HC Deb 24 May 1993 vol 225 cc685-702

'.—(1) The Franchising Director may form companies for the purpose of facilitating the performance of any functions assigned or transferred to him under or by virtue of this Act.

(2) The Franchising Director may—

  1. (a) hold interests in any company which he forms as mentioned in subsection (1) above;
  2. (b) exercise rights conferred by the holding of interests in any such company; and
  3. (c) provide financial or other assistance to or in respect of any such company, including assistance by way of guarantee of its obligations.

(3) The Franchising Director may (whether by exercising his powers to make a transfer scheme or otherwise and whether or not for any consideration) acquire or dispose of any property, rights or liabilities which have been, or which are intended to be, designated as franchise assets by or under any franchise agreement.

(4) Any sums required by the Franchising Director for making payments in consequence of the exercise of any such powers as are mentioned in this section shall be paid by the Secretary of State out of money provided by Parliament.

(5) Any sums received by the Franchising Director in consequence of the exercise of any such powers as are mentioned in this section shall be paid into the Consolidated Fund.'.—[Mr. Freeman.]

Brought up, and read the First time.

Mr. Freeman

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this, it will be convenient to discuss at the same time the following: Government new clause 15—Performance of Franchising Director's duties to secure the provision of services etc.

Government new clause 21—Failure to secure subsequent franchise agreement.

Amendment (b) to new clause 21, leave out lines 9 to 11.

Government amendments Nos. 160, 113 to 117, 121, 119, 120, 118, 122, 125, 123, 124, 126, 130, 148, 178. 176,175, 71, 81 and 82.

Mr. Freeman

I will be brief but will explain the reasons for these amendments, which all relate to the franchising director's ability to form companies, to fulfil his duty—[.Interruption.]

Mr. Deputy Speaker

Order. I ask right hon. and hon. Members who are leaving the Chamber to do so quietly —and those remaining to give the Minister a fair hearing.

Mr. Freeman

I was saying, Mr. Deputy Speaker, that Government new clause 14 and the other new clauses grouped with it relate to the ability of the franchising director to form companies so that the franchising director is able to ensure the continuation of rail passenger services, in the event of the early termination of a franchise or when a subsequent franchise competition, after the first one, results in failure to let a new franchise.

The first time round, if there are no acceptable competing bids, British Rail continues to run the service. In the event of a closure having been proposed but not yet approved, the franchising director has to ensure the continuation of the services for the time being.

Government new clause 14 gives the franchising director powers to form and finance companies which will be wholly owned subsidiaries of the franchising director. The intention is that those companies should either themselves perform the service or contract with others to provide a rail passenger service. Government new clause 14 also gives powers to the franchising director to acquire and dispose of designated franchise assets. Our previous debate touched in part on the definition of designated franchise assets, including leased rolling stock.

Government new clause 15 enables the franchising director to perform his duties by securing the provision of services by agreement with others —for example, a neighbouring franchisee. The new clause gives the franchising director power to stipulate fares and, therefore, to control them.

Finally, Government new clause 21 places a duty on the franchising director to secure the continued provision of rail passenger services, except where he considers that there are satisfactory alternatives.

Mr. Wilson

I am sure that we could debate this new clause at great length and go over much of the ground that was covered in the last debate, but it is in nobody's interest to do so. Our views on the role of the franchising director have been set out, as have our concerns about the power that he is to be given—taking responsibility for many of these matters, the Government hope, at long arm's length from themselves. Therefore, I shall concentrate my remarks on Government new clause 21—"Failure to secure subsequent franchise agreement." This is a significant new clause. It is the basis upon which a large number of services would be removed over a number of years.

The key words in the new clause are adequate alternative railway passenger services are available;". The powers given by the new clause allow the franchising director to cease to provide services if, in his opinion, adequate alternative railway passenger services are available.

It is odd that the Government want to add this new clause to the Railways Bill. It deals specifically with circumstances where there are two operators running on the same routes. The most obvious example relates to those parts of the country where there are both InterCity services and Regional Railways services. That was the position on the routes to Blackpool, Clitheroe and a number of other places that have already lost their InterCity direct services. Much more pertinently, the new clause covers those routes that will lose their direct routes, if this legislation is passed.

If I may make so bold as even to refer to the place in present company, Hull is an obvious example. The services to Aberdeen and Inverness on the east coast main line and the services to Penzance on the Great Western line are other obvious examples. The new clause provides a mechanism by means of which these services can be withdrawn.

Nobody doubts that when the franchises are drawn up and advertised, amid much ballyhoo, every station on the railway map as it is at present will be there. But that is not what is at issue. What is at issue is what happens thereafter within a relatively short space of time. Logic suggests that one of the things that will happen is that InterCity—although it is wrong to talk about an entity called "InterCity" because it will no longer exist—will start to rationalise its operations.

10.45 pm

The arguments should be familiar even if they are not. At present, InterCity is an extremely successful railway company. It is successful in that it records a small yearly profit. It does so on the basis of massive cross-subsidy within its own operations, but one of the Bill's specific purposes is to destroy InterCity and remove the possibility of cross-subsidy.

There is currently an entity called InterCity; from next April, there might be the coaches painted in the livery of InterCity and the name may even be used as a marketing device, but the entity itself will have been splintered, not so much to the four winds but to six different profit centres around the country.

