HC Deb 11 February 1991 vol 185 cc600-1
5. Sir Anthony Durant

To ask the Secretary of State for Transport what is his current policy towards financial support for Network SouthEast.

Mr. Freeman

Our policy is that Network SouthEast should reduce its reliance on subsidy, which is equivalent to about 10 per cent. of operating costs, in order to release more funds for investment in a higher quality service.

Sir Anthony Durant

When my hon. Friend next meets the chairman of British Rail, will he discuss subsidy with him again, with a view to slowing down the rate of cut in that subsidy, bearing in mind the fall in passenger traffic and the terrible effects of the weather, about which we have already heard? I am particularly concerned about the Oxford line.

Mr. Freeman

Breaking even in 1992–93 is a target, not an obligation. My right hon. and learned Friend the Secretary of State will be reviewing, with British Rail, the achievability of that target in due course. We have already realised the need for higher safety expenditure and the downturn in revenue in the off peak and have increased the public service obligation by £100 million this year. We shall continue to be realistic and pragmatic.

Mr. Corbyn

Will the Minister explain why this arbitrary target has been introduced? Has not the time come to withdraw this ridiculous target and instead to give greater public support to the railway industry, particularly to investment in Network SouthEast, because lack of investment is leading to a reduction in maintenance costs, which has the knock-on effect of reducing the safety margins under which the railways operate? Does the Minister accept that he is responsible for the investment problems of the railways and therefore for the lack of maintenance that goes with it?

Mr. Freeman

No, I do not accept that. First of all, it was not an arbitrary target when it was set in December 1989 by the previous Secretary of State. It reflected a gradual 10-year progress towards recovery of a higher proportion of operating expenses from the commuting passenger. The passenger now pays 90 per cent. of the operating costs on Network SouthEast, so I should have thought that moving to paying 100 per cent. would not involve an issue of principle. My right hon. and learned Friend the Secretary of State will carefully consider any problems in achieving that which British Rail puts to him. Investment is at a record level. Network SouthEast will have £1.3 billion in the next three years, including the delivery of 700 new coaches. That is a creditable performance.

Mr. Adley

Is my hon. Friend aware that while some may consider his change of emphasis from target to obligation to be a retreat, for me it is an advance towards my right hon. Friend the Prime Minister's recently announced intention of improving public services? Will my hon. Friend confirm that he does not regard subsidy as an alternative to investment? Is he aware that West Germany spends three times as much annually on investment than is spent here and six times as much on subsidy? Is he prepared to say, albeit quietly so that not many of us can hear, that the reduction in the public service obligation grant concomitant with the decline in services must be related?

Mr. Freeman

If my hon. Friend, with his long experience of railways, goes back 10 years he will recall that at the beginning of the 1980s the PSO grant was twice the present level—it was then over £1 billion and it is now £600 million—and investment was half the current level. There is a relationship, when we consider the public purse, between that which can be afforded by way of revenue subsidy and that which can be afforded by way of investment. The Government accept that for the foreseeable future regional railways will have to be subsidised. They knit together the fabric of rural Britain. I have already commented in great detail on Network SouthEast in response to an earlier question.