreliable service, and that the latest cuts will mean higher fares and even poorer quality service?

The right hon. Gentleman talks about passengers' willingness to pay more for a better quality service, yet fares are already twice as expensive in Britain as in Belgium, and one third more costly than in Germany, France and the Netherlands. How much more should passengers pay for a seat on a train which is on time and to guarantee a safe and reliable journey?

The right hon. Gentleman constantly claims that we can have either higher investment levels or higher levels of Government financial support, but that we cannot have both. Why not? They do in France, in West Germany, in Spain, in Italy and in Belgium. What is so unique about Britain?

Does the right hon. Gentleman accept that Britain is at the bottom of the European league of Government financial support for railways? We are still bottom of the league for investment. Why is it only on fares that we are at the top of the table?

Will the right hon. Gentleman confirm that not one penny of the investment claims that he makes comes from the Treasury and that all of it comes from higher fares, chronic overcrowding, property and land sales, redundancies and low pay? Will he explain that some 90 per cent. of the investment over the next three years will be for the routine replacement of trains, signalling and rail and structures and will not necessarily help to expand capacity in the system?

Passenger bodies are complaining to the right hon. Gentleman and to many hon. Members about the chronic overcrowding. Is the right hon. Gentleman aware that Network SouthEast passengers will be outraged that BR is already saying in its corporate plan that it will not be able to meet the target that he has set for reducing overcrowding in the system, despite the increase in fares that will flow from his statement this afternoon? Is it not true that, according to the passenger bodies, train cancellations have doubled on the provincial services and have increased by 50 per cent. on Network SouthEast?

Why are there no environmental objectives in the statement? Does the right hon. Gentleman agree that the increasing bulk freight's rate of return on assets from 2.5 to 8 per cent. will reduce even further rail's share of the freight market, especially in view of the CBI's calculation that the cost of road congestion is £15 billion a year? How can it make sense to drive even more freight on to the roads? Has the right hon. Gentleman discussed that with the Secretary of State for the Environment?

The right hon. Gentleman assured the House that finance would not stand in the way of the implementation of the Hidden report following the Clapham disaster, but what does that mean in practice? Will the right hon. Gentleman expand on the statement to give an assurance that safety—[HON. MEMBERS: "Too long."] I hope that the House will always listen to points about safety. We have not listened in the past and we have now paid a terrible price for that. Will the right hon. Gentleman assure the House that the safety deficiencies identified by Sir Anthony Hidden will be paid for by grant aid either in the form of PSO funding or a direct safety grant and will not have to be paid for by passengers in even higher fares?

Finally, does the Secretary of State endorse the view of the chairman Sir Bob Reid when he said last week: Our duty is not to run a service that is desirable; it is to run a service that will be profitable"? If he does, let me offer the right hon. Gentleman some advice. He should take some time off from his tour of the nation's auction rooms peddling valuable old number plates to study the transport systems of other European countries and, yes, perhaps even use them. He may then realise that there are some things that may not be considered profitable in the narrow and petty-minded terms of the Government but which are desirable for a vital and modern nation. They include a concern for safety, for the environment, for quality of life, for economic regeneration and for the whole of Britain, and they are all sadly lacking from the statement.

Mr. Parkinson

When I listen to the hon. Gentleman, the thought that strikes me is that he is never happier than when he is attacking the work of the 131,000 people who work in British Rail and bad-mouthing their efforts.

Let me quote a passage from a White Paper produced by a Labour spokesman a little wiser than the hon. Gentleman. It says: To use subsidies to disguise from people the cost of the services they are paying for is pointless, and to subsidise richer people at the expense of poorer is perverse. There is no sense—I have made this point over and over again—in the people of Hull subsidising the service in London and the south-east which is used by people who are earning much more than they are and for which there is already an excessive demand. To subsidise a service for which there is excessive demand is an absurd waste of money and it is a silly way of reallocating the national income.

One would never believe it from listening to the hon. Gentleman, but BR has more passengers in every aspect of its business in Network SouthEast and Provincial and is investing more than ever before in Network SouthEast and Provincial. Two years from now, more than 80 per cent. of the rolling stock on Provincial will be less than five years old and will effectively have been renewed.

The hon. Gentleman's picture of a declining railway suffering from lack of investment simply does not accord with the facts. The only point that he can make—it was the only point that he made in the course of his remarks—is that the subsidy is lower than it used to be. We have explained that we plan gradually to phase out the subsidy for Network SouthEast, to reduce it by £55 million from£400 million in the next three years on the Provincial network, and that that reduction, coupled with the growth in business, should not give rise to any substantial increases in fares. It is absolutely—[Interruption.] There is one simple point between the hon. Member for Kingston upon Hull, East (Mr. Prescott) and myself. He believes that the Government's commitment to the railways or to any other service is the extent of the subsidy that they provide. We believe that it is a matter of improving the service and of increasing investment.

Mr. Peter Snape (West Bromwich, East)

Why do the Government not prove that?

Mr. Parkinson

The hon. Gentleman and his right hon. and hon. Friends are very enthusiastic about bad-mouthing Britain's railways and Underground systems. The right hon. Member for Islwyn (Mr. Kinnock) on a visit to Paris, praised the French for modernising five Metro stations a year and investing money. We are modernising 10 stations and investing twice as much—but all that we hear from the hon. Member for Kingston upon Hull, East is criticism. We are investing more money per route mile than the French. It is bad news for the hon. Gentleman that we are making progress and improving the system. We intend to carry on doing so, and to ensure that the fares do not increase excessively. We intend to ensure also that Britain has a modern railway system.

