GENERAL DUTIES OF THE SECRETARY OF STATE AND THE REGULATOR

HC Deb 01 November 1993 vol 231 cc38-78

Lords amendment: No. 1, in page 4, line 46, at end insert— ("() The Secretary of State shall also be under a duty, in exercising the functions assigned or transferred to him under or by virtue of this Part, to promote the award of franchise agreements to companies in which qualifying railway employees have a substantial interest, "qualifying railway employees" meaning for this purpose persons who are or have been employed in an undertaking which provides or provided the services to which the franchise agreement in question relates at a time before those services begin to be provided under that franchise agreement.")

4.40 pm

The Minister for Public Transport (Mr. Roger Freeman)

I beg to move, That this House doth agree with the Lords in the said amendment.

Madam Speaker

With this it will be convenient to take Lords amendments Nos. 2 and 3.

Mr. John Heppell (Nottingham, East)

On a point of order, Madam Speaker. I seek your guidance. During the passage of the Bill in Committee, 713 amendments and 32 new clauses were tabled. On report, we debated 252 amendments and 28 new clauses. We are now faced with another 470 Lords amendments and new clauses. Is there a parliamentary procedure to prevent the Government from tabling new amendments at this late stage and effectively changing their earlier promises?

Dr. John Marek (Wrexham)

Further to that point of order, Madam Speaker. I am concerned about the matter. You must have seen the myriad amendments and new clauses that have been tabled. It makes me think that my service on the Standing Committee was a complete waste of time because we have a new Bill before us. Is there no way to send this botched job back to the Government draftsmen so that they can come up with something new that we can consider in detail, and in enough time? Effectively, we have a new Bill before us and only two days in which to consider it. It is a travesty of the rules of Parliament.

Madam Speaker

There is a great deal of responsibility on the Ministers whose task is to persuade the House to agree with the amendments. The ball is in their court.

Mr. Freeman

I hope that the House will find several of the groups of amendments that we shall be considering today and tomorrow relatively uncontroversial, although I recognise that some are controversial. My noble Friend the Minister for Aviation and Shipping gave detailed explanations of many of the amendments and I hope that the House will have had the chance, to the extent necessary and prudent, to study his remarks.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

On a point of order, Mr. Deputy Speaker. I seek your guidance. I do not believe what my ears are hearing. Is it customary for hon. Members to recommend that other hon. Members take as read speeches made in the other place? Is it not normal parliamentary procedure for Ministers to take responsibility for their own speeches, to move their own amendments and to do the House the elementary courtesy of at least trying to explain what they have in mind?

Mr. Deputy Speaker (Mr. Michael Morris)

Ministers must make their own judgments.

Mr. Freeman

I am just coming on to do that. I was trying, in a courteous manner, to refer to the proceedings in another place. I am only too delighted, as I had planned to do, to explain the purpose of the amendments.

Lords amendment No. 1 lays a duty on the Secretary of State in relation to part I. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody), who participated in the Standing Committee, will remember that there were already provisions in the Bill, which we debated in Committee, dealing with the promotion of management-employee buy-out bids. The Bill was defective in not including such reference in part I. The amendment rectifies that. It does not introduce a new principle or policy. It makes the Bill clearer.

The amendment lays on the Secretary of State a duty clearly to promote the award of franchise to management-employee bids, and that is defined in the amendment. It refers to companies in which qualifying railway employees have a substantial interest, 'qualifying railway employees' meaning for this-purpose persons who are or have been employed in an undertaking which provides or provided the services to which the franchise agreement in question relates at a time before those services began to be provided under that franchise agreement. There is no clear definition—essentially, it will be a matter for the courts—of "a substantial interest". I shall not attempt to define that. The courts may wish to adjudicate upon the matter if a case comes before them.

The purpose of putting "a substantial interest" on the face of the Bill is to show that we wish to support British Rail management and employees who come together to take an interest—it does not have to be a 100 per cent. interest—in a company that bids for a franchise. Although the interest does not have to be 100 per cent., clearly, "a substantial interest" does not refer to a 5 per cent. interest. It is for the courts to determine, in the circumstances of a case, what is "substantial".

Mrs. Dunwoody

I am beginning to find this even more "Alice in Wonderland" than I had expected. Will the Minister accept that it is the responsibility of the House of Commons to frame legislation in such a way that it is clear and that House votes on it on the basis of its meaning? I have always had the rather old-fashioned view that Parliament is here to examine clear English, to understand what it means and to take decisions based on that. Will the Minister explain why he is seriously suggesting that the House should accept wording that is so unclear that he automatically expects it to be challenged in a court?

Mr. Freeman

The hon. Lady had time to table an appropriate amendment defining that in terms of 5, 10, 15 or 20 per cent.

Mrs. Dunwoody

I am not a Minister.

Mr. Freeman

The Government prefer this more general language. One has to decide, in the particular circumstances of the case, what "a substantial interest" means. In part, it will depend on the capitalisation of the company. It is not possible to legislate precisely in all circumstances. It depends in part on the debt burden. As those on the Opposition Front Bench will appreciate, in past bus privatisations, the amount of debt incurred by the management and employees varied considerably. The substantiaal debt burden incurred by some is still being repaid from the profits of the operation. It is not possible to be precise in every circumstance.

Mr. John Prescott (Kingston upon Hull, East)

Is the Minister telling the House that if British Rail employees —managers or workers—want to combine in a joint bid with both private and public sectors, a judgment will have to be made about the size of the interest? Is he leaving the courts—rather than the House—to decide whether that will be 5, 10, 15, 20 or 50 per cent.? Taking into account the Government's other view—that British Rail will be allowed to make a bid for a franchise and could do so at a cheaper price than that being offered by the private sector—will that not encourage the private sector to get into bed with one or two employees so as to offer a cheaper price and make its bid seem like a British Rail bid?

Mr. Freeman

It might help if I explain that the Government have not reached any conclusions, or made any announcements, about any price reference to management-employee buy-out bids for franchises. The hon. Gentleman will recall that in Standing Committee I made it plain that our policy in relation to the outright sale of freight, whether train load or container business, was that it was appropriate for a small premium to be afforded to the management-employee bids, consistent with the preferences given in the sale of bus companies. That is normally expressed in terms of a discount.

Mr. Prescott

A cheaper price.

Mr. Freeman

Yes, but we are not applying that principle to the bidding for franchises. As I made clear in the Standing Committee, there is a distinction between franchises and bids for discrete businesses of British Rail which it will sell.

Mr. John McAllion (Dundee, East)

If the Minister looks at the wording of the amendment, he will see that a duty is imposed on the Secretary of State to promote the award of franchises to bids which involve former employees of British Rail. If the Government are to promote in that way, that must mean that some competitive advantage will be given to such a bid.

If the Government are doing that, why is it necessary for franchise bids only to have "a substantial interest"? It will be possible for a bid with only a minority interest of former BR employees to be given a competitive advantage. The Minister is not addressing that point. Has not the Minister recommended to the private sector that a bid representing the interest of 20 or 25 per cent. of former employees of British Rail will have a competitive advantage over every other bid for franchises?

Mr. Freeman

We are not discussing the process for the bidding for franchises. The hon. Gentleman knows that that subject will be dealt with in the debate on a grouping of amendments in due course. We are talking about a general duty that is placed on the Secretary of State to promote management and employee buy outs—

Hon. Members

That is the point.

Mr. Peter Snape (West Bromwich, East)

Perhaps I could help the Minister.

Mr. Freeman

I am well capable of helping myself, thank you very much.

Mr. Prescott

It does not seem so.

Mr. Freeman

Perhaps I could explain. I have dealt with the price preference, but there is another way in which management and employee bids can be assisted. That is in terms of the financial assistance which is to be provided by British Rail, and which is limited to a sum of £100,000 in each particular management and employee bidding group, in preparing for bidding for franchises. That is a clear example, and I am not talking about the price preference in the context of the 5 per cent. discount that has been applied in the past for bids for bus companies.

Mr. Snape

The Minister seems to be floundering—that is unusual for the hon. Gentleman—on the clear piece of legislation contained in the clause.

I wish to raise a point similar to that raised by my hon. Friend the Member for Dundee, East (Mr. McAllion). Surely at such an early stage of the proceedings it would be helpful to know what criteria—financial or otherwise—railway managers are expected to follow before they mortgage their homes. Is not this the right place and time to debate that subject?

Mr. Freeman

I hope that the hon. Gentleman will raise that matter during his speech, at which time I will seek to answer it.

I know that the hon. Gentleman has experience of the process because he has been associated with a distinguished management and employee bid in the bus industry. I congratulate West Midlands Travel and appreciate the supporting role that the hon. Gentleman has been playing since the company entered the private sector. I do not wish to score party political points here, but the company is owned by its management and employees. It is successful, and I am pleased that the former employees of the company own shares in it. The hon. Gentleman and I visited the company recently and I am glad to applaud the company, its management and its employees.

There is no question of the management and employees of British Rail having to enter into second, third or Fourth mortgages to raise money to bid for franchises. That is wholly out of the question. We are talking about the management and staff of British Rail joining to bid for franchises, either by themselves or in conjunction with other private sector companies. Those companies might be financial institutions or operating companies.

We want that to happen, and there is real evidence of interest among the 25 potential franchise companies. I have spoken to a number of managers and I can confirm that senior management responsible for running train services within British Rail are interested in proceeding. We shall see how many of them offer bids when we come to the franchising process, but the Secretary of State will have a duty under the amendment to promote that interest. I have given a clear example of the way in which my right hon. Friend intends to do so.

Mr. John Gunnell (Morley and Leeds, South)

The Minister referred to a management buy-out in the West midlands. He will be aware that I was involved in a similar buy-out in West Yorkshire.

There is a great difference between those buy-outs and what the Minister is dealing with in this case. In the cases of the bus companies, the buy-outs involved existing and functioning companies, the value of which could be ascertained; finance could then be put together on the basis of management who were motivated to move in that direction before it received any suggestions from outside. The buy-outs came from the innate motivation of the managers, who believed that that was way to ensure an integrated network in West Yorkshire.

The position is different if one has to encourage and prod people into undertaking management bids. Does the Minister agree that the motivation of managers and their drive to make a company successful will determine in part whether people will finance that company? I am concerned that—

Mr. Deputy Speaker

Order. The House is becoming concerned at the hon. Gentleman's lengthy intervention. He has made his point, and perhaps the Minister will now reply.

Mr. Freeman

It is a fundamental tenet of Conservative party policy that we wish to encourage the management and staff of any enterprise to take an equity interest in the running of that enterprise. That has worked well with the National Freight Corporation, with British Airways and with the bus industry. It is a fundamental tenet, and that is why we are putting it in the Bill.

It may be helpful if I briefly explain the financial structure of the franchises. I am not talking about a company that is bidding for a franchise with or without its management and employees having to bid sufficient sums to acquire or maintain the infrastructure. That is the responsibility of Railtrack.

I am not talking about the necessity to acquire rolling stock. We recognise that rolling stock—either second-hand or new—will have to be leased from the rolling stock leasing companies which we propose to establish. Franchising companies will need sufficient resources to meet the working capital requirement. In many cases, that will be a negative working capital requirement because of the prepayments of season tickets by commuters. There may be no need to raise capital simply for the working capital requirements of the business. It may be necessary to have lines of credit or financial resources which may have to be drawn upon if the business encounters either a fall in its revenues or an unforeseen increase in costs. Those are risks with which the private sector has experience of dealing. Therefore, although I do not anticipate that the management and employees will have to put up significant sums, they will be involved in the venture. They will need lines of credit or financial support from the City and elsewhere to bid for franchises.

Amendment No. 2 deals with the relationship between my right hon. Friend the Secretary of State—and future Secretaries of State—and the regulator. The amendment deals with a change in a provision in the original text of the Bill, where the regulator had to have regard to the financial position of Railtrack. The change which was proposed in the Lords and which we are commending to the House deals with the regulator acting in a manner which will not render it unduly difficult to finance any activities.

The amendment strengthens the position of Railtrack vis a vis the regulator in a perfectly sensible fashion. It allows Railtrack to prosper, and ultimately we wish to see Railtrack move into the private sector, although we cannot forecast when that will happen. We want Railtrack to be able to manage its affairs in a sensible fashion and in accordance with the financial regime that has been laid down by the Secretary of State while it is subject to the regulator.

The way in which the regulator controls the activities of Railtrack is essentially through the access agreements, with which the regulator has to agree. The Government think that the amendment is sensible and that it provides sufficient air for Railtrack to breathe to ensure that it succeeds and prospers.

Those are the reasons behind the two amendments which I have addressed. Amendment No. 3 does not represent a change in policy and is technical. I commend the amendments to the House.

Mr. Brian Wilson (Cunninghame, North)

First, I must place on record our deep objection to the way in which the Bill has been handled right up to the eleventh hour. In two days we are supposed to deal with 109 pages and 470 Lords amendments. The Bill has been rewritten. Fundamental changes were made at the eleventh hour and fifty-ninth minute. Many of the assurances given by Ministers in Committee have been thrown overboard at the last moment in an effort to make the whole thing workable—a task in which Ministers have signally failed.

Seldom can a piece of legislation have been so thoroughly discredited before even reaching the statute book. Yesterday the final depths of farce were plumbed. We learned that the Department of Transport working party on restructuring British Rail had told Ministers that a £2 billion public service obligation grant will be required for next year. That is £1.15 billion more than for the current year, and it is just the first instalment in the cost of privatisation.