I do not pretend to have any insights into the Tory mentality, but, for the life of me, I cannot understand why any Conservative Member, any more than a Labour Member, should regard it as a great wheeze to destroy InterCity. I should have thought that InterCity was something of which people could be reasonably proud—a profitable railway, which is unique in Europe in that respect. For all the abuse that is hurled at it and all the denigration of British Rail, InterCity in my experience provides an absolutely first-class service on the basis of being an integrated, highly motivated entity. In any event, InterCity is to go. It will be no more, but will be divided among six profit centres and a range of separate franchises.

When cross-subsidy is removed, each section of what is now InterCity will be left to its own devices. Some will depend directly on subsidy and a few will be profitable, but we all know that even those that are profitable are not profitable to the extent required by the private sector. The Minister for Transport in London helpfully confirmed that in Committee. I said that even the profit made on the east coast main line, which is by far the most profitable sector of the British Rail network because of the investment that has been put into it, was nothing like what the private sector would want. The Minister readily agreed and said that the private sector would of course he looking for a far higher return and would get it through entrepreneurial flair and better marketing.

I do not think that many people with two brain cells to rub together would accuse InterCity of being deficient in marketing ability. The idea that the east coast main line will greatly increase its profits through better marketing is absurd. Every hon. Member knows that, but it is the basis on which InterCity is being broken up. What I have said applies to the most profitable route on the network, never mind the rest.

When the rubbish has been exposed and the east coast main line is not making the greatly enhanced profit which the Minister for Transport in London acknowledges will be required of it, the operators will be looking for other ways of increasing their profits. Even within the east coast main line, the Great Western line or some other sectors of InterCity, there is a great deal of cross-subsidy. It is an imprecise breakdown, but, by and large, where a route is electrified, it makes money, but because of the additional on-costs of diesel operation where the route is not electrified, it loses money. For example, the east coast main line is highly profitable overall, but north of Edinburgh it is a significant loss maker. In the case of the south-west, perhaps everything south-west of Plymouth is also a clear loss maker. Clearly, when a route is not making the required return, the operators or franchisees —if they ever exist—will look for ways of cutting or getting rid of loss-making routes.

Nobody has suggested that places will be left without train services. The proposition being put forward, which all common sense suggests is what will happen, is that instead of having a choice of direct services to London, there will be feeder services into InterCity at the point at which InterCity becomes profitable. That is exactly what happened at Blackpool, at Clitheroe and at Stranraer a couple of years ago. We are not talking about a far wider range of direct services being threatened.

I ask Conservative Members to study new clause 21 and to ask themselves what other conceivable reason there could be for including it in the Bill, apart from the reason that I have given. People would not lose their trains, but it would be reasonably argued that it was adequate for them to be able to get a train from Aberdeen to Edinburgh to join InterCity there, to get a train from Inverness to Glasgow to join InterCity there or to get a train from Penzance to Plymouth to join InterCity there. It would be argued that there would still be a service with no loss of frequency. However, crucially what would be lost would be direct services.

New clause 21 fits that scenario exactly. The franchising director will be given the power not to say that lines will be closed—nothing as dramatic as that—but to say that adequate alternative railway passenger services are available. The franchising director will not be able to say that adequate bus services are available, but that adequate railway passenger services are available. In other words, the only scenario in which new clause 21 is applicable is one in which there are at present two types of railway operations—Regional Railways and InterCity. InterCity will go and Regional Railways will be left with feeder services.

The proposal makes sense for many other reasons. At present, InterCity travels for nothing on the stretches of line about which I am talking because the costs are borne by Regional Railways. It is a fairly ad hoc arrangement, but essentially both InterCity and Regional Railways are part of British Rail. Although there already are subdivisions—ludicrous in my opinion—and cost apportionment within British Rail, the organisations are part of one operation. That will not be the case in the brave new world that is envisaged. The operators will pay money to Railtrack and Railtrack will have a commercial imperative under the Bill to make a return from all operators.

Railtrack will not be able to say to InterCity, "You can ride for nothing and we shall put the entire burden of costs on to whichever ship that passes in the night happens to be running that sector of Regional Railways." There would be an outcry: "How can the guy who runs the Regional Railways sector make a profit when his competitor, InterCity, is riding on the tracks for nothing? "That would not be sustainable. However, the moment that one says that Railtrack will charge InterCity or its successor for operating on the tracks, one increases another burden, which is why those services will not be there for very long.

New clause 21 will chop down the branches of InterCity, as experience will show. I do not expect much from most Conservative Members, although I expect a lot from some of them. I suggest that any Conservative Members who have an area served by InterCity which is a loss-making part of the InterCity network at present should look closely at new clause 21. If they can find a better explanation for giving the franchising director the right to cease to provide passenger services if, in his opinion, adequate alternative railway services are available, I should be interested to hear it.

Mr. James Wallace (Orkney and Shetland)

Like the hon. Member for Cunninghame, North (Mr. Wilson), I think that new clause 21 is well worth examination. I also draw the House's attention to amendment (b), which stands in the name of my hon. Friend the Member for North Devon (Mr. Harvey), myself and others of my hon. Friends.

The House is aware of the Government's prime argument for the Bill—that it introduces competition into the railway system. They say that it will lead to customers becoming winners, through lower costs, greater frequency and reliability of trains and a better overall service. That view has clearly been challenged. The key to better performance is not an argument over ownership; it is the key question of investment.

