HC Deb 07 June 1991 vol 192 cc575-82

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Patnick.]

2.30 pm
Mr. Nigel Spearing (Newham, South)

Railways are in the news this week, but when I won this Adjournment debate a fortnight ago, the speech by the Secretary of State for Transport and the relevations of yesterday had not yet occurred. I wish to discuss something at least as fundamental—a major reorganisation of British Rail's management structure.

This reorganisation was referred to in The Observer on 19 May 1991 under the headline, "BR managers in open revolt." The article revealed for the first time a proposal by British Rail known as "organising for quality", which represents the dismemberment of the main line railway regions as we know them.

This has caused considerable anxiety both on the railways and among people who are not professional staff but who take an interest in these matters. The proposal implies the break-up of the functional and operational actuality of the main line regions of British Rail in favour of a complex structure based on perceived markets. That is confirmed by British Rail in an article in Railway Gazette International, saying: Businesses and profit centres based on markets will be responsible for managing nearly all British Rail assets including infrastructure, and for most operating and engineering staff; sharing of assets, including track, is covered by rental agreements. This is a fundamental change which means that all track, earthworks, civil engineering works, depots, motive-power depots, stations and, presumably, management and control of staff and their promotion will be divided up in a new way. I can see no other interpretation of the statement.

All this is very strange given the sort of railways that we have in Britain. Railways are run differently in the United States and elsewhere, but here, a railway is a complex organism bringing together a wide variety of skills, occupations and experience in order to provide a multiple service to public and industrial clients alike. Efficient operational control on a day-to-day, hour-to-hour, minute-to-minute basis over the whole route is a central task, around which a successful railway service inevitably revolves. This happens not to be a quotation—it is my summation of what I believe to be good railway practice, but it appears not to be the view of the chief executive of the British Rail Board. He continues in the same article: territories covered by the private railway companies that were nationalised in 1948, the Regions evolved into operational units running trains to the order of business sector managers with bottom line commercial responsibility. The logical process of serving distinct markets rather than arbitrary geographical regions is now to be completed by BR's Organising for Quality project. OfQ is far reaching, permeating every corner of the industry. Yet its goal is clear and simple: devolve responsibility and accountability to our component Business Units as far as possible within the constraints imposed by the BR Board's statutory duties", which are imposed by this House.

Hon. Members will have noted the expression, "arbitrary geographical regions". They are not arbitrary; they are largely the railways as built and subsequently modified with sensible adjustments and interpenetrating linkages. The document says that as far as possible it will be done within the legal constraints that are imposed, not within the constraints imposed by effective and efficient operation. That statement by the chief executive of the British Railways board is quite astonishing.

From the early 1980s, a matrix organisation has evolved that has not been entirely satisfactory, although it had some good points. The brand name "InterCity" led people to expect a certain standard that would be maintained throughout the journey, but that is not always the case. Brand names such as Network SouthEast were satisfactory as long as they did not mean going much further than painting all the coaches in the same colours. Mr. Pullman had that good idea more than a century ago.

As any accountant knows—and the Minister has practical experience of this—running a double set of internal accounts is not only necessary but helpful in improving efficiency. However, that should not be driven to the lengths to which British Rail appears to be driving it. The board says that public support has gone down from 37 to 17 per cent. of revenue in the past 10 years and that the fall is due to that fact. It says that conflicts and difficulties have arisen and that it will push matters to the other extreme. Instead of having regions based on operational actuality and the movement of passengers, it will create seven business units, each of which will be independent and will report loosely to central headquarters. All the assets, including signalling, will be transferred and the operative firms will buy and hire track between themselves.

We heard on Wednesday about this reorganisation by British Rail, and yesterday a map was placed in the Library. It shows the nine business units and about 26 or more profit centres on which the whole organisation will be based. Performance and, no doubt, promotion will be centred on those profit centres. The map is not much use because it shows only InterCity. Yesterday I showed it to an hon. Member who said, "Where is my station? Oh, my line is not even there."

The note on the map states that as well as the Network SouthEast divisions, of which there are nine, and the regions, it shows the whole route network over which InterCity will operate, including some track sections and facilities of other businesses. The note states that it is beyond the scope of the map to indicate such detail.

