Railway Manufacturing Industry

HC Deb 20 December 1994 vol 251 cc1538-49

11.1 am

Mr. Brian Wilson (Cunninghame, North)

I am grateful for this opportunity to raise as a matter of urgency the plight of our railway manufacturing industries. With your permission, Mr. Deputy Speaker, and that of the Minister, some of my colleagues who have a particular interest in the subject will be participating in the debate.

This is not a hypothetical threat. According to the Railway Industry Association, 5,000 jobs have been lost in 1994 alone and about 20,000 more jobs are under threat, 2,000 of them in the very near future. It is a rapidly unfolding, utterly unnecessary tragedy created solely by the Government's policies towards the railways. Even after 15 years, I find it incredible that the Government are prepared to stand idly by and see another great industry, in which Britain long led the world, being destroyed. But that is what is inexorably happening.

This year, 1994, is the first year in the history of our national rail network that British Rail has not authorised the construction of new rolling stock. As recently as last week, Richard Hope and Professor Bill Bradshaw stated in their report to the Select Committee on Transport that on current projections it would be 1997 before new orders were placed. By that time, Britain would undoubtedly have lost the capacity to build whole trains.

Until 1 April this year, British Rail owned 11,800 coaches which were then handed over to the rolling stock leasing companies which, for the time being, remain in the public sector. The life expectancy of trains ranges from 25 to 40 years. If one assumes an average of 30 years, the average rate of replacement should be about 400 a year. On top of that, there should be an on-going demand from London Underground. Together, those sources of orders should provide a stable base for train builders and their suppliers which can be topped up by the export orders which, mercifully, our industries continue to attract. However, one cannot have an export industry for very long without a home base and that is what Government policies are denying the railway manufacturers.

In September 1992, the then Minister for Public Transport, the right hon. Member for Kettering (Mr. Freeman), said that he did not intend there to be any hiatus in rolling stock investment. In reality, Ministers could not have been more effective in creating a fatal hiatus for the train building industry if they had planned to do so. I have sheaves of similar examples of Ministers giving assurances to my colleagues and me that there would be no such hiatus. During one exchange, my hon. Friend the Member for York (Mr. Bayley) pointed out with uncanny accuracy what was going to happen to ABB in York. He was attacked by the right hon. Member for Kettering as a designer socialist who did not understand how those things work. We now know who understood how things worked and thousands of train makers are paying for that knowledge with their jobs.

The 1991 procurement plan for British Rail envisaged a programme of 800 class 471 Networker vehicles for Kent coast services—600 to replace slam-door stock and 200 to reduce overcrowding. In fact, the Kent coast services will get 15 of the four-car Networker express trains now being completed by ABB at York—60 vehicles instead of 600. That is important not only for the train building communities but for those which depend on railways and are suffering from obsolete stock because of the collapse in manufacturing orders.

There were to be 248 class 341 Networkers to upgrade services on the Great Eastern route and 32 locomotives and 320 coaches as part of the long-overdue upgrading of the west coast main line. Neither of those projects has reached first base. I stress that, at present, there are no plans for new orders in 1995.

So far, I have concentrated on rolling stock but it is exactly the same story in other aspects of railway manufacturing. In the last two years of British Rail's responsibilities, which ended on 1 April this year, there were no new contracts for signalling or electrification projects of any significance. That has not changed under Railtrack and it will not change in the current year in the light of the external financing limits announced by the Government following the Budget.

Late in the day, the Tories reluctantly conceded that there could be such a thing as a public/private finance initiative. So far, that has yielded only the Northern line order for London Underground, which was granted only after an intensive campaign by the manufacturers in alliance with the Opposition and important sections of the media, notably the London Evening Standard. The Railway Industry Association said: Whilst there may well be a role for Private Finance Initiative projects in the longer term, it will take time, and time is something manufacturing industry does not have. In any case, the private finance initiative is not a panacea and cannot be presented as such. In fact, in many ways it further complicates the possibility of orders being placed rapidly because it imposes yet another hurdle between a project being conceived and an order being placed.