We believe that privatisation is a smoke screen for the Government to hide behind and so avoid the charge of inadequate investment. New clause 21 is a classic example of such a smoke screen. On the face of it, it appears that the Government are trying to do something positive and helpful. It is a good longstop or safety net. If the franchisee ends the agreement, the franchising director will have a duty to secure the provision of the services that were secured under the franchise agreement until there is time for a new franchise agreement to be provided.

The rub comes in the phrase in new clause 21: subject to subsection (2) below". According to new clause 21 (2)(a), the franchising director does not have to secure that provision of any services, if and to the extent that, in his opinion, adequate alternative railway passenger services are available. The hon. Member for Cunninghame, North has already described how that could be used to strip away the uneconomical parts of the InterCity service and to provide connecting feeder services that would downgrade many parts of the network.

That exemption and means of relieving the franchising director of a duty reduces competition. Far from promoting competition, it allows a service to be eliminated. Read in conjunction with clause 5, where the franchising director is required to follow the instructions of the Secretary of State, it is clear that services can he withdrawn, although at arms length so that the Government do not get their hands dirty. That is what the franchising director would be required to do.

Despite the rhetoric of competition and improved customer service, the effect of the new clause 21 would be to reduce services. That could apply in many places. The service between Carlisle and Glasgow is the main line from Carlisle to Lockerbie and Carstairs to Glasgow. The other line runs through Annan. Dumfries and Kilmarnock. That line provides a very important service, but it might be challenged with regard to new clause 21.

Scottish Members and Members in the north of England are concerned about how new clause 21 might place a question mark over the key connection of the west coast main line from London to Glasgow. Increasingly, that line is seen to be in competition with the east coast main line in respect of the number of trains linking through Edinburgh into Glasgow.

As the Select Committee on Scottish Affairs was recently informed, in European terms, the west coast main line is the third most important line in terms of traffic flow. The west coast main line and the east coast main line to Edinburgh are key arterial rail routes for Scotland. In its submission to the Select Committee, the CBI in Scotland stated that the "priority" in the rail privatisation exercise was to secure the preservation of the East and West Coast Main Lines". In its evidence to the Scottish Affairs Select Committee, the Department of Transport conceded that the west coast main line was vital not just to Scotland's needs, but to that part of England through which it runs". A survey of businesses in Carlisle carried out by Carlisle city council found that when 91 businesses were asked about rail issues, they stated that the priority to them was the upgrading and improvement of the west coast main line.

Ms Liz Lynne (Rochdale)

Does my hon. Friend also accept that it is vital for areas like mine and for the rest of the north-west that the west coast main line is protected? If we do not have money for that line and the Government use that as an excuse to run down the west coast main line by saying that the east coast main line will take the traffic, my constituency and many other constituencies in the north-west will suffer.

11 pm

Mr. Wallace

I endorse my hon. Friend's comments. It is not only a Scottish fear. It is a fear in many parts of the north-west of England. The west coast main line links five key conurbations—Greater London, the west midlands, Greater Manchester, Merseyside and Clydeside. Those are important links for the commercial and economic well-being of not only Scotland but of the whole United Kingdom. In addition, there are links into the west coast main line from north Wales, the Fylde coast, Cumbria, the Lake District and the south of Scotland.

So the west coast main line is a key line. We argue that it has been starved of necessary investment in the past 20 years since electrification was completed in 1974. There is a problem of underinvestment which gives rise to fears. The hon. Member for Cunninghame, North said that there could be a direct service from Glasgow to London, with routes feeding into that. It could be worse than that. Inter-city services could stop at Preston with only a regional route going to Carlisle.

That begs the question of what would happen to a station such as Lockerbie. I understand that in the previous debate my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) noted that Dunbar could no longer be served by ScotRail. According to the map of the franchise for ScotRail, Lockerbie would not be allowed to have a service provided by ScotRail. If the inter-city service excluded Lockerbie, what would happen to that important station for the south of Scotland?

I remember standing on a crowded Lockerbie station waiting for the train to Edinburgh on many Sunday evenings when I was a student. I understand from local sources that it is still a busy station. Potentially no provision is made for it. There is a need for investment in locomotives and carriages and to improve the reliability of the track and timetabling. In all those matters, the west coast main line has lagged behind the east coast main line.

The trains and carriages on the west coast main line are mostly of a 1970s design. Even if the track were improved to allow greater speed, I understand that the trains and carriages would not allow it. Last year the tendering arrangements for a substantial investment by British Rail in new carriages and trains for the west coast main line were allowed to lapse because the resources were not there. BR was starved of resources and was unable to go ahead with that necessary investment.

The line is also in urgent need of investment to improve track and signalling systems. In a British Rail document which came into the public domain in February this year it was stated that, in addition to all the other investments, between £3 million and £5 million per annum would be needed every year until 2000 to restore signalling and telecommunications. It said that the track between Carlisle and Gretna in particular was in need of resignalling on safety grounds.

We have poor rolling stock, a poor state of track and increasingly a limit on the high-speed performance of trains on the west coast main line, so it is less competitive than the east coast main line. A cursory look at the timetable shows that the Scottish Pullman takes four and a quarter hours from King's Cross to Edinburgh while the Royal Scot takes one minute short of five hours from Euston to Glasgow. What private company would be prepared to take on the London to Glasgow west coast franchise in the face of fierce competition from the east coast, especially when it is not allowed to compete on level terms?

