Railway Finances: The Serpell Report

HL Deb 02 March 1983 vol 439 cc1141-208

3.15 p.m.

Lord Marsh rose to call attention to the Serpell Report on Railway Finances; and to move for Papers.

The noble Lord said: My Lords, I beg to move the Motion standing in my name, and at the same time to thank my noble friends for giving me the opportunity of speaking on this particular subject. I think anyone who has had the opportunity of working in any nationalised industry finds it interesting, and anyone who has worked in British Rail finds it particularly interesting. I discovered at a very early stage as chairman how different it was. When I returned back to Victoria Station after an overseas trip, having arrived at Gatwick, I was met at the station, as happens with British Rail, by the station manager and the deputy station manager. A large West Indian porter took my luggage, and we walked up the platform and stopped at the large chauffeur-driven taxpayers' car in which I travelled in those days. The porter put the luggage in the back of the car. I walked across, took out 30p and said, "Thank you very much indeed", to which he replied, "Man, I don't take money from people I work with." I think that gives one an indication that it is an industry of great interest.

On the other hand, I have long felt that there must be something missing in my emotional make-up. I adore my wife, I help old ladies across roads and I am extremely fond of animals, but while I regard the railway problem as an extremely important and fascinating problem, I must confess that I have never managed to become emotionally aroused by the sight of a diesel locomotive. I think this is one of the problems. I was born and brought up in Swindon, frequently known as the Athens of the West Country and the home of the Great Western Railway. It is the town in which both my father and grandfather worked for the Great Western Railway—still commonly known by railwaymen as "God's Wonderful Railway". Indeed, without wishing to brag, I think I can claim that as chairman of British Rail I probably declared more of my family and school friends redundant than anyone else I know. But I do not have a love of railways any more than I have a love of roads, buses or taxis. They just exist for the benefit, or otherwise, of the population.

I make this point in all seriousness because part of the railway problem is the enormous difficulty of obtaining any rational or objective examination of the role we expect from the railways. The mere fact that this afternoon we are discussing the Serpell Report and the rôle of the railways is in itself extraordinary since it underlines the fact that after about 40 years of nationalisation we still do not know what we want of them. If the Houses of Parliament do not know, I think that the management of British Rail may be forgiven for having a certain amount of doubt and uncertainty as to what is its rôle.

There are people who will declare their love and affection for the railway, and there are others who display an almost obsessive vendetta against the industry. That includes some civil servants and some academics. There are many railwaymen—they are in a minority—who strongly believe that it should be heavily contracted. But both sides—those who love the railway and those who think it is a thing of the devil—tend to blur the opportunity for any rational discussion.

The cost to the taxpayer is high. No one can shrug aside £926 million a year. That is a great deal of money. But one really needs to look at it in perspective. In the current year, against a loss of £926 million by British Rail, we are going to spend £1,163 million on subsidies to housing, quite regardless of social need (and it is almost sacrilege to question that); we shall be spending £791 million subsidising uneconomic coal mines; we shall be spending £770 million on agriculture and £818 million on grants to industry; and as the the cost of the tax concession on company cars alone—and here I declare an interest in that I hope the Chancellor never changes that since I and my wife each have one—in terms of lost tax revenue, which is nothing to do with roads, signalling or the police, is estimated at £1.4 billion a year. Of course there is a problem so far as the railway is concerned, but I wish that we could get it in the total context.

Indeed, we read only this morning that local authority overspending, which is becoming a national scandal, is in excess of £900 million. When one sees some of the causes to which that overspending is dedicated—Lambeth Lesbians Against Foxhunting, for instance—one is entitled to wonder whether all outlets of expenditure are equally desirable in the national interests.

None of those areas creates controversy on anything like the scale of any discussion on British Rail's finances, and yet a rational and informed debate is essential if we are not to have a railway system which continues to decline in quality and, paradoxically, increases in cost as it declines in the service that it provides. That is the paradox. The inability of successive Governments to make up their mind what they want of the railway has provided the public with neither a cheap nor a good railway. It has produced a declining railway at increasing cost. That cannot make sense.

I had hoped, my Lords, that the Serpell Report would make a major contribution to the debate. Sir David Serpell is an old friend who has a very distinguished record in both the Treasury and the Department of Transport. He is a man of considerable intellect. It gives me no pleasure to have to say that in my view this latest of very many studies of the railway is of no value whatsoever in enabling us to make up our mind what we want of the railway.

An extraordinary feature of the inquiry was the emergence of the minority report. None of us sitting on these Cross-Benches has ill-feelings towards minorities. We are a persecuted group with no home to go to. But I find it extraordinary that in a committee of four, which was established on 5th May, it was not until 9th December that Mr. Goldstein concluded that he could not sign the committee's report and intended to submit his own, not on some point of detail but because he was in fundamental disagreement with the committee's interpretation of its terms of reference.

In paragraph 2.10 of the minority report, Mr. Goldstein says that, direction is unclear … emphasis on the next few years is not consistent with our Terms of Reference and is an emphasis I was not willing to adopt". In paragraph 2.15 he says, referring to his colleagues, to whom, I must say, he was singularly unfriendly: they say that our terms of reference 'included a requirement' to report 'on options for alternative policies … over the next 20 years'. In fact this was the only matter upon which we were required to report by our terms of reference". My Lords, if 25 per cent. of the committee took eight months to find out that they did not agree with what they had been discussing, it must call in doubt the conduct of the whole exercise. But of course it was a rather unusual committee.

It was decided, quite understandably—I should be interested to know who was responsible for that particular exercise; it could not have been a Minister acting on his own—to provide the committee with the services of independent consultants, so Travers Morgan and Peat Marwick were appointed. There is nothing extraordinary about that, but I find it extraordinary that, having appointed two well-known companies to provide independent objective advice as consultants, they then proceeded to appoint two of the senior partners of those two companies to the committee of four which was making the objective appraisal. That is rather like inviting the Kray family to pass judgment on the twins. I find it quite extraordinary.

There has been considerable criticism of the methodology adopted by the inquiry. There is not time, or much point, to argue that now, but again an example is given in paragraph 12.23. If your Lordships will bear with me for one moment, I will seek to find it, if only to prove that I have read it. Both Houses are invited to determine the future course of the railway on the costings. The figures given are qualified, which is not surprising. It is a difficult exercise to do; but what are the qualifications? In arriving at these estimates, no allowance has been made for the transitional costs (eg of redundancy), which could be substantial,"— I ask the Minister whether later on he will give us an indication of what "substantial" means in that case— or for any implications for revenue or for additional investment". So, my Lords, the House can have total confidence in those figures, except that they take no account of the transitional costs, changes in revenue or increased investment. It is a most bewildering document.

As I say, I would ask the noble Lord when he comes to speak to give us some indication of those transitional costs. Part of the problem with changing the shape of the railway is precisely that; that the transitional costs of getting from a now till then situation must, in my view, be astronomical. The system has to be kept running in a safe and efficient condition right up until the day it is decided to close it.

We have only one railway company in this country. Therefore, if that company decides that it does not want the railway locomotives, there is not much more that it can do with them than write them all off. I would ask just for an indication of the figure to help the House in its conclusions; whether the transitional cost of a major contraction would be estimated at £10 million, £50 million, £100 million or more than that. I do not want to nit-pick over these figures, but I think that every time that we have a doubt about the odd £100 million or so it is reasonable to ask whether we could have an order of magnitude figure.

I also find it extraordinary that no evidence was invited from any other railway system. How you examine a railway without comparing it with other railways causes me some doubt or difficulty. Indeed, no experience of other railway systems was invited. That is extraordinary. Since the railways were nationalised, there have been seven different chairmen of British Rail and five Labour and five Conservative Governments. If the problem is really as simple as just making the system a bit smaller and cutting off the unprofitable bits, one would have thought that somebody might have noticed that before and perhaps moved in that direction.

The problem is much more complex than that, as noble Lords will agree. The curious and peculiar thing about it is that no passenger rail system anywhere in the world can break even. Countries as different as France, Germany, Japan, Italy, Switzerland and Canada—every one of them—face similar problems, and yet the committee did not think to ask any of them what they had been doing over the past 20 or 30 years with the same problem.

The blame lies in the terms of reference, which required the committee to produce options designed simply to improve the financial results over the next 20 years, but with no indication of the political and social objectives which that railway expenditure was supposed to achieve. That seems to me as sensible as seeking to define the optimum financial support levels for hospitals with no reference to the levels of health care expected. How can you judge whether you are getting value for money if you do not first have an idea of what it is you think that you are buying? I find the terms of reference very strange and of little help in this.

Economies can and should be made in British Rail. Some services, such as catering and shipping, should be hived off or franchised, but the basic problem of British Rail is not an accountancy one and nor is it susceptible to an exercise in first-year economics. It is partly the nature of the beast that the railway was built in a different age to service and to provide for a different pattern of population and a different shape of industry. The big problem that we have with British Rail is that of course if we were building it today we should build it very differently, but we have it as it is.

I am bound to say that only a non-politician could produce a report which envisages Ministers going to the nation in these heady electoral days and saying that they have a jolly good new plan and policy to put before the electorate; they are going to shut down all the railways north of Glasgow and Edinburgh and just have a link to join them up and they are going to shut down all the railways in Wales apart from a railway to Cardiff—I can see the noble Lord the Leader of the Opposition becoming restless at the mere thought of it—or that they are going to shut down all the railways in the West Country. That is not politically feasible. It does not matter whether some academic believes that it might be a nice idea; we actually have the railways in their present shape and I suspect that unless they rot by neglect, their shape will not be fundamentally different in 10 years' time.

Of course the other problem is the level of inescapable cost. It is very difficult to get away from some of the fixed costs of a railway system. But the real problem, the basic problem, is a political problem. It is not a problem of economics; it is not a problem of management. I note with great pleasure that the noble Lord, Lord Ezra, will be making his maiden speech today, and he will possibly mention these matters. But the idea of politicians spending their days seeking to force reluctant nationalised industry chairmen to close railway lines, begging them to shut down coal mines, begging them to sack tens of thousands of people and to increase fares and costs by 40 per cent. or 50 per cent. is not borne out by the evidence of anyone who has ever been in the political world. The fact is that it is pure political hogwash.

During my period in the public sector I felt that John Peyton was the only Minister in five years who took any serious interest in the industry at all, and most of his efforts were devoted to trying to keep his colleagues off my back so that we could do our job. Under both parties I certainly experienced industrial disputes as regards which I was assured that the Government would stand firm, but then I was subsequently told to settle at higher levels than I could have settled at in the first instance. One has been dragged out of bed in the middle of the night by Ministers who had had, in those days, "a chat with Vic"—the late Victor Feather—and one was told, "It is not really for us to intervene but we have mentioned that the Government are not on your side, but we are on his". The noble Lord, Lord Ezra, might well recall those wondrous days when the Wilberforce Committee sat and pondered and how much that cost the taxpayer. The responsibility for that lay not with the management of the National Coal Board but with Ministers—and they do not get any better, whichever party you are in; I have tried both.

Let me give a few specific examples. At British Rail we had a proposal to reduce the white collar staff by 9,000 people. That proposal, the Field reorganisation, was virtually agreed with the union leadership. In the end the union leadership withdrew their support. They withdrew their support because Ministers and Members of Parliament were telling the membership of the union that they would oppose these reductions and it was impossible for the union leaders to be out front when their members were being suborned by professional politicians. So that 9,000 reduction was not made.