The unfolding tragedy is at its most acute in York, where there has been large-scale investment by ABB to create a production line which is the equal of anything in Europe. However, the cupboard is bare of orders and thousands of jobs are on the line. The same is true of suppliers to that company. The situation will become terminal when the Networker contract expires towards the end of next year unless replacement orders are received.

Unless Ministers intervene and cut through the bureaucracy of rail fragmentation and privatisation, there will be no such orders. That is the stark reality. Because of the uncertainty in the railway industry, no one is in a position to order new rolling stock—not British Rail, not the leasing companies and not the operators. Only the Government have the power to break the deadlock but so far they have shown a shocking lack of interest in doing so.

There is no doubt that, at the time of privatisation, ABB was sold British Rail Engineering Ltd. under false pretences. There was supposedly a long-term procurement programme and there was no hint of the politically motivated chaos which was about to be visited on the whole railway industry.

Mr. Richard Hope, one of the most authoritative observers of the railway industry, wrote in Modern Railways about the "precipice diagram" heading rapidly towards disaster in 1995 and wipe-out in 1997. He said that nothing could happen in terms of new orders before 1996 at the earliest and then we can only guess at how long a privatised ROSCO"— or leasing company— would take to strike a deal with a newly appointed franchisee, go through the Euro-procurement gavotte punctiliously and then place an order. The railway manufacturing industries cannot wait that long. The Government have already decimated the British shipbuilding and bus building industries through the politics of dogma. Are they now going to do the same to railway manufacturing? The indictment is already serious; 5,000 jobs have been lost in the year now ending. Are the Government prepared, for the sake of privatisation dogma, to go the whole hog and deny Britain a train building industry?

The extraordinary irony is that, so far, the greatest victim of the obsession with rail privatisation is the existing private sector of the railway industry—the people who build trains and other railway equipment. Must American, Spanish and Korean workers benefit yet again from the destruction of a great British industry? Those are the countries that will supply our trains if our own industry is allowed to wither and perish. That is the question that the Minister must face today, and his answer will be closely listened to in every railway manufacturing community in Britain.

With your leave, Mr. Deputy Speaker, I should like the rest of my time to be taken by my hon. Friends who have constituency interests in such matters.

11.10 am

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

As you know, Mr. Deputy Speaker, the Select Committee on Transport is so concerned about the situation in the railway industry that it has undertaken to put on the record a report dealing with the immediate chaos and total confusion brought about by privatisation. Therefore, I cannot speak about either the evidence that will be given or that which has already been submitted to us in a short paper by Mr. Richard Hope.

However, I shall speak about ABB, in my constituency, especially the nature of the bill of sale made out at the time of privatisation. It is important to realise that thousands of jobs in Crewe depended on what used to be called the British Rail works. That was the reason why the city exists; it was to build railway engines that Crewe was first set up on a green-field site.

At the time of privatisation, a large sum of taxpayers' money had gone into modernising the factory, and its working practices and overall organisation had been totally changed within the previous 18 months. ABB was taking on not an old-fashioned factory or a non-flexible work force, but a modern manufacturing unit capable of competing with the best in the world and of supplying British Rail throughout the country with the very best of equipment. The factory had not only done that in conjunction with British Rail in the past but was set up very much in line with what BR needed for the future.

However, the reality for ABB has been different. My hon. Friend the Member for Cunninghame, North (Mr. Wilson) has spoken of the contract recently agreed for underground trains. Of course we are delighted when any manufacturing jobs in the railway industry have been brought to Britain, but even under that contract, much of the manufacturing will be done in Spain and France. Although the west midlands will benefit to some extent from the contract, most of the work will be not manufacturing but assembling, which the factories can carry out without much difficulty. Indeed, we have factories throughout the United Kingdom that can manufacture from scratch very high-quality trains.