Paragraph 45 of the Scottish Select Committee report said: We wish to see the plan to invest £750 million in track improvements and new rolling stock implemented as soon as possible. This upgrading must not be delayed by uncertainties about rail privatisation and the transfer of responsibility to Railtrack. That view is certainly endorsed by Opposition Members. I hope that it will also find favour with Conservative Members who also want to see an improved rail network.

Investment is needed to improve and secure quality, enhance safety, reduce operating and maintenance costs, to be more environmentally reliable and, through the improvement of consumer choice, to increase usage and revenue. Investment, not the form of ownership, is the key to providing more effective competition and securing a better service for the customer. We believe that new clause 21(12)(a) is a Trojan horse which could be used to eliminate lines and reduce competition. I hope that the House will support the amendment which my hon. Friends and I have tabled to the new clause.

Mr. Snape

Like earlier speakers, I am concerned about new clause 21(2)(a).

First, there is the competition—if that is the right word—between the west and east coast main lines. As the hon. Member for Orkney and Shetland (Mr. Wallace) reminded us, since the completion of the electrification of the west coast line in the mid-1970s there has been little investment in the route, if any: indeed, the service has slowed down by about 35 minutes since the stretch from Weaver junction northwards to Glasgow was electrified. As for the service in other north-western cities, the service between Manchester and Glasgow is no more punctual now than it was in the days of steam. Such a franchise would not prove particularly attractive—to say the least —to any private operator.

There is an investment problem on the west coast main line, and the sooner that problem is tackled, the better; but many of us feel that it will not be tackled by the Bill, which —if anything—is likely to dissuade investors rather than attracting them.

My hon. Friend the Member for Cunninghame, North (Mr. Wilson) mentioned towns that are currently served by both Regional Railways and InterCity. As he said, the Government propose the fragmentation of the InterCity network. Where that has already happened, InterCity is withdrawing, leaving Regional Railways to provide the only service between, for instance, Blackpool and Preston —where the InterCity service was recently withdrawn—and Wolverhampton and Shrewsbury, in the west midlands area.

It is an open secret that British Rail want to withdraw InterCity services completely, in the short term, from cities such as Hull: my hon. Friend the Member for Cunninghame, North referred to the recent whittling away of that service. But the Bill will not only affect the towns and cities currently served by both InterCity and Regional Railways. I ask the Minister to consider the service between, say, Birmingham and Stratford in the context of new clause 21(2)(a). At present, two services exist, both supported by the passenger transport executive: one runs via Solihull, the other via Shirley.

Let us suppose that there are two separate franchisees, one of which decides not to renew the franchise or to withdraw the service. Would the franchise director be right in saying that, as another service exists—let us say that the service via Solihull remains— adequate alternative railway passenger services are available"? He might well point out that the distance by road between Solihull and Shirley was five or six miles and that there was a bus service connecting the two points. One rail service still exists; is it adequate, in the terms of the new clause?

A couple of weeks ago, Birmingham Snowhill station —in the same part of the world—was reconnected with London for the first time in 30 years. The Network SouthEast Chiltern line turbo train service was extended to Birmingham Snowhill and there is now a two-hourly service via Solihull. It is difficult to imagine such a franchise being considered particularly attractive once the various sections of the railway network are up for grabs; but let us suppose that someone bids for that franchise and decides after a while to cut the turbo service to Banbury, Bicester or another point on the Marylebone line. Passengers in Solihull who wish to travel by rail normally drive five or six miles up the M42 to Birmingham International station to catch the service running between Wolverhampton, Birmingham and Euston. Could not the franchising director decide that, as that service presumably still exists, it should be regarded as an adequate railway passenger service under the terms of the Bill?

Problems will arise not only in relation to cities that are currently served by two different segments of a nationalised railway system, but in relation to those services that I have just described and similar services in other parts of the country. Will the Minister give a straight answer? What will the franchise director regard as an adequate alternative passenger railway service? Will it be a service of the sort that I have described, or will there be even greater safeguards?

The Minister referred to the franchise director's duty to guarantee future rail services. During the previous debate the hon. Member for Keighley (Mr. Waller) asked how he or she was to fulfil that duty. In repeating that question I shall outline a scenario which is not beyond the realms of possibility under the terms of the legislation. A franchisee could go bust quickly—as people do—owing a great deal of money. That has happened to hundreds of thousands of businesses since the present Administration were elected. People to whom money is owed will seek to recover that money by the sale of the franchisee's assets, whatever they may be. How can the Minister say that, the day after a franchisee goes bust, British Rail or someone else will come to operate those services?

Trains are not like buses; it is not practical to pluck a driver off the street, put him behind the controls of any train and say, "Drive from A to B." Drivers have to know every inch of the route, the signalling system, the bends and the speed restrictions. It is not possible to stop a train in the same way as a bus—it takes weeks, sometimes months, to train drivers on a specific route. How can the Minister say that in the event of a franchisee going bust it is the franchise director's duty to find an alternative operator? How could such a duty be discharged?

Today, the length of an individual route is often controlled by a signal box—to use more modern parlance, a signalling centre. In the event of a franchisee going bust, who negotiates the signalling of that route with the new franchisee, assuming that such an alternative franchisee exists?