I turn to particular services. The Heysham/Belfast Shipping Service was a very big loss-maker because of the troubles in Ireland. We tried and tried to withdraw it. In 1974 that service was losing £850,000 a year. We were prevented by the then Government from closing it until in the end I wrote to the Secretary of State for Northern Ireland at that time—an eminent and good politician—and told him that unless we received a written instruction from him we proposed to take the initiative and to shut the service ourselves. It was pointed out to me that out of courtesy I should first inform his private office. I rang his private office and I well remember the reaction of his private secretary when he heard our decision. He spoke most eloquently and said, "Oh crikey!". At that stage it was shut.

However, let us take the example of the Inverurie workshop. It is a very small Scottish workshop and it took 10 years to close. The Edinburgh/Hawick/Carlisle line was proposed for closure in the Beeching Report in 1963. We have not got over Beeching yet, but we are starting on the son of Beeching. Eventually the Minister of Transport agreed to the closure in 1968. There was still further pressure and the line was not eventually shut at that stage.

There is also the Central Wales line of Swansea to Shrewsbury. That railway line is 90 miles long. It has very few regular passengers. It would literally be cheaper to provide every single passenger with a chauffeur driven Bentley in which he could be driven wherever he wanted to go. When I was a young, naïve Minister I did a great deal of study on the economics of closure. I went to the Cabinet and delivered myself of a stirring speech. One Cabinet Minister, whom I shall not name because as an eminent Speaker he should not be named, was sitting at the end of the table, and when I sat back and waited for the applause for my argument for closing the line he said, "But Prime Minister, it runs through six marginal constituencies". Nobody else took a blind bit of notice of the rest of the discussion. It was made even worse by the fact that the Labour Party lost all six of them at the election.

As regards price rises, the report talks in terms of doubling the level of fares in some parts of the country. The case as regards that is a fascinating one. Under Conservative Governments and under Labour Governments we were specifically prohibited from raising prices. I believe that the noble Lord, Lord Ezra, and I went together at one stage to lead a delegation to meet the CBI, the Prime Minister and some of his Ministers because we had stumbled upon the important statistical fact that if you froze prices in a nationalised industry when inflation was running in double figures, the likelihood was that the public sector borrowing requirement would increase. But in fact millions of pounds were lost as a result of all that.

I know that there are many noble Lords who wish to speak and so I shall draw my remarks to a conclusion. In my view one is entitled to ask: What is the Government's next step? What is their programme for action? We cannot go on saying that we do not know what we want in regard to the railways. How will they approach this matter? It is a decision which can only be taken by politicians; it cannot be taken by anybody else. I ask the noble Lord when he rises to speak to give us some indication of the Government's intentions and timescale as regards bringing this long, sorry issue to an end.

Finally, I should like to ask: What was the cost of this inquiry? I have heard it said that the cost of the inquiry was in excess of £600,000. I shall look forward with interest to hearing whether it was something much less than that, but if it cost anywhere near that figure it is quite extraordinary. Indeed, as one who has contributed over the years on many occasions, as have many other noble Lords in industry and commerce, to the Consultants' Welfare Benevolent Fund, I know that they are pretty pricey people. At the end of the day it failed and the taxpayer received no value whatever, not because of the fault of the Committee, certainly not because of the fault of Sir David Serpell, but simply because this Government, like their predecessors, have yet to make up their mind about what we want from the railway system that we have, which has cost us a large sum of money and for which all the political evidence shows that at the end of the day the people are prepared to pay. My Lords, I beg to move for Papers.

3.39 p.m.

Lord Lucas of Chilworth

My Lords, the House will be grateful to the noble Lord, Lord Marsh, on two counts this afternoon: first, for raising this immensely important subject for debate; and secondly, for the humour and good nature with which he has introduced it. We are indebted, and will be for a long time, to the noble Lord for his contribution on matters of this kind where his experience is of so much value. Additionally this afternoon we have the privilege of hearing two maiden speakers, and I am quite sure that we shall look forward to that.

For me to participate in a debate of this kind from this particular position may come as a surprise to some of your Lordships. However, the House knows that I have long desired our transport system to prosper through modern, economical and efficient equipment and practices—and that, of course, includes the railways. At this stage, perhaps I may remind the House of what I said at column 1165 on 5th May last year when, speaking from the Back Benches, I initiated a debate on inland transport. I said: I have no doubt in my mind that the railway industry is a continuing business of great importance to this country. I believe that it has to be sustained and nurtured. That afternoon I referred to the need for modernisation of equipment and working practice, and today I stand by what I said on that occasion.

In these opening remarks—because, by leave, later I shall hope to answer in greater detail some of the questions that will arise—I should like to set the scene, as I see it, with regard to Serpell and this debate. We must be absolutely clear about the status of the report, which is by an independent committee. Serpell is not Government policy; nor should we debate it as though it were. The Government cannot reach final decisions about all the issues raised by Serpell, nor, indeed, on the wider issues affecting the railways which Serpell did not consider. Decisions upon future policy for the railways cannot and will not be taken until all the facts and arguments have been heard, and part of that process is indeed this debate in your Lordships' House this afternoon. Serpell is an input to the debate: it is an important one, but it is not the only one.

The railways are one of our major industries and there are many dedicated people working within the railways. The present management, led by Sir Peter Parker, the chairman, and Bob Reid, the chief executive, have been praised for their efforts to improve British Rail's management arrangements, to reduce costs and to get rid of restrictive practices. We must bear in mind that the work they have done in recent years has been against an immense change in the industry and particularly in the manpower over the last generation or so, when the total number of staff has fallen from something approaching 600,000 30 years ago to something just over 200,000 now.

However, some of the public comments on the Serpell Report show that enthusiasm and appreciation for the railways can sometimes distract us from more rational and constructive thought. Some of the responses have been based on misunderstandings, particularly as to the content and even the very status of Serpell. From time to time every part of the economy requires an injection of fresh ideas, better management and innovation; it needs to examine restrictive practices with the aim of improving efficiency and moving towards meeting and attempting to solve the problems that will arise tomorrow and in the future. The railways are no exception to this. We cannot just stick our heads in the sand and pretend that everything in the railways is perfect and that there is nothing to do but to pour money in and the wagons will roll down the lines. It is not like that.

Certainly the finances of the railway—the subject of Serpell—have become a matter of great concern. Unit costs have risen fast and the costs falling on the taxpayer in terms of grant per passenger mile have risen in real terms by nearly 40 per cent. since 1975. So last year we reached a position where only half the real cost of rail travel was being met through the fare box—the fares paid by travellers. The gap between total costs and revenues in 1982 was over £1 billion. Grants from taxpayers and ratepayers were over £900 million, representing something like £40 per family in the country irrespective of whether they had travelled on the railways. It was an immense amount of money.

To return to the setting up of Serpell, it was in fact the Railways Board which asked my right honourable friend for a review of their finances. Against the background that I have just given, the British Railways Board also argued that their existing levels of finance were no longer sufficient to enable them to fulfil their duties and responsibilities. As a result, my right honourable friend the Secretary of State set up the Serpell Committee last May to consider the question of railway finances. That is what the Railways Board had asked for and that is what the Secretary of State agreed to.

The Railways Board welcomed the appointment of Sir David Serpell and his committee. The noble Lord, Lord Marsh, has spoken of Sir David, so it is not necessary for me to go further with his qualifications for that appointment. The Railways Board also agreed the terms of reference that the committee was to be given. The Secretary of State made clear, when he announced the committee's appointment, that he hoped for a report within five or six months, because the matter was urgent. An injection of urgency into the matter of British Rail's financing had to be brought to bear at that time. In the event, the committee took a little longer.

Criticism that the terms of reference were wrong because they were too narrow, I reject. The requirement which was recognised by the board and the Government was, as I said, for an inquiry into railway finances, and that is what Serpell did. It is for Government and Parliament—it is not for Serpell—to put the outcome of that report into the context of wider railway and transport policy.

It is unfortunate that so much attention in the press and elsewhere has concentrated exclusively on the last few chapters of what is a long and fairly weighty report. The bulk of the report does not deal with the network—and I shall return to that in just a moment—but with potential improvements in efficiency and working practices within the existing system. The committee identified some £200 million-worth of potential savings, and that must be worthwhile by any standards. These savings are not dependent on changes being made to the network. The savings which Serpell identified—which would give a much better bargian to rail users and taxpayers—show how hasty and ill-considered it would be to consign the whole report to the waste bin or a shelf.

Serpell has not been an exercise which is a waste of time or money. My right honourable friend was told by Sir Peter Parker that there is much that is constructive in the report, and Sir Peter said that British Rail would be using the opportunity of the reports to make the most of the challenge in them. In relation to the key subjects of planning, investment, engineering and financial information, Sir Peter said: I am sure that the Committee's work, complemented by the work that we have put in hand, will enable us to accelerate the improvements that we had in mind in these fields and respond positively to new points raised by the Committee". The noble Lord, Lord Marsh, referred to financing the transitional costs, and perhaps I may deal with this point now. Neither I nor the Government can put a figure on how much transitional finance would be available. The noble Lord, Lord Marsh, knows full well that that cannot be done in isolation, because at this time we do not know exactly how British Rail propose to tackle some of the problems. As a Government, we would consider any transitional financing expenditure request properly, but it would be on the merits of the case. For example, last year, the Government provided £33 million to help with the cost of additional initiatives to reduce manpower. That was through the increase in the PSO grant and the external financing limit. If there was a subsidy of £900 million in 1982, I frankly cannot conceive at this time of a figure that might be required over the next four or five years to meet transitional costs of improvements of the kind which may have to be considered.

May I turn for a moment or two to the so-called network options. The report makes it clear that the committee intended these options only as illustrations. They simply illustrate what the costs of a variety of particular networks might be in the view of the committee. The methodology and the computer models on which they are based are the responsibility of the committee and the consultants. Certainly from the point of view of the Government I emphasise that the networks are illustrations of what the costs of the particular networks might be on varying assumptions. They are not policy proposals. They are not options between what we can or should choose, and they are certainly not being treated in that way. And, I may add, there are no closure proposals arising from Serpell that are being considered by the Government.

My right honourable friend made it clear that he is not in the business of making hasty decisions on the long-term future of the railways. The value of the grant given to the railways each year, the £900 million of which I have spoken, is enormous, and we have to ask ourselves whether we are obtaining value for the taxpayers' money or whether there are alternative ways of meeting the needs of both traveller and taxpayer. Not only do we have to consider the questions raised by Serpell, but we want to have the broadest possible discussion on the best way to achieve a modern and efficient railway for the long-term future.

There is one particular point that I ought to mention, and that is the Government's belief not only in the long-term future of the railway but in the carriage of freight being part of that long-term future. There is no doubt that the railway is well suited on a number of grounds—we have discussed this before—to take a fair share of goods. Indeed, the Freight Transport Association, in their response to Serpell, said: There is no reason why rail freight cannot operate on a fully commercial basis without any financial support from the taxpayer … the key to this is the improvement in efficiency identified by the Serpell Report, rather than slimming the network". That should dispel any fear that there is a huge road lobby being mounted against rail. We have discussed this so many times before: the two go hand-in-hand. It was the noble Lord, Lord Marsh, speaking in your Lordships' House only a few days ago, who said, "Never mind what Governments do; the mode of transport that is open to the consumer will be chosen by the consumer".