Ministers continually tell us that they understand that without an adequate transport system, our economy would fall apart. In a recent speech that I discovered only today the Minister said: We cannot afford to ignore or even underestimate the economic implications of transport. Transport measures which would make it more difficult for our industries to flourish at home arid compete abroad would lead to increasing unemployment and would deprive us of the wealth that is necessary to maintain and enhance our natural environment". Why then do the Government seem so determined to ignore all the advice given to them since the beginning of the disaster of privatisation? In a remarkable and brilliantly researched report, the Transport Select Committee under a Conservative Chairman—the late lamented Robert Adley—told them exactly what would happen if there was a hiatus between the initial decision to privatise and the decision to go ahead.

The evidence was spelt out in that report—evidence was even given by Lord Prior, not only a former Conservative Member of Parliament but a former Conservative Minister—explaining in detail what the railway industry would face if no immediate orders were placed and if there was not an immediate commitment to a considerable new build programme.

The Government ignored all that. They took absolutely no account of the destruction that they were bringing about in the railway industry. Indeed, they made it worse, because the suggestion was that privatisation would in future concentrate on Railtrack rather than on the ROSCOs. The chaos caused by those decisions added to the problems that already existed.

I shall not take up a lot of time, but I want to say one simple thing to the Minister. This country used to be able to compete throughout the world in manufacturing industry, especially manufacturing for railways. It is no accident that wherever one goes in South America or in the Commonwealth one finds the remains of British railway equipment manufactured in Britain—and it is of the best quality.

Yet, under the Conservative Government, there has been a deliberate rundown of those industries, on the grounds not of economics, or that we could not compete, but of a deliberate dogmatic commitment to the destruction of what were seen as subsidiaries of a nationalised industry. Even when it became plain to everybody that that was not the position, the Government persisted in treating the manufacturing units in that way.

The loss of jobs and skills has been horrendous. Every time that we lose a major order that should go to British railways and improve the lot of the customer, we lose a whole generation of skills as well as all the economic input to the areas concerned. Railway passengers are now travelling in increasing discomfort, as if we were using the rolling stock of Argentina in the 1900s, and they pay horrendously high fares. They can see no clear understanding of that on the Government's part, and no commitment to doing anything to improve matters.

When I look at what has happened in my constituency—at the agony of the destruction of the British Rail works and the jobs that it provided—and when I realise their total lack of understanding of the future of the British rail manufacturing industry, I see all that is worst in the Government. They are unimaginative and dogmatic and, so far as one can see, they are doing their best to hand over the whole of our manufacturing industry to any country in the world, so long as it is not this country. If they want to build bogies they send to France; if they want to build shells they send to Spain. They will not build trains in Britain because somehow they see that as a political decision.

Anyone in his right mind knows that unless we manufacture in this country, we shall perpetually have to import other people's products. The Government will have to pay a high price for what they are doing to the railway industry.

11.18 am

Mr. Hugh Bayley (York)

I congratulate my hon. Friend the Member for Cunninghame, North (Mr. Wilson) on securing the debate. When the Railways Act 1993 was before the House as a Bill, the Government often said that they wanted to avoid a hiatus in railway investment during the initial period running up to privatisation. That initial period has stretched because the franchising timetable has slipped, which has made the problems in the railway manufacturing industry even greater.

I shall speak briefly about the situation in my constituency which, as my hon. Friend the Member for Cunninghame, North said, faces the most serious problems. When BREL was privatised five years ago, the York carriage works employed 2,500 people. Now it is left with just 750 employees. After Christmas, with the end of the order for building the Strasbourg tram, there will be yet another 100 redundancies. Then the remaining work force will have their future literally hanging on a thread. They will have the tail end of just one order—the last part of the Networker order for Kent commuters—which will come to an end in the autumn of next year. Unless a further order is received in the next two or three months, the York works will close.