5 pm

At a time when everything worth while in our society is under threat and when the nation's economic plight is so dire that value added tax is to be added to the cost of domestic fuel, the Government are considering spending an extra £1.15 billion not on improving the railways but on financing the privatisation of the railways. As a result of that extra £1.15 billion, not one extra train will run, not one extra passenger will be carried and not one extra tonne of freight will be transferred from our roads. The phenomenal increase in the taxpayers' subsidy will not go towards developing our railways. It will go towards paying for the gargantuan additional costs inherent in rail fragmentation and privatisation.

The proposed level of grant referred to in the working party's document is far in excess of the grant that British Rail has ever been given. If British Rail were given an annual grant of £2 billion, no one would be talking about privatising the railways. We would be boasting, like our continental neighbours, about how good our state railway company is. But having cut the grant to British Rail by 23 per cent. in the current year, with all the resultant service cuts and fare increases, the Tories are preparing to increase the grant by 250 per cent. next year to put in place the structure for privatisation. That is not a transport policy. It is the politics of prejudice, which have characterised the whole shoddy operation.

We see the same approach in the first amendment before us today. The Minister in the Lords suggested that it was merely a technical amendment. The Minister here says that it does not change anything. But the amendment would not have been proposed if it did not change anything and was not intended to do so. It was specifically the first attempt at circumventing the Peyton-Marsh amendment. That amendment placed a duty on the franchise director to give preference to management buy-outs. As my hon. Friends have adduced, management buy-outs are a form of privatisation.

The record of many management buy-outs is different from the one cited by the Minister. The Medway Ports were a management buy-out. City Link was a management buy-out. But, of course, management buy-outs quickly become full privatisations. The Government merely say that preference will be given to private bids to take over parts of the railways.

I object strongly on behalf of the great majority of railway managers to the way in which their name has shamelessly been taken in vain by Ministers. Ministers have paraded the country telling everyone who would listen—many preferred not to—that the Government were doing everything for the railway managers, who were champing at the bit to become involved in management buy-outs. Under the regulations that the Government insisted on enforcing, those same railway managers are not allowed to answer back for themselves on pain of losing their employment with the railways. If one of them had stood up and said that railway managers were not keen to become involved in management buy-outs, he would have risked not only his career prospects but his job.

While railway managers have been constrained, Ministers have felt able to travel around the country falsely representing the views of the railway managers. Ministers took it to the ultimate extreme in dealing with their Back Benchers. They told Back Benchers that they could not allow British Rail to compete because railway managers wanted to compete. Last week we saw the first evidence of the truth of the matter in a survey of railway managers.

Under the protection of anonymity—which surely should not be required in a democratic society—81 per cent. of railway managers said that they were opposed to privatisation as outlined in the Railways Bill. When asked whether they were in favour of British Railways Board having the ability to bid for franchises, 68 per cent. said yes and 18 per cent. said no. When asked whether they were in favour of management buy-outs in preference to BR bidding, 20 per cent. said yes and 64 per cent. said no. When asked whether there was a conflict between management buy-outs and BR bids, 77 per cent. said yes and 6 per cent. said no.

So when, for the first time, the managers are asked, we find a majority of between three and four to one against everything that the Government are doing. Yet Ministers have shamelessly maintained outside this place the hypocrisy and untruth that the purpose of the legislation is to support the ambitions of railway managers.

Why do the Government always support minority vested interests? It would be astonishing if within the whole railway network there were not a few managers who could be paraded in The Daily Telegraph—three, to be precise—and I believe that the same three were paraded last week at St. Ermine's hotel to tell Tory Back Benchers about the enthusiasm for management buy-outs among their colleagues. If railway managers were so in favour of management buy-outs, I should have thought that two different sets of three could have been found—one for St. Ermine's hotel and one for The Daily Telegraph. But not a bit of it—it was the same three.

I should be interested to know who paid those three railway managers while they sat in St. Ermine's hotel in a room booked by Coopers and Lybrand telling Tory Back Benchers what to do with their votes in the Division Lobby. Indeed, I am interested in the role of Coopers and Lybrand in rail privatisation as a whole. Why does Coopers and Lybrand book rooms at St. Ermine's hotel and fill them with railway managers, presumably in British Rail's time, in order to dragoon Tory Back Benchers into those rooms to be told what to do?

Coopers and Lybrand has a big role in all this. It has a big financial role. One of its directors, Sir Christopher Foster, is the Secretary of State's adviser on privatisation. While Coopers and Lybrand may be able to do some of the Government's dirty work a few yards away from here and book hotel rooms, it does not seem to be getting on so well with the substantive matters of railway privatisation. I do not know whether the Minister will tell me what Coopers and Lybrand is paid for its consultants' reports.

Coopers and Lybrand has come back twice to the Government to tell them that it cannot come up with access-charging regimes for the railways and that more work will have to be done. According to Modern Railways this month, Coopers and Lybrand has told the Government that the idea of railway leasing stock companies will not work. The Government can pay anyone to book a room in St. Ermine's hotel, but they are paying Coopers and Lybrand millions to tell them that the thing will not work and that the crucial solutions cannot be found. If the Minister can shed any light on the role of Coopers and Lybrand, Sir Christopher Foster and all the rest of the interlocking gang who are pushing privatisation through, the information will be received with interest and probably with surprise by the House.

Conservative Back Benchers can do what they like. I am sure that they will vote for all this nonsense. They will think that they have got themselves off the hook. The legislation was another own goal even before the historic compromise was reached: it had been discredited and the Government were a laughing stock because they were offering nothing. The amendment is part of that. Priority, preference and promotion will be given to private bids against any bids from British Rail. That is the easy bit. Legislating for that is easy. But management buy-outs or private companies with a token insert of management involvement will still have to raise the money.

We know—we do not need to have it explained in a little tutorial from the Minister—that companies will not take over the assets. We know that the Tory Government are setting up a raft of quangos to take over the assets. We know that the companies will take over management contracts for a limited period without any of the assets that provide security. We understand all that. But the companies will still have to raise the money in the markets to finance that operation.

I notice that the Secretary of State is sitting there dumb. I am reminded of something that I read yesterday when I was browsing through Lady Thatcher's memoirs—it is good for insomnia. I quote from page 835 under the heading, "Men in Lifeboats": But I still wanted a new face at Education where John MacGregor's limitations as a public spokesman were costing us dear in an area of great importance. If he was a failure at education, he is a disaster at transport. [Interruption.] I am sorry. Lady Thatcher has high opinions—

Mr. Stephen Day (Cheadle)

Will the hon. Gentleman give way?

Mr. Wilson

No. Obviously, the Secretary of State for Transport has a great track record on popular policies. I quote from page 848 of Lady Thatcher's memoirs: John MacGregor supported me: I could not now credibly promise a radical overhaul of the community charge, no matter how convenient it seemed. He is back today and cannot promise an overhaul of rail privatisation, no matter how convenient or sensible it might seem, and no matter what a splendid precedent it might be.

Yesterday, he was confronted with questions. Suddenly, after so many months, we started to hear about 15-year franchises—such franchises entered the frame. It is policy on the hoof. The Government can provide 15-year, 30-year or 50-year franchises, and they can politically fix a subsidy to those franchises for a couple of years, but they will not be here to see them through. I make no idle boasts but there may or may not be a change of Government—that remains to be seen.

If anyone in the City puts money into the franchises on the assumption that this Government, for political reasons, can guarantee a level of subsidy and then guarantee the conditions of those franchises to those operations for more than 18 months or two years, much less three years, five years, 10 years or 15 years, they will be much mistaken. I would not put tuppence on it. I do not think that they will put much money on it because everyone realises that the Government will throw money at a small number of franchises to give them some political credibility this side of a general election. People will see through that because they will realise that, if it ever got beyond that stage, every bit of loading that went towards the few private franchisees would be at the expense of those operations that were still run by British Rail.

Labour Members speak for railway managers. We speak for the 80 per cent., not the 20 per cent. While 20 per cent. are being bribed into taking franchises with assurances that Ministers are in no position to give, 80 per cent. will still be running services in the public sector. We will not stand idly by and see them left with a rump railway stripped of investment and subsidy in order to skew financial support to those small elements that the Government have managed to get into the private sector.

"Preference" and "the promotion of management buy-outs" are double talk for saying that, in all the circumstances, British Rail will be discriminated against and anyone the Government can get to bid against British Rail will be preferred. That approach, which is inherent in this amendment, was confirmed by the deal done last week where it was formalised that if anyone bids, or anyone can be found to run a railway, British Rail will be disqualified from doing so.

I need hardly say that that is not acceptable to the Labour party. I said last week, and I say again, that if people buy the fact that silly Government Members paraded their consciences in the summer about their concern for the future of the railways and the right of British Rail to bid, electors and anyone who knows anything about the industry will judge the consistency or the principle that underlies that decision. We will oppose amendments Nos. 1 and 2.

The whole question of Railtrack's charges becomes extremely interesting in the context of the document entitled "Commercial Returns for Passenger Train Operating Companies", which states: Roundly the central Government grant requirement would total some £2 billion in 1994–95 assuming an 8 per cent. return for Railtrack. It is interesting to have confirmation that Ministers are working on a return of 8 per cent.

Mr. Freeman

indicated dissent.

5.15 pm

Mr. Wilson

The Minister is welcome to intervene if he so wishes. The 8 per cent. return for Railtrack will come only through charges to the operating companies. That will be the source of income for Railtrack via the franchise director. As we all know, the subsidy to British Rail in the current year is about £830 million. Those are the two figures, like for like—£830 million and £2 billion. The hon. Member for Worcester (Mr. Luff) looks characteristically puzzled. I may be able to help him.

Mr. Peter Luff (Worcester)

My puzzlement relates to what the hon. Gentleman's speech has to do with the amendments under consideration.

Mr. Wilson

The hon. Gentleman's puzzlement speaks volumes about his comprehension. If he does not understand—

Mr. Matthew Banks (Southport)

rose—

Mr. Wilson

Tory Members should hang on a second —I will listen to one at a time. Public schoolboys are so impetuous.

If the hon. Member for Worcester cannot read the amendments and find that they relate to the charging regime of Railtrack and management buy-outs, perhaps he needs a course in literacy rather than rail privatisation.

Mr. Banks

If the hon. Gentleman spent more time doing his homework not simply on the railways but in every respect, he would know that neither my hon. Friend the Member for Worcester (Mr. Luff) nor I went to a public school. Throughout this debate, I hope that the hon. Gentleman will spend more time concentrating on the amendments and less time on the invective. I have always felt that he makes much better contributions, which are listened to with greater interest on both sides of the House, when he is less personal and concentrates on the matter in hand.

Mr. Wilson

I am so impersonal I have forgotten the hon. Gentleman's name.

We have come to the end of a long process. We had reasonable debates in Committee, and we won assurances there. However, we have seen those assurances overturned in the other place. We have come to the last lap in the parliamentary process and we are confronted with an additional 470 amendments. Railway pensioners have written to us to express their concerns, but those concerns have been ignored.

Frankly, I am much less concerned about abuse towards Government Members than I am about the abuse of Ministers towards the railway network, railway pensioners and so on. If Conservative Members expect a soft ride and a nice little game of cricket, they will not get it. This privatisation is not like other privatisations because the difficulties do not end here—they begin here. All around the country, we will continue to tell people what the Government have done to the railways. We will identify stage by stage the consequences of the legislation and we will hold to personal and electoral account those who voted for it in the full knowledge of precisely what they were doing to the railways.

Sir David Mitchell (Hampshire, North-West)

rose—

Mr. Wilson

Does the hon. Gentleman wish to intervene?

Sir David Mitchell

I simply join my colleagues in expressing the hope that the hon. Gentleman might turn his attention to the amendments.

Mr. Deputy Speaker

Order. The amendments relate to the general duties of the Secretary of State and the regulator. There has been nothing out of order to date.

Mr. Wilson

If I were in trouble, I do not think that I would like the hon. Members for Worcester, for Southport (Mr. Banks) and for Hampshire, North-West (Sir D. Mitchell) as my cavalry. Many of my hon. Friends wish to participate in this key debate.

What we have here is a set-up. I wonder whether any Conservative Members took the trouble to fight to get a copy of the report. It is not a two-bit report from a junior civil servant; it is a report from a top working party—the good and the great of the Department of Transport putting their collective intellect into how this will work.

I can provide copies of this paper to any Conservative Member who wants to know what he is voting for. It roundly says that the Government grant requirement will total some £2 billion in 1994–95, assuming an 8 per cent. return for Railtrack. Everyone will pay everyone else 8 per cent., and so that the train operating companies can pay the leasing companies and Railtrack the economic costs plus 8 per cent., £2 billion will be needed next year to start the circle. That compares with £830 million this year.

I hope that I have demonstrated that I am happy to take interventions and will be pleased to answer questions. The hon. Member for Lewes (Mr. Rathbone) was a great rebel in this matter, and by now I would have expected the hon. Gentleman and the ex-Transport Minister, the hon. Member for Hampshire, North-West, to be leaping to their feet to explain why it is a better deal for the taxpayer to pay £2 billion to restructure for privatisation than to pay £830 million to keep the BR network going. If any Conservative Member can explain that, I shall be pleased to allow him to intervene.

There is silence, because they do not know and do not care. They do not care how much it costs, or about the £2 billion for restructuring or the £25 million currently being paid to consultants such as Coopers and Lybrand and the usual suspects who are trying to tell the Government how to make the plan work.

They do not care that the extra £2 billion next year to British Rail will not provide an extra train. All that they care about is the ideology of breaking the system up and selling it. That is how it is seen in the country. No doubt we shall return to these arguments in the debate.

I ask my hon. Friends to oppose Lords amendments Nos. 1 and 2. I again express shock at the fact that we shall have to vote on 470 amendments. We are in for a long night.