The fact that InterCity will own some lines and rent others is not a matter of detail. The seven organisations are InterCity, which will have some track of its own and hire the rest, and will have five profit centres; Regional Railways, which will consist of ScotRail, north-west region, north-east region, central region, south Wales and west region; Network SouthEast, which will have nine divisions each based upon—surprise, surprise—the old main lines out of London. There will be a European passenger division, Train Load Freight division with four profit centres, and Rail Freight Distribution, which we know better under its brand name of Freightliner, which will have two divisions, United Kingdom and Europe. There will also be a Telecommunications division and a Parcels division, the latter being jointly owned by all the operating divisions.

Southern region disappeared on 1 April and the other regions will disappear over the next year. That is the only part of the plan with which I can agree, because the three southern divisions of Network SouthEast follow the three divisions of the old southern region—eastern, central, and western—which is common sense. For the rest, there are all sorts of problems. What about Euston, St. Pancras and King's Cross? Who will own the track from those stations to the Network SouthEast boundary? If it is one or the other, what will happen when there are delays? Who will control the signal box? We shall be back to Victorian times, when there were shenanigans between the private railways companies, lawsuits and all sorts of things.

I shall give an example of the extent to which the process has already gone. About a year ago I was on a train that broke down at Ilford. It was an electric train of the sort that are always breaking down between Liverpool street and Norwich. In the siding was a diesel locomotive. I thought, "They will get that out." Railfreight was painted on it. I said to the railman, "Let's have that." He replied, "No, sir. We would have to hire that."

I understand that at Peterborough recently an InterCity train had to use a loop line which is already allocated to Network SouthEast. I understand—this is only reportage —that the signal man was told, "Make sure you book that because we can have 46 quid off InterCity for using the line." That may or may not be true, but the crews and the staff understand it to be the position. Nothing has been done to stop such problems arising.

I shall use Stratford to present a more practical example, though the Peterborough example was practical enough. I represent part of the London borough of Newham where the Great Eastern railway was born and where the hub of its operations was located. It is the densest suburban railway network north of the Thames. There is Liverpool Street, with its network of former Great Eastern lines, which is divided into two. There is Great Eastern and a new animal called West Anglia, which is the route to travel to Cambridge, and probably to King's Lynn. As I have said, the map is not especially clear. It is probable that Stratford will be operated by Network SouthEast, Eastern, which would make sense. However, it becomes Regional Railways beyond Manningtree.

InterCity trains will go through Stratford. Trainload Freight will be coming out of the Ford company on the Thames estuary, an area in which there is a great deal of industry. There will be oil trains, for example. So we have three firms competing for lines from Stratford already.

There is also Railfreight, which has a lot of trains coming out of Tilbury, and perhaps from the channel tunnel. That is firm No. 4. Surprise surprise, the north London link is run—quite sensibly up to a point—by Network SouthEast, north. Its trains run out from Willesden, but underneath. That is firm No. 5. We have plans for Crossrail. They are good plans, which the Metropolitan railway produced 100 years ago. That will come from Network SouthEast, Thames and Chiltern division. That is firm No. 6.

We must not forget the docklands light railway and the Central line of London Underground, which currently co-operates with British Rail.

We have six firms that are all competing, all of which have profit centres, I suppose, and controllers. Railway operation is not especially well known to the general public although it receives a lot of hobby interest. It is, however, familiar to many through the remarkable books of the Rev. Awdry. When chaos and human nature ran amuck, the fat controller sorted everything out. That illustrates precisely the importance of a centralised railway operation over a certain route and a certain network.

We do not have a fat controller at Stratford. Instead, we shall have six thin controllers, all be hungry for profits and promotion from the six businesses, each of which will be trying to find its little bit of track. I have no doubt that Network SouthEast, being in a strong position, will screw them all down hard. This is private enterprise. That is the way that we get efficiency, or do we?

I would not wish to joke about safety. As I have said, letters have been sent privately to the chairman of the British Railways Board and others which have found their way into The Observer. One of them was from Mr. Peter Rayner, who should not be confused with his namesake, David Rayner. In a 44-page memorandum Mr. Rayner says: The present organisation has evolved over 150 years, and it has its problems, but when safety is threatened the hierachy of Area Manager, Regional Operations Manager, Area Engineer, Regional Engineer and General Manager becomes a professional protective team that would pass any Safety Validation Panel, because traditional systems, knowledge and experience apply, and transcends business decision making. Irrespective of safety, a team effort is involved, giving the results of a team corporate railway.