Since privatisation, ABB has invested some £50 million in the York works: £20 million in capital assets such as machinery and £30 million in staff training and new work practices. All that could be cast aside. When rail manufacturers from abroad come to the York works, they say that it is the most modern manufacturing plant for aluminium-bodied railway carriages in Europe. 'That would be lost if the plant were allowed to close.

There is a way to save the York works. It is for the Government and British Rail to invoke the clause in the present contract which allows the existing order for Networker carriages to be rolled forward into a fourth tranche. The only people who seem to be opposed to that are ABB's main competitor, GEC. GEC appears to be lobbying the Government to persuade them that the follow-on clause should not be invoked. The company says that, instead, the contract should go out to Europe-wide competition. GEC knows full well that if that happens, by the time the order is awarded, the ABB factory in York will have closed and the company will be in a monopoly position as the only major supplier of railway rolling stock in the United Kingdom. Such a predatory approach to the industry will lead to the destruction of the industry. It will lead to higher prices for British railway customers because there will be a lack of competition.

Mr. John Greenway (Ryedale)

Will the hon. Gentleman give way?

Mr. Bayley

No, I am afraid that the hon. Gentleman had a good chance to speak yesterday.

I shall give 12 good reasons, all short, why the Government must act now. First, if they invoked the follow-on clause, the customer would get the trains at least 12 months earlier than if a Europe-wide tendering process was initiated. Secondly, British Rail would get the trains at a lower price because it is cheaper to use an existing production line than to close it down and build a new one. Thirdly, if the Government let the York works close, it would show an appalling contempt of inward investment, given that the company has brought £50 million of investment into the British economy. Fourthly—I say this with deference to a policy with which I do not agree—it would be a poor advertisement for privatisation to allow a company that the Conservatives privatised with 2,500 employees just five years ago to close.

Fifthly, it would not cost the Treasury a penny to invoke the clause. British Rail would be able, using the private finance initiative, to raise capital from the private sector. Indeed, it would be a good demonstration of the viability of the PFI. Sixthly, it would demonstrate the Government's environmental commitment to rail transport and relieving pressure on the roads. Seventhly, it would avoid the costly life extension repairs that would be needed to the clapped-out, 30-year-old, slam-door rolling stock which would be left servicing Kent commuters if the order did not come through.

Eighthly, to place the order for the new carriages would respond to the safety case put up in the Cannon Street crash report that the old carriages should be replaced on safety grounds. Ninthly, it would improve the quality of service to Kent commuters. Tenthly, it would improve the income generation of the train operator in that part of the country. When ABB's carriages went on the Chiltern line, the number of passengers increased by 60 per cent. Eleventhly, to bring forward the order would avoid import penetration. As my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) said, the main competitor imports its body shells and bogies from abroad. Twelfthly, it would retain competition in the manufacturing of rolling stock in the United Kingdom. In summary, there would be massive economic benefits for York, London and commuters to London.

Last May the Minister with responsibility for railways told the hon. Member for Ryedale (Mr. Greenway) and me at a meeting of the York rail forum that the question of who would place the order and who would own the rolling stock could and should be resolved by September this year. Now the Government blame British Rail for dragging its feet, but they, too, have dragged their feet and they must break the deadlock.

11.26 am

Mr. John Gunnell (Morley and Leeds, South)

I wish to illustrate the problem by referring to another company. The Hunslet Engine Co. in my constituency is 132 years old. Its products have served railways throughout the world for the greater part of that time. Therefore, it has a distinguished history as one of the oldest companies in Leeds and one of the oldest railway engineering companies in Britain. Its products are to be found not only still running after many years but in museums and parks as exhibits because of the long service that they gave to the railways.

I shall mention three aspects of the relationship of the company to Government finance in recent years. I was a member of the Leeds development corporation when that was set up. It found Hunslet Engine Co. doing well and expanding. The company built a works to do body work on coaches. Hunslet TPL was formed. I was part of the committee that gave a city grant to the company, so that it could expand its premises and build a modern line for the production of new rolling stock. On that line, the 323 class has been produced for the west midlands. That order is on-going. It will be completed in six months. If no further orders come forward, the Hunslet Engine Co. will close at the age of 133.

