§ Mr. SpeakerI have selected the amendment in the name of the Leader of the Opposition.
§ The Minister for Public Transport (Mr. Roger Freeman)I beg to move,
That this House takes note of European Community Document No. 4478/90, relating to Community railway policy; and broadly welcomes proposals aimed at improving the efficiency and competitiveness of the European railways.The proposals on Community railway policy set out in the Commission documents which the House has before it are, in the Government's view, a useful and important contribution to preparing for and exploiting the benefits of the single market.The heart of the Commission's approach is that the European railways need to become more competitive. Indeed, the whole approach of the Commission is against encouraging any nation to continue to subsidise railways or, as in the past in some countries, to have railways which are production-led and do not cater sensitively and flexibly for the interests of their consumers, the passengers. The Commission wants commercial and autonomous organisations which are sensitive to the needs of the customer. The Government welcome the approach of the Commission in that regard.
That approach is in marked contrast to that of Her Majesty's Opposition in the past. Undoubtedly, we shall hear from the Opposition spokesman whether the Opposition welcome the refreshing approach of the Commission in favour of a profitable European railway industry. That is the approach that the Government have pursued. We now have a railway that is more vigorous, profitable and responsive than when the Opposition party was in office. The changes that have occurred in our railway system in the 10 years of this Government are a great credit to British Rail and to this Administration, who supported British Rail in some of their sensible investment decisions and provided the cash from the taxpayers for those ends.
The Government want to see a thriving United Kingdom and European railway system. We want to ensure that that is done fairly, sensibly and profitably. As my right hon. Friend the Prime Minister said earlier in the House today, we believe that there should be no subsidy to international traffic, passenger traffic or freight traffic. That is enshrined in the Channel Tunnel Act 1987. The Government have no intention of changing that principle or repealing section 42 of the Act—unlike the Opposition, who voted for the Channel Tunnel Bill but have now changed their tune and want section 42 repealed to permit subsidy of international traffic.
§ Mr. David Shaw (Dover)Can my hon. Friend confirm that, under this Government, the ferries of Dover are safe from unfair, subsidised competition and that, if a Labour Government were elected, public money would go into unfair competition that would do down the ferry industry of Dover and make many ferry workers unemployed?
§ Mr. FreemanI am grateful to my hon. Friend. One can extend the argument. Why should subsidised international freight and passenger traffic have to compete with the unsubsidised air and ferry traffic between the United Kingdom and the continent? I agree with my hon. Friend.
§ Mr. Robert Adley (Christchurch)Can my hon. Friend confirm that, when my right hon. Friend the Prime Minister this afternoon used the word "international" when referring to the provision of public funds for rail links, she chose her word carefully? Can he confirm that there is nothing whatever in what she said that would preclude British Rail from approaching the Government and the Government acceding to its request to provide assistance for railway investment to cope with the inevitable congestion on the existing railway system caused by channel tunnel traffic?
§ Mr. FreemanI can confirm my hon. Friend's interpretation of what my right hon. Friend the Prime Minister said. There are three principles involved in my hon. Friend's question. First, the Government have ensured that there are substantial public funds for sensible British Rail investments. Some £3.7 billion has been earmarked by British Rail for investment over the next three years. As the hon. Member for Kingston upon Hull, East (Mr. Prescott) will know, that will in part be paid for by the taxpayers. The second principle is that there is an understanding of and recognition by the Government that in the case of domestic services, there may be a case for grant aid, as is the case in respect of Network SouthEast and provincial railways. That is perfectly consistent with the principle of no subsidy to international traffic.
The third principle is that British Rail should be encouraged to exploit the environmental advantages of rail traffic in terms of lack of congestion, speed, and convenience. Those are great advantages for any rail network, and British Rail, like other European railways, should be encouraged to exploit them.
The fourth principle is that we believe strongly that the customer should pay his or her fair share of the cost of railway journeys. It is understood that, particularly in the south-east, heavy expenses are incurred in providing a peak-hour service. That involves for Network SouthEast what amounts to running an unprofitable service. Therefore, the Government recognise, through the public service obligation grant, the need to contribute to British Rail in providing those services.
§ Mrs. Gwyneth Dunwoody (Crewe and Nantwich)Will the Minister explain therefore why Network SouthEast will have much less money next year than this year, in terms of its PSO grant?
§ Mr. FreemanThe reason is that Network SouthEast is running its services better and more efficiently, so the public service obligation grant can be a little less next year than it has been in the past. That is to the credit of British Rail. As the hon. Lady knows, British Rail has great difficulty in providing services in the south-east, but those offered to the commuter this year will be better than last year. Because of the £3.7 billion British Rail investment programme, a portion of which will go to Network SouthEast, services will improve further over the next two to three years.