Mr. Edward Heath (Old Bexley and Sidcup)

We naturally want to give careful thought to the announcement made by my right hon. Friend this afternoon. I hope he will realise that it is difficult for many right hon. and hon. Members to attach much weight to any forecast or undertaking given by British Rail at the moment. That is particularly so in the light of British Rail's treatment of the fast link from the Channel tunnel. British Rail had four plans to consider, and after long debate and many public meetings, it reached the conclusion only six months later to cancel everything that had been discussed, arranged or agreed—and announced that it was taking an entirely fresh look at the problem.

Leaving that matter on one side, my right hon. Friend made the important comment at the end of his statement that particular problems will go to him for examination and a decision. I ask him to acknowledge that there is a difference between a subsidy—even though I may not accept everything that my right hon. Friend said about subsidies—and expenditure that is required for environmental considerations. The Government have pledged themselves to expenditure to protect the environment. It is not possible to have a railway that is profitable and which, at the same time, takes account of environment requirements. No railway in Europe does so.

Mr. Parkinson

indicated dissent.

Mr. Heath

My right hon. Friend shakes his head in disagreement. If a railway is to follow its own profitable inclinations, its track will run straight through a town. Everything will be pulled down, compensation will be paid, and that will be the end of the matter. If a railroad is to take account of all environmental considerations, as we would like it to do, it must have a source of revenue other than its normal ticket taking.

The Channel tunnel fast link is also a matter of national concern because it will continue on to the north of England and to Scotland, when further environmental considerations will have to be taken into account. I hope that my right hon. Friend's concluding comment means that he is prepared to do now that which his predecessors did not do—accept that expenditure on the environment and on tunnelling is a necessary form of expenditure by Government, and that the question of a railroad's profitability does not arise.

Mr. Parkinson

As my right hon. Friend knows, the estimated costs of the fast link escalated enormously. No one really knew what the final costs would be. The figure of £3.5 billion was really a guesstimate. Because of the uncertainty surrounding the nature of the ground, no one could be sure what would be the true cost of tunnelling. It could have been billions more than the £3.5 billion originally estimated. That is why British Rail and its partners reached the conclusion that, although they could confirm the line to Swanley, they should look for other less expensive ways of connecting from there to Waterloo and then on to King's Cross. They are now doing so. Although I agree with my right hon. Friend that the environment must be taken into consideration, I cannot agree that the cross-Channel link should be tunnelled under London regardless of cost.

Coming nearer to home, the north Kent lines, which are also important to my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath), are the subject of an announcement of specific orders for £257 million of new rolling stock in the modernisation of that whole network. While I cannot satisfy my right hon Friend on the fast link, I promise his constituents that their local lines are in the course of being substantially improved.

Mr. Ronnie Fearn (Southport)

I welcome the fact that British Rail is achieving its objectives, and also that it is attracting many more passengers—because that is what the statement says. However, is the Secretary of State aware that practically all its passengers travel in discomfort because of overcrowding? What steps will be taken immediately to introduce new rolling stock—and I mean immediately, rather than over the next three years that the right hon. Gentleman mentioned?

The statement also promises that there will be no large increases in fares but that there will be "modest" increases. Can the right hon. Gentleman elucidate on the meaning in that context of the word "modest"? Most of the travelling public would like to know. Also, is the Secretary of State aware that the northern regions need to know urgently what connections there will be between them and the Channel tunnel? When might we expect an announcement on that aspect?

Mr. Parkinson

The investment plans of £3.7 billion over the next three years include orders for a whole range of rolling stock. If the hon. Gentleman reads the press, as I know that he does, he will have learnt this morning of the announcement of another order valued at £350 million. In September, I announced a £257 million order for rolling stock. Our plans are being translated into action. As I mentioned earlier, we aim at modernising the rolling stock on the whole of the provincial network, and a substantial start has been made. The hon. Gentleman will see that for himself, if he looks around various provincial stations, as I do, and notices the new Sprinter trains on track.

British Rail has predicated its five-year plan on fare increases around and slightly above the rate of inflation. There are no plans for substantial increases above the rate of inflation. In some cases there are no plans for increases. In others, there are plans for substantial increases. The second year of the plan provides for substantial increases in the fares of long-distance commuters. We have made that announcement and there is no secret about that fact.

The long-distance commuter is paying on average only a tiny proportion of the standard fare, yet travels at peak times. The long-term season ticket is too good a bargain, and that is why there will be increases in various sections —[Interruption.] When I travelled to Brighton the other day, I shared a compartment with a passenger using a season ticket, and whereas I paid a return fare of £24.40, the season ticket holder was paying only £9.50—and agreed that he was enjoying a substantial bargain.

As to Channel tunnel links to the north of England, Sir Robert Reid's remarks have been much misunderstood. He said that, as announced, a service will be run from the regions to the Channel tunnel. However, at this stage we cannot forecast what the demand for it will be. The service will be increased if necessary, but if excessive provision is made it will be reduced. We are determined to give the regions proper access to the tunnel. The initial proposals represent a best guesstimate. If they need to be expanded, they will be expanded, but if they prove excessive, they will be reduced.