I think I have said quite enough to illustrate at this time how the Government see the report. Decisions will not be taken in a vacuum. We have to take account, now particularly, of wider transport, social (which includes the future of rural communities) and economic factors. I know that we shall hear more about these matters this afternoon, and I look forward to hearing your Lordships' views. I am quite sure that we share the common aim of a modern railway with a good, long-term future playing a proper part in the transport system. It is quite wrong if we start our debate on the basis on which the noble Lord, Lord Marsh, left us: that the taxpayer has received no value from the report. That depends on what we in Parliament do with the report.

Lord Marsh

My Lords, before the noble Lord sits down, could he possibly answer the question that I raised? I want the taxpayer to get value from the report. Could he tell us how much the taxpayer has paid for the report?

Lord Lucas of Chilworth

My Lords, I would in fact prefer to come to that point when I wind up, largely because I suspect that there may be other questions around the fringe of the costs and who, what and why, and it may be more convenient to the House if I attempt—I do not know whether I shall succeed—to embrace all answers of that kind at that time.

3.55 p.m.

Lord Underhill

My Lords, I, too, should like to thank the noble Lord, Lord Marsh, not only for bringing this subject before us but also for the amiable and informative way in which he introduced it. So much so that, although he and I have not always seen eye to eye on some issues in your Lordships' House, I find myself so much in agreement with the noble Lord that I would readily issue him with a card to come back to us. The debate has also attracted two maiden speakers. I am certain we shall hear from the noble Lord, Lord Ezra, points on what industry needs from the standpoint of freight carriage. I also look forward to hearing my noble friend Lord Prys-Davies, and I shall be surprised if he does not refer to some of the options as they affect the Principality.

When we had the Statement in your Lordships' House about Serpell on 20th January, after a cursory reading I was critical of aspects of that document. Having read it, re-read it and re-read it since, I agree with the noble Lord, Lord Marsh, that it is a disappointing and unhelpful document in many ways. Although it has some suggestions which are worth following, it generally has a negative approach. There is nothing at all in the report about the possibilities of generating new traffic. There is little of a positive approach on the future of the railways. It concentrated on the financial audit, management and savings, and possible cuts.

There was no consideration of social consequences in the report; and there was little in the report about the environment. There was little about energy conservation, there was little about the problems of road congestion, and no real approach to public need. An indication is that there are just seven lines on electrification, and it just dismisses this and suggests that there may have to be another review. Surely we do not require any more reviews of rail electrification. The Department of Transport and the board itself issued an excellent document on the whole question. We do not need another review; we need a policy decision about it.

It also says that there is no case on energy grounds for subsidising railways during the next 20 years. I should like noble Lords who understand energy problems and scientific problems to tell me whether that is a fact. I should have thought that that point could be disputed. Along with the noble Lord, Lord Marsh, I was amazed to look through the report—and I looked through it again in case my eyesight was failing—and see nothing at all about international comparisons. It is just incredible. We ought to know what are the comparisons of costs, and what are the comparisons of public subsidies. I agree with what the noble Lord, Lord Marsh, says: there is not a single industrialised nation's railway service that can run without public support. Other countries—and I have said this time and time again—seem to be proud of their railway services, but somehow we in this country seem to want to denigrate them.

There is nothing about productivity in comparison with other countries. I should have thought that this would be important. There is even no reference to points raised on transport problems in general in Armitage. I find that my reactions are endorsed—and one might say that of course this would happen—by the initial response of British Rail. British Rail have said: The reports contain some unreliable information, make few specific recommendations, mix policy and procedural matters and pay little attention to the need to maintain momentum behind current initiatives. In the conclusion to the BR document on the report they expressed regret at the need to criticise the report so much, but went on: There was very little advice in either Report on the key questions of the nature and content of the long-term strategic objectives which BR and the Government should be pursuing. That is the major criticism of the report.

No contribution is made by the report to our transport policy. That may be because, by its terms of reference, the committee were asked to concentrate on financial aspects. Indeed, that is made clear in paragraph 5 of the report: While we have paid close attention to the evidence, we have not by any means addressed all the issues raised with us. This is mainly because our review has been concerned with the railways' finances, not transport policy". How can you consider the railways and not look at the whole question of transport policy? Whenever I read reports on transport, and there have been many of them—including BR's corporate plan and even Government legislation—it becomes more and more apparent that you must look at transport as a whole. I agree with the noble Lord, Lord Marsh, that we must not be lovers of only the railways, or buses or coaches, and so on; we must urge an integrated transport policy. If somebody asks: "Why do you not do that?" my answer is that the Labour Party and the TUC have worked out their integrated transport policy, and the railway and transport unions have collaborated and agreed in that. It was adopted by last year's TUC and the Labour Party Conference, so there is a blueprint for an integrated transport policy.

The criticism by the noble Lord, Lord Marsh, of the consultants' engagement and the membership of the committee—without passing any personal comments on the two individuals—is valid. While the consultants are recognised to be very competent and experienced civil engineers, may I ask the Minister to say how much experience they have in the railway side of consultancy? There are grave doubts as to whether they have that sort of experience.

As for the figures in the report, can we afford to do without a sound railway system? The report tells us that, from Monday to Friday, 2 million passengers are conveyed daily; there are some 1,600 passenger trains daily calling at nearly 2,400 stations; and when referring to London and the South-East, which has 50 per cent. of all rail passengers, it says that 250,000 passengers travel on BR's London and South-East routes into the London terminals every rush hour Monday to Friday. What, indeed, would happen if they were not travelling by British Rail?

The report says there is no justification for the season ticket discounts which apply in London and the South-East. Serpell seems to treat the commuters of London as though they were captive passengers. Increased season ticket charges must surely follow the law of diminishing returns. Increased charges could affect employers and the whole question of London weighting. It is strange that, having made that comment, we wait a number of chapters in the report to find that they realise that if people were taken away from the railways in London and the South-East there could be problems of road congestion.

To cut my remarks short on that statement, I would only say that we did not require a £500,000 survey to tell us that if we took away the trains from people travelling by train in London and the South-East there would be road congestion. Of course there would, and, as I say, it took them several chapters to tell us that, after having said that attention should be paid to the discounting of season tickets. The report makes no suggestions as to how the level of demand could be increased.

Nor does it make any suggestions on how the railways could be dovetailed into the other transport services, and it says in paragraph 5.13 that BR has the temptation to retain the market without sufficient regard to long-term costs. Of course, we must have regard to costs and efficiency, but there are other matters to be taken into consideration in addition to costs alone. That is the very argument we have been having with the Government all this week in debating the Transport Bill. And that negative attitude is reflected in paragraph 5.4 of the report which, although commenting that schemes of reduced fares make sense and increase revenue by making fuller use of off-peak resources, it expresses doubts as to whether the various card system schemes introduced by BR are justified. Then they urge a long-term examination. Perhaps they want another £500,000 review to see whether that statement is correct.

There is no consideration whatever of encouragement for people to become rail passengers. There is no consideration of the social implications—of encouraging and helping people to travel by reduced fare schemes in order to increase the travelling public at off-peak periods—and the view is expressed that there is little prospect of increasing commuter traffic in London and the South-East. Then they make the suggestion that the congestion problem is mainly a London one. I wonder whether noble Lords from other conurbations take the view that, if the railway systems were abolished, there would be no problems of road congestion in their areas. I very much doubt whether many noble Lords would agree with Serpell on that.

They then say there is little hope of increasing passenger services on provincial lines, except in the areas of public transport executives. As we have one more day in Committee on the Transport Bill, I hope that comment of Serpell's will be borne in mind. There is the same negative attitude with regard to freight. While most noble Lords recognise that there is a limit to the amount of freight that can be carried by rail, some transfer—and I agree that it must be for the consumer to choose—would make a great deal of difference to rail finances and alleviate some of the road congestion.

This negative view is seen clearly in Serpell's comments on Speedlink. Although it is stated that BR believes there is a potential market for Speedlink—that is, in relation to the carriage of freight—paragraph 3.21 says it would be unwise to commit resources unless there is reasonable certainty that business will be won. I understand that BR has conducted surveys on that possibility. But how many undertakings will give a commitment to use Speedlink unless they know that developments will take place? Therefore, there must be some commitment in advance.

I would comment in passing that there is nothing in Serpell about the problem of rail transport—that is, if it were not there—for defence purposes. Overlooked also are the problems that would be faced on the roads if the 154 million tonnes of freight carried each year by rail was no longer so carried, and the fact that it requires 1,900 freight trains a day to cope with that.

The report questions the board's comments on track deterioration and the need for track maintenance In reply, the board has challenged Serpell's comments on that. The report quotes from the Chief Inspecting Officer's annual report for 1981, from which I will refer to only one sentence: The Railway's policy of putting safety before operational or commercial considerations has prevented any serious erosion of their traditionally high safety standards". I am sure all noble Lords would accept that no railwayman would be prepared to economise on safety measures. That is why the safety of our railway system is so efficient.

We find the astounding suggestion in paragraph 6.9 that, instead of keeping to its practice of obtaining all steel rails from BSC—and we know the problems the steel industry is facing—BR should possibly consider overseas purchases. We find the same astounding suggestion made in relation to mechanical and electrical engineering in paragraph 6.37, in which it is said that there should be a full appraisal of the possibility of buying foreign components and locomotives.

There is a section dealing with British Rail's engineering services and criticism of the fact that they purchase only 1 per cent. of their materials from abroad. As we know, BREL obtains some 60 per cent. of their materials from private industry in this country, and that is very important. I hope that, whatever else they do, the Government will not listen to Serpell when they say that we should be obtaining steel rails and other equipment from overseas. The report stresses that the question of BREL must be looked at, and I was pleased to note that the Minister—not the Minister here today—emphasised the possibility of export work for BREL. It has been so sad to hear in the last few days of the huge reductions that are to take place at the British Rail engineering works at Shildon and Horwich. Such action could kill the home base from which it is possible to attract export orders, and the tragedy that would be brought to the communities concerned must be fully realised.

Reference is also made to the question of closing rural lines, and I would urge that this cannot be dealt with on a national basis. It is necessary to look separately at each line, or group of lines, and we must consider other factors in addition to the cost factor. It may be, as the report states, that in some rural areas buses may be more effectively substituted—and an amendment on that very point is to be considered tomorrow by your Lordships' Committee when it considers the Transport Bill. But in other areas routes could be kept open, particularly if there is further investment in radio-controlled signalling and the question of existing level crossings is dealt with. There may also be development following the experiments that have been conducted by British Rail relating to the light 141 two-car unit, and possibly development of the rail bus—the very light unit.

The report contains suggestions for management which British Rail says it has either carried out, or will look at carefully. But if noble Lords look at the report they will see that the section on investment is woefully inadequate, and the general impression is that the committee has concentrated on proposals for cutting costs, while increasing services and service demands seem to have been secondary considerations.

There is an interesting table on page 41 of the report. It shows that the actual drop in British Rail investment in 1981 was £180 million, compared with the figure for 1979. The point is also made that the level of investment fell below the actual investment ceiling, but the report states that that was due to the constraints of the external financing limit—a point that we have made time and time again.

Mr. Goldstein seems to be quite happy for the network to be cut down to about 1,300 miles. Nevertheless, in his minority report he urged on the Secretary of State the importance of determining the long-term task to be set for the railway and the financial support commensurate with it. He stated that he departed from his colleagues with regret, but the need for a long-term review of, and direction for, the railway is so compelling that I can take no other course". I remind your Lordships that, in its annual report for 1981, published only last April, the Central Transport Consultative Committee for Great Britain expressed concern about the effects of the application of rigid financial targets on the quality of services. The consultative committee said that it was supportive of British Rail's efforts to obtain from the Government improved levels of investment, and that it had made representations to the Government. That committee is the watchdog for railway services in Great Britain.