§ Mr. Nicholas Winterton (Macclesfield)As to clause 42 of the Channel Tunnel Act 1987, can my hon. Friend tell the House by what means the massive infrastructure improvements in the Pas de Calais are being carried out? A major country is undertaking those improvements in competition with us. As my hon. Friend knows, I am 237 deeply concerned that the North-West region should be able to take advantage of the Channel Tunnel Bill, which I fully supported when it went through this House.
§ Mr. FreemanI am not responsible either for the French Government or for SNCF. However, I can tell my hon. Friend that the Government recognise that the north-east and the north-west, and all regions outside London, must benefit from the opening of the channel tunnel. That is why British Rail will, by the opening of the tunnel in 1993, have invested more than £1 billion in making sure that both freight and passenger services in all regions of the country can capitalise on the opening of the tunnel.
§ Mr. Martin Redmond (Don Valley)Will the Minister ensure that British Rail finalises its decisions not next week but this week, so that local authorities having an interest can clearly plan for the future? British Rail and the Government have been waffling about the benefits that will go north, but will the Minister ensure that speedy decisions are made, so that any local authorities that are affected can make good plans for the future?
§ Mr. FreemanI hope that I can give the hon. Gentleman that assurance. We expect an announcement shortly—I hope in the next week or so—on the first freight terminal in the north. British Rail will make announcements before the end of this year on all the regional freight terminals that will be available to capitalise on the channel tunnel.
The Commission proposals before the House tonight fall into three parts, and I shall deal briefly with each. First, the Commission recognises that certain services may need specific grant assistance, especially urban commuter services. That is largely due to the problem of peaking, and the need for rolling stock, which cannot be used at an even load throughout the day. The Commission wants that grant assistance to be properly indentified and paid for by the Government or local authorities, possibly as a contract, as opposed to the grant procedure that we have at present. That is simply a difference between revenue and expenses. We will consider that proposal. It is certainly an interesting idea. It will not affect the amount of financial assistance that the taxpayer has to provide, but it is an interesting idea for the form that the assistance takes.
§ Sir David Mitchell (Hampshire, North-West)Does my hon. Friend agree that grants of that sort ought not to be designed to benefit railway users—who in many cases, in the commuter belts, are some of the most well-off users—but should be designed to help reduce congestion on the roads for others who do not use the railways and are much affected by the congestion that they would otherwise have to face?
§ Mr. FreemanI am grateful to my hon. Friend. He is my predecessor bar one and was a distinguished Minister in the Department of Transport. In evaluating British Rail's investment proposals, we recognise implicitly the benefits of relieving congestion. My hon. Friend knows that, in certain investment appraisals undertaken by British Rail and reviewed by ourselves, we take that into account. He is right to draw attention to the advantages of rail as opposed to road transport, and of bringing commuters on to the new light rail schemes.
238 Recently, I inaugurated the Manchester metrolink scheme, which will bring great advantage to the citizens of Manchester. I hope that that will be a means of avoiding having to bring cars into the centre of our big cities.
The second proposal from the Commission argues for separating the infrastructure, and by definition one supposes its financing, from competing railway operations, which the Commission says should be run on a profitable basis. Presumably the railway operations would pay, through some form of leasing or franchising arrangements, for the use of the infrastructure.
The Government are not convinced by those arguments. It is an interesting approach, and we agree with the Commission that there should be transparency—the true costs of the infrastructure, track, signalling and stations, should be fairly allocated to the different railway business sectors which operate over the track. That is the path down which British Rail is going: the allocation of infrastructure costs to each of the five separate business sections of British Rail. It is interesting to note from recent reorganisations at SNCF that it appears to be heading down the same route.
§ Mr. Peter Fry (Wellingborough)Does my hon. Friend agree that the proposal by the Commission would provide an answer to those who often claim that road transport runs on an environment which is paid for by the taxpayer, whereas the railways have to run on tracks that they have paid for. The removal of that sort of argument would ensure that there was fair competition between rail and road.
§ Mr. FreemanI understand my hon. Friend's point. I am not convinced at the moment that we need to separate the finances of the infrastructure from railway operations to achieve what my hon. Friend is seeking: some recognition in investment appraisals of the benefits of relieving congestion and the related social benefits. My hon. Friend and I are at one in seeking to achieve those benefits. I do not believe that the Commission's proposals are necessarily the only solution.