The company has won two orders in recent years, the first being the order to produce the new rolling stock for the Strathclyde passenger transport executive. That order was won against competition and at a competitive price. It could not be proceeded with because the Government have measures in place to abolish the regional council of Strathclyde, and no alternative financing method could be found in time to allow that order to be placed. Therefore, the company lost work that would have kept it in existence for a further two years.

The company also won an order to produce the rolling stock for the Leeds-Bradford electrified line. Again, that order could not be proceeded with because finance for the West Yorkshire passenger transport authority could not be found as a result of the changes introduced with privatisation, and alternative arrangements could not be put in place. The company has won two major orders against competition, including European competition. Each of the orders has been effectively cancelled by the Government's legislation.

I took the previous Minister, the right hon. Member for Kettering (Mr. Freeman), to Hunslet TPL last year. He was extremely impressed. He promised that he would do all that he could to help it and see that it continued and had orders financed. However, it was beyond him to find his way through the legislation. He could not make it possible for the orders to be financed.

The mess of the Government's privatisation plans has killed the railway engineering industry in Britain. What has happened to my company in Hunslet is disgraceful. It is struggling on in the hope that orders will be produced, but unless the Government change their policy, it will be impossible for any orders to come forward to save those major companies. That will have a major employment effect in Yorkshire.

11.28 am

Mr. Denis MacShane (Rotherham)

I am grateful to my hon. Friend the Member for Cunninghame, North (Mr. Wilson) for securing this debate which, although not well attended, is about an important issue. Railways are not, as many people seem to think, a leftover from the 19th century. In the thrusting, forward-looking parts of the world, railways are very much part of the future. Korea has its new high-speed train network. Taiwan has its new metro system. Even in Geneva, new rails are being built in the city centre to run street cars for people to move their money around in that great Swiss capital. It seems that only in this country are railway systems—the rails that trains run on and the engines themselves—consigned to the scrap heap. I have a particular interest because I represent a steel constituency. The demand that is already virtually absent for products made by my constituents will now be further lessened by the announcement that we have heard this week about ABB in York.

I am glad to say that this year British Steel made handsome profits, but as we look at those handsome profits, we must ask ourselves where they are going. Today, it has been announced that £40 million odd is to be invested in Alabama. While the sun sets on steel making at Ravenscraig, Templeborough and my constituency of Rotherham—

Mr. Deputy Speaker

Order. The hon. Gentleman must relate his remarks to investment in the railway manufacturing industry, not traverse the world talking about the future investment plans of British Steel.

Mr. MacShane

Railway manufacturing consists almost entirely of steel products. If British Steel is to have a future in this country instead of becoming a holding company with its operations mainly overseas, we need a new coalition of demand for the products used to manufacture railway trains and tracks. Products for use in this country are sorely needed to link my constituency of Rotherham to the high-speed network in Europe. We also need products for export overseas because the future of the most forward-looking countries lies in their transport systems, based on rail systems.

I commend the points made by my hon. Friends and I hope that we shall soon have a Government who take seriously the need for a coherent, modern railway manufacturing sector in this country. I hope that we shall soon have a Government who put demand for the products made by my constituents at the top of their priorities.

11.31 am

The Parliamentary Under-Secretary of State for Industry and Energy (Mr. Charles Wardle)

I congratulate the hon. Member for Cunninghame, North (Mr. Wilson) on obtaining this debate. I understand the interests that he and his hon. Friends have in the subject. As became apparent to the House, there is a fundamental divide between us on the merits of privatisation. It is not a matter of dogma—while I entirely understand the pressures in the marketplace, it is simply not enough to complain that jobs are going to American, Japanese or Spanish workers or, as the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) said, to French workers.