I shall not spend much time on the question of network options, because the noble Lord, Lord Marsh, has made it quite clear that the report emphasises that these are no more than illustrations. When your Lordships look at the options, you will see that some of them are, frankly, absolutely ludicrous. Mr. Goldstein stated that the studies carried out show that, as services and network are reduced, costs fall faster than revenue. "Let's abolish the whole lot"—and that could be said of rural bus services too. It is such a simple thing to say; it is as easy as Mr. MacGregor smashing up the steel industry, instead of developing it. It is very easy to say those kind of things.

I was pleased to note what was said by Mr. Robert Adley in a Commons debate. I shall paraphrase his remarks, since I am not allowed to quote him. He said that the Serpell Report does not address itself to two fundamental questions: do we need a railway and how much are we prepared to pay for it? I shall add a further question: how are we to develop a co-ordinated, integrated, public transport policy? Those are the three issues, and we need answers from the Government.

4.14 p.m.

Lord Tanlaw

My Lords, I am particularly grateful to the noble Lord, Lord Marsh, for using the Cross-Bench day to put forward a Motion which not only I, but many other noble Lords, have wanted to debate in your Lordships' House. The debate has attracted a wide list of speakers, including two maiden speakers, and I am privileged to be taking part on the occasion when my noble friend Lord Ezra will be making his maiden speech. In that regard I cannot recall having heard more references to a maiden speaker than were made by the noble Lord who moved the Motion today. I also look forward to hearing what the noble Lord, Lord Prys-Davies, with his experience in the Principality, has to say.

The noble Lord, Lord Marsh, very amusingly, but with great authority, speaking from experience, explained the main criticisms of the Serpell Report, and perhaps the reasons why it came about. The noble Lord might not be too happy with my own criticisms of the British Rail Board, since obviously he knows what it feels like to be criticised, while I have not had that "luxury"; nor have I been a Minister of Transport, a post which equally attracts criticism. I hope that when the noble Lord the Minister replies to the debate he will not confine himself to the very narrow terms of reference that were given to the Serpell Committee, and that he will answer questions outside those of railway finances, since people have made a great point about not speaking in terms of figures in a debate of this kind. I agree with a number of the points made by the noble Lord, Lord Underhill, and I hope to take up some of them later.

Meanwhile I should like to go back to the terms of reference, which were given by the right honourable gentleman the Minister of Transport, which forced the Serpell Committee to stick its collective head in the till. No one can expect to have a wide field of vision when in that posture, and the committee was no exception. I regret that I found the report difficult reading, and what vision it does embody has been bifurcated by the inclusion of the minority report. The significant details and implications are awkward to extract, and my intervention from these Benches is an attempt at a simple analysis of some salient points that I believe are relevant to the travelling public and the railway industry, but, regrettably, I, like many others, have come to the conlusion that overall the report was a great opportunity missed.

I should like to come back to the point taken up by the noble Lord, Lord Marsh, on the constitution of the Serpell Committee and the members' interests. I wonder what actually are the reservations and guidelines laid down by Her Majesty's Government on the practice of professional members of Government-sponsored committees using their own firms and consultants to serve those committees. In the particular case of the Serpell Committee, the chairman, Sir David Serpell, was a member of the British Rail Board which, after all, was the corporation under investigation, while Messrs. Butler and Goldstein were partners of the two consulting firms engaged, the fees and costs of which amounted to approximately £600,000—if that is a correct figure given by the noble Lord, Lord Marsh. For that sum of money British Rail could have purchased two two-car rail buses, or half of a new Southern Region electric train, and in the eyes of the travelling public either of those options would have been more use than what has come out of the report. I say that for the reasons that I am about to give. It would be interesting to know what method of selection was employed in the case of the consultants to the Serpell Committee, and perhaps the noble Lord will enlighten us in his winding-up speech.

I now come to the question of the terms of reference. A review of the nation's remit to British Rail was considered desirable by almost everybody, but surely such a review cannot take place without the framework of a national integrated transport policy. Both noble Lords who have spoken have said that, and no Government that I can recall have ever taken a position beyond vague Green and White Papers on the subject. We know that the options put forward in the report were meant to be illustrative, but regrettably, though inevitably, the general public has interpreted them as proposals. While clearly that has been embarrassing for Her Majesty's Government—after all, that was the object of the leak campaign—I now understand from what the noble Lord the Minister said quite categorically that it is still the case that the options under the terms of reference are entirely illustrative and are not in any way proposals. No doubt he will confirm that in his winding-up speech.

There has been much criticism of the report, and a great deal of it has been unjustified, or misinformed, or both; in particular with regard to the minority report written by Mr. Goldstein, which was submitted at the eleventh hour, without the prior knowledge of his colleagues on the committee. Apart from the obvious discourtesy of that procedure, I do not share in the general criticism of the substance of Mr. Goldstein's approach. In fact he was the only member of the committee who tried to meet the terms of reference laid down by the right honourable gentleman the Minister of Transport. It is the terms of reference, more than anything else, that should be criticised, because, if they were fully understood by the right honourable gentleman the Minister of Transport and his department, then surely the period of five to six months allotted to the committee was ridiculously short, even when the remit was limited to railway finances.

I come now to the integrated railway which was touched upon by the noble Lord, Lord Underhill. I wonder whether the noble Lord will state quite categorically that he now believes that an integrated transport system is right for this country. At least one of his noble friends gave quite the opposite view from the Front Bench in a recent debate in this House. We believe from these Benches that the local experience and professionalism within the PTEs of the metropolitan counties reflect the views and needs of their communities and strengthen the case for the power of local transport authorities to be increased, rather than decreased through centralisation by the Department of Transport. Road/rail integration, which is dealt with in chapter 16 of the report, is a case in point. The benefits to the passenger of integrated bus and rail services are apparent to the user but not, it seems, to the present Government or to Sir David Serpell and his colleagues. As Tyne and Wear has shown, the integration of local bus services with a new metro has produced an increase in ridership in an area hard hit by the recession, compared with the national trend of falling transport usage. Would the noble Lord not agree that there is a lesson to be learned here which can be applied throughout the network?

Chapter 16 of the report goes into detail of how bus substitution could replace the cut in rail services. This part of the report implies integration; but it is worrying to note that the committee feel that a great deal of work would have to be done before bus substitution could occur on any scale. I assume that here they are indirectly referring to potential difficulties over agreements with the unions involved, transferrable ticketing and relationships with the local bus companies. I find this concept exciting and imaginative, provided that British Rail has the responsibility of running the combined service which would replace a reduced railway network. Nevertheless, in spite of the Serpell reservations, I cannot understand how there can be too many difficulties in arranging the arrival of a bus to coincide with that of a train for a nation which mounted a sucessful task force to the South Atlantic within a matter of three weeks.

My Lords, in contrast to the public transport executives, the true rural services are suffering as much from lack of policy as from inadequate finance. At present, the remit under the 1974 Transport Act is to provide a level of service comparable with that being provided when the Act was passed. The procedure on closures is based on 1962 legislation. Clearly, a new remit is long overdue—and one which should include British Rail integration with local bus services. Will the noble Lord not agree that rural services are a true social service just as much as the supply of electricity to a remote Highland village or a telephone kiosk in rural Wales? No doubt the noble Lord, Lord Prvs-Davies, will have something to say about this in his speech, to which I am looking forward.

It is not just the railway lines which are lightly used in rural areas. Thousands of miles of country roads have traffic densities which fail to reach double figures when measured in vehicles per day. Yet local authorities maintain these roads to excellent standards, even though they might probably earn more for the nation if they were ploughed up for growing crops or grazing sheep. It might be as well to remind the House, while comparing road and rail, of the horrifying safety statistics of the two different modes of travel. On 3rd February Mr. Robert Adley—who, in my opinion, made one of the few sensible interventions on the Serpell debate in another place—stated that over the past 14 years, 526 people have been killed by accidents on British Rail of whom at least 300 were apparently suicides; 2,660 people have been killed by violence in Northern Ireland and 105,000 people have been killed on the roads.

These grim statistics are confirmed by the International Union of Railways which claims in its latest brochure that throughout Europe the railways are by far the safest means of transport. For example, in 1976 the number killed in traffic accidents on European railways amounted to only 0.5 per cent. of the slaughter on the roads. For similar levels of traffic in Europe, there was one fatal accident on the railways for every 2,300 road deaths. As railways and roads in the United Kingdom provide a similar service, it would surely make sense for the maintenance of the railway track to become the responsibility of the state with British Rail providing the train service. While this might justifiably be seen simply as moving public money from one purse to another, it would give the transparency of accounting at present lacking in the comparison between the various forms of private and public transport. Are Her Majesty's Government going to pursue this line or will they continue to maintain that the road and rail systems should have separate disbursements governed by different criteria from the central Exchequer?

This brings me to the cost-effective railway which was mentioned in the report. It has been an obsession with finance rather than with cost-effective railway service which has neutralised much of the report. I am sure that other noble Lords will have much to say on this matter. That is why the Serpell Report is so incomplete. It lacks the appreciation that, to succeed, a product must provide more, not less, of what the customer buys it for. Passengers and the nation are not going to pay for the cheapest railway they can have; they are paying for the best railway they can afford—the high speed train, the electric commuter services in the great conurbations and the daily miracle of bringing (I make it) 400,000 Londoners to and from work. It is a pretty good railway at that but an expensive one. Serpell should have provided, but did not provide, a range of new remits for British Rail on the railway the country wanted.

A vision is required of how good a cost-effective railway could be. The nation cannot wait forever. It has already been said the Government have gone so far and have got to go further to do something about it. British Rail claims, on the basis of comparisons, to be the most cost-effective railway in Europe. Unfortunately, I may disagree with Lord Marsh on this but I believe that this is largely meaningless because each nation has a different heritage in terms of transport infrastructure, different attitudes to railways, to investment and to industrial locations. Therefore I do not think comparisons are fair. The need is for a vision of a cost-effective British railway for which the travelling public will be prepared to pay because they see it as value for money.

Then I come to what I call the social railway. One of the main criticisms that we have from these Benches of the report is that the committee looked only at how the railway network could be cut down to cost less. It completely ignored the social and commercial dimension of railways, and when the Central Transport Consultative Committee wrote to Serpell suggesting that the inquiry's terms should be extended to include the interests of passengers, Sir David Serpell replied that passengers were only another relevant consideration. Liberals cannot and will not accept this view. This, again, is where the report has made a great failure of omission. The British Rail chairman, Sir Peter Parker, who has been an excellent front for so many of the board's shortcomings, spoke recently of 1983 as a watershed year for the railways. He was referring in particular to the social railway, still an ill-defined part of Britain's transport system dependent on state subsidy and which most directly affects the greatest number of rail users.

But the social and commercial dimension should not be applied to the railways only. I refer back to my statement on the need for a fully integrated transport policy, and it is in this context that the costly social role of British Rail should be clarified. In a developed nation such as our own, the infrastructure for all basic services has been built up during the past 150 years. For the public transport service it is not unreasonable to make a general policy statement that, for example, every community of more than 4,000 people should have available a regular, time-tabled transport service connecting them to every other community of a similar size in the country. The Dutch Government enacted such a policy shortly after the war in 1947. In 1910, the British railway system offered this and the need is still there today, albeit no longer necessarily in the railway form. With the aid of computers and integration of public and private transport, it should be entirely possible to make this a social and cost-effective reality.