Thirdly, as regards combined transport—when loads are carried by road and then transported for part of the journey by rail—the Commission has made certain recommendations about reduction or reimbursement of vehicle taxes. We do not accept those, and in any case, that is a matter for my right hon. Friend the Chancellor of the Exchequer and not for Transport Ministers. We do not accept its arguments. The House has the proposals. Our reaction is set out in the explanatory memorandum that we have provided.
The draft Council directive on the development of the Community railways and the draft Council regulation amending regulation No.1/91/69, which established the public services obligation regime, set out the proposed organisational and other objectives to which I have referred. These proposals together represent the latest thinking of the Commission and supersede earlier proposals—in particular, the contents of departmental documents Nos. 4901/80, 4351/84 and 7343/85.
Discussions within the Council on the two proposed Council directives and the proposed Council regulation have so far been limited. Therefore, it is too early to give the House an idea of how the discussions are likely to 239 proceed and when they are likely to be concluded. The Government hope that it will be possible to make reasonable progress on these important matters.
§ Mr. Roger Moate (Faversham)Is it not the case that a number of the proposals in the draft directive have already been rejected by a number of the railway undertakings on the Continent and are therefore likely to be opposed by a number of member Governments? How much importance should be attached to the draft directive? Is it likely to be given a fair wind and to form the basis of serious intergovernmental discussions? If so, when may it emerge as a directive?
§ Mr. FreemanMy hon. Friend anticipates the last of the Commission's recommendations dealing with the high-speed rail network. I anticipate that it may occupy the House's attention first and foremost. In December 1989 the Council of Transport Ministers invited the Commission to consider the priorities for developing a European high-speed rail network. I expect that report, from officials of the various countries involved, to be completed by the end of the year. It is important that it should be received in good time. I have already referred to the Government's response to the three previous proposals. A Community response to the other three is likely to take longer than the time scale for considering the high-speed rail network.
We want high-speed rail network systems to be developed, but they must be developed on a sensible basis. We want such networks to permit the through running of trains. The existing tracks for TGV trains are not compatible with the TGV Atlantique trains. The latter cannot run on the track currently laid to Lyons. When we refer to ensuring that high-speed trains can run on the whole European network, we must remember that the French already have a problem with running those two types of train.
The House ought to give credit for the fact that British Rail operates more services at 100 mph and above than any other continental country except France. [Laughter.] The hon. Member for West Bromwich, East (Mr. Snape) may laugh, but he should not run down British Rail's services. I shall deal with the geographic and demographic advantages that the French enjoy in planning their high-speed rail networks, but British Rail operates more services at these very high speeds than any other continental railway except SNCF.
High-speed train services in this country are excellent. Recently I had the opportunity to inaugurate the electrified line between London and Leeds. I have ridden on the track. That new service, using class 91 locos, will benefit many of my hon. Friends who use the east coast line. It is an excellent service. It has cost the taxpayer £450 million. In due course, it will be extended to Edinburgh. The French have made excellent progress. We give credit where it is due. Their high-speed trains are suitable for their terrain and demography. The French do not have the problem of London as a capital city, where tunnelling under part of the capital is inevitable for the construction of new rail links.
Those on the Opposition Front Bench probably have not appreciated that the international high-speed services operating through the tunnel after 1993 from Manchester, Edinburgh and Glasgow will be able to travel as far as 240 Paris, but there passengers will have to change. The French do not provide through services for British passengers beyond Paris.
In debates about high-speed rail links, there is a danger of forgetting the importance of making sure that we improve our domestic services, particularly commuter services. My hon. Friends who represent north Kent constituencies are rightly concerned—
§ Mr. Ian Bruce (Dorset, South)rose—
§ Mr. FreemanI shall finish my point; then I shall happily give way, first to the hon. Gentleman and then to my hon. Friend the Member for Dorset, South (Mr. Bruce).
I recognise the problems faced by my hon. Friends who represent constituencies in Kent, particularly with the north Kent line. I have visited London Bridge station and seen for myself the rolling stock, which is some 30 years old, and the overcrowding on those trains, but I can tell my hon. Friends that relief is at hand. Part of British Rail's £3.7 billion investment plan over the next three years is allocated to improving the quality of services on the north Kent line. That involves not only new rolling stock, which will begin to appear next October or November, but also the lengthening of the station platforms so that larger train capacity will be able to run on those lines.
§ Mr. SnapeCan I take the Minister back to Paris, away from the realms of fantasy in which he is now becoming involved? The French do not want to take through passengers through Paris; they want to take them round Paris. That is exactly what the Opposition want to do with through passengers travelling through London.