Sir Michael Grylls (Surrey, North-West)

I have not spoken on the Bill before. That confession is not especially relevant but my deeper confession is that I am filled with admiration for the Opposition. For 13 years companies have been privatised or commercialised, one after the other. Great monolithic nationalised industries which were pinned down by the Government and the Treasury were allowed to fly free and prosper and provide a better service for the public. After 13 years the Opposition are still bitterly opposed to that.

The hon. Member for Cunninghame, North (Mr. Wilson) gave me the impression that he was not greatly in favour of privatisation. I admire the fact that he can still say that because he has been proved wrong time and again. Today's issue of the Evening Standard has a front-page headline about British Telecom offering a better and better service to the public. I am using that as an analogy, and I hope that I am in order. British Telecom would never have offered such a service before it was privatised. It is offering it now because the monopoly has been broken, more competition has appeared, and BT has to offer a better service.

Many of my constituents daily use the railways, and it might be thought that I would have been nervous about privatisation because it might upset some of them. I have thought carefully about the Bill and about the railways, which I use. To put it mildly, the rail service is not that good, and almost anything would be an improvement. Our track record on freeing up monopolies and introducing competition over the past 13 years has been very successful.

I am prepared to stick out my neck and say that railway privatisation is good because it will introduce competition through franchises and because it will allow management buy-outs. The Opposition used to espouse a form of co-operative ownership, and that had some attractions. A management buy-out is at least half of that because it will free experienced people in the railways from the bureaucratic clutch of British Rail. They will be allowed to get money to run a railway and offer a franchise, and that must be good.

Mr. Keith Hill (Streatham)

The hon. Gentleman speaks about the breaking of monopolies and the development of competition. Is he aware that the Government's proposals will lead to the establishment of regional and local private monopolies for periods of six, seven and possibly 15 years? Some of us prefer public and publicly accountable monopolies to private monopolies of the sort proposed by the Government.

Sir Michael Grylls

I understand the hon. Gentleman's point and I accept that he is partly right. However, there will probably not be different franchises on all sets of railway lines, so it would seem that there will not be competition. There may be competition on the north-east route to Scotland. Let us assume that the hon. Gentleman is right, and that only one franchisee will operate on that line. There will be competition between that line and an operator on another line. People may say about my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell), "His constituents have a fantastic line with a wonderful operator and we should try to encourage that operator to another line." Therefore, there will be competition by example.

Sir David Mitchell

Surely because of the private car and the considerable expansion of coach operators, especially on commuter routes, it is no longer true to say that railways have a monopoly. On the longer routes there is competition from the airlines. The hon. Member for Streatham (Mr. Hill), who raised this hare, is wrong.

Sir Michael Grylls

I was giving the hon. Gentleman the benefit of the doubt and trying to be as kind as possible while not deviating from the amendment.

Sir Paul Beresford (Croydon, Central)

I shall be a little more vicious than my hon. Friend. Does he agree that the hon. Member for Streatham (Mr. Hill) is diametrically wrong? The whole point about franchising and contracting out is that they will give the client, British Rail, control of public accountability on behalf of the taxpayer. Currently there is no such accountability.

Sir Michael Grylls

My hon. Friend puts the point rather more firmly than I would have done. I rest on the truth of the interventions by both my hon. Friends who spoke with great clarity.

No hon. Member can escape the fact that competition, however it is done and however imperfect—and it is difficult to get perfect competition—is beneficial. We should aim for maximum competition, and I thank the Government for breaking the monopoly because it has always been illegal for anyone other than British Rail to operate a railway system. That is a big step. [Interruption.]

The Opposition should listen. Hon. Members are here for only one reason—to try to serve the public. We are not here for our own gratification. At the moment, the railway is a public service and we should try to ensure that it provides a better service.

I end where I started. The Opposition have experienced successful privatisation and commercialisation over the past 13 years, and they are still saying, "Oh no, it does not work." They are either blind or determined not to work for the good of their constituents or the wider public. We should encourage the Government to press ahead with franchising as quickly as possible in the interests of our constituents. Management buy-outs should be encouraged, and I am glad to see that referred to in the amendment.

Mr. Wilson

The hon. Gentleman is obviously a great expert on privatisation. Can he tell us of any other privatisation in which the industry concerned continues to depend for its profitability on the level of taxpayers' subsidy?

Sir Michael Grylls

The hon. Gentleman has asked a perfectly fair question and I shall answer it. We are aware that many of the railway routes will require continuing subsidies. The Government have not been doctrinaire and said that the subsidies will be wiped out overnight. It is in the interests of the public that they continue. If the hon. Gentleman is saying that the rail network is a more difficult commercialisation—perhaps a better term than privatisation when applied to the railways—I agree with him. However, that does not mean that we should run away from it and that we should not be more flexible in the way that we handle it.

5.30 pm

The hon. Gentleman cannot deny that the railways will be better served by competition, by the breaking of the monopoly and by the provision of a service with a private enterprise ethos. The industry needs to get away from the dread hand of a huge, bureaucratic business, which can never ben changed from within. The culture is too deep to change it from within; it can only be changed from without. I remember Sir Ian MacGregor saying when he was at British Coal, that every decision made either by him or by those at levels below him was immediately reported to the then Department of Energy. A business cannot be run properly with continual interference from Government.

British Rail needs to be freed from the dread hand of Government and commercialisation and management buy-outs must be encouraged. The Government are to be congratulated and I wish them well with the amendments.

Mr. Nick Harvey (North Devon)

It is small wonder that, at this last stage in the progress of the Bill, we are considering measures to featherbed management and employee buy-outs. It is not that many months since the Secretary of State told us that he was holding back the floodgates of private sector interest until 1994. Now, with just two months until it is 1994, the floodgates are in danger of collapsing inwards for the lack of any water on the other side. The truth is that virtually no one is showing any interest in bidding. The whole madcap plan for privatisation is now dependent upon management and employee buy-outs. As the hon. Member for Cunninghame, North (Mr. Wilson) said, a recent survey shows that, even among those groups, there is precious little interest in bidding.

The Government are flogging a dead horse and this is their last chance to salvage anything from the project. Is it any surprise that management and employees are showing such a lack of interest? What is in it for them? They are being offered only short franchises and there are no assets against which to raise funds. There is no opportunity to build up any assets that they can sell on at the end of the franchise period. For them, it will just be a daily struggle to run the services.

Why should managers and employees want to carry the can when disasters, such as that at Clapham, happen? Why should they take on that burden of responsibility without any proper corporation behind them? They know the horrible truth about the running of the nation's railway services and trying to encourage them to take responsibility for that is, as has been said, like trying to sell ice to an eskimo. It is no wonder that they need the incentive of extra funds and a clear path in the bidding process, with British Rail being kept out of it.

In Committee, we discussed in some detail the principle that the teams running the shadow franchises should not then bid to take over those franchises. At that point in the saga, the Minister agreed with that. If the teams running the shadow franchises then bid for them, in effect they will be determining the price that they will have to pay for those franchises, or the subsidy that they will receive to run them. I recall that there was bad feeling during the bus privatisation because teams of managers valued the bus services that they then proceeded to buy.

In considering the special measures proposed to help management and employee buy-outs, we must question what impact competition law will have. I cannot help but remember the whole sorry debacle of the British Aerospace takeover of Rover, when the European Commission found that there had been unacceptable sweeteners. There is a risk that the Commission will reach the same conclusion about these measures.

Only this weekend we heard how much more privatisation will cost than was originally suggested. The late Robert Adley, the predecessor to my hon. Friend the Member for Christchurch (Mrs. Maddock), coined the expression "poll tax on wheels" to describe the Bill. At the time, he was referring to its unpopularity, but it might have been a more apt comparison had he been referring to the horrible expense that the taxpayer will have to bear. Privatisation will end up costing at least what was suggested at the weekend and probably a great deal more.

The preparations within British Rail for the shadow franchises and the management buy-outs are already having a desperate effect on morale as people within the industry wonder whether they are part of the in crowd—part of any bid. The air of intrigue and suspicion is having a profound effect on the morale of railway workers and that will become worse as time goes on.

Sir Michael Grylls

If the hon. Gentleman is so opposed to the Bill, why has the Liberal Democrat-controlled county council on the Isle of Wight welcomed the opportunity for the private sector to bid for the Isle of Wight railway? Why does the hon. Gentleman take a different line?

Mr. Harvey

I have said nothing today, or previously, to suggest that there should not be any private sector bid for any railway service. The amendments that we are discussing relate to management and employee buy-outs, which the Government want to featherbed. They want to distort competition and to short-change the taxpayer. Taxpayers have been investing heavily in our railway network for many decades. When someone wants to take over the service—whether a management buy-out or a private sector business—the least that the taxpayers are entitled to is the satisfaction and certainty of knowing that the service will be better run and at a better price than under British Rail, the existing carrier. There is no reason why there should not be management and employee buy-outs; I am not suggesting that they should be prohibited. However, such bids should be able to stand on their own feet in their attempt to beat British Rail.

The truth is that, in the dying hours of the passage of this Bill, the Government have been driven to make policy off the cuff. That is behind the Secretary of State's reluctant admission at the weekend that franchises might be allowed to run for as long as 15 years. For many months, anyone considering taking on a franchise has told him that, because any investment in the railways takes so long to be repaid, potential bidders would be interested only if the franchises ran for longer than originally proposed. Now, in their desperation to make some sense of the privatisation, the Government have had to agree to that.

The Government are absolutely determined to wipe British Rail off the map. The amendments are an attempt to load the dice in favour of any bidder trying to take services away from British Rail. By all means management and employee buy-outs should be allowed to bid, but they should stand on their own feet, win on price and win on service provision.

Mr. Keith Hill

Lords amendment No. 2, according to the Minister, will enable Railtrack to manage its affairs sensibly. It also modifies the powers of the regulator in his application of access agreements.

Splitting the railway network between operating companies and an infrastructure authority—Railtrack—is a fundamental aspect of the Government's proposals. The scheme was greeted with bewilderment by the international experts who appeared before the Transport Select Committee, and the Committee expressed great scepticism about it on operational grounds. It remains a matter of deep confusion, however, why the Government have resolutely refused to name Railtrack on the face of the Bill, or to describe its functions therein.

Why have the Government refused to include any reference to Railtrack? Why have they broken with all precedent in privatisation legislation and refused to name a successor organisation of such fundamental significance? Why did they take their resistance to naming Railtrack to the extent of voting down an amendment so to do in the House of Lords? Does not that confirm that enormous powers for the future organisation of the railway will be concentrated in the hands of the Secretary of State. In the words of the Select Committee report, it is an indication of the sweeping powers contained in part II which enables the Secretary of State to restructure British Rail in the way he sees fit. Will the Minister confirm, because Parliament, the public and potential operators have the right to know, that the absence of Railtrack from the Bill means that it will be possible for the regulator to approve franchises which combine control of both operations and infrastructure? Is that not the very definition of a network licence, which appears in amendment No. 2?

In other words, will the Minister confirm that it will be perfectly possible for, for example, Mr. Richard Branson, of a potential Virgin Rail, to enjoy sole ownership of the east coast main line—if he so wills and if he can afford it—for a period of several years in the not-too-distant future? Was not that the effect of amendment No. 163, passed in Standing Committee B in the House of Commons on 23 February 1993?

5.45 pm

The Minister owes it to the House to be frank about the matter, because it bears profoundly on the kind of railway service that the public are likely to experience in the future. It also bears profoundly on the future viability of Railtrack itself.

Are there not several other major question marks over the financial arrangements of Railtrack? One major question is about access charges. Will the Minister confirm that, with only five months to go before Railtrack assumes its responsibilities, there is still no agreement on a financial regime—in other words, that there is still no agreement about the rate of return that Railtrack is required to make on its assets and that, as a consequence, there is still no agreement on the charges that it will want to impose on British Rail or on possible private operators?

Is it not an extraordinary state of affairs, when literally half the railway, less than half a year before it comes into operation, still does not know what its revenue costs or revenue charges will be? Does not that uncertainty compound the uncertainty about the investment that is likely to be available to Railtrack following the current Public Expenditure Survey Committee round?

The Minister was right when, in Committee, he deplored the tendency of Governments to treat railway infrastructure as an economic regulator. He said: It is sometimes seen as the regulator. When public sector revenues are under pressure, investment projects are often postponed."—[Official Report, 11 February 1993; c. 52.] Quite right too.

In contrast to that deplorable record, the Minister drew, at that time, a rosy picture of a long-term rolling programme of investment for railway infrastructure under the new Railtrack arrangements. It would help the House if the Minister could give us a guarantee that, following the Budget, there will be no cuts in investment for Railtrack. At the end of the day, it is not phoney deals or fancy franchises, but cash entering the system, upon which the future of the railway system depends.

Mr. McAllion

The hon. Member for Surrey, North-West (Sir M. Grylls) referred to Opposition Members repeatedly getting things wrong. The hon. Member for Christchurch (Mrs. Maddock) reminded him of the words of her predecessor, Mr. Robert Adley, that the proposals contained in the Bill were the poll tax on wheels. If ever a Government got anything wrong, it was the Conservative Government when they brought in the poll tax; and if ever a Government are going to get it wrong again, it is the Government when they force this measure through the House tonight and bring upon themselves the hatred and rejection of the British people, who do not support the measures in the Bill and especially do not support the break-up of the public service railway.

I listened to the Minister of Transport in Committee, and I was not over-impressed by his contribution. I thought that perhaps he would have improved, having been given the summer recess during which to recover, but he made a brief speech tonight in introducing the amendments which even he should be embarrassed about.

The Minister began by saying that amendments Nos. 1 and 2 were relatively uncontroversial, and then he ran right into a wall of controversy when he suggested that he should not make the arguments for them, because we could read them in the Hansard report of the House of Lords. As my hon. Friend the Member for West Bromwich, East (Mr. Snape) pointed out, that is no way for a Minister of the Crown to operate in the House of Commons. If he can argue the case for those amendments, as he does here, he should not refer hon. Members elsewhere.