There are two sectors of British Rail management which make up Sir Peter Parker's social railway. The larger of the two (which has been mentioned) is the South-East, which ranks in turnover with Inter-City. Bringing 400,000 commuters to work in London each day makes it more of a necessity than a social service. While the finance and organisations of London's rail services may be debated endlessly, the need for them is undeniable at this time. In future, however, this may not be the case if the microprocessor revolution, combined with new developments in telecommunication and home terminals, begins to affect travel patterns. This aspect was not looked into by Serpell but a special study should be made as soon as possible, because these effects go far beyond the problem of assessing the volume of commuters coming to London every day. They will affect the whole working of the metropolis.

That leaves what British Rail calls the provincial services. Unlike the other sectors, this is far from homogeneous and is suffering the most from out-dated or inadequate remits. While the popular impression of these provincial services is the rural branch line, this is misleading. This sector also has responsibility for rail services in the metropolitan counties, the main-line services within Scotland, the stopping services on main Inter-City routes and also inter-regional services such as Cardiff-Portsmouth and the trans-Pennine route.

Each of these subgroups has its own problems and opportunities but it is in the metropolitan counties that the monolithic image of British Rail is at its weakest. Each of the metropolitan counties has a Passenger Transport Authority charged with responsibility for an integrated transport system. The policy established by the authority is implemented by the Passenger Transport Executive. Some noble Lords know about this but some may not know, and so I think it is worth explaining this for a moment or two.

The Public Transport Executives "buy" their rail services from British Rail under a formula laid down in Section 20 of the 1968 Transport Act. They also specify service patterns and fare structures. The responsibility of each PTE for all transport in its area has also resulted in considerable progress with the integration of public transport. However, all this could be endangered by the latest Transport Bill if the Secretary of State does not agree with the integration plans of the local public transport system, as interpreted by the PTEs in the seven metropolitan counties. That would be a great pity, but we can come back to it on another night.

Two more examples illustrate this point. The highly successful Tyne and Wear Metro has had an extremely flexible one-man operation under radio control for several years and it makes use of some sections of former British Rail lines. In the West Midlands the PIE has taken an active part in the long-running problem of how to replace the ageing diesel multiple-unit trains which provide commuter services in many conurbations. The concept of PTEs is already a success story, although I doubt very much whether the intervention of the Secretary of State for Transport under the new Transport Bill will improve conditions for the travelling public, for reasons of management.

This brings me to the subject of business and commercial management of BR and BREL. This is something on which my noble friend Lord Ezra may be able to speak with equal experience to the noble Lord, Lord Marsh. The railways board has clearly lacked a coherent business approach for many years. Financial forecasting has been poor, and that has already been mentioned. Cost identification has been quite incomplete. That the Serpell Report was needed in the first place is an indication of the poor quality of top-level rail management, although this is now being remedied in part by the sector management system. Unfortunately, the board's hasty and underhand response to the document did nothing to dispel this general view. Figure 4.1 of the minority report on page 118 illustrates the British Rail matrix of management, which is a complex cube of corporate activities, with the chairman and the board balanced on top.

What Mr. Goldstein did not emphasise was the mirror-image structure which exists within the Department of Transport, for which the Minister and his advisers are responsible. The report, apparently, does not recognise that this means duplication of all procedures and decision-making machinery pertaining to railway businesses. This situation has created a double matrix of management that explains to a large degree many of the muddles, defects, missed opportunities and high costs of the railway transport system in this country. Add to this a similar complex structure of trade union management, as described by Mr. Sid Weighell in the latest edition of Rail News, and we have the ultimate recipe for perpetual inertia. Therefore, it comes as no surprise to read in the same edition of Rail News that no further progress has been made on the manning levels of the new rolling-stock which is still lying idle among the weeds in a Bedfordshire siding. Those responsible for negotiations over this issue should read Mr. Weighell's words carefully. He said: Nobody owes the railway a living. If we don't harness technological changes and bring in modern working practices the industry will die. Others will do our job for us. The heavy lorry, inter-city bus services, internal airways, even the private car—all are operated by people who are trade unionists themselves and accepting new technologies. Railways will have to survive by their own efforts". He went on into further detail, but I think those words should be heeded by all who have an interest in the future of British Rail.

Problems with investment are another side-effect of the monolithic image of British Rail. The success or otherwise, with productivity agreements on London commuter services, has unfortunately coloured attitudes to investment in rural railways where flexible rostering is the least of the local managers' worries. All the services, both long distance and rural, must be suffering from the increase in British Rail administration costs. Since 1977 loaded train-miles on British Rail have declined by just over 3 per cent., but over the same period administration costs per loaded train-mile have increased by 14 per cent. to 96.4p in 1981. Virtually a pound a mile may not be a heavy imposition for a well-loaded Inter-City train but in the provincial service, where cost reduction will be the key to survival, such rising overheads, when all else is being cut back, cries out for action. No commercial organisation can afford to increase its overheads during the current world recession if it wishes to stay in business. The British Rail Board has done so without a blush or an explanation and, according to Serpell, is, not surprisingly, about to go out of business.

What, therefore, is the way ahead? Vague talk of millions for electrification and a better railway mean nothing to many people. Specific projects, detailed improvements in journey times, reliability, frequency, and time-keeping on a particular route can mean much to fewer people. It is therefore hard to understand the board's obsession with electrifying the King's Cross to Edinburgh route, which already has a highly efficient and popular train service with trains barely five years old. In contrast, the midland main line from St. Pancras has suffered from lack of investment and management attention for many years. Yet the recent introduction of high-speed trains running at only 90 to 100 mph has increased passenger revenue by as much as one-third. Electrifying the London to Edinburgh route would disturb a world-class Inter-City service. On the other hand, electrifying St. Pancras to Derby, Nottingham and Sheffield, the first 50 miles of which have already been completed, would provide a major improvement in the transport infrastructure of the depressed areas in the East Midlands and South Yorkshire. Will the noble Lord undertake to make representations to his right honourable friend the Minister to see that this electrification scheme is completed without further delay?

Defensive thinking may have caused the board to overlook some of British Rail's better achievements. Freight business shows what can be done—yet freight is largely ignored by Serpell, except in the most severe option, where it shows a profit despite having most freight customers disconnected from the railway.

Ten years ago the board wanted to get out of wagonload freight altogether. It was the far-sighted freight managers in the working railway who retained their vision of what was to become Speedlink. This was a new-look overnight wagon-load freight business, with wagon-loads—the same as truck-loads on the roads—running up to 75 miles per hour overnight under computer control. Speedlink is the antithesis of the old-fashioned wagon-load system where wagons got lost for weeks in marshalling yards. This new business has grown rapidly and the costs of the old marshalling yard system have been stripped out with remarkably little fuss or industrial reaction.

Speedlink is a growth business and it is entering the distribution business, in partnership with road and warehousing concerns. It is a commercial success and this has come about by providing better services that companies are willing to pay for; not because it has concentrated on cutting costs.

I think that most political spokesmen on railways see the manufacture of railway equipment in terms of British Rail Engineering. Unfortunately, this is misleading, I think, because the main task of British Rail Engineering has always been the maintenance of British Rail equipment, even when there was a substantial new build. Now, Government, British Rail and rail union spokesmen rightly emphasise the sales of railway equipment overseas by BREL but have failed to put it in the context of the railway industry as a whole.

For the private railway industry, exporting has since 1840 been a way of life on which its survival has depended. On the other hand, BREL, which was formed in 1969, becomes interested in export only when the home market dries up. The railway industry has suffered far too long from overspecification by the main domestic customer, and this point, at least, was highlighted in the Serpell Report. Such overspecification is totally inappropriate for most commercial railways overseas, which means costly redesigning for export.

The whole industry has, up to now, been severely handicapped by the regular attempts by BR, as customer, to get as much equipment as it can built in its own workshops, regardless of cost or known costing procedures. A prime example of this is the case of the Advanced Passenger Train and the £50 million of taxpayers' money that has disappeared on its design and development. There is a pressing need for a separate report or public inquiry on this subject, would the noble Lord not agree? Therefore, can he specify what action Her Majesty's Government are intending to take in this regard?

I want to conclude as shortly as I can. In the short-term—that is, up to the general election—the Serpell report is so bad that it will probably freeze any sensible discussion of British Rail's future policy. Alternatively it will be put away on the pile of past railway reports, where it will gather dust with all the rest. Nevertheless, it has shown the taxpayer, perhaps for the first time, what the extreme options could be and the country clearly has not liked them. But there is growing concern that, if the present Government were by chance re-elected, one of the lesser options—the series designated C1to C3 in the report—might be adopted, on the assumption that there would be no general outcry except from those affected.

It would be quite wrong to conclude without saying that according to the Serpell Committee it would appear that the summation of British Railways Board policy has been a preoccupation with self-perpetuating procedures designed solely to maintain the status quo of the British Railways Board. The same conclusion can be applied with equal force to the present leadership of the two rail unions, the top management of BREL and the mirror image management structures that exist within the Department of Transport.

Until public demand replaces this self-interested attitude and its attendant high costs with a vision of an integrated public transport system that works, British Railways must inevitably decline under the Serpell formula, to the detriment of the travelling public and all those who are employed in the railway business. This debate on the findings of the Serpell Committee, if it is to have any meaning at all, should be the first step in awakening the travelling public to re-create that vision of a fully integrated, cost-effective transport system, and to turn it into a reality.

4.43 p.m.

The Lord Bishop of Durham

My Lords, after a speech of that comprehensiveness and authority, what is a poor bishop to do? Clergy are traditionally supposed to have a rather romantic attitude towards railways, of the kind disavowed by the noble Lord, Lord Marsh. I do not think that I have a romantic attitude towards them, but I am conscious of serving a diocese which is steeped in railway history. When I travel home from your Lordships' House, I travel along the oldest railway route in the world: at least, part of it. I now see that it also contains part of the newest railway system in this country. I am also conscious as I speak that this afternoon there has been a mass lobby in another place by many people in my diocese living in the town of Shildon, whose railway works are threatened. So where I come from railways are an emotional subject, and this makes it all the more important to look for the basic principles on which decisions on this subject have to be made.

That is why, when I opened the Serpell Report, I turned with particular interest to Part II, the section labelled "Longer-Term Options" on page 61, and, in particular, to the part labelled "Travel and Subsidy", which should be at the heart of the whole of this debate. That particular section consists of just over one page and is so unbelievably superficial that I could scarcely believe what I was reading. I do not blame the committee for this. Mention has already been made, more than once, of the very narrow brief that they were given. But the fact that this was treated so superficially surely makes it all the more important to set the report in a very wide context.

Let me take up one of the points made by the noble Lord, Lord Underhill, in reference to that section, when he raised the question of energy. All that the report says is that, at the moment, energy costs on the railways and other forms of transport are, in terms of efficiency, very similar. But what, in heaven's name, has happened to all the discussions that we have been having for years about long-term energy policy? What about all those considerations concerning long-term energy resources? Surely, if one is trying to look at this subject from a broad perspective and in the long term—which one has to do—one has to recognise that, whatever our major source of energy in the long-term future, it is virtually certain that it will have to be distributed in the form of electricity. And if our major form of energy is distributed in the form of electricity, that means, almost inevitably, railways, for all but very short journeys. It is therefore incredible, I should have thought, in trying to take that sort of perspective, to think in terms of running down a system which is likely to become increasingly important as the change-over to other fuel resources begins to take effect.