The reasoning behind the new clause and others in the group is flawed because it has been drafted on behalf of politicians who believe only in ideology and have failed to look in depth at the problems that will arise if the scenario —which is by no means unlikely—occurs. The Minister will have to come up with better arguments to persuade most Opposition Members that the group of amendments is feasible. I hope that some of the more thoughtful Conservative Members will express the reservations that my hon. Friends and I have expressed.

11.15 pm
Mr. Dickens

The new clause is a safety valve which is central to the Bill. In the unlikely event of a franchisee dropping out, the franchising director can step in to ensure that all our constituents enjoy a proper rail service while a new franchise arrangement is created. That seems to be common sense.

Earlier, many hon. Members talked about profit being a dirty word and higher fares being the only way to create profit. They could not be more wrong. If there is a sensible level of fares, clean comfortable trains running on time with good facilities on them and a package of concessions to make it attractive, people will start to move off the overcrowded roads. We are doing that with freight to Europe and we should do it with passengers all over the country. We should get cars off the roads and people on to trains. However, people will get on trains only is if there is a sensible level of fares and sensible arrangements.

That is the essence of creating a profit. The profit is then ploughed back in. We have ploughed the profits back into many other privatised industries and they have improved to the point at which they are the wonderful industries that we have today. In the old days, we shovelled millions of pounds into a bottomless pit—into nationalised industries —and we never got anything for it except misery all the time.

The Bill is important. New clause 14 is a safety valve to ensure that we keep trains running to our constituencies in the unlikely event of a franchisee dropping out. It is sheer common sense. I cannot understand why any hon. Member would want to vote against something that is a safeguard.

Mr. Gunnell

I shall resist the temptation to respond to the speech of the hon. Member for Littleborough and Saddleworth (Mr. Dickens). He shows even more faith than the Conservative Members on the Standing Committee that considered the Bill.

I shall simply ask the Minister two questions. On clause 21, many of the services that will be franchised will be those on which the passenger transport authority and the passenger transport executive have been involved in discussions. If clause 21 becomes operative and there is a failure to provide a sequential franchise, what will be the involvement of the PTA and the PTE at that point? That is not spelt out, but the passenger transport authorities need to be clear about it.

On new clause 14, is it anticipated that, perhaps in securing railway investment, the frachising director will form a finance company to finance, for example, the purchase of rolling stock? If so, and given the powers provided in new clause 18, will it be in order for the franchising director to form a company jointly with perhaps several passenger transport authorities to secure investment in rolling stock?

Mr. Denham

I almost hesitated to raise an example of another route that might be hit by new clause 21? It struck me that, when new clause 21 was being drafted, there must have been a moment at which either the Minister turned to his civil servants and said, "Why don't we put this in new clause 21" and the civil servant said, "What do you have in mind, Minister? What about so and so?", or the civil servants came to the Minister and said, "We think you should put this in new clause 21" and he said, "What do you have in mind? What about such and such a route?"

We have heard speculation about whether the franchising director will say that the east coast route is a satisfactory substitute for the west coast route or vice versa. I have a specific constituency interest to which I referred several times during the Standing Committee deliberations. There is an InterCity route that normally runs from Poole to the north-west—to Manchester—or the north-east. I understand that it is one of the loss-making parts of InterCity. Therefore, it will lose the cross-subsidy from the east coast line when that is privatised.

Most, though perhaps not all, of the stations on the InterCity route from Poole through my constituency can be reached by alternative routes via London. It is usually quicker to go via London, but more expensive under current arrangements. There is a fair degree of passenger choice because people can decide whether to break the journey by travelling via London, spending more and taking less time, or have a longer more roundabout journey.

I said several times in Committee that the cross-country route from Poole is likely to be threatened by the new franchising regime. That is because it will require a subsidy and BR and the Central Transport Consultative Committee have told us in briefings in the past 24 to 48 hours that there is still great uncertainty about whether there will be enough money in the system to subsidise those routes. Any future francisee running that cross-country route runs a high chance of failing to provide a service or he may decide to withdraw after the initial franchise period.

Does the Minister envisage the alternative routes through London as satisfactory, adequate or acceptable substitutes for the current InterCity route from Poole through Southampton to the north-west and the north-east? It is reasonable to ask the Minister that question because every hon. Member knows that when the framework is in place and the system is operating, complaints about decisions of the franchising director will be met by the Minister or his successor saying, "It has nothing to do with us, guy. It is the responsibility of the franchising director. That is the way Parliament set up the system." This is our only opportunity to ask the Minister what he had in mind with new clause 21.

It is reasonable for hon. Members to name specific routes and ask the Minister whether he decided that they would be acceptable alternatives. The Minister must know the acceptable alternatives, or he would not have used the term in the legislation. Which routes had he in mind when he agreed with his advisers to put that in the Bill?

Mr. Freeman

Six issues have been raised and I shall try to deal with them succinctly. The hon. Member for Cunninghame, North (Mr. Wilson) spoke about InterCity. I confirm that we want the brand name to continue because there is no reason why it should be inconsistent with the separate management of the individual routes. There will be further discussions with Mr. Christopher Green, who is responsible for running InterCity I pay tribute to Mr. Green and his managers for what they have achieved. InterCity has been a success story over the past 10 years and it can do better. It needs more investment in rolling stock, especially on the west coast main line, the Great Western line and the midland main line when it is eventually electrified.