The Minister went on to say that the amendments were to make things clearer, but he could not say clearly what "a substantial interest" meant. He could only say that it is not 5 per cent. We are all agreed about that. "A substantial interest" does not mean 5 per cent., but what does it mean? The Minister could not define it more specifically.

An annexe in a letter that the Minister circulated to my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) describes the different groups of amendments. When describing amendments Nos. 1 and 2 the Minister says that employees providing the railway services to be franchised must have "a significant interest". Which is the correct phrase? Is it the "substantial interest" that is in the annexe which the Minister sent to my hon. Friend? Will the Minister tell us which phrase will appear on the statute book when the Bill finally becomes a statute?

There is a difference between "substantial" and "significant". "Substantial" suggests that perhaps we are describing a majority interest. The Minister was careful not to define it in those terms, but that is what I would take to be the meaning of "a substantial interest". What do other hon. Members believe the phrase "a substantial interest" means? One may receive 650 different interpretations of what "a substantial interest" might mean.

Let us remember that we are dealing with law that will go on to the statute book. We could not get a definition of a key term in an important amendment that will go into a Bill and, by my standards, that is no way for a Minister to try to get any legislation through the House. In fact, he went on to say that he could not define "a substantial interest" because it depends on the capitalisation; it depends on the debt burden; it depends on the possibility that the company that is set up will suffer a loss of revenue at some time in the future.

It also depends on the unforeseen rise in costs. One foreseen rise in costs that may be able to be taken into account are the track charges that will be levied by Railtrack, but, as my hon. Friend the Member for West Bromwich, East pointed out, neither the Government nor the Minister are prepared to tell anyone what those track charges may be, so we do not know what foreseen or unforeseen costs may arise.

That is an insane way for the House to behave when we are dealing with legislation. What happens when one of the franchises is awarded to a bid that comes from a management buy-out and someone contests that award on grounds of interpretation? Should one go to the regulator and ask him to define "a substantial interest", or should one go to the courts?

Let us suppose that the parties ask the courts to decide what Parliament meant by "a substantial interest". The courts would look at the Hansard record of the debate and would find out that no one in Parliament could define "a substantial interest". The Minister was not prepared to do so. He virtually told hon. Members that it is up to us to make up our own minds about what that phrase means before we vote on the amendment. What will the courts think of the House if that is the sad result of our debate, because the Minister and the Government do not know what they are doing in these amendments?

The phrase "a substantial interest" is not the only problem. We went on to ask the Minister what he meant by "promoting". We are placing a duty on the regulator and the Secretary of State to "promote" management buy-outs. The Minister says that that does not mean price preference, so we are clear about that. Funds will be made available to help in the preparation of management bids. I think that the Minister said that—he referred to the fact that £100,000 of taxpayers' money would be made available for potential management buy-outs.

If I were a private sector bidder considering a franchise, I would make sure that former British Rail employees made up the required 6 per cent. Under the Minister's definition that is all that will be necessary to qualify for a £100,000 handout to prepare the franchise bid. That percentage interest will also place a duty on the Secretary of State and the regulator to promote the bid when compared with one with which no former British Rail employees are involved.

The whole thing is absolute nonsense. What will happen if there are two bids which in all other respects are equal, but one is a management buy-out? Will the Secretary of State and the regulator be obliged to give the management buy-out preference? What if a private sector bid is only marginally better than a management buy-out? Does "promoting" mean that the Secretary of State must still give preference to the management buy-out in those circumstances?

It is an insult for the Minister to come to the House in 1993 with those arguments and to expect the amendment to be carried with a majority. It is also an insult to those Conservative Members who have been getting kudos from their constituents throughout the summer by arguing that they will stand up to the privatisation of the railways. When the time has come, they are not taking part in the debate or complaining when the Minister tables such shoddy and slipshod amendments.

As a Scottish Member, I have a special interest in the debate, because ScotRail and the east coast main line will be two of the first franchises put out to tender. I am especially concerned because, at a time when the Scottish rail network is crying out for investment, the Government seem to have got their priorities completely wrong.

A recent report on transport links with Europe prepared for the Select Committee on Scottish Affairs identified an urgent need for a £750 million investment in track and rolling stock in Scotland. At such a time, it is wrong for the Government to proceed with a Bill that will promote management buy-outs and privatisation, change the structure of the railways, and put at risk safety and all the other things that are important to people in Scotland.

Time and again, hon. Members have referred to the stories at the weekend about the measure costing about £2 billion. We know that the original estimate for the public sector obligation grant for next year was £851 million, based on the assumption that the rail network would remain in the public sector. However, an influential interdepartmental Committee set up by the Minister and the Secretary of State is suggesting that, if privatisation goes ahead, the cost will be £2 billion.

Every hon. Member knows that there is an unprecedented squeeze on public expenditure. The Chancellor of the Exchequer has made it clear that his proposed limits for public spending next year will not, under any circumstances, be breached. We must believe the Chancellor of the Exchequer when he says that £851 million will be spent on the public sector obligation grant next year. We must believe that that figure will not be breached, but if so, where will the other £1 billion-plus come from? I suggest that it will not come from Government grants to any franchise holder next year. The people who win the franchises will be expected to make savings by cutting services, jobs and working conditions for railway staff. That is not merely my view but that of the people who work in the industry.

Only last week, representatives of the "Save Our Railways" campaign came here. A train started in Glasgow, went to Edinburgh and then down the east coast main line, picking up protesters. They all said exactly the same. People in Scotland have complained about the collapse of morale in ScotRail, caused by the threat of privatisation and management buy-outs. The Government dismissed that complaint. Mr. Donnie Shannon, a chargehand at Queen Street station in Glasgow, said: Privatisation isn't an answer. The railways require investment. Privatisation will threaten rural services and staff are particularly worried about their conditions under private ownership. The protesters are not the only people to think like that. Tayside regional council is the transport authority for my constituency in Dundee and it has a strategy to try to persuade commuters to move from private to public transport. A key component is to encourage the use of our railways. A series of stations just outside Dundee—Broughty Ferry, Monifeith, Carnoustie and Arbroath—desperately need investment to upgrade the buildings, improve rolling stock and keep the fares down so that the service can compete with the cost of taking a private car into Dundee.

There is no hope of fulfilling that aim if the Secretary of State and the Government go ahead with their privatisation plans. There will not be sufficient investment, because the money will be directed elsewhere, to ensure the profitability of the franchises, whether they are management sector buy-outs or private sector bidders.

The same is true of the east coast main line. I said in Committee time and again that that line consists of two complementary services—an electrified core service, which runs between London and Edinburgh, and a non-electric, non-core service from London to Dundee, Aberdeen and Inverness. I am worried about what will happen to the non-core services if the line is taken over by the private sector.

I wrote to InterCity to explain my fears. Mr. Brian Burdsall, the director of the east coast main line, wrote back and assured me that, as long as InterCity remained in the public sector, it intended to maintain the present level of services to Aberdeen and Inverness, and that it regarded the non-core services as an integral part of the line. He went on: Whether private sector bidders will comply with this particular train plan and whether this timetable will endure for the length of the Franchise it is impossible to say at this point in time. This will partly depend on profitability and the level of Track Access charges which the Government has not yet determined. While the line remains in the public sector and has Government support, services to Dundee and Aberdeen can be guaranteed, but once it is taken over by the private sector—whoever wins the franchise—there will be no guarantee. If the service cannot be run at a profit, it will not be run at all. It is as simple as that.

Mr. John Home Robertson (East Lothian)

Where is the hon. Member for Aberdeen, South (Mr. Robertson)?

Mr. McAllion

Where are the Conservative Members who represent Scotland? I see that the Under-Secretary of State for Scotland has slipped into the Chamber. It is nice to see that at least one Scottish Tory Member has taken an interest in the debate, even if he has to because he is the Minister with that responsibility.

Recently, Mr. Douglas Smart, the secretary of the Railway Development Society in Scotland, wrote to Scottish Members to tell them of his concerns about the implications of rail privatisation in Scotland. He received a reply from the hon. and learned Member for Perth and Kinross (Sir N. Fairbairn), who said: I regard the complications of privatisation of British Rail as insurmountable and I am inclined to vote against the matter or abstain. I do not know whether the hon. and learned Gentleman had hoped that that answer would be kept anonymous—he is not in favour of allowing anonymity for certain other people in society.

However, the letter was published, and at least that hon. and learned Gentleman replied to Mr. Smart, whereas other Tory Members representing Scottish constituencies did not —and we do not know their intentions tonight.

If privatisation goes ahead and lines are taken out of the public sector to be run by management buy-out teams or whoever, only one factor will determine their survival—whether or not those lines can be run at a profit. There will be no consideration of service to the people of the east coast of Scotland. In those circumstances, I know how I shall vote on the amendments and on the Bill tonight. I shall vote against them. The people of Scotland will be watching to see how Government Members who represent Scottish constituences vote.

6 pm

Mr. Home Robertson

I am happy to follow my hon. Friend the Member for Dundee, East (Mr. McAllion), because I also represent an east Scotland constituency that depends on services provided by ScotRail and the east coast main line.

I was amazed by the speech of the hon. Member for Surrey, North-West (Sir M. Grylls), who presented the view of a true believer in rail privatisation. He said, rightly, that we should be predominantly concerned about the interests of our constituents, particularly those who rely on railway services. I hope that the hon. Gentleman's constituents will follow what happens to railway services in their part of the world. I fear greatly for the prospects of rail services in my part of Scotland. There is little doubt that the Bill will lead to poorer services and higher fares across the board.

Lords amendment No. 1 states that the Secretary of State shall have a duty to promote the award of franchise agreements to companies in which qualifying railway employees have a substantial interest". Those who study the Register of Members' Interests will know that I am sponsored by the Transport Salaried Staffs Association. Its members, who are British Rail managers, must be the kind of people to whom the Minister was referring when he expressed the hope that there would be massive participation in management buyout by rail staff.

I am grateful to the TSSA for informing me of the views expressed by those of its members who are senior British rail managers in the survey to which my hon. Friend the Member for Cunninghame, North (Mr. Wilson) referred. Ninety-two per cent. of senior managers replying were not in favour of rail privatisation as outlined in the Bill; 77 per cent. were in favour of British Rail retaining the ability to bid for franchises; 71 per cent. were not in favour of management buy-outs; and 85 per cent. felt that there was a conflict between management buy-outs and British Rail bids—and I believe that the majority of people want British Rail to bid for franchises.

British Rail's senior managers want no part of privatisation. They are more concerned about the future of the service.

Mr. Gary Waller (Keighley)

Does not the hon. Gentleman think that it is significant that one of British Rail's most senior managers, Chris Green, managing director of InterCity, is prepared to put his career at stake by moving to ScotRail? That displays a very different attitude among managers than that claimed by the hon. Gentleman. Mr. Green said: The biggest difference in the end will be that we're going to have to be more inventive, attracting more customers through marketing initiatives against a backdrop of Treasury squeezes over the years. At least Mr. Green recognises that, in the past, it was not Government handouts that were the key factor, but the dead hand of the Government and the Treasury, which prevented the railways—particularly in Scotland—from attracting more customers. He acknowledges that there is a different way of approaching the problem in future, and is prepared to move to Scotland to prove it.

Mr. Home Robertson

Chris Green moved to InterCity from ScotRail in the first place, and I am not surprised that he is baling out of InterCity when the Government are in the process of dismantling it.

The hon. Member for Surrey, North-West conjured up the wonderful spectacle of competition leading to processions of private operators laying on more and more services for the benefit of our constituents, but he gave it all away when, replying to an intervention by one of my hon. Friends, he acknowledged that all services would depend on subsidies for ever more. They will be big subsidies, as we know from leaks over the weekend.

The House may be interested to hear some of the responses by British Rail senior managers in the TSSA survey. Sadly, they must remain anonymous. One commented: Rail privatisation is essentially unsafe, requiring people unskilled in railway businesses to have access to systems and equipment for which they have inadequate training. Another said: Political dogma is blind to practical reality. One manager stated: I totally oppose BR privatisation in any form and I, like most other BR managers, believe it will fail to provide any kind of service. There were many more comments, but perhaps the most significant of the comments that were passed to me was: Every success in your fight. We have been muzzled. That is what the Government have done to the people who know about managing rail services. Right hon. and hon. Members are not supposed to be muzzled but are meant to protect the interests of their constituents—both those who work in the railway system and those who depend on rail services. Where are all those right hon. and hon. Members? Where is the hon. and learned Member for Perth and Kinross?

Mr. Matthew Banks

The hon. Gentleman quoted on the subject of safety someone whose identity and place of work is unknown to me. Does he accept that, throughout the whole process, the Government accepted each and every recommendation of the Health and Safety Executive?

Mr. Home Robertson

I am not persuaded that privatisation will ensure the retention of proper safety standards, and I do not believe any of the Government's assurances.

Mr. Hugh Bayley (York)

My hon. Friend knows that Opposition Members tabled an amendment in Committee that sought to write into the Bill guarantees on each of the Health and Safety Executive's 37 recommendations to the Government. Is he aware that the Minister urged Conservative Members to defeat that amendment, so that it would not form part of the Bill?

Mr. Home Robertson

Nothing surprises me about the Government's cynical approach to this type of legislation. We know from bitter experience that they are prepared to sacrifice all manner of important principles in their drive for privatisation for the hell of it—and we see that today.

The presence in the Chamber of so few Government Members speaks volumes. I suspect that the vast majority of Conservative Members are thoroughly embarrassed by the Bill. Many of them led their constituents to believe that they would oppose the Bill. Where are those right hon. and hon. Members now? I hark back to the poll tax. Conservative Members failed to stop that lousy legislation reaching the statute book, and they ended up with a botched job that did them great damage. There is a serious danger that the same will happen again with the Bill.