In this same meagre section the report talks about the justification of subsidies in terms of providing cheap public transport for various members of society. Indeed, the whole thing is biased towards subsidising customers, rather than towards subsidising the system. In a sense, this is fair enough so far as it goes, but it ignores the extent to which a cheap public transport system benefits the whole of society—and this even in a society where freedom and competitiveness are given a very high value.

It is a platitude to say that the exercise of freedom depends upon the existence of an underlying order. But it does not seem to be recognised that economic freedom and fair competition equally depend upon the existence of an underlying order and, in particular, the existence of substructures in society which provide the framework for that market to operate, and which spread the opportunities fairly. One of those substructures of a fair, competitive society surely ought to be an efficient and reasonably priced public transport system. Such a system ought to become one of the means of ensuring that different parts of the country relate to one another without being penalised.

Let me put this in very concrete terms. We hear a great deal nowadays about the need for mobility in search of jobs. Again, fair enough. But one of the great disincentives to mobility is the high cost of public transport. People are simply not willing to uproot themselves if that will mean disintegration of their communities and disruption of their family lives, with little chance of remaining in contact with those whom they have left. I know this from personal experience, because one of the greatest single problems that I have in attracting young clergy to come to the North of England is that they cannot afford to travel home to see their families. I wonder whether anybody in Government circles puts side by side the current concern about the family, and the current concern about the mobility necessary for job seeking, and asks what these mean in terms of a transport policy? These are the questions which have to be answered if there is to be any sensible response to the immediate financial problems facing British Rail.

Let me take up one specific issue on my own doorstep, the proposed closure of the Shildon wagon works. Shildon is a railway town. The wagon works is its only major employer for men. The town already has a higher unemployment rate than any other town where there are British Rail workshops. If the works closes, unemployment among men in a community of some 20,000 will rise to approximately 50 per cent. Last year, the Shildon wagon works won a temporary reprieve. I quote from the statement of the British Railways Board. It was reprieved, "against the background of possible wagon export orders and the uncertainty surrounding the Serpell inquiry". A few days ago, as noble Lords know, the closure was reaffirmed.

What, then, does Serpell say which might help the people of Shildon? As we have heard already, there is strong discouragement of any idea that there could be a recovery of markets by BREL. I am glad of the assurance already given by the noble Lord, Lord Lucas of Chilworth, upon the commitment to freight traffic in the future. But as one looks to possible areas of expansion in the manufacture of freight wagons—this is basically what Shildon is all about—there seem to be two options. One of these has already been discussed: namely, Speedlink. I will say no more about it, except to add to the sorrow that Serpell has been so dismissive of this particular possibility.

The other area of expansion is in the manufacture of private wagons. This seems to be the growth area where individual firms are encouraged to have their own sidings made, to buy their own wagons and to run these on the railway network. Here there is a large potential market, but it is one which for the most part has been captured by private industry—and captured for two reasons. First, it has been captured because BREL was very busy re-equipping British Rail at a time when more freight wagons were needed. Secondly, it was captured because many of those who wished to have freight wagons wished to lease them rather than to buy them outright, and BREL is hampered by not having the power or the capital to enable such leasing to take place. I am told that it has no borrowing capacity, so the market is more and more slipping away from it.

This is why it becomes possible to produce figures which show the sort of fall-off in demand for wagons which then seems to justify the closure of a works like Shildon. But this is not fair competition. This is to tip the balance against the public sector and then use the consequent damage to the public sector as an argument for privatising BREL altogether. This is the direction in which Chapter 7 of Serpell is leading. In fact, the report goes further. It seems to look with positive equanimity at a state of affairs in which heavily subsidised overseas manufacturers could corner the market. We have already heard of this in relation to rail, but it is now happening in terms of wagons. Shildon is an efficient works. It is a loyal works. It is a trouble-free works. But I am told by those who belong to it that overseas competitors are now in a position to offer wagons for sale on the British market at less than the cost of the steel required in Britain to build them. If this is true, it seems to me to be disgraceful.

I am not competent to argue the detailed financial case, nor would your Lordships expect me to do so. Those directly concerned will do it for themselves. I simply want to ask the question: what kind of responsibility should the Government have for their nationalised industries? And given the powers which the nationalised industries have to plan not just for particular areas but for the good of the nation as a whole, ought not financial considerations to give place to social considerations when a good enough case can be made? In the case I am talking about, we are not thinking about just the closure of a works. We are thinking about the death of a town.

I do not like making a case in your Lordships' House for a particular works, because I am sure that many others of us might do the same for things which are of particular local concern to us, and in this House we ought to be above local interests. However, what I am really pleading for is a spirit of responsibility and a spirit of fairness: fairness within British Rail itself which I fully recognise has got to make cuts. But a nationally responsible body ought in my view to take account of the places where those cuts will hurt most. Also I am pleading for fairness between the public and the private sectors of industry, fairness which seems to be noticeably lacking just at the moment in this particular sphere and which is the source of much bitterness. I am also pleading for a broader vision of what the railways of the future could be—a much broader vision than we find in this report.

4.57 p.m.

Lord Ezra

My Lords, it gives me particular pleasure today to be speaking in a debate on the railways which has been introduced by the noble Lord, Lord Marsh. He and I have worked very closely together in a variety of ways since 1966 when he was Minister of Power in a previous Government and subsequently when he was chairman of British Rail. I have always found him stimulating, witty and practical. His speech this afternoon fully justifies that view.

Having been in the coal industry since it was nationalised in 1947 until last year, 1982, I was able to develop a very close and continuous connection with the railway. This began in the late 1940s, when it was my task to sell them coal to run the locomotives, something which does not occur (some would say with regret) these days. They were then very big users, but they also negotiated very hard. I remember visiting the railway buyers, two gentlemen of sombre mien who received me in a stark office near King's Cross and conditioned me by showing me charts which demonstrated conclusively that all rail delays were due to poor quality coal. I am not quite sure what they would say today.

When I knew that the report on the railway which we are debating today was about to appear, as someone from the outside who had been so much involved in railway affairs, I looked forward with great anticipation to studying the report, hoping to find within it how we could develop the great railway system which we had inherited and which, after all, was the basis of the Industrial Revolution. Like other noble Lords who have spoken in this debate, I must say that there was a degree of disappointment. The noble Lord, Lord Lucas of Chilworth, said that it was not for the committee but for the Government and Parliament to consider this issue in a wider context. Clearly, we must do so but it would have been helpful if such an eminent committee, producing a report that happens to he the twentieth major report on the railway system of this country since it was nationalised in 1947, had given us the wider view on which we have to make our decisions.

I would have preferred the committee's terms of reference to have been something like the following, if your Lordships will allow me to make this suggestion: To examine the prospects for the railways in the light of all the relevant circumstances; to report on the action needed to provide Britain with an adequate, efficient and technologically advanced railway over the next 20 years; and to consider the financial implications of so doing. I believe that, if we had given answers addressed to that question, we could have had a much more informed and constructive debate today. As it is, this eminent group of people were limited to certain aspects of the problem. In their report, which had to address itself necessarily and almost exclusively to the financial options, they were unable—as they themselves stated, and as noble Lords have indicated—to address themselves to the wider issues.

I happen to know most about a certain aspect of the railway system, as someone from outside; that aspect is the freight side of the operation. I have been in an industry which represents the largest element of the railways' freight traffic. If your Lordships will address yourselves to the table on page 21 of the report, you will see that the vast proportion of freight traffic moved on the railways is bulk traffic—90 per cent., as the report states, of which 60 per cent. is coal, a large proportion iron and steel, with petroleum and chemical products representing another proportion, and aggregates and building materials representing yet another.

Over the years, the railways have developed a most efficient way of moving bulk traffic. That was really sparked off by the movement of coal being the largest single element of traffic. This started in the days of the chairmanship of the noble Lord, Lord Beeching, and was taken up by his successors Sir Henry Johnson, the noble Lord, Lord Marsh, and the present chairman, Sir Peter Parker. Throughout that period, a skill was progressively developed in handling bulk traffic, and in my opinion leads the world in that concept. I myself, as chairman of the National Coal Board working with the railways, have been party to it, and have received visitors from abroad who wished to see how this system worked—bulk loading at the colliery; the rapid transport to the power station, the steel works, the cement works, or the port; the rapid discharge; and the excellent economy and handling thrughout. It is a great pity that, at this stage in the development of the railways, this great achievement—and it is an achievement—was not recognised. I do not know why we in this country seem to ignore that which we achieve and concentrate unduly on that which remains to be done. Of course things remain to be done, but let us give some encouragement to those people who have worked hard to develop a system over the years which has paid dividends, and which will continue to pay dividends.

When I look at this report, I see that it veers towards Option A. It does not come down in favour of Option A but it seems to veer towards it. Certainly it does so in the minority report. In the minority report we are told that under Option A, freight traffic will show an increase of revenue compared with costs of something like 40 per cent. What it does not reveal, and what one has to look elsewhere in the report to find out, is what absolute level of freight one is talking about that will give that advantageous financial position. When one examines this point, one finds that one is talking about reducing the amount of freight carried by the railway to 25 per cent. of what it is today.

I cannot conceive of a reason why, in this country's present predicament, we should even be contemplating the possibility of cutting off from the railways a form of freight transport in which they have excelled themselves. So I suggest that when we have the yet further inquiry into the railways which I am afraid the present report leads one into holding, these factors should be taken into account.

My noble friend Lord Tanlaw and the noble Lord, Lord Underhill, and other noble Lords, have referred to Speedlink. Here, the railways have shown a remarkable initiative. They have recognised that the main freight they could carry would be bulk freight but have said also, "We will not be defeated by the problem of carrying manufactured goods". So they have worked very hard to devise a system whereby, in the appropriate circumstances, such goods can he carried. They have already made a big dent into that market. It is perfectly true that in this report tribute is paid to that initiative. But, as other noble Lords have indicated, that tribute is severely qualified by great caution. If we are to express extreme caution every time that the management of a publicly-owned enterprise shows desirable initiative, then we shall not get those people to do anything like what they are capable of doing. I hope that we have come to the stage at which we shall have a report that will tell us about the positive things we can do with our railway system.

May I just conclude on this note? There are signs at the present time—particularly in the United States, and this might be spreading to other countries—that the present world recession may be nearing its end. It is to be devoutly hoped that this is true. No doubt recovery will be slow, but it looks as though recovery is coming in the course of the next year or so. Our objective in Britain must surely be to prepare for that eventuality and to obtain a major share of it. We must create the circumstances in which our manufacturing enterprises can expand on a competitive basis. We must ensure that they are served by an adequate and efficient infrastructure. My Lords, there is no doubt that in that infrastructure the railway plays a crucial role.

Several noble Lords

Hear, hear!

5.10 p.m.

Lord Somers

My Lords, it is the custom in your Lordships' House when one follows a maiden speaker to give him all the usual congratulations, and one is never absolutely certain, of course, with what sincerity one does so; but in this case I can say that I do congratulate the noble Lord, Lord Ezra, from my whole heart and say that I only hope, as I am sure your Lordships feel, that we shall hear him many times, particularly on the subject of railways and transport when it arises.