The franchising of InterCity services will be based on the whole timetable, including services to Penzance, Inverness and Aberdeen, immediately before the franchise is let. That will apply to all the services and stations served by that InterCity line. The amendments are not about chopping InterCity branches. We want InterCity to thrive.

I agree with the hon. Member for West Bromwich, East (Mr. Snape) that considerable investment is required on the west coast main line; perhaps up to £500 million on the infrastructure and £300 million on rolling stock. If the £150 million worth of new leasing facilities is used on the west coast main line, that would be a start. If not, I assure the hon. Gentleman, as I have already assured the House, that as soon as British Rail makes its mind up on the use of that £150 million facility, we will work with it on the route where that money is not used to devise a proper operating lease which meets the Treasury guidelines. If a satisfactory lease is drawn up, even more investment can be made. We want the west and east coast main lines to be thriving, because we want choice and competition. There is no hidden agenda to end services north of Preston on the west coast main line.

The hon. Member for West Bromwich, East also asked what would happen should a franchisee go bust. We amended the Bill in Committee to provide for railway administrative orders. They are unique because they enable the franchising director, with the assistance of the courts, to step in to ensure the continued provision of railway services. That is quite unlike the arrangements for any other form of transportation or any other company. It will not happen that a franchisee will be in financial difficulties on a Sunday and the trains will not run on Monday. We spent considerable time developing the new concept of railway administration orders to deal specifically with that problem.

The hon. Member for Morley and Leeds, South (Mr. Gunnell) asked whether the passenger transport executive would have a continuing role should the franchising director not renew a franchise. The answer is yes. If the hon. Gentleman studies clause 29, he will discover that it offers provision on that score. If he is not satisfied, perhaps he would write to me. The hon. Gentleman also raised the interesting idea of a joint company being formed between the franchising director and the passenger transport executive to own rolling stock. I shall certainly consider that suggestion, which is consistent with our desire that the franchising director, the PTE, the franchisee and the lessor should be tied together, by legal agreement, for the provision of new rolling stock.

The hon. Member for Southampton, Itchen (Mr. Denham) asked about cross-country services. We want to franchise all railways that are run—that is our intention. When we come to franchise the InterCity cross-country services, the same principle will apply. We will take the entire service offered and franchise it. We have not yet been specific about cross-country services, or the central division of Regional Railways, because, as the hon. Gentleman is aware, Regional Railways, and, to some extent, cross-country services, are run on artificial boundaries. We want to ensure that we provide the right geographic description or boundary of specific services. There is no hidden agenda for the cessation of cross-country services. They are part of the present pattern of railway services and we intend to franchise those lines.

It is important to consider the purpose of the new clause. Today, my right hon. Friend has announced 26 fairly large franchises. If a franchise comes to an end, it does not mean that the franchising director must look at alternatives. That is not possible when one considers the east coast main line, the London-Tilbury-Southend line or lines to Wales and the south-west. We are discussing large franchises.

Where open-access services are developed in the coming years, they may provide a satisfactory, unsubsidised, unfranchised service. The franchising director might consider that those routes—perhaps they would operate in those parts of the country to which reference has already been made—provide a satisfactory service. It might then be considered unnecessary to franchise that part of a much larger franchise.

Mr. Wallace

I welcome the fact that the Minister said that he wanted the west coast main line, as well as that on the east coast, to be successful. How is that likely to happen, given that the line will be starved of investment? The £150 million that the Minister mentioned represents about one third of the tender price for new rolling stock on the west coast main line, a tender which British Rail had to allow to lapse last year. How does he expect that line to be successful if it does not have the investment to allow that to happen?

Mr. Freeman

The hon. Gentleman will appreciate that British Rail, Railtrack and the successor franchisees cannot do everything at once. The east coast main line has benefited from a successful investment project worth up to £450 million. Network SouthEast has benefited from upwards of £700 million of investment on the Kent link. Attention must now be turned to the west coast main line. We have announced that the private sector has put forward propositions to improve the infrastructure. The private sector, working with the public sector, can help to advance the date of completion of works. Already, British Rail plans to start soon on resignalling the west coast main line, and I welcome that. I am determined that new, modern rolling stock should come on to that line, which is the premier line in Britain's railway infrastructure, as soon as possible.

11.30 pm
Mr. Prescott

That is a sound bite.

Mr. Freeman

It is not a sound bite, it is the truth. The west coast main line is our most important rail artery. Its services will continue to run to Glasgow and north of Glasgow. Investment is coming to the line and privatisation will advance that. I commend the new clause to the House.

Mr. Wilson

That is a good saying: "It is not a sound bite, it is the truth." That may be the first confession by a politician that the two are incompatible.

Two of the Minister's statements cannot be allowed to go unchecked. He said that InterCity was a success. In that case, why not leave it alone and let it develop? He then said that he could confirm that the Government want the brand name to continue. InterCity is not a shell. It is not livery and a brand name. It is not a marketing concept alone. It is about people who have worked hard to make it what it is—a profitable railway company. Why cannot it be left to do that job, dependent as it is on internal cross-subsidy?