What we must have—I am sure that the industry is striving for it—is a thoroughly competitive industry that faces up to the realities of the marketplace. Privatised company after privatised company has increased its investment, adding to its order books, becoming more efficient and competing in the marketplace and, in a number of instances, in the world marketplace. I shall not dwell on that subject for long, but I am bound to answer the questions posed.

Before I turn to the key issues raised, I must mention orders for ABB—a subject raised by the hon. Members for York (Mr. Bayley) and for Rotherham (Mr. MacShane) and also mentioned—I think yesterday—in a speech by my hon. Friend the Member for Ryedale (Mr. Greenway). British Rail is currently assessing whether it can justify a new order of electrical multiple units under the private finance initiative.

The Department of Transport stands ready to provide any assistance that British Rail may require in preparing such a case and, if a submission is made, will consider it as quickly as possible. It would be wrong for the House to get the impression that British Rail has been dragging its feet—that is not so. There has to be a commercial need, and a good business case made, for new rolling stock. As I am sure that the House will agree, it would be folly to scrap sound and serviceable trains prematurely. It must be the operators of the trains who say that they need to replace certain rolling stock, that the prices available look reasonable and competitive, and that the extra revenue generated will pay for the new equipment.

Moreover, the financial terms offered by the private sector have to be acceptable as a long-term lease. When the commercial case for the new trains is made by British Rail, I can assure the House that the Government will look at it swiftly, but they will need to be satisfied that the terms represent proper value for taxpayers' money.

We have heard much this morning about the problems of over-capacity, and a number of Opposition Members have mentioned redundancy. Nobody relishes redundancy. There can be no question about that—before I came to Parliament I worked in manufacturing industry and I understand the need to be competitive. I also understand the pain, trauma and dislocation involved when workers, whatever their job in manufacturing industry, are made redundant. But unless industry is competitive and can compete in world markets with suppliers offering goods and equipment from abroad, in the longer run there will be yet more redundancies. We must face that fact.

We have an effective manufacturing base in this sector and it must strive to remain so and to win yet more export business. We are doing a great deal to support those efforts, as I shall show. Investment in the railways has been at record levels in recent years. The 1992–93 total of £1.5 billion was the highest amount in real terms since 1961. About £4 billion has been spent by British Rail on rolling stock since 1979. About one quarter of the total rolling stock has been renewed since 1985—that represents almost 4,000 new vehicles and locomotives that have been brought into service over the past 10 years.

Investment levels over the past few years in London Transport and London Underground, which are supplied by the same industrial base, have been equally high. In 1992—93, the figure was £832 million. In 1993—94, it was £846 million and in the current year, ending next March, it is estimated to be £999 million.

Those high levels of investment will continue. We expect the railway industry to be able to invest about £1 billion next year. That figure includes British Rail expecting to spend £90 million and three rolling stock leasing companies expecting to spend £129 million on new rolling stock in 1994—95. British Rail was also allowed to sign operating leases for £150 million worth of additional Networker trains earlier this year. That relaxation of the guidelines was designed to promote a competitive leasing market. We shall continue to encourage manufacturers to come forward with privately funded proposals that offer value for money and fall within the private finance initiative.

In terms of infrastructure, between 1980 and 1993, investment of the order of £1 billion, especially in new technology in track and signalling projects, has already taken place. In this current financial year, Railtrack expects to spend £550 million on investment in track and signalling, including £100 million for channel tunnel services, and £800 million for the maintenance of track, signalling and telecommunications.

The recently announced £400 million order for new Northern line tube stock shows what can be done. London is to receive a complete fleet of new trains for the Northern line, with the first coming into service in about 18 months. That breaks new ground in the provision of rolling stock, in a deal in which GEC-Alsthom will finance the entire cost of the trains and their maintenance and take a substantial share of the risks in the project. In return, the company will be paid according to the performance of the new trains.