Mr. Terence L. Higgins (Worthing)

Does my right hon. Friend agree that the Government and British Rail should be congratulated on doubling the rate of investment in real terms since 1983 and on planning for a further 75 per cent. increase over the next three years? Will my right hon. Friend ensure that much of that investment is concentrated on rolling stock in the south-east, which is long overdue for renewal? Following the Clapham junction disaster, will my right hon. Friend give an assurance that finance will be made available for the rapid introduction of in-cab radio telephones, as there is some concern that that will not be done?

Mr. Parkinson

Yes, there are substantial programmes to increase expenditure on rolling stock in the south-east. I have made quite clear the Government's position on Hidden. The Government do not know, because British Rail is in the process of working it out, what the cost of implementing Hidden's recommendations will be. When British Rail has done that, it will discuss it with us. We made some provision in the public expenditure plans and we shall discuss further financing with BR. I have made it clear to the House, and repeated it categorically today, that safety will not in any way be compromised by a shortage of funds. The necessary funds will be available.

Mr. David Marshall (Glasgow, Shettleston)

Will the Secretary of State ensure that the necessary funds for safety are made available to ensure that all junctions with single-track lines are reconverted to dual-track lines so that accidents such as the one at Bellgrove in Glasgow never happen again? Will he instruct British Rail accordingly?

Mr. Parkinson

I cannot give the hon. Gentleman that assurance. Many pieces of single track up and down the country work successfully. The cost of changing them would be enormous, but if the hon. Gentleman has specific areas where he believes that there is a specific threat to safety, I should be happy to hear from him. In the main, single-track working works well.

Mr. Robert Adley (Christchurch)

May I apologise to you, Mr. Speaker, and to the House for having to leave immediately after asking my question to go to a Select Committee upstairs?

I welcome what my right hon. Friend said about the cost-benefit analysis. Does he accept that there is any relationship between the increase in complaints and the reduction in the public service obligation grant? Does he accept that the pursuit of efficiency must not be carried to the point where it undermines an essential public service? Does he ever think why efficient, prosperous and free-market West Germany spends three times as much taxpayers' money on its railways as we do?

Mr. Parkinson

I invite my hon. Friend to consider whether overcrowding has something to do with the fact that 25 per cent. more people are catching trains. I should have thought that their presence is the direct cause of overcrowding. That does not seem to suggest, as the Opposition attempt to suggest over and over again, that people are being priced off the line. Half the time the Opposition complain about people being priced off, but for the other half they complain about overcrowding.

My reply to my hon. Friend is no: the increase in the public service obligation grant has coincided with a substantial increase in other revenues. I hope that my hon. Friend is not suggesting that British Rail is not capable of cost saving or improving its efficiency, because that certainly is not the view of its management, who negotiated and accepted the objectives that I declared today. They are happy that they can meet them.

Mr. Tam Dalyell (Linlithgow)

What price tag is attached to the phrase, "no economising with safety"?

Mr. Parkinson

I have already explained to the House that we are unaware of the cost of implementing the recommendations of the Hidden report because costings are still being done. I gave British Rail the objective of reporting within three months, one month of which has passed. It will come back to me after that time. When we are aware of the size of the bill, we shall discuss how it is to be paid.

Sir Hector Monro (Dumfries)

I welcome my right hon. Friend's statement on investment, but does he accept that I am entirely unconvinced by British Rail's statement on the Channel tunnel link with the west coast of Scotland? Does he accept that we must have the facilities in place when the tunnel is opened or trade will never develop?

Mr. Parkinson

The problem with the west coast line is a passenger one. British Rail is not convinced that there will be sufficient passenger demand to travel from Glasgow to the continent by rail, simply because of the time involved. There will be many quicker ways of getting there. Proper provision will be made for freight to serve the west coast, because I realise that industry, especially round Glasgow, is extremely important. It appears that there will be not as much demand from passengers because of the time that it will take to complete the journey.

Dr. Dafydd Elis Thomas (Merionnydd Nant Conwy)

Will the Secretary of State clarify what he said in his letter to Sir Robert Reid about investment in local regional services, particularly where the level of return does not immediately meet the 80 per cent. increase in the asset base? He said that a cost-benefit analysis will be undertaken on social grounds and grounds beyond the straight economic criteria. Will he tell the House precisely what those grounds are and what he will be taking into consideration?

Mr. Parkinson

I recognised in my statement that subsidy will be a continuing feature of the existence of local Provincial services. We accept that, which is why the reduction in subsidy over the next three years is relatively modest. We expect that to be a continuing feature of the Provincial network. We recognise that there are wider social and economic reasons, especially in the provinces, for considering investment in services. Against that wider background, we shall therefore be prepared to consider the case for investment in the provinces.

Mr. Conal Gregory (York)

My right hon. Friend is to be congratulated by not only the users of British Rail but its many employees. As there are some 5,500 British Rail employees in my constituency of York, will he say why so far one significant omission from the objectives has been his plans for denationalisation? As they look forward to Santa's Christmas stocking, they should like to learn of the plans for that.

Furthermore, will my right hon. Friend say something about performance-related pay and the fact that British Rail has shifted the goal posts? Most hon. Members are conscious of the clock and are aware that "on time" means on time. British Rail has now fudged being on time from five minutes to 10 minutes late and related higher management pay to that. When can we return to accuracy and honesty with British Rail timetables?

Mr. Parkinson

As my predecessor made clear, the Government are considering whether and how denationalisation should take place. I must admit that that has not been a high priority for me since I arrived in my new job. It was made clear by my predecessor that it could not take place before the next Parliament and that that would be in at least three or four years' time. I have had rather more immediate problems to deal with, but the question is still on the agenda. I shall consider it and report to the House in due course.