My Lords, I feel a little diffident in joining in this debate after two such speakers as the noble Lord, Lord Ezra, and my noble friend Lord Marsh, who are really experts on the subject, but I shall try and contribute a a little something, or convince myself that I have contributed something: perhaps that is more to the point. This is certainly a very exhaustive report, and after wading through it I realised that it showed us in detail what are the sources of financial difficulties in the railways, but it did not say much about the way to avoid them; there was nothing really very constructive. I feel that the railways are an essential service, and I can say to my noble friend Lord Marsh that I am not speaking from any emotional point of view; I used to have it as a boy of course, but that has gone now. I am speaking because I feel it is an essential service to the country, even though many people, I know, would like to do away with the railways and transfer everything to the roads. But, my Lords, that is impossible. The roads are already grossly overcrowded and to do away with the railways would make them practically unusable. So the railways must be kept.

The question is how to avoid the dreadful drain on the public purse that they are causing. There is one thing in which roads can never compete with the railways; I say one thing, but there are really three: one is speed, one is safety and the other is volume in goods traffic. However, we must do something to try to remove this frightful loss at which they are running. But the report says something about making them run at a profit. The railways, one must remember, are a public service, they are not a business, and therefore it is not really essential that they should make a profit. In fact I think it is impossible in any case. But we must try to reduce the loss.

I do not think that cutting the network is the way to do it. Not everybody in the country has a car today, though when one looks at the roads one might think that they had. There are many country districts which depend entirely on the railways, and there are many people everywhere who do not drive a car—being one myself I can speak with authority on that—and who depend entirely on the railways for their ability to move about. Therefore, to cut down the network would be depriving a lot of people of the ability to move from one place to another. So I do not think we can do that. At the time when the Beeching Report was issued and there were some cuts in the branch lines, we were all comforted by statements that the lines would be replaced by bus services. Well, many of them never were; there were no buses at all. In fact I think it was impossible to provide them because the roads were so narrow that it would have cost more to improve the roads then to keep the railway running. Therefore the inhabitants of such an area were absolutely stranded. So I do not think that cutting the network is the right answer.

May I deal with goods traffic, a subject which has just been spoken upon with such authority by the noble Lord, Lord Ezra. I was very glad to hear him speak of the efficiency of Speedlink, which I think can be developed into one of the finest and most efficient goods services in the world. I am old enough to remember the days of the old loose-coupled freight trains, slow-moving, which were far from efficient, but now we have come into quite a different era. What I suggest is that many factories which are near the railways or within reasonable distance should have their own sidings, and possibly even their own trucks, as the right reverend Prelate suggested, though I do not know that that makes a great deal of difference. In that case the cost of building the sidings could be divided between the firm, the factory, and British Rail; and could we perhaps hope for a Government grant, which I think would make it a workable proposition? Then the large goods termini in the big towns need modernising; they need more modern loading and unloading mechanisms. I also think that traffic would be speeded up a good deal if only we could go over more widely to the container packing system.

Dealing with passenger transport, I think here the problem is more a psychological than an engineering one. When everybody or nearly everybody owns a car—I have just said that not everybody owns a car, but is is quite certain that a very large percentage do—people need to be persuaded that it is much to their advantage to travel by train. Of course, the car has one advantage that no other form of transport can ever have and that is that it is door to door. On the other hand, the railway can offer many advantages in the way of safety, speed and comfort. Safety does not really need to be discussed; it is so absolutely obvious. Railway accidents are so rare that when they occur they create large headlines in the newspapers, whereas road accidents are happening not only every day but every hour. When we once had a debate on road safety I remember being given some data by, I think it was, one of the motoring organisations, that a fatal accident happened on the roads every hour. Of course, I cannot prove this data. Therefore, I can only say that that was my impression at the time.

Comfort includes comfort at each end of the journey, and that involves the stations. The average London terminal station today is rather a bare and barren place, and the waiting rooms, when there are any, are something like I should imagine a prison cell to be, with hard wooden benches to sit on and nothing to look at. You just sit and wait. If you have any thoughts you think them, but if you have not, you just sit and wait. I know, of course, that vandalism is ever with us and the process of the law seems to be entirely incapable of stopping it, but would it not be possible in some of the larger termini in London, or in the provincial cities for that matter, to have a small bar with an attendant who could check these activities? I know that this would cost a little more but I think that in the end it might pay for itself by attracting more people to rail travel.

There is another matter. There are no porters nowadays and one has to walk a long way before finding a trolley, which is the only way of conveying one's heavy luggage. That is a great disadvantage. As for information, it is practically unobtainable. One can ask the ticket inspector sitting in his little booth, staring into space, what time one's train is going and from what platform, but he merely looks at one, shakes his head and says, "I don't know"—if he looks at one at all. Naturally there is an information bureau but it is probably on the other side of the station and a long, long walk. By the time one has got there and stood in the queue for several minutes and then got back to the patform one has probably lost the train. So what is the use of that? The trouble is that no one seems willing to help and it is willingness to help that makes for comfort in travel nowadays. I am sure that that is what would draw people to the railways far more than even the high speed trains or things of that nature. They are, of course, a great achievement, and I do not deny that for one moment, but people would be far more apt to travel by train if they felt that they were to be looked after and comfortable.

Another suggestion which was made in the report was the installation of automatic ticket barriers, such as in the Underground system. I think that might be quite a good idea. It would save a great deal of travelling on false tickets, which is unfortunately one of the habits of today. In certain cases—there are very few of them—where there is a branch line which is looked upon as being unprofitable, would it not be possible to rent that line to a private undertaking which could run a railway bus on it? If only one rail bus is used a single line could be operated which would do away with the signalling apparatus. That would be helpful. It would be possible to keep the entire network running if only one could do such things. All these suggestions I have made would possibly reduce the expenditure to a small extent; but beyond that I am afraid I cannot hope to see much result.

5.25 p.m.

Lord Prys-Davies

My Lords, I can quite truly say that it is with no small degree of awe that I rise to address this distinguished House for the first time. I am the more diffident in that I am intervening in a debate to which so many of your Lordships have so much to contribute and I have so little.

A few miles from where I live there is a plaque to commemorate the first railway line, built by Richard Trevithick; though I seem to recollect that a similar claim to be the first railway is made by Darlington, where, as we are all aware, a different contest is about to begin. But in our Welsh communities within sight and sound of this first railway there are today very real fears that soon there will be very little left but plaques and sad and empty shells. They are afraid that they will have another raw deal. Indeed, next month the Mid-Glamorgan County Council is convening a Welsh conference of Members of Parliament, councillors, railwaymen and representatives of the CBI, Transport 2000 and consumers to consider the implications of this report, which they fear.

I believe it is true to say that most observers consider the report to be too negative, not offering opportunities so that the public will come back to the lines, but merely signalling varying degrees of decline. We have heard a great deal about one end of the spectrum of options illustrated in the report. We appreciate that these options are illustrations and not proposals, but what we are offered at the extreme end of the spectrum is a railway system which will produce a theoretical profit of £34 million a year. I think we are all aware that the £34 million is a theoretical profit. It does not take into account the additional and unprofitable burden which will inevitably be thrown on the road system, which itself is often inadequate. Let us not forget that the Severn Tunnel has proved more durable than the Severn Bridge.

So this extreme option, revised or modified, by implication questions the need for railways except to serve a handful of cities, none west of Cardiff and none north of Edinburgh. Is not this option out of touch with reality, or is its slender outline a shadow of what is to come? Indeed, lop a few more miles of railway route off this option and British Rail will cease to be British Rail.

On the other hand, I accept that it is sometimes claimed that we should continue to go along with the existing pattern unchanged. However, I think that history suggests that the old order always changeth, and I would be a little worried about maintaining the status quo because the acceptance of the status quo provides too little incentive to make the present system more efficient, convenient and reliable.

There must be somewhere a balanced view as to the amount of taxation a country is prepared to invest in its public transport. I would have thought that most of us, if not all, would accept that expenditure on public transport cannot be open-ended. There is a long list of new pressures on tax revenue, and I am very conscious of the demands made by the old, the cronically ill and the sick. We also heard earlier today about the needs of homeless persons. Those are a few of the deserving causes. There are other hidden needs which will be slowly converting themselves into demands. It seems to me that we cannot be blind and deaf to such demands. There is a lot that can be done for deserving groups of people with half a billion pounds—yes, even a third of a billion pounds—per annum.

I will not be controversial. I do not have a particular love for the railways, and neither do I have a particular love for the road system; but in an industrialised country there must be an essential place for an efficient and reliable railway system somewhere in between the more extreme option of cut-back, which is illustrated in the report, and the status quo.

There have been many references to the terms of reference of the inquiry. I find myself in sympathy with the many commentators who consider that of its own volition the committee adopted too restrictive an interpretation of its terms of reference, and in the result failed to tune into the main debate. It was content to consider railway finance in isolation from the wider aspects of transport and related policies; but we have been in that position before. That is the very criticism that was aimed at the Beeching Report by the late Lord Morrison in your Lordships' House 20 years ago

Again, the committee failed to explore the alternatives to a range of closures and a reduction of services. It failed to identify the opportunities for radical innovation, creativity and development which could make British Rail even more efficient, even more economical and even more convenient to the traveller. Furthermore, I wish that the committee had had something to say about the defects and weaknesses which flow from the size and structure of the British Rail organisation. I wish that it had had something to say about the need for flexibility in applying the principles of a United Kingdom policy. The organisation is so very large, and its decision-making so centralised. I readily acknowledge the significant contribution of the present chairman of British Rail; but I am not surprised to read in the report that the 1982 rail plan was either not known or not understood by many of the staff up and down the country.

Many of the decisions about transport policies in Wales, Scotland and the English regions should be made in Wales, Scotland and the regions. It seems to me that a decision that may be suitable for one part of the United Kingdom may damage the interests of the consumer elsewhere. Thus, for example, experience of rail traffic in south-east England is a poor guide in the context of the valleys of South Wales or of rural Wales, because the problems of the areas are so different and specialised. It seems to me that we have to accept as a fact of life that within the United Kingdom we have different geographical problems and population patterns which call for different solutions. That implies that within an overall United Kingdom transport policy regional variations are required and should be allowed within an agreed framework.

That brings me to the last point that I should like to make. There is a need not only for a substantial degree of decentralisation within British Rail but also to open up firm lines of communication with the Welsh Office and the Scottish Office and to consider the possible assumption by the two territorial Secretaries of State of financial responsibility for the support of bus and rail operations in Wales and Scotland within a total transport budget and within a global industrial, environmental and social strategy for their respective countries.

I conclude by acknowledging that, obviously, British Rail is big business—very big business indeed. But it is more than a business. It is one of the most important of our public undertakings, and its goal must be to serve travellers and the communities. Although I accept that its demands on the public purse cannot be open-ended, it would be unreasonable to demand that it must show a profit on every mile of railway route.

5.35 p.m.

Baroness Elliot of Harwood

My Lords, it is a very great honour and pleasure to follow the noble Lord, Lord Prys-Davies, who has just made his maiden speech. I think that everybody who heard him must have been deeply impressed by the calm, accurate and interesting manner in which he presented the point of view of someone living in Wales and in different parts of Wales. He described the rural area so very graphically. As I live in a rural area in Scotland, I can endorse every word that he said about the vital importance of recognising that the railways must meet the needs of rural, as well as urban, communities. I hope very much that we shall hear many more speeches from the noble Lord on different subjects. I am sure that we shall all listen with very great interest indeed.

