Rail Privatisation (Hansard, 10 February 1997)

§ 9. Mr. Grocott
To ask the Secretary of State for Transport what is his current estimate of the cost of rail privatisation. [13353]

§ Sir George Young
In the six years since 1990–91, the following costs will have been incurred in restructuring, privatising, franchising and regulating the new railway industry: Department of Transport, £91.7 million; British Rail and Railtrack, £417.2 million; and the Office of Passenger Rail Franchising and Office of the Rail Regulator, £121.1 million. Those costs represent some 2 to 3 per cent. of total railway industry turnover over that six-year period. They are far outweighed by the proceeds of more than £5 billion that the Government have received from privatisation.

§ Mr. Grocott
That is a staggering waste of public money, and an incomplete list. Why did the Secretary of State not include the £450 million of consultancy and other fees involved? Why did he not mention the train leasing companies, valued at £3 billion but sold for £1.8 billion? Cannot the Government understand the anger people feel about the sale of priceless national assets such as the rail network, which was built for the most part with picks and shovels owned by us all? As soon as the Government got their grubby hands on the assets, they were sold off at knockdown prices to the few at the expense of the taxpayer.

§ Sir George Young
That was the same speech that we heard 10 years ago when the Government privatised British Airways. We heard the same diatribes from Opposition Members at every privatisation. Every privatisation has incurred some up-front costs. We believe that they are justified by the enterprise, investment and improved service for customers. Exactly the same arguments apply to British Rail.

§ Mr. Robathan
Does my right hon. Friend welcome nostalgia that harks back so lovingly to the days of the British Rail sandwich, the mass closure of stations and lines, the wrong snow and the wrong leaves on the track: the standing national joke that was British Rail, notwithstanding the good work done by many? Will he reassure my constituents that he will travel on Midland Main Line so that he can see the excellent work that has been done and the plans that are in hand to increase the number of trains to allow a half-hourly service from London to Leicester, and appreciate the 4 Sight fare, which is finally encouraging people off the M1 and into the trains?

§ Sir George Young
People outside will contrast what they have just heard from my hon. Friend with what they heard from the hon. Member for The Wrekin (Mr. Grocott). My hon. Friend has rightly pointed out that we are already seeing improvements in punctuality and reliability as a result of franchising. The long-term savings from privatisation will be substantial; after seven years, the subsidy for the 20 franchises that we have let will be less than one third of that required by British Rail in 1995–96. We are, therefore, getting a better deal for passengers, at less cost to the taxpayer.

§ Mrs. Dunwoody
Is not the Secretary of State a little frightened of being struck down for the marvellous interpretations of the figures that he manages to give the House? Is not the reality that under some of the new franchises, the old slam-door stock, which is known to be dangerous, is being brought back into operation, painted a new colour and presented as a new service? Is it not true that taxpayers will be paying more after the end of the right hon. Gentleman's machinations, having lost all the assets, than at any other time? Would not it occasionally become the Conservative Government if they just admitted that, in the most brutal and panicky fashion, they have handed bars of gold to all their colleagues in the City in exchange for a worse and unacceptable standard of transport?

§ Sir George Young
The party that needs to admit that it got it wrong on privatisation is the Labour party, not the Conservative party. As a result of franchising, we are witnessing a £1 billion investment in new rolling stock. There is no way that that sort of investment could have been achieved had the railways remained in the public sector—not under this Government and not under an alternative Government supported by the hon. Lady. We are driving up investment to a far higher level than would have been sustained had the railways remained in the public sector.

§ Mr. Garnier
When the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) mentioned the slam-door rolling stock that has been painted a new colour, did not my right hon. Friend think of new Labour? Will he ask his Department to cost the amount that the privatised Railtrack and privatised franchise companies will be investing in the railways in the next few years? Were that money to come from central Government funding, how much would that cost the British taxpayer?

§ Sir George Young
The figure for Railtrack is £8 billion spend over five years and the figure for rolling stock investment, which I have just given to the House, is £1 billion. That investment is not coming out of the public sector, and it no longer has to compete with funds for health, education and law and order. The public sector constraint has disappeared. As with other privatisations, railway investment has been driven up fast after privatisation.