The new performance targets represent a tightening up and meet a request made by the Select Committee on Transport, which said that off-peak and peak periods should be distinguished. We have agreed an overall target for performance and a subsidiary target for peak-time performance. In the past, peak-time performance was obscured by the overall performance figures. The figures are more open than they have been before, and it will be possible more easily to monitor performance.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

How long does the Secretary of State imagine that the travelling public will take seriously someone who tells the Transport Select Committee that the roads are not capable of carrying a sufficient number of passengers and that, therefore, we must have an integrated service with railways and who talks about the need for environmental concern, but who increases fares and puts such squeezes on the finances of British Rail that it will find it exceedingly difficult to do any of the things that he has promised his electors?

Mr. Parkinson

I do not wish to take up the time of the House repeating myself, but last year we invested more money in British Rail than for 25 years. In the next three years, that will increase by 75 per cent. I know that that is very disappointing for the hon. Lady—[Interruption.] A Labour Government invented the concept of the external financing limit. It may be new to the hon. Lady, but it is not new to us; it was invented by her Government. Investment in British Rail is at an all-time high. The sooner she stops bad-mouthing it, the better will be the prospects for her constituents.

Mr. Keith Speed (Ashford)

Does my right hon. Friend accept that the commendable objectives that he has outlined today can be achieved only with a better trained, better motivated and better paid work force?

Mr. Parkinson

I thank my hon. Friend for the brevity of his question. It came as a pleasant surprise after listening to Opposition Members. I agree that that is at the heart of the matter. It is encouraging that management and unions are now discussing greater flexibility so that they can attract the quality of people that they need to man the system.

Mr. Nigel Spearing (Newham, South)

Is the Secretary of State aware that in the past four months a Minister of State at the Department of the Environment and the Minister for Public Transport have visited the north London link line for Stratford to Silvertown in north Woolwich in my constituency and that ever since then the quality of the service has taken a severe dive? Why does he insist on a percentage return on so-called book assets? Clearly that must prejudice the maintenance of property, facilities and equipment which would provide flexibility and reliability, and therefore increase the reliability of the service? Would not the removal of those facilities encourage deterioration and attack the morale of the staff who are the railways' biggest asset?

Mr. Parkinson

My hon. Friend the Minister is aware of the deterioration in the service on that line and has called for a special report on it. I must make it clear that he is convinced that his visit was not the start of the decline. Maintenance and investment in safety are not taken into account in seeking the rate of return. Safety is specifically excluded from any consideration of the rate of return on the assets.

Mr. David Gilroy Bevan (Birmingham, Yardley)

May I thank my right hon. Friend for the forthcoming and welcome statement that he has made and say that I wholly disagree with the comments of the hon. Member for Kingston upon Hull, East (Mr. Prescott) about it? It was as welcome as my right hon. Friend's recent evidence to the Select Committee on Transport. I appreciate that British Rail will invest an additional 75 per cent. in the next three years. Will my right hon. Friend now look sympathetically and benevolently at the request to approve the electrification of the cross-city line, which I had the honour to open when I was chairman of transport in the west midlands in about 1979? At that time the stock was 20 years old and it is now that much older. May I hope that the long-awaited plans for British Rail which have at last arrived on my right hon. Friend's desk will meet with his approval, so that we can again surge ahead with this new method of motive power on that line?

Mr. Parkinson

thank my hon. Friend for his remarks. I hope that he noticed in yesterday's announcement that the spine road for Birmingham Heartlands was approved. I hope that we shall be notching up a second achievement for Birmingham in the near future when we announce our decision about electrification. Over the next three years £3–7 billion will be invested. British Rail's five-year plan is for a £5 billion investment in the next five years. These are massive sums. They disappoint the Opposition, but they will delight the travelling public.

Mr. Donald Anderson (Swansea, East)

Should not this statement have been made by, preferably, a Treasury Minister? May I suggest to the Minister that he travels by French Rail and sees an example of subsidy for public purposes, such as safety, the environment, getting rid of congestion and regional development? Does not the narrowness of the statement tell us about the narrowness of Thatcherism in the past decade?

Mr. Parkinson

No. The hon. Gentleman, who normally knows better, is once again simply measuring everything by the extent of the public service obligation. That is not the only measure of a Government's commitment to the railway system. If it is, I must point out that the Provincial network will receive £345 million at the end of this three-year period, which is no mean sum. The Government and the country recognise that certain rail lines cannot pay their way and need subsidy, but that is no excuse for those that can pay their way remaining subsidised.

Mr. Andrew Rowe (Mid-Kent)

Does my right hon. Friend accept that his announcemmnt will create enormous optimism and hope among the hard-pressed commuters of Kent? They will feel that they have received a Christmas present under the tree. However, they will have some doubts about whether the box has anything in it, because, first, British Rail plans to use two passenger lines for freight in this most congested area of the United Kingdom and, secondly, some construction work is thought to be required to build the Channel link through London. The assertion by a senior British Rail manager that British Rail hopes that it can do that by weekend working only has not struck complete confidence among my constituents.