The Minister did not give us one rational reason for separating from InterCity the profitable elements so as to create, overnight, a whole new railway that will have to be subsidised if it is to survive in anything like its present form. Where is the virtue in that? I cannot see where that comes from in my philosophy and I find it odd that it is part of Tory philosophy to create new businesses that are dependent on public subsidy instead of profitable ones that stand on their own feet.

The Minister told us that the new clause was based on a hypothesis of future open access. I doubt whether anyone believes that we shall ever see the open access proposals come to fruition, but if this is to do with open access, such a provision could be written into existing clauses. The new clause is far too convenient for the Government, because they are getting a device by which InterCity routes can be pruned, to be replaced by feeder services. It distresses and disappoints me that not one Tory Member representing the areas that will be threatened by the clause has got to his feet to lodge concerns which, at the very least, are justified by inclusion of the clause in the Bill.

Question put, That the clause be read a Second time:—

The House divided: Ayes 214, Noes 109.

Division No. 280] [11.33 pm
Ainsworth, Peter (East Surrey) Gallie, Phil
Aitken, Jonathan Gill, Christopher
Alexander, Richard Gillan, Cheryl
Alison, Rt Hon Michael (Selby) Goodson-Wickes, Dr Charles
Amess, David Gorman, Mrs Teresa
Ancram, Michael Greenway, John (Ryedale)
Arbuthnot, James Griffiths, Peter (Portsmouth, N)
Arnold, Jacques (Gravesham) Hague, William
Arnold, Sir Thomas (Hazel Grv) Hamilton, Rt Hon Archie (Epsom)
Atkinson, David (Bour'mouth E) Hamilton, Neil (Tatton)
Atkinson, Peter (Hexham) Hannam, Sir John
Baker, Nicholas (Dorset North) Hargreaves, Andrew
Baldry, Tony Harris, David
Banks, Matthew (Southport) Haselhurst, Alan
Banks, Robert (Harrogate) Hawksley, Warren
Bates, Michael Heald. Oliver
Bellingham, Henry Heathcoat-Amory, David
Beresford, Sir Paul Hendry, Charles
Biffen, Rt Hon John Hill, James (Southampton Test)
Blackburn, Dr John G. Horam, John
Booth, Hartley Howarth, Alan (Strat'rd-on-A)
Bottomley, Peter (Eltham) Howell, Rt Hon David (G'dford)
Bottomley, Rt Hon Virginia Hughes Robert G. (Harrow W)
Bowden, Andrew Hunt, Rt Hon David (Wirral W)
Bowis, John Hunt, Sir John (Ravensbourne)
Brandreth, Gyles Jack, Michael
Brazier, Julian Jenkin, Bernard
Bright, Graham Jessel, Toby
Brooke, Rt Hon Peter Jones, Gwilym (Cardiff N)
Brown, M. (Brigg & Cl'thorpes) Jones, Robert B. (W Hertfdshr)
Browning, Mrs. Angela Kellett-Bowman, Dame Elaine
Budgen, Nicholas Kilfedder, Sir James
Burns, Simon King, Rt Hon Tom
Burt, Alistair Kirkhope, Timothy
Butterfill, John Knapman, Roger
Carlisle, Kenneth (Lincoln) Knight, Greg (Derby N)
Carrington, Matthew Knox, David
Carttiss, Michael Kynoch, George (Kincardine)
Cash, William Lait, Mrs Jacqui
Channon, Rt Hon Paul Lang, Rt Hon Ian
Chapman, Sydney Lawrence, Sir Ivan
Clappison, James Legg, Barry
Clark, Dr Michael (Rochford) Lester, Jim (Broxtowe)
Clarke, Rt Hon Kenneth (Ruclif) Lidington, David
Clifton-Brown, Geoffrey Lightbown, David
Coe, Sebastian Lilley, Rt Hon Peter
Congdon, David Lloyd, Peter (Fareham)
Coombs, Anthony (Wyre For'st) Lord, Michael
Coombs, Simon (Swindon) Luff, Peter
Cope, Rt Hon Sir John Lyell, Rt Hon Sir Nicholas
Couchman, James MacGregor, Rt Hon John
Cran, James Maclean, David
Davies, Quentin (Stamford) McLoughlin, Patrick
Davis, David (Boothferry) Maitland, Lady Olga
Day, Stephen Malone, Gerald
Dickens, Geoffrey Mans, Keith
Dorrell, Stephen Marlow, Tony
Douglas-Hamilton, Lord James Martin, David (Portsmouth S)
Dover, Den Mawhinney, Dr Brian
Duncan, Alan Merchant, Piers
Duncan-Smith, Iain Milligan, Stephen
Dykes, Hugh Mills, Iain
Elletson, Harold Mitchell, Sir David (Hants NW)
Emery, Rt Hon Sir Peter Moate, Sir Roger