The country is looking to Parliament to protect the interests of our constituents. It is our duty to do that, but I fear that the Tory majority in the House will let down the people of Britain again.

Mr. Snape

Listening to the Minister was like getting into a lift—or into an elevator, if one prefers the American name—that has muzak playing in the background. For the first three or four floors, it is relatively pleasant but as the lift continues to ascend, one realises that the guts of the music has been taken out and one is left listening to plink plonk. By the time that the lift gets anywhere near the top floor, one wants to rip out the speaker and jump on it. Putting violence aside in respect of the Minister, listening to him felt much the same. His voice was mellifluous enough but his speech was sadly lacking any any content. I do not believe that the Minister, in his heart of hearts, has any more faith in the Bill than any other right hon. or hon. Member. Indeed, although the few Conservative Back Benchers who are present profess to be in favour of it, I suspect that, in their heart of hearts, they do not believe in it either.

I listened with interest to the contribution of the hon. Member for Surrey, North-West (Sir M. Grylls). He said that he had not spoken on this subject for 14 years. One forbore to say that, by the time he sat down, one could well understand why; but his speech did not—let us say—hit the heights in comparison with other speeches that we have heard in this Chamber.

Anyone who believes that fragmenting the railway system in the way proposed by the Government—in particular, in two of the three amendments that we are discussing—will be good for safety and cohesion in the industry betrays his or her ignorance. It is a pitty that the hon. Member for Surrey, North-West left the Chamber after making his speech. We need go back only 70 years or so—a comparatively short time in railway history—to see what happened to the system when small private operators competed with each other: gradually, they all went under financially, and in 1923 the railways were combined into groups of larger, still privately owned, geographical) based regional companies.

I have no wish to cause Conservative Members further distress; I fear that, in due course, the electroate will do that anyway. However, let us consider what happened to those large, geographically based, privately owned companies throughout the 1930s and the second world war, until nationalisation. It is clear that they were exceedingly unprofitable. Let me choose one at random: the London and North-Eastern railway paid no dividends to its shareholders between 1935 and 1940. After that, of course, the taxpayer took care of the outgoings because of the second world war.

The fragmentation of the industry that the Government propose—whether or not management buy-outs are involved—is likely to prove disastrous on safety grounds as well, as has already been mentioned. It is difficult to find any senior BR managers who are in favour of the proposals, whether or not they can be persuaded to lead management buy-outs.

Predictably, the hon. Member for Keighley (Mr. Waller) referred to an article in this morning's Daily Telegraph, in which Chris Green was presented as a leading supporter of the principle. Although I cannot speak for him, I would not have thought that to be the case. I know that he is widely respected by railway workers for the way in which he has performed successive difficult jobs, but those jobs have been done within a unified railway system, in which some senior managers are themselves responsible for safety matters.

What concerns many Opposition Members about the proposed management buy-outs is the fact that they will be commercially driven and commercially led. Senior managers responsible for signalling safety, for example, will have neither the inclination nor the resources to be caught up in MBOs—which may well be led by people who understand how to turn over a quick profit, especially with the subsidies that we are discussing, rather than by senior managers directly concerned with safety.

One extremely senior manager to speak out against the proposals was Mr. Peter Rayner, formerly regional movements officer of the former London midland region. He was responsible for all train movements in the region. After the Clapham disaster, he denounced the fragmentation of the railway industry on the grounds of its likely impact on railway safety. Soon afterwards, he was transferred from his post and given a job that had been specially created; he described it to me as involving something called psychometric testing. I do not envy Hansardthe task of transcribing that! It was clear that—as he put it himself—Mr. Rayner was a square peg in a round hole. Before long, he took early redundancy and left the railway industry. So much for railway managers' being allowed to speak freely about the damage that they expect to be done to their industry.

The hon. Member for Southport (Mr. Banks) said that the Government had given various assurances about safety. What assurances from the present Government can we believe or trust? They have given many assurances about other matters that we shall debate today and tomorrow, but those assurances do not appear to have satisfied many people.

6.15 pm

As my hon. Friend the Member for Streatham (Mr. Hill) suggested, financial matters lie at the heart of the amendments. I never thought that he and I would be in the Chamber bemoaning the fact that railway subsidies were to rise. For many years, we have pursued successive Ministers—successive Governments, indeed—on the subject of expenditure in the industry. The fact is that, as my hon. Friend points out, the increased subsidy will not provide a single extra service, a single refurbished railway station or a single extra member of staff at a country station. The money will be used—purely in the short term —to bribe people to become involved in purchasing a franchise to operate a railway service.

Will anyone seriously wish to put up a considerable sum, whether it is their own money or the Government's —the Minister cannot tell us how much will be involved, because he does not know—to operate a railway service on track owned by another, in the short term, publicly owned company—Railtrack, which itself must achieve an 8 per cent. return? Would any Conservative Member do so?

I note that the hon. Member for Worcester (Mr. Luff) has returned to the Chamber. A few weeks ago, he and I engaged in a short television debate; the last question I asked him was how much of his money he would put up to purchase the railway that runs through his constituency. After all, it is a hundred years or so since the Oxford, Wolverhampton and Worcester railway—known, for some reason, as the Old Worse and Worse, which does not augur particularly well for the future—disappeared into the maw of the Great Western railway.

Unfortunately, the programme ended before I could get a straight answer from the hon. Gentleman however, I should like to know how much of his own money he is willing to put in—as a great supporter of this damned piece of legislation—if there is a management buy-out of the former Old Worse and Worse. Alas, answer came there none; but let me presuppose that the hon. Gentleman will not bankrupt himself, although he may well expect railway managers to bankrupt themselves.

My hon. Friend the Member for Dundee, East (Mr. McAllion) spoke of morale in the railway industry. I have been connected with the industry, in various junior capacities, since the mid-1950s—or, rather, the late 1950s; I should not make myself sound older than I am. I have never known morale to be as low as it is now, from the very top to the very bottom. The Government must accept some responsibility. If they think that managers whose morale has been virtually crushed by their attitude will now rush into MBOs at the behest of the Bill, they have another think coming.

It is nearly 15 long years since the Conservatives came to office. During that time, every member of the British Railways Board has been appointed by a Conservative Secretary of State—or, in some cases, reappointed.

Mr. Deputy Speaker (Mr. Michael Morris)

Order. I have allowed a fairly broad debate, but this goes far beyond the general duties of the Secretary of State or, indeed, the regulator.

Mr. Snape

I beg your pardon, Mr. Deputy Speaker, but if the general duties of managers in the industry are to mean anything, we must consider how the industry has been managed under various Conservative Administrations. However, at your behest, Mr. Deputy Speaker, I shall move on from that argument.

If Railtrack is expected to make the return envisaged under the Bill, railway management will not rush to participate in management buy-outs. The budgetary constraints to which my hon. Friend the Member for Streatham referred are likely to come sooner rather than later. Like him, I appeal to the Minister for Public Transport to assure us that moneys pledged for management buy-outs and for the investment envisaged in the railway industry—which will be privatised if the Government's majority is brought to bear tonight—will not be cut in the Budget later this month. Will he also assure us that that money and investment will not be subjected to the invariable trimming that takes place every time that it is deemed necessary for the axe to fall on public expenditure projects?

If the Minister is serious about encouraging managers to become involved in the future of their industry, the Government will have to perform differently from the way in which they have performed in recent years. If we are made to stagger through the effects of another round of public expenditure cuts, which will fall on the railway industry in particular, morale among managers will collapse even further. That is not good for those who work in the industry; nor, from the Conservative party's point of view, is it good for those who use railway services. I hope that the Minister will give those assurances: those on financing are essential not only from a political point of view but from the point of view of the future of the railway industry.

Mr. Heppell

It is disappointing that, at this late stage of the Bill's passage, hon. Members are in so much of a muddle about the Bill. That muddle was not foreseen when the Bill was introduced or during its Committee stage. The amendments have now been tabled because the Government got the Bill wrong in the first place.

Sometimes people look for complicated arguments to explain the reasons of the Bill. The truth is that there are two reasons for it. The first is Government dogma that privatisation is good and the public sector is bad. The Secretary of State, knowing that being appointed Secretary of State for Transport was likely to be a stepping stone to spending more time with his family, wanted to flex his muscles and show the backwoodsmen on the Government Back Benches that he was made of stern stuff and that he would tackle privatisation. That is the main reason why we are here today. The second reason is simple: the Government have recognised that there are massive amounts of money in British Rail's pension funds and have been trying to get hold of those funds. Those are the reasons why we are here.

The Government had no idea how privatisation should take place, which explains the muddle. If we start from the basis of not knowing where we are going, we may end up where we do not expect to be, which is why the Government are still tabling amendments. In Committee, we seldom had a chance to discuss a clause, because before we could do so the Government amended it. We seldom had a Chance to discuss amendments, because before we could do so the Government amended them. I am sure that the House of Lords has been through a similar process, with amendment after amendment being tabled. In effect, no one has discussed the original proposals.

There are two specific reasons for Lords amendment No. 1. The first is to cloud and disguise the Government's feelings about BR being able to bid. An amendment was tabled in the other place to allow BR to bid for franchises. Rather than impose conditions that make it impossible for BR to bid, why will not the Government come clean and admit that they oppose the amendment that was passed in the House of Lords and admit that they are doing all they can to frustrate it?

The second reason is Ministers' fears that privatisation will be a failure because insufficient people are prepared to bid. We were told that people in the private sector were queuing up to participate in this great enterprise, but they have not materialised. However, the Government now seem to welcome the thought of a few management buy-outs.

Let us face facts. The private sector will not be attracted without sufficient bribes, which will be given at the expense of the taxpayer. There will be no more management buy-outs without sufficient bribes. Who has heard of such nonsense? The Government talk about a level playing field and about competition, yet they say, "We shall issue a tender under which everyone is equal, but we shall pay for adverts placed by those who tender to help them to bid."

The original purpose of the Bill was to ensure competition. The hon. Member for Surrey, North-West (Sir M. Grylls) spouted about how marvellous it will be when we have competition. Competition has long since been abandoned. It went many months ago when the Government abandoned the idea of open access. After that, they abandoned the idea of anyone competing against the franchisee, effectively ensuring that, when a franchisee won a bid it would have a monopoly on the service. Here is the clearest demonstration that there is no competition. The purpose of the amendment is to allow anyone to bid except BR.

British Rail's management have been encouraged to bid. They have been allowed up to £100,000 of taxpayers' money to prepare their bids. They have been allowed 85 per cent. of the cost of the first £10,000 in preparing their bids and 75 per cent. of the cost of the remainder, with a £100,000 cap on preparation. Is that a sufficient bribe? If it is, it still has not worked. As my hon. Friend the Member for Cunninghame, North (Mr. Wilson) explained, of the 25 directors in charge of existing profit centres that can become TOCs—train operating companies—only five are in the process of becoming such companies. It is interesting that there are so many new words to learn, and TOCs may be one of them. "TOCing" may go into the dictionary. That is not to be mistaken for "TWOCing" —taking without the owner's consent. "TOCing" may have the same definition in the dictionary, but it may or may not mean having consulted the Secretary of State or Minister first.

If we have been bribing management to prepare bids by giving them up to £100,000 to bid against the publicly owned company that we are financing, who is running the railways in the meantime? If the management are not needed to run the railways, one has to ask whether that is the type of management that we want in the first place.

6.30 pm

The truth is that there are no companies ready to bid. Only two companies—British Bus and Stagecoach—participated in a recent seminar held, I think, in August, by the Health and Safety Executive. Not one other company turned up to find out what the safety procedures would be on franchised railways. That tells me one of two things: no other companies are interested in bidding for the franchises or only two companies were sufficiently interested in safety to attend the seminar.

I have no time for the Minister's reassurances about safety. As I said in Committee, if the Minister believed that the recommendations in the Health and Safety Executive's report needed to be implemented, he would have included them in the Bill so that they had to be implemented. Similarly, we had hoped that many pension arrangements would have been included in the Bill. If they had been, tens of thousands of pensioners would not now believe that they have been ratted on by the Secretary of State, who, in effect, gave guarantees to the House which have now been broken in Government admendments.

Mr. Ealfyn Llwyd (Meirionnydd Nant Conwy)

You referred to competition. Even if it were still covered in the Bill, do you agree that it is a complete waste of time—

Madam Deputy Speaker (Dame Janet Fookes)

Order. I remind the hon. Gentleman that he should be addressing me.

Mr. Llwyd

I am sorry, Madam Deputy Speaker. The hon. Member for Nottingham, East (Mr. Heppell) said that competition was a dead letter in the Bill. My rural constituency contains one west coast railway and one in the north; what possible use is discussion about competition in such an area? I am sure that the socially necessary services are of great concern to us all. My understanding is that the Treasury rules would not allow a guaranteed subsidy for more than three years. I discussed that issue with the Minister earlier this year and I await a reasoned response even now.

The hon. Member for Nottingham, East also mentioned "TOCing", he might be interested to know that the word "tocio" in Welsh means "to cut back".

Mr. Heppell

I thank the hon. Gentleman for that helpful intervention. I agree that the very idea of competition has completely disappeared from the Bill. It is no longer relevant. It is certain that the Government will not allow proper and free competition, including the participation of British Rail. One has only to consider the drafting of the franchising director's powers. When considering bids for services, the criteria will not be who is making the cheapest bid, who is the most efficient or effective or who will provide the best service to passengers or customers. Not one of those criteria will be relevant when BR makes a bid.