Mr. Parkinson

It does not inspire me with confidence either. My hon. Friend has been the staunchest advocate of his constituents' case in resisting the proposals on the Channel tunnel rail link and I am sure that he will continue to be. Some of the alternative schemes offer a substantial threat to Kent, particularly the notion of doubling the number of lines so that freight can run parallel to the new passenger line. That would represent a major intrusion and I hope that my hon. Friend will think carefully about it as he continues to advocate it.

Mr. Andrew F. Bennett (Denton and Reddish)

Does the Secretary of State realise that his statement is wholly out of touch with reality for the commuters in my constituency and the rest of Greater Manchester who, for the past seven months, have waited regularly for trains that do not turn up, turn up late or turn up with insufficient carriages? The service has been so poor that the number of passengers travelling in Greater Manchester has decreased rapidly. What will the Government do to ensure that British Rail can provide the service that is essential if people in Greater Manchester are to be attracted from the roads to good-quality public transport? It is not being provided now.

Mr. Parkinson

There have been problems in Manchester and I understand that one of the reasons has been the failure of new rolling stock. Some people, including the hon. Gentleman, always insist on our buying British. British has not always been best for the rail system—[Interruption.] It is getting better. The hon. Gentleman will have noticed that the Government have announced a substantial grant towards Metrolink in Manchester and the provision of a £23 million proposed rail link to Manchester airport. Although there have been difficulties, I hope that the hon. Gentleman will realise that they are being tackled and that Manchester is getting its fair share of investment in the infrastructure.

Mr. Teddy Taylor (Southend, East)

While the success and improved efficiency of British Rail to which my right hon. Friend referred may have been happening, is my right hon. Friend aware that this morning I received a letter from Sir Robert Reid, chairman of British Rail, saying that the service from London to Southend has reached a wholly unacceptable level? Does my right hon. Friend agree that, in view of the serious problems in some areas and the utter misery of some commuters, there is a case for a trouble-shooting squad to look at special problems? Can he give some hope to my constituents—perhaps even the pledge of coming to visit Southend to see our transport himself?

Mr. Parkinson

I will be happy to come to Southend with my hon. Friend and see transport there for myself. I recognise that, after the north Kent line, the Southend line is probably the worst line left in England. We have announced a huge programme for north Kent and I am aware, because my predecessor was not uninterested in this subject, that Southend desperately needs the same treatment. I shall press British Rail to give it priority.

Mr. Peter L. Pike (Burnley)

Will the Secretary of State not realise that the proposals for a direct service from the regions to the links with the Channel tunnel, and the proposals for King's Cross are, at best, second best for the regions? The regions, and the north-west in particular, need direct connections, bypassing London with public investment, and we need improvements to the west coast line and the electrification of the Manchester to Blackpool and the 'Roses' lines, and we want them now.

Mr. Parkinson

I am afraid that the hon. Gentleman will be disappointed. Although there have been criticisms of the provision from the regions to the Channel tunnel, 3 million seats will be available from the regions through London to Paris and Brussels. That is a huge increase in the availability of transport to the continent from the regions. If there is a demand for more, the service can be increased. I do not believe that it is reasonable to say that provision for the regions is not adequate. It is a guesstimate, but it can be increased if it needs to be.

Mr. Christopher Gill (Ludlow)

My right hon. Friend spoke of his support for British Rail's plans to improve the service to its customers. I invite him to tell the House which other nationalised industry, past or present, has shown any particular expertise in caring for the needs of the customer?

Mr. Parkinson

I think that most people would agree that privatised companies offer a higher standard of service. I am afraid that it is a great disappointment to Opposition Members, but it is a simple fact that when it was nationalised, a tiny proportion of British Telecom's public boxes worked. Now, more than 98 per cent. are regularly available for use. My hon. Friend is right; it is more difficult for a nationalised industry to give service. Nevertheless, British Rail, under the chairmanship of Sir Robert, has made a major effort. There is an improvement, and we want to see that continue under the new chairman.

Several Hon. Members

rose—

Mr. Speaker

Order. There is great pressure on the next debate, and there is an opportunity to raise this matter in the debate on the Consolidated Fund, particularly for hon. Members who represent London constituencies. Therefore, I will allow three more questions from each side, and then I shall call the Front-Bench spokesmen.

Mr. David Hinchliffe (Wakefield)

Is the Secretary of State aware that one of the consequences of British Rail's improved efficiency, which he referred to in the statement, is that elderly ladies are being mugged because of the removal of staff from many railway stations? An example is Kirkgates, which is one of the two major mainline railway stations in my constituency; all the staff have been removed. As a direct consequence, passengers are afraid to use that station. Will the Secretary of State consider the issue, and press British Rail to improve the situation and make funding available so that all stations have some staffing, in the interests of passenger safety?

Mr. Parkinson

I will look into the situation at that station in Wakefield. As the hon. Member knows, although there are proposals to reduce staffing on stations, they are accompanied by a substantial increase in monitoring equipment.

Mr. Edward Leigh (Gainsborough and Horncastle)

My constituency enjoys the dubious distinction of having had more railway lines under threat of closure by British Rail last year than any other constituency. I was relieved that my right hon. Friends said in his letter to the chairman of British Rail that in certain cases improved productivity may produce better results than bus substitution. While my right hon. Friend cannot give a definite commitment on the fate of those lines, will he keep British Rail up to the mark, and ensure that there is adequate publicity for lines? In recent years, we have been struck by the extent to which rural lines are run for the benefit of producers and the rolling stock, rather than the customer.