§ Mr. FreemanI repeat the assertion that I made earlier. Passengers from Manchester, Edinburgh and Glasgow travelling through the tunnel after 1993 will have to change in Paris if they want to travel further on the French railway system.
Finally, I turn to the three points of misrepresentation and misunderstanding by Opposition Front-Bench spokesmen.
§ Mr. Bowen Wells (Hertford and Stortford)How will the subsidies to the railway system in France, including the subsidies that undoubtedly will be necessary for the high-speed train, be shown and reflected in fares in France and Germany, so that there is a level playing field in terms of competition between the European countries? Flow will that be demonstrated in the prices?
§ Mr. FreemanI am not responsible for the way in which the French and Germans run their railway systems. However, I draw my right hon. Friend's attention to the document before the House, containing the recommendations of the Commission, which state that each of the European nations' railway companies should be profitable, independent and autonomous. We accept those principles, as we hope our European partners do.
§ Mr. Ian BruceWill my hon. Friend confirm that, in many continental countries, the use of a high-speed link is regulated by a higher fare for that service? In other words, they use the market to determine whether people are willing to pay more money to use that service. In my constituency, British Rail abandoned and ripped up a 241 track between Wareham and Swanage, having decided that it was uneconomic, and a group of enthusiasts are now relaying that track. Instead of using it for a fun railway, they are now demonstrating that people would like to use that line again. Private enterprise and the market are showing that railways can be built at an economic price. Surely that is what the Government are saying to those in Kent who oppose the high-speed link.
§ Mr. FreemanI am grateful to my hon. Friend for his observations.
At least three points of misunderstanding have been expressed by the Opposition about international rail link services. First, there seems to be an assumption—certainly by the media, and perhaps also on the Opposition Front Bench—that we are unprepared for the opening of the channel tunnel in 1993. British Rail has spent £1 billion on railway infrastructure to ensure that we have passenger and freight services to exploit the benefits of the channel tunnel in 1993. Coupled with that, by 1993, £600 million will have been spent on our road systems. Those sums are significant, and they show that we are prepared for the opening of the channel tunnel.
The traffic forecasts show that, by the turn of the century, extra capacity may be needed not only to carry international traffic through the tunnel but to provide for commuter services. I am well aware of those forecasts, as are my hon. Friends. As for a high-speed rail link between Folkestone and London, at the turn of the century—not 1993—proposals have been put to us and a statement will be made shortly. The business aspects must stand up in terms of international traffic and be viable, but we understand that, as regards domestic Kent commuters, different financing principles will apply.
§ Mr. Andrew Rowe (Mid-Kent)Will my hon. Friend confirm British Rail's present assessment that the traffic carried on its commuter lines is at a level that would make the provision of extra capacity unnecessary? Would my hon. Friend like to consider whether changes in working patterns, because of the massive increase in the use of fax, computer networks and so on, may throw out the traffic forecasts, and whether this expensive project may be unnecessary?
§ Mr. FreemanThose who have made traffic forecasts would not share my hon. Friend's judgment. The forecasts which the Department has seen and which were made by a number of promoters of alternative links, and British Rail's figures, show that, perhaps by the turn of the century or a bit later, depending on the forecast made, extra capacity will be needed. That will mean not just using the infrastructure better but having additional lines.
The second misunderstanding has been expressed by the hon. Member for Kingston upon Hull, East. It has been said that Government money is not involved in either the preparations for 1993 or thereafter. I have already made our position plain on section 42 of the Channel Tunnel Act, but it is important to delve a little deeper into the Opposition's claim that private sector finance is available in great quantities and on competitive terms to help finance—
§ Mr. John Prescott (Kingston upon Hull, East)Knocking on the door.
§ Mr. FreemanLet me just analyse the hon. Gentleman's statements a little further. He asserts that this money is not disguised gilt-edged borrowing—in other words, it is not guaranteed or procured by the Government, which would count as public sector borrowing. Any private sector finance brought in to finance any part of British Rail's plans, including a high-speed link, will cost more than gilt-edged borrowing. The private sector rightly demands a higher rate of return, because the private sector wishes to minimise or hedge its risk. Private sector finance is not an easy option.
The hon. Member for Kingston upon Hull, East wishes to bring in substantial private sector money to finance his grandiose plans for the railway networks of the next century. He will find that the private sector will demand far higher rates of return. By definition, public sector finance, which looks for an 8 per cent. real rate of return, will often be a better way of financing railway expenditure. I appreciate, of course, that the involvement of the private sector, in terms of engineering and route design, can sometimes bring economies and savings about which British Rail and the public sector have not thought. Private sector involvement can often be a better mechanism to ensure that money is not overspent and that projects are controlled properly.