Government amendment (a) in lieu of Lords amendment No. 31 states that the franchising director will not have to consider the inclusion of a bid by BR unless it is desirable

1. "(a) for the purpose of promoting competition for franchises;
2. (b) for the purpose of promoting the award of franchise agreements to companies in which qualifying railway employees have a substantial interest;
3. (c) for the purpose of encouraging new entry to the passenger railway industry;
• or
66
4. (d) for the purpose of preventing or reducing the dominance of any person or person in the market for the provision in Great Britain, or in any part of Great Britain, of services for the carriage of passengers by railway."

Each paragraph means that BR will be left out of the equation. If the Minister and the Secretary of State are not saying that BR is being told that it cannot bid, will the Minister tell the House in what circumstances will it be allowed to bid?

Mr. Bayley

Clause 4, to which the amendments relate, deals with the Secretary of State's powers, and I am pleased to see him back in the Chamber. I should like him to deal with a point raised in paragraph (a) in Lords amendment No. 2, which instructs the regulator to take note of the Secretary of State's guidance. Precisely what guidance will the Secretary of State give the regulator about the need to promote freight on the railways? With reference to paragraph (b), what action will the regulator take to promote the use of rail freight?

Paragraph 46 of the White Paper claims that privatisation offers the best prospect of attracting new freight to rail with the environmental benefit that this will bring. The Minister of State made a similar point in Committee. He said: It is extremely important to protect the interests of all users of the railway network—passengers and freight—and to promote the use of the railway network. Later that day, he said: We want Railfreight to develop all sensible business that can be handled by rail."—[Official Report, Standing Committee B, 16 February 1993; c. 136–65.] On 9 March the Minister told the Committee that new Government grants would be introduced which will broaden the benefit given to the rail operator"— vis-a-vis the road operator— by taking account of the environmental damage caused by heavy goods vehicles on trunk roads and motorways".—[Official Report, Standing Committee B, 9 March 1993; c. 675.] The rhetoric is fine but, sadly, privatisation will have exactly the reverse effect: it will drive freight business off the railway on to the roads.

Let us take the case of Trainload Freight. In 1992–93, it made a profit of £103 million. I have today seen a memorandum from Graham Smith, Trainload Freight's corporate planning manager. It was dated 13 September 1993 and was sent to all members of the Trainload executive, the board of this British Rail subsidiary. It shows that the company's profits will fall. In 1994–95, profits are expected to be down to £53 million. The following year, it is anticipated that they will be down to £9 million, rising slightly the following year to £17 million and to £27 million the year after.

However, if one takes account of the large number of redundancies expected in the freight sector, which we discussed in Committee, the cash contribution that the company will manage after having met the redundancy payments will fall from more than £100 million last year to £46 million next year, to £4 million the year after and to zero—no profit whatsoever—the following year. That is hardly the rate of return that a private owner would expect on a £400 million business. It does not give much confidence for the future or in the prediction that privatisation will, in the words of the White Paper, move freight from road to rail for environmental reasons.

Senior British Rail managers are telling Ministers that the privatisation of the freight business is a one-way ticket to liquidation. No wonder there is so much in the Bill about administration orders, winding-up procedures and insolvency: that is what privatisation will do to the freight business.

I have a verbatim record of a meeting between British Rail's chief executive, John Welsby, Trainload Freight managers with the Minister for Public Transport on 11 October 1993. Mr. Welsby said: I'm just about to appoint three managing directors and I don't want to send them off on bum prospects". Those managing directors have now been appointed. They are Kim Jordan for the south-eastern division of Trainload Freight, Ian Braybrook for the north-eastern division and Julian Worth for the western division. Is the Secretary of State sending them off on bum prospects? Everyone in Trainload Freight is complaining that the fragmentation —the three-way split of their company—will mean that the operation will lose economies of scale.

At the same meeting, Welsby told the Minister: You are in a hole and still digging. I don't see how there will be anything still to sell, certainly not the cake, just the cherries. John Welsby is clearly picking up language used by my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), who was the first to talk about cherry picking as the likely consequence of privatisation. The Minister replied to Mr. Welsby: Thank you for your clear and forthright presentation. The message is not surprising. I've understood the message for some time. I can imagine the Minister saying precisely that, because he said similar things in Committee. Later at the same meeting, the chief executive of British Rail said: All you'll be left with is a car boot sale. I'm not joking. We are playing a zero sum game with a totally inelastic market. Every plus is a minus to another rail player. I've got an instruction to start releasing surplus assets. You've even asked for a telephone number. The Minister replied: I wouldn't quite put it like that. With some menace, John Welsby said: You'll have to sort this one out. Will the Secretary of State sort it out; more to the point, how will he sort it out at this late stage? When will the Government abandon their poisonous love affair with the juggernaut? When will they stop driving traffic from the railways on to the roads? When will they stop building roads through areas of outstanding natural beauty? When will they stop poisoning people with car fumes and move the traffic from the roads to the railways, as they promised —because they certainly will not achieve that through privatisation?

Mr. Gunnell

I want to comment briefly on clause 4, and in particular on the proposed encouragement of management buy-outs. I believe that, even against the background of the Government's own wishes and intentions, this has not been set about in the right way. We spent 16 hours discussing the clause in Committee. We recognise that the Secretary of State and the regulator have wide-ranging responsibilities under that clause. Price, quality, safety and, as my hon. Friend the Member for York (Mr. Bayley) pointed out, the effect on the environment are all the responsibility of the Secretary of State and the regulator, who must make the best possible regulations and arrangements to fulfil these responsibilities. It is thus understandable that the Government should take the view that they want British Rail managers to be involved in management buy-outs. I can therefore understand the Government's motivation in introducing a proposal by which they seek to ensure that that happens.

The Government seem to be adopting an extremely doctrinaire position, however. In effect, they are seeking to castrate Lords amendment No. 31 and render it ineffective. That is not a satisfactory way of proceeding—even to get what they themselves want—and an alternative means ought to have been found.

6.45 pm

I was interested to hear that the venture capital industry has little interest in management buy-outs or in the Bill itself. The industry is uncertain about the future and believes that the arrangements that are being put in place are wholly risky. The risks are not risks that most members of the industry want to enter into. Why is the venture capital industry so concerned about and so distant from the legislation, given that, as my hon. Friend the Member for Cunninghame, North (Mr. Wilson) said, the new arrangements will cost us £1.15 billion more than the present arrangements? One would have thought that there would be a lot of money to go around and therefore much by way of potential profit for the industry to garner. One wonders why the industry has no enthusiasm for the Bill.

We must consider what makes a successful management buy-out. I not only have experience of the bus industry buy-out in west Yorkshire but have been involved in a number of other management buy-outs, albeit from a different point of view. It seems to me that such buy-outs have certain qualities in common which have led to their success. The motivation of the managers, their ability to manage and their understanding of their own market are crucial.

Many British Rail managers regard the management buy-out option as the lesser of two evils. Either their job as a whole will be under threat because BR will not be performing the function in question, or they become part of a separate company in order to bid. Choosing the less unsatisfactory option is not the basis on which to form a successful company. The managers have to have enthusiasm and have to want to enter into such an arrangement before the Minister offers them £100,000 to set up. In the context of the services that they will run, £100,000 will not make a very great difference. In the case of successful management buy-outs, one usually finds that those involved are extremely enthusiastic about making money. Enthusiasm about making money is not a quality that is innate in British Rail managers and it does not seem to me that the Bill will help them to acquire that attitude.

It is hard to understand why the Government have not taken the view that to allow British Rail to bid—and bid on an honest and untrammelled basis—would be a far better way of ensuring that services proceeded satisfactorily. Moreover, they should realise that, had they allowed BR to bid for franchises, they would have created circumstances in which many BR managers would have learnt how to operate franchises in the context of belonging to BR.

The Government have told us what they ultimately want —if they, and the Bill, survive long enough for the provisions to come into effect. I can only say that, had they operated as I suggest, they would in effect have been training people who were capable of managing a separate franchise company; instead, they are making people managers and creating their companies for them—or providing the wherewithal at least to get them started—without ensuring that they have the expertise that they would need to make a success of the Bill.

I say that knowing that the Bill is fatally flawed. Like my hon. Friends, I believe that it is wholly misplaced. It is hard to see the scope for any profitability in the whole process, other than through direct subsidy from the public purse. My experience of dealing with transport and pricing tells me that, if one increases the price, one reduces the number of passengers. Even if they could produce rapidly the quality that the Minister sought, those who managed the companies would find themselves hemmed in by considerations of price and passenger numbers so that the only way in which their company could become profitable would be by an increased subsidy from the public purse. Therefore, we must be clear that the legislation provides for privatisation at public expense.

The fundamental question of my hon. Friend the Member for Cunninghame, North must be addressed. He stressed the lack of motivation among managers as revealed in a survey. However, he also identified the additional costs as a result of this way of tackling the rail system. Those costs, £1.15 billion, are high. It is quite clear that they are the price of dogma and not of practicality.

Mr. Prescott

I do not need to detain the House for long on this issue. From our debate on the amendment, it is clear that one factor has characterised the Bill from the very beginning: the Government have constantly changed their position. In Standing Committee, the Government moved amendments which altered announcements that they made at previous sittings. The Lords amendment is another example of that.

The amendment refers to the Secretary of State's general duties in respect of which he will direct the regulator. According to the Bill, it is the Secretary of State's duty to exercise the functions assigned or transferred to him under or by virtue of this Part in the manner which he considers best calculated". The Bill then makes those calculations clear. They are (a) to protect the interests of users of railway services". The Secretary of State must make that judgment. The calculations continue: (b) to promote the use of the railway network…(c) to promote efficiency and economy". I like the next calculation: (d) to promote competition". I am not sure whether it has anything to do with competition. As other hon. Members have made clear, only one franchise will be operated on a particular line. There will be no competition. Preference in a bid will be given to the private sector bidder even if the BR bid is better. Quite frankly, this has nothing to do with competition. Clearly, the idea that competition is the best way to provide a better railway service for railway users is in doubt.

The Minister for Public Transport referred us to the debates that took place in the other place. That was a bit of a cheek. I hope that he will give us a proper explanation of the amendments, as that is what the House would expect. It would be proper for him to do that.

It has been difficult to study the 450-odd Lords amendments in detail, because they became available in their present form only last Thursday. I want to raise a little protest. The Lords amendments refer to specific clauses. As I understand it, the relevant lines are not numbered in Lords amendments. Thai makes it extremely difficult to find the relevant sections. I hope that that procedure will be simplified because I spent most of Sunday trying to relate the amendments to the Bill. I do not recommend that exercise to anyone, but I had to do that in order to find out exactly what the Lords amendments did to the Bill. If the relevant lines were marked in the margin, that would make it much easier for us to make better contributions. I hope that we can all agree that that change should be made and that my protest will be noted in the appropriate quarters.

The Minister asked us to assess, according to the Lords amendment, that the regulator could give preference to a bid from a company in which British Rail employees have a substantial interest. The Minister said that he could not define "substantial". Clearly, someone will have to define "substantial" because it is a crucial point. If BR employees held 1 per cent. or 2 per cent. of a buy-out, that would clearly not be considered to be substantial.

I do not understand why the Minister cannot have a stab at defining "substantial". For example, in monopolies legislation, control of the market relates to more than 30 or 40 per cent. There are various areas in respect of which we must make judgments. Someone will have to judge and it would not be wise to leave it to the courts. The Government must have an idea of what constitutes a substantial bid.

I am afraid that the Secretary of State will direct the regulator to give preference to a certain bid, such as an up-front employee buy-out in which BR employees represent only 10 per cent. of the company. The private sector would be using those employees to achieve a cheaper bid. That seems a very curious way of bidding for franchises. The only competition in the Bill is that for subsidies. As the Minister made clear, very few franchises will make a profit. That is why we are arguing about the £2 billion which is double the largest public service obligation payment.

The Secretary of State appeared on "On the Record" at the weekend. I could not challenge him on that programme as I was taken off it. He said that the £2 billion was not for one line. We know that. The £2 billion referred to in the Department of Transport document is assessed on the basis of apportioning a profit to the rate of return, or return on capital, for the track or assets. That calculation amounts to £2 billion. However, the Department's document makes no assessment of the operator's profit because that has not been calculated. The figure that we are talking about is £2 billion-plus.

If BR had been given a fraction of that money to run a good railway system, it would be fair to judge whether BR could run a good service. Instead, BR has been forced to live on a quarter of the resources and to cut available services. Because of the inadequate resources made available to it, BR has been forced to cut services and it has been condemned for that. If the private sector makes a bid under Lords amendment No. 1, all sorts of money will be available for that bid, but that money is denied to BR. That is unfair.

As hon. Members have said, there is so much of a tilt towards a management buy-out because the Government had a difficulty in the other place. Their Lordships supported the idea that BR should be allowed to bid for a franchise and the Opposition will support that when we reach that part of the debate. British Rail, as a corporate body, should be allowed to bid exactly as happens in Sweden in similar circumstances. The Government will oppose that when we reach those amendments later. The alternative is to allow a few managers to buy in.

As was made clear earlier, the reason for all this concern about management buy-outs is that we no longer hear the rhetoric about 30 companies lining up to bid for the franchises. Virgin has made it very clear that it would have difficulty bidding in such circumstances. Stagecoach ran a service which collapsed. Stagecoach sued me for saying that it collapsed. I said that outside and I repeat it here. That service no longer remains and that sounds to me as though it has collapsed. It was taken off before the lease to run the system ran out.

The private sector is no longer talking about bids. The Minister does not want to give BR an opportunity because he made it clear at the earliest stages of the Bill that if BR were allowed to bid for franchises it would punch a big hole in the Bill, so the Minister has had to concoct a formula to allow managers to bid.