Mr. Parkinson

In my letter I draw attention to the fact that the case for bus substitution, or for investment and improved efficiency on the railways, should be taken into account before arriving at a decision. It is also true that we are less enthusiastic about the possibilities for bus substitution than we were two or three years ago.

Mr. Roy Beggs (Antrim, East)

Does the Secretary of State accept that people in Northern Ireland would like to share the benefits that will arise from 1992 and the Channel tunnel? Does he agree that improved rail and passenger facilities at Stranraer, on the west coast of Scotland, would help the economy of the south-west of Scotland and of Northern Ireland? We could all benefit from improved rail facilities.

Mr. Parkinson

I think that I had better discuss with my right hon. Friend the Secretary of State for Northern Ireland whether we can find a way to give the access that the hon. Gentleman wants.

Mr. Graham Riddick (Colne Valley)

Is my right hon. Friend aware that the service provided by British Rail in my constituency is not what it might be, if the level of complaints is anything to go by? Does he agree that, as long as the railways are in the public sector, the levels of service and investment will always be inadequate? Does he agree that it is about time that we got that great industry where it belongs—in the private sector? We should break it up, along the lines of the pre-war railway companies, and get it away from the dead hand of state control.

Mr. Parkinson

I am sure that my hon. Friend speaks for an increasing number of people when he argues that privatisation could play a part in improving the performance of the railways. That is being considered as a separate matter.

Mr. Dennis Skinner (Bolsover)

Is it not the truth of the matter that the Secretary of State came to the House last week and provided more than £1,000 million in public money to the road lobby, including his former employer, Tarmac? This week, he had a chance to provide money for British railways and he has refused. The truth is that he and his Government are better characterised by selling second-hand car number plates than running a national public railway.

Mr. Parkinson

One can always tell when the hon. Gentleman is on weak ground—his vehemence exceeds his ignorance. In the three-year programme that we announced the other day, we plan to spend £5.7 billion on the national road programme. We plan to spend £6 billion on public transport, so the hon. Gentleman is, as usual, talking offensive nonsense.

Mr. Gerald Bowden (Dulwich)

When reappraising British Rail's objectives, and to optimise the opportunities that the Channel tunnel offers, will my right hon. Friend urge British Rail to reconsider its present plans, and the alternatives that are being discussed for a direct, fast and cost-effective link for passengers and freight from the whole of the United Kingdom to continental Europe?

Mr. Parkinson

As my hon. Friend knows, the range of possibilities were considered by British Rail before it took its decision to link up with Eurorail, pursue the line to Swanley and find an alternative route through to King's Cross and Waterloo. I have had a cursory look at some of the alternatives, and I am sure that my hon. Friend would be the first to admit that they are not without substantial problems. The plain fact is that British Rail feels that it must focus on coming forward with firm plans for its chosen routes, and it is concentrating on that.

Mr. Peter Snape (West Bromwich, East)

Will the £3.7 billion forecast spending on British Rail have to be funded entirely from British Rail's own resources, or will the Secretary of State seek additional assistance from the Treasury for that long-awaited and much-needed investment? Has he discussed the plans with his right hon. Friend the Secretary of State for the Environment? What will be the impact on passenger carryings of increasing fares, in real terms, in Network SouthEast? Does the Secretary of State consider that it makes sense, environmentally, to transfer passengers from an overcrowded railway system to an already congested road system and does he agree that that will be the impact of his proposals? Does he agree that bulk freight's rate of return on assets is to be raised from 2.7 to 8 per cent.? Will that not reduce even further rail's share of the freight market, and lead to more heavy goods vehicles on Britain's already congested roads?

May I ask the Secretary of State about passenger transport executives, which he has not so far mentioned? [HON. MEMBERS: "No—too long."] Conservative Members should listen as their seats are at risk as a direct result of these plans. Does the Secretary of State intend that ratepayers in Birmingham, Manchester, Merseyside and Tyne and Wear, for example, must meet the full cost of rail services in and around those cities? What is the likely impact on the environment of such proposals?

The Secretary of State has had a fairly unenthusiastic response from his Back Benchers today because, in their hearts, they know that he is on a kamikaze mission, putting up rail fares in the south, and they are the accompanying passengers, whether willing or not.

Mr. Parkinson

I congratulate the hon. Member on taking about one third of the time of his leader and on being about twice as effective. Two thirds of these funds will come from the external financing limit, which is entirely guaranteed by the Government. The hon. Gentleman keeps predicting that, fares increases will drive people off the railways, but the evidence in Network SouthEast is that, as the subsidy has gone down, the number of passengers has gone up. The subsidy has fallen and there has been about a 25 per cent. increase in the number of passengers. To a slightly lesser extent, the same movement is mirrored in the Provincial system.

The Government and British Rail are following a Monopolies and Mergers Commission finding that too little of the true charge was being passed to the passenger transport executives and that the matter should be reconsidered. We, the taxpayers, are still paying an overwhelming proportion of the costs of Provincial. About 65 per cent. of the costs of Provincial are met by the taxpayer, and about one third is met by the customer.

We believe that there are substantial possibilities for attracting freight to the network. We believe that an increased return can come from a growth in traffic. That is why we are investing to ensure that that becomes possible.