Mr. Rayner went on: To destroy these traditional values for no obvious reason other than to make financial management easier is not a big enough prize. Again it appears to compromise the key role of running a safe railway and contradicts Hidden 50. That refers to the 50th recommendation of the Hidden report on the Clapham disaster, which reads: BR shall ensure that the organisational framework exists to prevent commercial considerations of a business-led railway from compromising safety. I have heard about some of the details of the new organisation and I know that there are audit boards, officers and surveillance. Safety will be affected if morale is lowered and team effort is destroyed because people believe that, rather than working together, they are allocated to an organisation which is in competition with another.

In the Secretary of State's recent statement, only one approach was new. The other matters to which he referred appear to be happening now to some degree. He made a remarkable statement about BR's monopoly. I thought that the problem with BR—and with most railways in western Europe—was that it has no monopoly—the Government have to do something about that—to solve our traffic problems and to deal with green issues. Is the Secretary of State suggesting that, in future, in addition to those nine businesses others will be using the 14 track authorities which also run trains through the 14 sub-businesses? I suspect that that is what he has in mind.

Why did it take so long to receive a summary of these proposals, which I asked for on 23 May—I received a courteous reply from the Minister—when it was written up by Mr. Welsby in the April issue of Railway Gazette International? I do not know whether that publication is read at the Department of Transport, but the information should not have taken so long to reach me.

Thirdly, were the far-reaching plans approved by the Government? Was BR asked to provide such an organisation or did it suggest it itself? Fourthly, bearing in mind the recommendation of the Hidden report, to which I have just referred, was the railway inspectorate asked to assess the safety implications of the new commercial structure for the railways? If so, what were they and will they be published? If not, will the Minister consider referring the structure to the inspectorate for its comments?

Railways were invented in this country. We have an emotional attachment to them and interest in them coupled with a fairly widespread ignorance of the complexities of their operation. Since the death of Mr. Huskisson when the Rocket was being tested, Parliament has had a responsibility for these matters. I know that the Minister shares my view and understands the relative importance of accounts and humanity. I hope that he will consider these matters with the utmost seriousness.

2.48 pm
The Minister for Public Transport (Mr. Roger Freeman)

The hon. Member for Newham, South (Mr. Spearing) is an expert on transportation matters, particularly railways. Not meaning to be critical of the hon. Gentleman, I must say that, when he speaks about the provision of transportation in London, I associate his thinking but not his age with Herbert Morrison. Right after the war—and indeed before the war—there was much to be said for corporate, public sector or state provision and planning of railway services. However, the Government believe strongly that times have changed.

There is a basic difference of approach and of philosophy between the Government and the hon. Member for Newham, South and many of his Opposition colleagues. That is reflected in the approach of some—but not all—members of British Rail management. That view is that the best services are provided as a result of judgments by rail professionals of what is needed for the corporate good. In other words, what is corporately good for British Rail must, by definition, be good for the passenger. I understand that approach: it has been deeply embedded in the attitudes of some parts of British Rail's management for many years.

The previous chairman, Sir Robert Reid—not to be confused with Bob Reid, the present chairman of British Rail—introduced almost nine years ago the first steps towards reorganising British Rail's internal management to encourage greater accountability and greater management orientation towards the market and what the passenger wanted. The organisation was intended to be more responsive to the passenger.

As the hon. Member for Newham, South is aware, that reorganisation in the 1980s resulted in a rather complex matrix. Those responsible for what were called the businesses sectors—InterCity, Network SouthEast, freight and what were known as provincial railways, but are now known as Regional Railways—were responsible for marketing and pricing decisions that were quite separate from the business management. There was a system of regional or area railway management and also functional management involving the engineers, accountants and others.

The Government have been kept fully informed of British Rail's plans, and we support their thrust. British Rail wants to simplify that matrix so that, within each business sector which the hon. Member for Newham, South identified, the financial responsibility for marketing, pricing and advertising is brought together with the operational responsibility and the safe provision of services.

It must be a tenet of every good and well-organised business that it should bring together responsibility for the provision of services with the responsibility for the interface with the passenger; that involves the quality of service, the pricing of that service and its frequency. That is what the reorganisation is all about.