I do not know whether the Secretary of State has talked to the managers to discover whether they agree with privatisation or with bids of this kind. I assume that he has done that. I am sure that our evidence, produced by the trade unions in assessing the view of the managers, has been sent to the Secretary of State, so I shall not repeat it, but when asked how many were in favour of privatisation, 88 per cent. were against. When asked whether they were in favour of the British Railways Board handling franchises, 74 per cent. said yes and that they would like to be able to bid for franchises. When asked whether they were in favour of a management buy-out in preference to BRB's bidding, 68 per cent. were very much against that because it would create great tensions within BR.

No doubt those managers will read the reports of this debate. I must tell them that if they choose to bid in those circumstances to run a private sector railway instead of a public sector railway, they have declared their hand. We believe that it should be a public sector railway. It should be subject to public accountability and meet public needs. We have made clear our position on that point; it could not be clearer. We want managers who believe in the system.

I hope that managers who make bids remind themselves that, if it goes back to a publicly owned system, we might look elsewhere for managers rather than look to those who have shown their hands. [Interruption.] That is fair for managers who judge whether they should change their careers and pension arrangements and bid for a private sector line or remain in the public service.

The Government's principle is that BR will still run the majority of services. We still want BR to run services. It is fair for the Opposition to want people who believe in a publicly owned system running a public railway. I hope that the message will go out loud and clear to those who seek to depart from that position. That is the point that I make to managers who are considering making bids. They have made their position clear.

The amendment is solely about trying to save the Government's face. There are no private sector people queuing up to bid, even with the massive bribes being offered'to them. The Government will deny British Rail the right to make bids—that is clear from what they have said—and they hope that a few managers will be encouraged to get together with the private sector. We are against that and we shall oppose the amendment.

We will not vote against all the amendments because there is insufficient time to deal with all the important issues. We shall therefore vote on amendment No. 1 and not push votes on the other amendments, although we are clearly against other amendments. We want to make it clear that we believe in British Rail having the right to run services. The amendment undermines British Rail's corporate ability to do that.

7 pm

Mr. Freeman

I will seek to answer as concisely as I can some of the points that have been raised in this important debate. It has taken two hours, but it has covered very important issues, and they need to be addressed, albeit as succinctly as I can.

The hon. Member for Kingston upon Hull, East (Mr. Prescott) asked what "a substantial interest" is. The Government believe that, in certain circumstances, that can be less than a 50 per cent. interest in the entire equity, but I stand by my earlier remarks—the courts will eventually decide precisely what that definition means. It is clearly because different circumstances will apply in each management and employee buy-out.

The hon. Gentleman again raised the matter of £2 billion, which his colleague the hon. Member for Cunninghame, North (Mr. Wilson) raised earlier. I make it absolutely plain that they were quoting from a working document within the Department of Transport. No decision has been taken on the financial regime for Railtrack, and my right hon. Friend the Secretary of State for Transport will settle that matter in due course after the unified Budget which is to be presented at the end of the month.

Clearly, some account must be taken in setting the franchising director's budget for the new regime of track charges that Railtrack will introduce. Therefore, to the extent that Railtrack, a public sector body, earns more, that money will be available to the public sector to provide additional funding not only to the franchising director but, as I have already given commitments to the passenger transport authorities and executives, for the running of railway services. To that extent, the movement of money is circular. My right hon. Friend will be making a clear statement and set the external financing limits not only of British Rail but of Railtrack and the franchising director in due course.

Mr. Wilson

Will the Minister give way?

Mr. Freeman

If the hon. Gentleman will forgive me, in a minute or two, when I come to his remarks, I will certainly give way.

The hon. Member for Morley and Leeds, East (Mr. Gunnell) talked about an apparent lack of interest from financial institutions. That is not the case. My right hon. Friend and I have had several meetings with financial institutions, including venture capital interests, and they are interested. This is a very early stage in the franchising process. We do not expect the majority of the first seven franchises actually to be let until 1995. It is very early days.

The hon. Member for York (Mr. Bayley) referred to Trainload Freight. Of course there is a conflict or a dilemma—to be resolved, as I admitted in Standing Committee and I admit now; intellectually, it is obvious —between maximising receipts from the sale of Trainload Freight and maximising open-access competition. That we will do.

We have not yet resolved the regime for the Trainload Freight companies or the degree to which, for example, surplus wagons and engines will be available to new entrants, but we are determined to ensure that we have managers in place not only for the Trainload Freight companies but also, I expect, for private companies to make maximum possible use of our rail freight network in this country. The initiatives that we have put in place—for example, that track charges will be based on avoidable costs, widening the section 8 criteria for grants to new rail terminals, and the track subsidy regime—are intended to promote the use of rail freight.

The hon. Member for Nottingham, East (Mr. Heppell) asked about private sector interest and whether it has materialised. I repeat the assertion that I made at the beginning: I have visited most—[Interruption.] It is an assertion, because I am not producing any evidence to the House tonight. I am asserting that I have visited most of the potential rail franchises and I have found considerable enthusiasm among senior management for our proposals. They are anxious to get on with the process of franchising.

The hon. Members for West Bromwich, East (Mr. Snape) and for East Lothian (Mr. Home Robertson) talked about safety. I repeat again that the Health and Safety Commission, on behalf of the Health and Safety Executive, made 37 recommendations about safety. The Government accepted all of them, as did British Rail. The Health and Safety Executive will have overall responsibility for safety, and Railtrack will administer the regime on a day-to-day basis. The Government do not accept that the privatised railway will be any less safe than British Rail.

The hon. Member for Dundee, East (Mr. McAllion) said that, according to his information, the east coast main line, while in public ownership, will continue to run through services to Inverness and Aberdeen. I am delighted. When the franchising director franchises the service, it will be based on the services that British Rail runs immediately prior to franchising. Therefore, the hon. Gentleman should draw some reassurances from what he has been told.

The hon. Member for Streatham (Mr. Hill) asked several questions about Railtrack. Railtrack is not on the face of the Bill because several possible network operators —owners of infrastructure—could be in play in future years, including Railtrack. That is obviously one, and certainly the major, operator. The hon. Gentleman asked whether franchisees could buy operations and infrastructure—a vertical integration. That is not the Government's policy, and we have made that plain. Apart from one limited exception, which will be the case of the Isle of Wight, that is not our policy, and that is set out very clearly in the draft objectives to the franchising director.

The hon. Member for Streatham asked about access charges, as did the hon. Member for Cunninghame., North. As I have said, we have not set the financial regime, but Coopers and Lybrand has now completed a substantial part of its work. From today, freight operators will be able to obtain a quote on the track charges that will apply to them when they start running services.

On passenger services, I make the obvious point that, because the franchising director will be essentially acquiring access to the whole of the railway network, the franchising director will be providing Railtrack with a substantial part of Railtrack' s income and taking the revenue risk on the ability to franchise.

Mr. Wilson

Will the Minister give way?

Mr. Freeman

I was going to answer the hon. Gentleman's points. Perhaps he would like to hear the answers first.

The hon. Member for Cunninghame, North quoted the survey conducted by TSSA, one of the three major rail unions. The hon. Member for Kingston upon Hull, East was good enough to admit that it might be a little partisan. That does not square with the evidence before the Department. There is significant interest on the part of senior rail managers who actually run the trains in the different divisions. [Interruption.] I would be very happy in due course, as and when the franchising director receives bids and then lets franchises, to make sure that the public are well aware of the interest.

In commending the Lords amendments—

Mr. Wilson

Will the Minister give way?

Mr. Freeman

No, I must finish. [Interruption.] I am answering the hon. Gentleman's points.

In commending the amendments to the House, I draw attention to the two points that the Opposition spokesman has made tonight. First, the Opposition are opposed to British Rail managers and staff bidding for franchises. They should tell that to British Rail management. Many managers want the chance to have an equity interest in running British Rail. Secondly, the hon. Gentleman is quite clear and candid—he does not want to break British Rail's monopoly. I agree with my hon. Friend the Member for Surrey, North-West (Sir M. Grylls) that breaking the monopoly, permitting competition and permitting the private sector to come in will revolutionise rail services and will improve the quality of service.

Mr. Wilson

With the leave of the House—

Madam Deputy Speaker

I am afraid that it is not possible under the rules to permit the hon. Gentleman to speak again. I understand the hon. Gentleman's disquiet, but I cannot permit that.

Mr. Wilson

On a point of order, Madam Deputy Speaker. Is it in order for the Minister to say that he will give way and then not give way? Is that not a breach of the courtesies of the House, if not of its rules?

Madam Deputy Speaker

I am afraid that it is not a matter for the Chair and therefore one on which I cannot rule.

Question put, That this House doth agree with the Lords in the said amendment:—

The House divided: Ayes 321, Noes 283.

Division No. 378]	[7.09 pm
AYES
Ainsworth, Peter (East Surrey)	Ashby, David
Aitken, Jonathan	Aspinwall, Jack
Alexander, Richard	Atkins, Robert
Alison, Rt Hon Michael (Selby)	Atkinson, David (Bour'mouth E)
Allason, Rupert (Torbay)	Atkinson, Peter (Hexham)
Amess, David	Baker, Rt Hon K. (Mole Valley)
Ancram, Michael	Baker, Nicholas (Dorset North)
Arbuthnot, James	Baldry, Tony
Arnold, Jacques (Gravesham)	Banks, Matthew (Southport)
Arnold, Sir Thomas (Hazel Grv)	Banks, Robert (Harrogate)

Bates, Michael	Forsyth, Michael (Stirling)
Batiste, Spencer	Forsythe, Clifford (Antrim S)
Bellingham, Henry	Forth, Eric
Bendall, Vivian	Fowler, Rt Hon Sir Norman
Beresford, Sir Paul	Fox, Dr Liam (Woodspring)
Biffen, Rt Hon John	Fox, Sir Marcus (Shipley)
Blackburn, Dr John G.	Freeman, Rt Hon Roger
Body, Sir Richard	French, Douglas
Bonsor, Sir Nicholas	Fry, Peter
Booth, Hartley	Gale, Roger
Boswell, Tim	Gallaie, Phil
Bottomley, Peter (Eltham)	Gardiner, Sir George
Bottomley, Rt Hon Virginia	Garel-Jones, Rt Hon Tristan
Bowden, Andrew	Garnier, Edward
Bowis, John	Gill, Christopher
Boyson, Rt Hon Sir Rhodes	Gillan, Cheryl
Brandreth, Gyles	Goodlad, Rt Hon Alastair
Brazier, Julian	Goodson-Wickes, Dr Charles
Bright, Graham	Gorman, Mrs Teresa
Brooke, Rt Hon Peter	Gorst, John
Browning, Mrs. Angela	Grant, Sir A. (Cambs SW)
Bruce, Ian (S Dorset)	Greenway, Harry (Ealing N)
Budgen, Nicholas	Greenway, John (Ryedale)
Burns, Simon	Griffiths, Peter (Portsmouth, N)
Burt, Alistair	Grylls, Sir Michael
Butcher, John	Gummer, Rt Hon John Selwyn
Butler, Peter	Hague, William
Carlisle, John (Luton North)	Hamilton, Rt Hon Archie (Epsom)
Carlisle, Kenneth (Lincoln)	Hamilton, Neil (Tatton)
Carrington, Matthew	Hanley, Jeremy
Carttiss, Michael	Hannam, Sir John
Cash, William	Hargreaves, Andrew
Channon, Rt Hon Paul	Harris, David
Chapman, Sydney	Haselhurst, Alan
Churchill, Mr	Hawkins, Nick
Clappison, James	Hawksley, Warren
Clarke, Rt Hon Kenneth (Ruclif)	Hayes, Jerry
Clifton-Brown, Geoffrey	Heald, Oliver
Coe, Sebastian	Heathcoat-Amory, David
Colvin, Michael	Hendry, Charles
Congdon, David	Heseltine, Rt Hon Michael
Conway, Derek	Higgins, Rt Hon Sir Terence L.
Coombs, Anthony (Wyre For'st)	Hill, James (Southampton Test)
Coombs, Simon (Swindon)	Hogg, Rt Hon Douglas (G'tham)
Cope, Rt Hon Sir John	Horam, John
Cormack, Patrick	Hordern, Rt Hon Sir Peter
Couchman, James	Howard, Rt Hon Michael
Cran, James	Howarth, Alan (Strat'rd-on-A)
Currie, Mrs Edwina (S D'by'ire)	Howell, Rt Hon David (G'dford)
Curry, David (Skipton & Ripon)	Howell, Sir Ralph (N Norfolk)
Davies, Quentin (Stamford)	Hunt, Rt Hon David (Wirral W)
Davis, David (Boothferry)	Hunt, Sir John (Ravensbourne)
Day, Stephen	Hunter, Andrew
Deva, Nirj Joseph	Hurd, Rt Hon Douglas
Devlin, Tim	Jack, Michael
Dickens, Geoffrey	Jackson, Robert (Wantage)
Dicks, Terry	Jenkin, Bernard
Dorrell, Stephen	Jessel, Toby
Douglas-Hamilton, Lord James	Johnson Smith, Sir Geoffrey
Dover, Den	Jones, Gwilym (Cardiff N)
Duncan, Alan	Jones, Robert B. (W Hertfdshr)
Duncan-Smith, Iain	Jopling, Rt Hon Michael
Dunn, Bob	Kellett-Bowman, Dame Elaine
Durant, Sir Anthony	Key, Robert
Dykes, Hugh	Kilfedder, Sir James
Eggar, Tim	King, Rt Hon Tom
Elletson, Harold	Kirkhope, Timothy
Emery, Rt Hon Sir Peter	Knapman, Roger
Evans, David (Welwyn Hatfield)	Knight, Mrs Angela (Erewash)
Evans, Jonathan (Brecon)	Knight, Greg (Derby N)
Evans, Nigel (Ribble Valley)	Knight, Dame Jill (Bir'm E'st'n)
Evans, Roger (Monmouth)	Knox, Sir David
Evennett, David	Kynoch, George (Kincardine)
Faber, David	Lait, Mrs Jacqui
Fabricant, Michael	Lang, Rt Hon Ian
Fairbaim, Sir Nicholas	Lawrence, Sir Ivan
Fenner, Dame Peggy	Legg, Barry
Field, Barry (Isle of Wight)	Leigh, Edward
Fishburn, Dudley	Lennox-Boyd, Mark
Forman, Nigel	Lidington, David