Following is the letter: Dear Bob,

New objectives for British Rail Your current objectives were set by the Government in October 1986 and cover the period up to the end of March 1990. They built on the success of the British Railways Board in meeting the objectives set in October 1983 on your appointment as Chairman. I am now writing to set out the Board's objectives for a third 3-year period from April 1990 to March 1993. These objectives will supersede the current objectives from next April. They supplement the statutory and financial duties of the Board and cover safety, quality and finance. They are aimed at producing a safe, efficient and high quality railway which is responsive to the needs of its customers. Your progress over the last six years shows that a growing investment programme can go hand in hand with lower subsidies. Investment has broadly doubled in real terms since 1983 and is planned to increase further by some 75 per cent. over the next 3 years. InterCity has exceeded the targets set for it in 1986 by eliminating its losses and earning a positive rate of return. Excellent progress is being made with the electrification of the East Coast Main Line. Railfreight is being re-shaped into a business better able to respond to the changing needs of its customers, and is investing to improve the quality and reliability of its services. Parcels is undergoing major restructuring to meet the challenges it faces in a very competitive market. Network SouthEast is now beginning to keep pace with the growth in traffic. The Provincial Sector has improved efficiency and covers a higher proportion of its costs from revenue. The grant target for NSE and Provincial was achieved one year early. The grant that is needed is now nearly 60 per cent. lower in real terms than in 1983. The objectives for the next 3 years need to consolidate and build on these achievements. You and I have agreed that we want to see further progress on safety, on quality (particularly punctuality, reliability and overcrowding) and on productivity.

Safety Under the Transport Act 1962 it is the Board's duty to have regard to efficiency, economy and safety of operation. Providing a very high standard of safety must remain the Board's top priority. I know you are committed to acting positively and quickly on the report of Sir Anthony Hidden's Inquiry into the tragic accident near Clapham Junction in December 1988. We have agreed that the Board should complete, in conjunction with the Department, a review of its investment appraisal and funding arrangements for safety-related projects as soon as possible. Non-commercial projects intended specifically to improve safety are not expected to earn a direct financial return. I have made clear that in implementing the Hidden Report recommendations, finance will not be an impediment. The financial targets set out below take account of the additional safety expenditure you have already incorporated in your plans in anticipation of the Hidden Report. I want you to let me know within the next 2 months what further measures you judge necessary and what additional expenditure may be involved, so that appropriate provision can be made. You have also begun work in consultation with the Railway Industry Advisory Committee of the Health and Safety Executive and with the Railway Inspectorate on a Safety Plan. I would like this Plan to be submitted to me by October 1990. The Board should update this annually and report on progress.

The Asset Base We have agreed that the asset base of all sectors should be revised to include infrastructure (stations, track and signalling). This will require further work by the Board. When that work is complete, all investment will be capitalised. Meanwhile I have taken account of preliminary estimates of the full asset base in settling the equivalent CCA rate of return targets (before interest) for the commercial sectors given below.

The Commercial Businesses InterCity earned current cost profits of £26 million in 1988–89 equivalent to some 1.3 per cent. on estimated asset values. I want to see further improvement towards the full 8 per cent. return needed on assets. As a further step towards this aim, I am setting an objective for InterCity to earn a profit of £95 million in 1992–93, broadly equivalent to 43/4 per cent. on estimated asset values. I want you to continue to report achievement on punctuality. Railfreight is facing keen competition. A return of 8 per cent. is the right objective for this commercial business to earn and should be the basis for decisions on new investment. I recognise however that some parts of the business will not be able to achieve a full 8 per cent. return over the next three years. I am therefore setting an overall objective for Railfreight of earning a profit of £50 million in 1992–93, broadly equivalent to 4.5 per cent. on estimated asset values. I welcome your intention to prepare plans for bulk freight to earn at least an overall 8 per cent. return on its assets by 1994–95. I shall want to see those plans by July 1990. I also look forward to seeing by then the Board's plans to improve the financial performance of Railfreight Distribution, to maximise the involvement of the private sector, and to reshape the business to seize the new opportunities presented by the Channel Tunnel. Parcels should continue to maximise returns from its increasingly successful Red Star business, and I welcome the £9 million profit target which the Board have set for the sector as a whole.

Channel Tunnel Services The Board should prepare and undertake investment to make maximum use of the commercial opportunities presented by the opening of the Channel Tunnel in 1993. I welcome your plans for a Joint Venture with Eurorail.

Regional and Local Passenger Services Investment: The Government's response to the Transport Select Committee Report on the Financing of Rail Services (Third Report, Session 1986–87) clarified the criteria for investment in the regional and local passenger railways. I expect the Board to take full account of this in preparing investment plans and considering priorities. Both Network SouthEast and Provincial currently face growth in demand for their services. I expect the Board to increase services to meet this growth whenever the incremental investment can be shown to earn the required rate of return (currently 8 per cent.). Where exceptionally investment which increases the asset base cannot meet the 8 per cent. test, I shall want a cost benefit evaluation to be carried out in conjunction with the Department to enable me to decide whether capital grants would be justified on wider social and economic grounds (e.g. through the benefits of lower road congestion). Fares: Over the last few years, progress has been made in relating fares more closely to costs and improvements in service quality. I expect this process to continue, but I want the Board to do further market research on the relationship between price and quality. I shall be looking to the Board to do as much as possible to improve productivity and make the most efficient use of resources so as to minimise the direct pressures of costs on fares. I want the Board to report annually on unit cost trends so that I can see whether satisfactory progress is being made.