That is a radical new way of providing train services and a clear demonstration of innovative thinking stimulated by the private finance initiative, with the private sector taking on risk and responsibility, and bringing its project management and commercial expertise to bear on what has for too long been regarded—it still is by some Opposition Members—as the exclusive preserve of the public sector financed by the taxpayer. The project is a clear demonstration of the Government's commitment to public transport and a perfect example of how the deal-driven private finance initiative can deliver more and better-quality investment in key projects. Private finance will no doubt speed the replacement of existing trains.

Current activities for new rolling stock include the Networker trains being manufactured by ABB for British Rail under the £150 million deal to which I alluded earlier. There is also a £40 million deal with ABB to supply mail trains for the Post Office, and the investment associated with the channel tunnel, where GEC-Alsthom is assembling the Eurostar trains and constructing coaches for the European overnight stock fleet. On top of that, Bombardier Prorail and Brush traction are producing the class 92 locomotive for the Euroshuttle freight trains. Orders are currently being processed for London Underground on the Central line and the Jubilee line and for major refurbishment work on Piccadilly line rolling stock.

As I said earlier, British Rail is at present assessing whether it can justify bringing forward work, but that is a justification which British Rail must bring to the Government's attention as soon as it sees fit.

Mr. Wilson

I want to be clear about this. Is the Minister urging British Rail to bring forward the continuation of the Networker programme on the understanding that if it is commercially viable, it will be approved? Does he recognise the urgency of the matter? Notwithstanding the fact that British Rail will cease to own the trains a few months later if privatisation goes ahead, is he saying that British Rail should come forward quickly with proposals to order the Networker trains?

Mr. Wardle

I repeat what I said earlier—I am sure that the hon. Gentleman heard me. British Rail must make that assessment and the Department of Transport is ready to provide assistance to it. I made the point that British Rail is not dragging its feet. British Rail must make a judgment as to whether the process is to go ahead.

Labour Members have talked about privatisation and I said that greater competitiveness is the key underlying theme in this area. Privatisation is the most far-reaching reform of British industry in half a century. Railtrack is now a fully independent company and, as my right hon. Friend the Secretary of State for Transport informed the House on 24 November, it is our intention to privatise Railtrack within the lifetime of this Parliament. Passenger and freight operating companies have begun to operate as units within the board.

We have set the target of franchising a majority of train services by April 1996 and the franchising director has announced the start of the pre-qualification process for the first franchises. The privatisation of British Rail's infrastructure service units, British Rail Maintenance Ltd. and other businesses, is already in progress and the transfer of British Rail's domestic freight services to the private sector should be completed by the end of 1995.

Privatisation will enable Railtrack and private companies to provide a better service, bringing substantial benefits to train operators, to passengers—the hon. Member for Crewe and Nantwich complained about the treatment of passengers—to other rail users and to investors. The privatisation of other public utilities has shown that privatised companies have invested heavily in infrastructure and in their industries post-privatisation. There is no reason why the railway system will not also benefit from the investment of private finance.

I shall now mention some of the activities in which the Department of Trade and Industry is involved, where the aim is to assist UK railway manufacturing companies. Under the leadership of my right hon. Friend the Minister for Export Trade, we are offering a wide range of export help. The industry has had a long period of success in winning export work, but I believe that more can be achieved. We stand ready to help, where we can, companies which seek to gain more orders at both main and sub-contract level.

The President of the Board of Trade's initiative on export promoters has led the way on a number of export-related activities and, taking their lead, we are running a series of market-opportunity awareness initiatives, including inward and outward missions which are aimed at both home and overseas markets. The industry can achieve a secure future through competitiveness.

We are also supporting research and development projects totalling £8 million, which are aimed at enhancing our technology capability. The sector has benefited from a scheme aimed specifically at pulling through industrially relevant technology.

The Government have done a great deal for the UK railway equipment industry. They have invested more money, opened up new opportunities to finance projects, and supported exports and research and development. Privatisation and a competitive cost structure offer the best long-term security to this sector of manufacturing industry. The Government's general support for manufacturing, coupled with a stable and low-inflation economy, reduced burdens on business and strong support for exports, mean that the industry can look forward to a strong future.