The hon. Member for Newham, South asked me four main questions. I shall try to respond to them, but if I cannot cover all the points I will read the Official Report and write to him. He asked why it has taken so long to deposit the relevant papers in the Library. I can only apologise. There has been no attempt by the Government or by British Rail to be secretive about "Organising for Quality." A document in the Library now contains a summary of the proposal, and the hon. Gentleman has clearly read it. There has been no attempt to cast a veil of secrecy over the proposals. As the hon. Gentleman has admitted, the senior management of British Rail have explained the proposals patiently and clearly, and I welcome that.

The hon. Member also asked about access. My right hon. and learned Friend the Secretary of State for Transport re-emphasised a few days ago the Government's commitment to move as much freight as possible off the roads and on to rail. I know that the hon. Gentleman supports that notion, and he outlined changes in section 8 grant procedures to encourage that process.

On the hon. Gentleman's question about access to the existing rail network, my right hon. and learned Friend directed his remarks primarily to freight, and indicated the Government's desire to permit other companies to have a right of access to a British Rail track. Clearly, to provide a statutory right, we would require new legislation. There is already much voluntary co-operation between British Rail and private sector freight operators. We greatly welcome the joint venture with Charter Rail—the Foster-Yeoman haulage of aggregate from the west country to London, with British Rail drivers but privately owned wagons. We wish to encourage that.

My right hon. and learned Friend said that, in addition to the concept of the privatisation of British Rail, there was in parallel with that and related to it the right of other operators—properly regulated, of course—to use the rail track of British Rail, and indeed the rail track of others. Perhaps in future, others apart from a privatised British Rail will construct new rail track in this country—obviously, subject to appropriate regulation. There must be a mechanism by which railway operators can travel over that track.

The "Organising for Quality" initiative is rooted in the reforms that were begun nine years ago. The proposals simplify the management matrix. I strongly believe that that is a logical development of the earlier proposals. It was British Rail's idea. It was not suggested by the Government and not forced upon British Rail. The reorganisation, welcome though it is, is in no way consistent with ideas that the Government may or may not have for privatisation, and neither is it inconsistent. Our approach to privatisation is a wholly separate exercise and it is not directly related either to the earlier reforms or the later reforms.

The hon. Gentleman touched on safety, a crucial matter. British Rail believes that the reorganisation is consistent with Hidden recommendation No. 50. The hon. Gentleman and I may need to correspond on that matter further. There is in place a process of safety validation at each stage of the reorganisation to make sure that, before it is introduced, it is not only consistent with the high standards that British Rail has set itself for safety but in no way confounds or complicates those standards.

For each profit centre—each business sector—there is to be a safety manager. The hon. Gentleman must concede that in the present system—the reorganisation is not complete—safety responsibilities were placed not only on different levels of responsibility but on different individuals. That is not to say that British Rail is not a safe railway on which to travel. The reorganisation places specific responsibility upon a safety manager for a particular sector of operation.

The headquarters of British Rail will set national safety standards and ensure that they are in place throughout not only British Rail's operations but any private operation that is permitted voluntarily to run on British Rail track at the moment. As and when there is deregulation and access is permitted to other operators to run on railway track, those safety standards will apply to all.

The hon. Gentleman asked about the Government's position. I hope that I have explained that it is a British Rail plan. We welcome it, but the details are for British Rail. However, we support the thrust of the plan. The hon. Gentleman held up a newspaper article—I believe it was from The Guardian. I have travelled widely on British Rail in the 12 months in which I have been a Minister in the Department of Transport. I have found widespread support among the management to whom I have spoken for the thrust of the reforms. That is not to say that there is no dissent or disagreement. There is bound to be dissent and disagreement. It is an open organisation, and senior management, with the wisdom of their experience of 30 or 40 years, should be allowed to express their opinions. I find support and enthusiasm for a reform that gives management greater accountability. It will be a simple system.

The hon. Gentleman asked me about dual control of track running out of London termini. That will not happen. It is not envisaged that InterCity track and Network SouthEast track run in parallel but under different ownership and control. That would be a recipe for chaos.

We welcome the report. The hon. Gentleman and I share great admiration for what British Rail has done. It brought me back from my constituency in time for the debate—from Kettering to St. Pancras, on time. It was a safe, reliable, well-priced and excellent journey. The hon. Gentleman and I want that to apply to all railway journeys.

Question put and agreed to.

Adjourned accordingly at one minute to Three o'clock.