Evans, Jonathan (Brecon) Monro, Sir Hector
Evans, Roger (Monmouth) Montgomery, Sir Fergus
Faber, David Moss, Malcolm
Fabricant, Michael Needham, Richard
Fenner, Dame Peggy Neubert, Sir Michael
Fishburn, Dudley Nicholls, Patrick
Forman, Nigel Nicholson, David (Taunton)
Forsyth, Michael (Stirling) Nicholson, Emma (Devon West)
Fowler, Rt Hon Sir Norman Norris, Steve
Fox, Dr Liam (Woodspring) Oppenheim, Phillip
Freeman, Roger Paice, James
French, Douglas Patnick, Irvine
Gale, Roger Pattie, Rt Hon Sir Geoffrey
Pickles, Eric Stewart, Allan
Porter, David (Waveney) Sweeney, Walter
Rathbone, Tim Sykes, John
Redwood, John Taylor, Ian (Esher)
Renton, Rt Hon Tim Taylor, John M. (Solihull)
Richards, Rod Thomason, Roy
Riddick, Graham Thompson, Sir Donald (C'er V)
Robathan, Andrew Thompson, Patrick (Norwich N)
Roberts, Rt Hon Sir Wyn Thurnham, Peter
Robertson, Raymond (Ab'd'n S) Townend, John (Bridlington)
Robinson, Mark (Somerton) Townsend, Cyril D. (Bexl'yh'th)
Roe, Mrs Marion (Broxbourne) Trend, Michael
Rowe, Andrew (Mid Kent) Trotter, Neville
Rumbold, Rt Hon Dame Angela Twinn, Dr Ian
Ryder, Rt Hon Richard Vaughan, Sir Gerard
Sainsbury, Rt Hon Tim Waller, Gary
Shaw, David (Dover) Wardle, Charles (Bexhill)
Shephard, Rt Hon Gillian Waterson, Nigel
Shepherd, Colin (Hereford) Wells, Bowen
Smith, Sir Dudley (Warwick) Wheeler, Rt Hon Sir John
Smith, Tim (Beaconsfield) Whittingdale, John
Soames, Nicholas Widdecombe, Ann
Speed, Sir Keith Wilkinson, John
Spencer, Sir Derek Willetts, David
Spicer, Sir James (W Dorset) Wolfson, Mark
Spicer, Michael (S Worcs) Wood, Timothy
Spink, Dr Robert Yeo, Tim
Sproat, Iain Young, Sir George (Acton)
Squire, Robin (Hornchurch)
Stanley, Rt Hon Sir John Tellers for the Ayes:
Stephen, Michael Mr. Andrew Mackinlay and Mr. Andrew Mitchell.
Stern, Michael
Ainger, Nick Hoon, Geoffrey
Banks, Tony (Newham NW) Howarth, George (Knowsley N)
Barnes, Harry Hughes, Kevin (Doncaster N)
Beith, Rt Hon A. J. Hughes, Robert (Aberdeen N)
Benton, Joe Hughes, Simon (Southwark)
Betts, Clive Hutton, John
Boyce, Jimmy Illsley, Eric
Bradley, Keith Jackson, Glenda (H'stead)
Brown, Gordon (Dunfermline E) Jones, Barry (Alyn and D'side)
Brown, N, (N'c'tle upon Tyne E) Jones, Ieuan Wyn (Ynys Môn)
Campbell, Mrs Anne (C'bridge) Jones, Lynne (B'ham S O)
Campbell, Menzies (Fife NE) Kilfoyle, Peter
Cann, Jamie Kinnock, Rt Hon Neil (Islwyn)
Chisholm, Malcolm Kirkwood, Archy
Clarke, Eric (Midlothian) Lloyd, Tony (Stretford)
Clelland, David Llwyd, Elfyn
Coffey, Ann Loyden, Eddie
Cohen, Harry Lynne, Ms Liz
Cousins, Jim McCartney, Ian
Cryer, Bob McMaster, Gordon
Cunliffe, Lawrence Mahon, Alice
Cunningham, Jim (Covy SE) Marek, Dr John
Dafis, Cynog Michael, Alun
Dalyell, Tam Michie, Mrs Ray (Argyll Bute)
Davis, Terry (B'ham, H'dge H'l) Milburn, Alan
Denham, John Miller, Andrew
Dixon, Don Morgan, Rhodri
Donohoe, Brian H. Morley, Elliot
Dunwoody, Mrs Gwyneth Mowlam, Marjorie
Etherington, Bill Mudie, George
Foster, Rt Hon Derek O'Brien, Michael (N W'kshire)
Fraser, John Parry, Robert
Galbraith, Sam Pendry, Tom
Gerrard, Neil Pickthall, Colin
Godman, Dr Norman A. Pike, Peter L.
Graham, Thomas Powell, Ray (Ogmore)
Griffiths, Nigel (Edinburgh S) Prescott, John
Griffiths, Win (Bridgend) Primarolo, Dawn
Gunnell, John Purchase, Ken
Hall, Mike Reid, Dr John
Hanson, David Rendel, David
Hardy, Peter Robertson, George (Hamilton)
Harvey, Nick Rowlands, Ted
Heppell, John Salmond, Alex
Hill, Keith (Streatham) Sheerman, Barry
Hinchliffe, David Simpson, Alan
Skinner, Dennis Wallace, James
Snape, Peter Walley, Joan
Spearing, Nigel Wigley, Dafydd
Spellar, John Wilson, Brian
Steel, Rt Hon Sir David Winnick, David
Stott, Roger Wray, Jimmy
Strang, Dr. Gavin
Taylor, Matthew (Truro) Tellers for the Noes:
Turner, Dennis Mr. Hugh Bayley and Mr. Alan Meale.
Tyler, Paul
Vaz, Keith

Question accordingly agreed to.

Clause read a Second time, and added to the Bill.

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