Lightbown, David	Scott, Rt Hon Nicholas
Lilley, Rt Hon Peter	Shaw, David (Dover)
Lloyd, Peter (Fareham)	Shaw, Sir Giles (Pudsey)
Lord, Michael	Shephard, Rt Hon Gillian
Luff, Peter	Shepherd, Colin (Hereford)
Lyell, Rt Hon Sir Nicholas	Shersby, Michael
MacGregor, Rt Hon John	Sims, Roger
MacKay, Andrew	Skeet, Sir Trevor
Maclean, David	Smith, Sir Dudley (Warwick)
McLoughlin, Patrick	Smith, Tim (Beaconsfield)
McNair-Wilson, Sir Patrick	Smyth, Rev Martin (Belfast S)
Madel, David	Soames, Nicholas
Maitland, Lady Olga	Spencer, Sir Derek
Major, Rt Hon John	Spicer, Sir James (W Dorset)
Malone, Gerald	Spicer, Michael (S Worcs)
Mans, Keith	Spink, Dr Robert
Marland, Paul	Spring, Richard
Marlow, Tony	Sproat, Iain
Marshall, John (Hendon S)	Squire, Robin (Hornchurch)
Marshall, Sir Michael (Arundel)	Stanley, Rt Hon Sir John
Martin, David (Portsmouth S)	Steen, Anthony
Mawhinney, Dr Brian	Stephen, Michael
Mayhew, Rt Hon Sir Patrick	Stern, Michael
Mellor, Rt Hon David	Stewart, Allan
Merchant, Piers	Streeter, Gary
Milligan, Stephen	Sumberg, David
Mills, Iain	Sweeney, Walter
Mitchell, Andrew (Gedling)	Sykes, John
Mitchell, Sir David (Hants NW)	Tapsell, Sir Peter
Moate, Sir Roger	Taylor, Ian (Esher)
Molyneaux, Rt Hon James	Taylor, John M. (Solihull)
Monro, Sir Hector	Taylor, Sir Teddy (Southend, E)
Montgomery, Sir Fergus	Temple-Morris, Peter
Moss, Malcolm	Thomason, Roy
Needham, Richard	Thompson, Sir Donald (C'er V)
Nelson, Anthony	Thompson, Patrick (Norwich N)
Neubert, Sir Michael	Thornton, Sir Malcolm
Newton, Rt Hon Tony	Thurnham, Peter
Nicholls, Patrick	Townend, John (Bridlington)
Nicholson, David (Taunton)	Townsend, Cyril D. (Bexl'yh'th)
Nicholson, Emma (Devon West)	Tracey, Richard
Norris, Steve	Tredinnick, David
Onslow, Rt Hon Sir Cranley	Trend, Michael
Oppenheim, Phillip	Trimble, David
Ottaway, Richard	Trotter, Neville
Page, Richard	Twinn, Dr Ian
Paice, James	Vaughan, Sir Gerard
Patnick, Irvine	Viggers, Peter
Patten, Rt Hon John	Waldegrave, Rt Hon William
Pattie, Rt Hon Sir Geoffrey	Walker, Bill (N Tayside)
Pawsey, James	Waller, Gary
Peacock, Mrs Elizabeth	Ward, John
Pickles, Eric	Wardle, Charles (Bexhill)
Porter, David (Waveney)	Waterson, Nigel
Portillo, Rt Hon Michael	Watts, John
Powell, William (Corby)	Wells, Bowen
Rathbone, Tim	Whitney, Ray
Redwood, Rt Hon John	Whittingdale, John
Renton, Rt Hon Tim	Widdecombe, Ann
Richards, Rod	Wiggin, Sir Jerry
Riddick, Graham	Wilkinson, John
Rifkiand, Rt Hon. Malcolm	Willetts, David
Robathan, Andrew	Wilshire, David
Roberts, Rt Hon Sir Wyn	Winterton, Nicholas (Macc'f'ld)
Robertson, Raymond (Ab'd'n S)	Wolfson, Mark
Robinson, Mark (Somerton)	Wood, Timothy
Roe, Mrs Marion (Broxbourne)	Yeo, Tim
Ross, William (E Londonderry)	Young, Rt Hon Sir George
Rowe, Andrew (Mid Kent)
Rumbold, Rt Hon Dame Angela	Tellers for the Ayes:
Ryder, Rt Hon Richard	Mr. Robert G. Hughes and
Sackville, Tom	Mr. Michael Brown.
Sainsbury, Rt Hon Tim
NOES
Abbott, Ms Diane	Alton, David
Adams, Mrs Irene	Anderson, Donald (Swansea E)
Ainger, Nick	Anderson, Ms Janet (Ros'dale)
Ainsworth, Robert (Cov'try NE)	Armstrong, Hilary
Allen, Graham	Ashton, Joe

Austin-Walker, John	Foster, Don (Bath)
Banks, Tony (Newham NW)	Foulkes, George
Barnes, Harry	Fraser, John
Barron, Kevin	Fyfe, Maria
Battle, John	Galloway, George
Bayley, Hugh	Gapes, Mike
Beckett, Rt Hon Margaret	Garrett, John
Beith, Rt Hon A. J.	George, Bruce
Bell, Stuart	Gerrard, Neil
Benn, Rt Hon Tony	Gilbert, Rt Hon Dr John
Bennett, Andrew F.	Godman, Dr Norman A.
Benton, Joe	Godsiff, Roger
Bermingham, Gerald	Golding, Mrs Llin
Berry, Dr. Roger	Gordon, Mildred
Betts, Clive	Graham, Thomas
Blair, Tony	Grant, Bemie (Tottenham)
Blunkett, David	Griffiths, Nigel (Edinburgh S)
Boateng, Paul	Griffiths, Win (Bridgend)
Boyce, Jimmy	Grocott, Bruce
Boyes, Roland	Gunnell, John
Bradley, Keith	Hain, Peter
Bray, Dr Jeremy	Hall, Mike
Brown, Gordon (Dunfermline E)	Hanson, David
Brown, N. (N'c'tle upon Tyne E)	Hardy, Peter
Burden, Richard	Harman, Ms Harriet
Byers, Stephen	Harvey, Nick
Callaghan, Jim	Hattersley, Rt Hon Roy
Campbell, Mrs Anne (C'bridge)	Henderson, Doug
Campbell, Menzies (Fife NE)	Heppell, John
Campbell, Ronnie (Blyth V)	Hill, Keith (Streatham)
Campbell-Savours, D. N.	Hinchliffe, David
Canavan, Dennis	Hoey, Kate
Cann, Jamie	Hogg, Norman (Cumbernauld)
Carlile, Alexander (Montgomry)	Home Robertson, John
Chisholm, Malcolm	Hood, Jimmy
Clark, Dr David (South Shields)	Hoon, Geoffrey
Clarke, Eric (Midlothian)	Howarth, George (Knowsley N)
Clarke, Tom (Monklands W)	Howells, Dr. Kim (Pontypridd)
Clelland, David	Hoyle, Doug
Clwyd, Mrs Ann	Hughes, Kevin (Doncaster N)
Coffey, Ann	Hughes, Robert (Aberdeen N)
Cohen, Harry	Hughes, Roy (Newport E)
Connarty, Michael	Hughes, Simon (Southwark)
Cook, Frank (Stockton N)	Hume, John
Cook, Robin (Livingston)	Hutton, John
Corbett, Robin	Illsley, Eric
Corbyn, Jeremy	Jackson, Glenda (H'stead)
Corston, Ms Jean	Jackson, Helen (Shefld, H)
Cousins, Jim	Jamieson, David
Cox, Tom	Janner, Greville
Cryer, Bob	Johnston, Sir Russell
Cummings, John	Jones, Barry (Alyn and D'side)
Cunliffe, Lawrence	Jones, Jon Owen (Cardiff C)
Cunningham, Jim (Covy SE)	Jones, Lynne (B'ham S O)
Cunningham, Rt Hon Dr John	Jones, Martyn (Clwyd, SW)
Dafis, Cynog	Jones, Nigel (Cheltenham)
Darling, Alistair	Jowell, Tessa
Davidson, Ian	Kaufman, Rt Hon Gerald
Davies, Rt Hon Denzil (Llanelli)	Keen, Alan
Davies, Ron (Caerphilly)	Kennedy, Charles (Ross,C&S)
Davis, Terry (B'ham, H'dge H'I)	Kennedy, Jane (Lpool Brdgn)
Denham, John	Khabra, Piara S.
Dewar, Donald	Kirkwood, Archy
Dixon, Don	Leighton, Ron
Dobson, Frank	Lestor, Joan (Eccles)
Donohoe, Brian H.	Lewis, Terry
Dowd, Jim	Livingstone, Ken
Dunnachie, Jimmy	Lloyd, Tony (Stretford)
Dunwoody, Mrs Gwyneth	Llwyd, Elfyn
Eagle, Ms Angela	Loyden, Eddie
Eastham, Ken	Lynne, Ms Liz
Enright, Derek	McAllion, John
Etherington, Bill	McAvoy, Thomas
Evans, John (St Helens N)	McCrea, Rev William
Ewing, Mrs Margaret	Macdonald, Calum
Fatchett, Derek	McFall, John
Field, Frank (Birkenhead)	McGrady, Eddie
Fisher, Mark	McKelvey, William
Flynn, Paul	Mackinlay, Andrew
Foster, Rt Hon Derek	McLeish, Henry

Maclennan, Robert	Robinson, Geoffrey (Co'try NW)
McMaster, Gordon	Robinson, Peter (Belfast E)
McNamara, Kevin	Roche, Mrs. Barbara
McWilliam, John	Rogers, Allan
Madden, Max	Rooker, Jeff
Maddock, Mrs Diana	Rooney, Terry
Mahon, Alice	Ross, Ernie (Dundee W)
Mandelson, Peter	Rowlands, Ted
Marek, Dr John	Ruddock, Joan
Marshall, David (Shettleston)	Salmond, Alex
Marshall, Jim (Leicester, S)	Sedgemore, Brian
Martin, Michael J. (Springburn)	Sheerman, Barry
Martlew, Eric	Sheldon, Rt Hon Robert
Maxton, John	Shore, Rt Hon Peter
Meacher, Michael	Short, Clare
Meale, Alan	Simpson, Alan
Michael, Alun	Skinner, Dennis
Michie, Bill (Sheffield Heeley)	Smith, Andrew (Oxford E)
Michie, Mrs Ray (Argyll Bute)	Smith, C. (Isl'ton S & F'sbury)
Milburn, Alan	Smith, Rt Hon John (M'kl'ds E)
Miller, Andrew	Smith, Llew (Blaenau Gwent)
Mitchell, Austin (Gt Grimsby)	Snape, Peter
Moonie, Dr Lewis	Soley, Clive
Morgan, Rhodri	Spearing, Nigel
Money, Elliot	Squire, Rachel (Dunfermline W)
Morris, Rt Hon A. (Wy'nshawe)	Steinberg, Gerry
Morris, Estelle (B'ham Yardley)	Stevenson, George
Morris, Rt Hon J. (Aberavon)	Stott, Roger
Mowlam, Marjorie	Strang, Dr. Gavin
Mudie, George	Straw, Jack
Mullin, Chris	Taylor, Mrs Ann (Dewsbury)
Murphy, Paul	Taylor, Matthew (Truro)
Oakes, Rt Hon Gordon	Thompson, Jack (Wansbeck)
O'Brien, Michael (N W'kshire)	Tipping, Paddy
O'Brien, William (Normanton)	Turner, Dennis
O'Hara, Edward	Tyler, Paul
Olner, William	Walker, Rt Hon Sir Harold
O'Neill, Martin	Wallace, James
Orme, Rt Hon Stanley	Walley, Joan
Paisley, Rev Ian	Wardell, Gareth (Gower)
Parry, Robert	Wareing, Robert N
Patchett, Terry	Watson, Mike
Pendry, Tom	Welsh, Andrew
Pickthall, Colin	Wicks, Malcolm
Pike, Peter L.	Wigley, Dafydd
Pope, Greg	Williams, Rt Hon Alan (Sw'n W)
Powell, Ray (Ogmore)	Williams, Alan W (Carmarthen)
Prentice, Ms Bridget (Lew'm E)	Wilson, Brian
Prentice, Gordon (Pendle)	Winnick, David
Prescott, John	Wise, Audrey
Primarolo, Dawn	Worthington, Tony
Purchase, Ken	Wray, Jimmy
Quin, Ms Joyce	Wright, Dr Tony
Radice, Giles	Young, David (Bolton SE)
Raynsford, Nick
Redmond, Martin	Tellers for the Noes:
Reid, Dr John	Mr. Peter Kilfoyle and
Rendel, David	Mr. John Spellar.
Robertson, George (Hamilton)

Question accordingly agreed to

Subsequent Lords amendments agreed to.

Dr. Marek

On a point of order, Madam Deputy Speaker. I rose to speak during the previous debate, but you put the question without raising your eyes, and did not see me. When you next put a question, will you perhaps raise your eyes to see whether some of us on the Back Benches are still trying to enter the debate?

Madam Deputy Speaker

I am sorry that I missed the hon. Gentleman. I genuinely thought that all those Back Benchers who wished to contribute had already done so.