§ Mrs. Edwina Currie (Derbyshire, South)Has my hon. Friend noticed something else odd about the private-public mix? The Opposition are keen to see public money go into British Rail as it is organised at present as a nationalised industry. As and when it is privatised, as most Conservative Members hope, if such a proposition were put to the House, the Opposition would be screaming blue murder and saying that we were subsidising our friends.
§ Mr. FreemanI am grateful to my hon. Friend. There is something inconsistent about the Opposition's argument that somehow private sector money is knocking on the door for railway investment. We have asked British Rail, together with its partner Eurorail, to consider carefully the financing of a high-speed rail link. That is private sector involvement. We are appraising that proposal at present to see whether it makes sense and whether it stacks up against the criteria that we have outlined.
§ Mr. Gerald Bowden (Dulwich)rose—
§ Mr. FreemanI think that the hon. Member for Kingston upon Hull, East will find that private sector money is not available in great quantities on the terms that his right hon. and learned Friend the shadow Chancellor of the Exchequer or his hon. Friend the shadow Chief Secretary to the Treasury is prepared to accept.
§ Mr. Teddy Taylor (Southend, East)Does the Minister accept that the only section of the directive that refers to Community funds being established to finance the network is the section on the high-speed trains? Will the Minister tell the House—this is terribly important—whether, if Community funds are established, as proposed in that section of the directive, that would be a way of getting round the financial restrictions of the Channel Tunnel Act 1987? Is he aware that hon. Members would feel cheated if, having passed a Bill that said that no public funds would be available, we found a Community fund 243 being established to finance gaps and to finance high-speed trains, which would simply be a way of tearing up all the assurances given in this place?
§ Mr. FreemanI am grateful to my hon. Friend, and I will finish on that point. My hon Friend has put his finger—
§ Mr. Gerald BowdenWill my hon. Friend give way?
§ Mr. FreemanI will give way before I conclude, because I am aware of my hon. Friend's close interest in the rail link.
My hon. Friend the Member for Southend, East (Mr. Taylor) has put his finger on the third and biggest misunderstanding and misrepresentation by the Opposition Front Bench. The hon. Member for Kingston upon Hull, East talks grandly about European Community financing. In a recent radio broadcast, he talked about the opposition's plans for a high-speed rail link from Folkestone to Scotland costing £15 billion, and he argued that a great proportion of that sum would come from a European infrastructure fund. That is pure fantasy.
§ Mr. PrescottThat is not true.
§ Mr. FreemanI have read the transcript of the broadcast.
That argument is wholly unrealistic, for two reasons. First, the European budget contains only 60 million ecu at present, which is £40 million. That is equivalent to the cost of buying two trains to run through the channel tunnel. Secondly, the hon. Member for Kingston upon Hull, East has argued that, somehow, our European partners can be conned into financing an enormous European infrastructure fund and that we should be net beneficiaries on a substantial scale. That is wholly unrealistic. Let him talk to the French and the Germans to try to persuade them to finance further British Rail investment. Before I conclude, I shall give way to my hon. Friend the Member for Dulwich (Mr. Bowden).
§ Mr. Gerald BowdenI am grateful to the Minister for giving way—especially so because I know that he will agree with me. No amount of public money can make a bad scheme a good scheme, and British Rail's present scheme is a bad scheme. Alternative schemes command commercial support.
§ Mr. BowdenI hear a sedentary voice say, "Spiv-led."
§ Mr. BowdenIf ever a scheme was developer-led, it is the British Rail King's Cross scheme, and I am grateful to my hon. Friend the Member for Christchurch (Mr. Adley) for making that point.
Let us look at the alternatives calmly: they are economically viable and they would go through a part of the country which is not made up of prime farm land or heritage landscape, which does not house communities, which is not inner London and which is not my constituency. I make no apology for defending my constituency, or, for that matter, for advancing a view that would benefit the whole of the United Kingdom. I urge my hon. Friend to consider the alternatives, which are economically viable and environmentally acceptable, which command widespread commercial support and which would be operationally effective.
§ Mr. FreemanI am grateful to my hon. Friend. I gave him assurances on those very points in the debate that he initiated a short time ago. He referred to King's Cross and the Stratford alternatives. Even the proponents of those alternatives believe and accept that the services must eventually run through to King's Cross and the other major London terminals, so I suggest that having King's Cross as a terminal centre—a second terminal—is not entirely inconsistent with those proposals.
I commend the motion to the House. We believe in a profitable railway system. We are pragmatic, sensible and realistic, and we will deliver the goods.