Network SouthEast On the Board's forecasts, continuing revenue growth and falling unit costs will enable Network SouthEast to break even by 1992–93. The large and growing investment programme will make a major contribution to this by enabling the Board to save energy and maintenance costs and by providing increased capacity and higher quality which lead to increases in revenue. The Board has already set an objective of reducing NSE's grant requirement to zero in 1992–93, which I welcome. I want the Board to prepare plans for NSE to achieve significant progress towards earning a commercial rate of return on its assets by 1995–96; I should like to see the Board's proposals by December 1990. Quality: My predecessor set new quality targets for NSE in June 1987 and, following the report of the Monopolies and Mergers Commission (MMC) into NSE services, he agreed with you that those targets should apply route by route. I want the Board to regard the targets as applying not only over the day as a whole but also to the morning and evening peaks (taken together) and to report on performance accordingly. You and I have now agreed that the overall punctuality target should be raised from 90 per cent. within 5 minutes to 92 per cent. by 1992. We have also agreed that there should be a separate target of 88 per cent. for the morning and evening peaks. You have agreed to arrange for me to be informed whether there are any routes and any time of day on which any of the quality standards will not be achieved by March 1993 and when the Board expects to achieve them. The present quality standards are based on market research carried out by the Board into the importance attached by the travelling public to different aspects of rail travel. Incomes and expectations are growing in the South East arid I want the Board to complete its programme of market research to see whether changes in the quality targets would be justified taking account of passengers' willingness to pay for them. I shall want to consider in 1991 whether the quality targets should be changed in the light of this further work.

Provincial Over the last 6 years the Provincial sector has been able to reduce costs, increase traffic, improve quality and charge more for it. Revenue has therefore increased in real terms. Subsidy including PTE payments has fallen from 75 per cent. of costs in 1983 to 65 per cent. in 1988–89. On the Board's own forecasts it should fall further to 57 per cent. by 1992–93. It will still be much higher on some service groups and it is clear that very large subsidies will be needed for the foreseeable future. I have described above the Government's general policies on investment and fares for Provincial and NSE. What follows is of specific application to Provincial. You have now carried out a review of the scope for bus substitution on certain rural lines. Where bus substitution can provide customers with an acceptable alternative and is a more cost-effective solution, the Board will want to bring forward proposals. In some areas, measures to improve productivity and reduce costs may produce a better financial result than bus substitution. The Board will want to take this into account in drawing up proposals for these lines. In preparing its full response to the MMC report on Provincial the Board will want to look closely at marketing and fares. Rail often provides a better service than buses running over parallel routes and it is right that BR should charge for the higher quality. There are also opportunities to exploit the attractions of scenic lines to tourists. I want BR to co-operate with others, including the private sector, to ensure that net revenue is maximised for these lines. The Board has already set an objective of reducing the Provincial sector's grant requirement to £345 million by

Quality of service objectives Annex A
InterCity Network SouthEast Provincial
Punctuality 90 per cent, right time and up to 10 minutes late. 92 per cent, right time and up to 5 minutes late all day. Express Longer Rural 90 per cent, right time and up to 10 minutes late.
88 per cent. in morning evening peaks. Urban Shorter Rural, 90 per cent, right time and up to 5 minutes late.
Reliability (Percentage of services to run) At least 99.5 per cent. At least 99 per cent. Express Longer Rural At least 99.5 per cent.
Urban Shorter Rural At least 99 per cent.
Train Enquiry Bureaux 95 per cent, of calls to be answered within 30 seconds.
Ticket Offices Maximum queuing time of 3 minutes off peak and 5 minutes peak
Carriage Cleaning
Interior daily clean 100 per cent. 100 percent. 100 per cent.
Exterior wash 95 per cent, (daily) 100 per cent, (daily) 100 per cent, (every 2 days).
Heavy interior clean (per 28 days) 95 per cent. 100 per cent. —

1992–93, which I welcome. I would like you to examine ways of achieving further improvement of the order of £20 million by that year.

Quality My predecessor set quality standards for Provincial services supported by the PSO on 28 July this year. Annex A summarises the quality standards for all the passenger businesses.

PTE Services The MMC report recommended that the Board should discuss with the PTEs and the DTp the charging to the PTEs of the full measure of costs attributable to the operation of PTE services. We have agreed that BR should bring forward proposals for carrying forward this recommendation, in consultation with my officials and the PTEs. When the report has been considered it may be necessary to adjust the grant target.

Private Sector Involvement I welcome the progress which the Board has made in broadening the participation of the private sector in the provision of services to the railway. The sales of BREL and Travellers Fare have been successfully completed, and the private sector is increasingly involved in providing ancillary services. I would like the Board to increase further the contribution of the private sector where this enables more cost-effective and competitive services to be provided, and to continue to report progress each year.

Public Accountability I would like the Board to report performance and progress in achieving these objectives in its Report and Accounts each year. This should include:

  1. (a) the quality of service achieved against the agreed standards;
  2. (b) progress towards the grant targets for NSE and Provincial;
  3. (c) the current cost operating profit before interest and CCA rate of return on assets for InterCity, Railfreight (both overall and separately for bulk freight and Railfreight Distribution) and Parcels;
  4. (d) progress on increasing the contribution of the private sector.

Yours ever, Cecil

Cecil Parkinson

InterCity Network SouthEast Provincial
Load Factors — No more than 135 per cent, for sliding door stock or 110 per cent, for slam door stock. No standing over 20 minutes except by choice. Express Longer Rural
—
Urban Shorter Rural
No more than 135 per cent, for sliding door or 110 per cent, for slam door stock. No standing over 20 minutes except by choice.