My Lords, this is the second debate on railways which we have had. The last time that we had a debate on railways—in May last year; I have here the Hansard report of it—the noble Lord, Lord Lucas of Chilworth, was sitting behind me. He and I have shared a great interest in the railways, I think always. I was very interested in what he said. If I disagree with some of the things that have been mentioned in the Serpell Report, I hope that he will not think that this is my attacking him or the Government. I simply agree with almost everybody who has spoken today that the report which we are discussing is very disappointing.

The noble Lord, Lord Marsh, said that some people may be enthusiastic about railways in a sentimental way or a practical way and that others thought that railways were out of date. I am an enthusiast for railways, partly because I like them and I like travelling that way but also because they serve a purpose which no other form of transport serves. I admire enormously the way that Lord Marsh opened this debate. I think that he said everything in the most delightful and entertaining way, and I agree with everything that he said.

My Lords this is a very important subject indeed. I feel that the Serpell Report is very disappointing. Whether it was the terms of reference, the way that it was handled or whatever else it was that turned it into so unsatisfactory a report, I do not know, but it is interesting that in your Lordships' House this afternoon I do not think that anyone has failed to criticise the way in which the report has been presented. I am afraid that I am one of those critics. It is no good, if you want to revive or to alter and change—which we must do—an industry, to start denigrating it and making it almost impossible to see where the future lies. That is one of the things which the Serpell Report has done. I am not attacking the chairman; indeed, I have never met him in my life. I am sure that he is an extremely able gentleman, but the net result of what he has put out is to me extremely disappointing.

The real point about the report is that it concentrates on railway finances in the short term and it neglects the real question of the long term role of the national railway network in a co-ordinated way with other services. That is a great mistake. One cannot improve a service unless one knows what one wants it to look like at the end, when one has spent the money and when people are using it. The present recommendations in the report, such as they are, in my view are very disappointing.

I was glad to hear the noble Lord, Lord Lucas, say that the Government were not intending at the moment, anyway, to follow any of the plans or diagrams set out in the report. The one that brings in Scotland is so devastating that I can hardly bear to look at it. If it were to happen that some people thought that they would cut off all the railways north of Glasgow and north of Edinburgh, the Highland risings in 1983 and 1984 would be much bigger than any Highland risings that took place in past centuries. So I hope very much that the noble Lord, Lord Lucas, will see to it that nothing as devastating as is described in one or to two of these diagrams will be ever likely to take place.

I agreed with the noble Lord, Lord Somers, when he listed the items that make the railways such a vital part of our economy. As has been said, we read every day of the dangers on the roads and of the number of people whose lives are lost on the roads. Safety on the railways is eight times as great as safety on the roads. The new trains in which I and many people travel between the north and the south are very fast, clean and quiet. I should like to see electrification covering a much larger area than it does at present. Electrification of the railways is very important indeed and I hope that that will be one of the matters upon which the Government, when they make their plans, will concentrate.

We have heard, quite rightly, about the carriage of freight. One freight train is equal to 30 or 60 lorries on the roads. I do not travel a great deal by road because I use my motor car purely for local travelling. I travel almost exclusively on the railways. But when travelling on the roads, I have very often seen vast lorries in bad weather or slippery conditions, jack-knifed on the roads and the motorways. That is extremely dangerous. In my view, we should get more freight on to the trains. As the noble Lord, Lord Somers, has said, an easy way of carrying freight is to put it in the great containers that can travel on the railways. I should very much like to see such a system develop.

Another point that was made to me when I discussed this subject with some of the railway people was that if we electrify the railways we shall have a much better service. Moreover, the actual manufacture of the electric equipment and so on will be of enormous help here in this country. Electrification on a large scale would result in 90 per cent. of the goods and services for that electrification coming from British companies. We are looking for capital investment. We know that there is an enormous amount of capital in this country waiting for investment. Why can it not be put into the railways, and particularly into the development of electrification?

When I read the Serpell Report it seemed to me to ignore the fact that an enormous number of the population still want to travel by rail and still do travel by rail, and that more would travel by rail if the facilities were improved. I also learnt that 60 per cent. of the population do not have driving licences and therefore cannot drive motor cars. That is quite a large proportion of the population. They are the people who want to travel on the trains. Why should they not go on the trains? We should encourage them to do so.

Stress has been laid, and probably quite rightly, on the costs of the railways. The noble Lord, Lord Marsh, gave us some figures regarding the comparable cost between the subsidising of various other industries and the railways, and it turned out to be less than in some of those other cases. According to my figures, 5p per head per day is what is being contributed by the public to the railways. Indeed, 5p per head per day is not a very large sum of money. One would of course prefer that there was much less subsidy; that is something that we should all obviously prefer. But the fact is that there is not a railway in Europe, perhaps not even in the world, that is not subsidised; there is certainly not such a railway in the United States. If we can keep the subsidies under control and as a result do something that all the public want, it will be worthwhile. It is something that we can afford to do and something that we should do.

As I have said, I looked—as I always do—at what effect this report might have on Scotland. It seemed to me to be an unmitigated disaster. In my view we should not allow anything like the proportion of cutting down of the railway services that is proposed. I agree with the noble Lord, Lord Marsh, when he spoke of having closer associations with the Scottish Office and getting the Scottish Office interested in the development of the railways. I am sure that that would be absolutely excellent. There is an electrified line to Ayr which has been opened recently and which is a tremendous success. Much more electrification on short routes could also be done. The difficulty is that it is expensive and that there is great competition with other forms of transport.

However, I am perfectly convinced that there is a real place for a first-class railway system in this country. We have had it in the past and I see no reason why we should not have it again. I am quite certain that it would serve the interests of the public and the interests of industry as well as anything we can do in this country today. I hope very much that this report will not be acted upon, but that something much more enterprising and far more useful will come out of the debate and the discussion which will obviously take place throughout the whole railway industry.

5.48 p.m.

Baroness Stedman

My Lords, I, too, would like to congratulate the two maiden speakers on their contribution to our debate this afternoon, and, as other noble Lords have said, I hope that we shall hear them in our deliberations and debates in this House very frequently for a long time to come. I should also like to thank the noble Lord, Lord Marsh, for giving us the opportunity to debate the Serpell Report in this House. I believe that because the report was so hastily prepared it is superficial and muddled. The Government laid down a timescale which was such that the terms of reference were very narrowly drawn; and, as other noble Lords have said, we have missed an opportunity for a thorough examination not only of the railways but of the possibility, at last, of an integrated transport system.

Successive Governments have tried to create an efficient railway system, and none of them has succeeded. On these Benches we are concerned about the proposals and the options for the removal of subsidies. We are concerned about the safety options, and we seek assurances from the Government and from the Minister tonight that safety will remain a prime factor in operating the railways.

There is an assumption in the report that the present recession will continue ad infinitum. The report gives no comparisons at all with other countries; it does not recognise the importance of safety standards being maintained; and it makes no allowance for replacements or transitional costs. Like the noble Lord, Lord Marsh, whatever the Minister may say about transitional costs you cannot have a proper review of railway finances without there being a good estimate or "guesstimate" of what those transitional costs are likely to be. What we should like to know is which of the options have been firmly ruled out by the Government. The Government may say that the options are purely for illustrative purposes and that, for example, Option A is an example of a purely commercial railway. But Option A also illustrates the need for subsidies to maintain an adequate railway service and network, and the need for considerable investment in our railways.

We want value for money for the subsidies that we pay and I believe must continue to pay. The report says that many of the provincial services represent poor value for the public. It says that the provincial sector's average load factor is only 20 per cent., and I find that both disappointing and depressing. I accept that on the face of it the options given only illustrate the type of network that we would have if certain cuts were made in the Government contribution; but as the years go by I get more and more nervous about this Government and their overriding desire to cut spending and to sell off the profitable parts of our nationalised industries.

We do not want to see massive cuts or swingeing fare increases, but the report points to some of the facts that we should recognise in seeking value for money in future. I come from a railway town—Peterborough. Both my grandfathers worked on the railway. I grew up in the railway part of that city in the days when railwaymen walked tall and were proud of the job they were doing. I represented a railway constituency on my county council; and I want the railways to have a proper and a secure future. I want to see investment in electrification; but the report is negative on the prospect of main line electrification. But we must also be sure that that investment is productive, and that management and unions work together to use that investment to the best effect.

I was attached to the Department of Transport when the decision on the St. Pancras/Bedford line was taken. I hope that we have no more unhappy stories like the St. Pancras/Bedford line, because there is no justification whatever for those new trains not running on that line today. It is an indictment of management and unions alike, and both sides must work together in the knowledge that, as Peter Parker said: To reject change is to reject a future: to accept change is to secure it". On these Benches we seek an integrated transport policy. We would accept some bus substitution with adequate safeguards for the service. We would agree to much more regional autonomy, and we would accept the financing of social lines. But we would not accept a reduction in safety standards; nor would we agree to any deterioration in maintenance or replacement costs. All these and other factors must be considered, and I believe that we must accept that if we want to preserve a national railway network then there must be a subsidy.

The noble Lord, Lord Marsh, referred to the fact that we have never made up our minds what we expect from the railways. He is right. The Government, answerable to Parliament, must decide the type of railway service that they want and the terms on which it should exist. We believe that there must be a substantial subsidy. The noble Lord, Lord Marsh, referred to the fact that this year we are spending £791 million on the coal industry, £770 million on agriculture, £1,163 million on general housing subsidies and £862 million on the railways. So what we are now spending on the railways is not generally out of line with the other subsidies.

However, what we cannot have is an open-ended financial commitment. The Government and Parliament must decide what they want the railways to do. They must agree the size of the subsidy that the Government are prepared to pay, and then they must give the British Rail chairman and board freedom to get on with the job.

I would praise the leadership of Sir Peter Parker. I believe that his identification with and his commitment to the railway system has been outstanding. I hope that his successors in years to come will be given managerial independence and will be able to give stability to the industry. For a long time British Rail has been seeking an update of the strategic transport decisions on the size and quality of the rail network. Only when this is clearly defined can the other major issues, such as the funding of the future network, be settled.

Both the main and the minority reports seem to accept that the only reason for subsidising the railway is for the relief of congestion in London. There are strong economic and social grounds for more general support by the Government all over the country. Neither report discusses any reasons why almost every other country in the world has to subsidise its railways. We all know that if the free market was left to itself it would not produce a socially desirable outcome in transport, because private investors would be concerned only about the profit return from their investment.

The losses to local economies and to local communities would be disastrous if the rail links were withdrawn and if they were not replaced by other means of transport. If subsidised public transport is not accepted, many people will lose all mobility. They will be deprived of any social life; and this would affect the children and the elderly most of all. The majority of the population do not hold a driving licence, and for many of them the rail subsidies can provide a reasonable standard of mobility.

The Serpell Report, if accepted totally by the Government, could destroy the railway service. If it is implemented, it would result in widespread closures, in thousands of jobs lost and in severe damage to British industry, which uses the railways to carry freight. This must not be allowed to happen, and my party will fight any major cuts that are proposed to the rail network.

The acceptance of the Serpell options would bring disaster to the travelling public. In some places it could mean no railways; in others, huge fare increases of more than 40 per cent. This drastic action would hit people who have to earn their living by commuting to the City, not only from outer London but from places like my home town of Peterborough. For them, the railways are a lifeline—they are not a luxury.

The Government must repudiate the Serpell options now. The success of the railways depends on greater investment in new equipment and the electrification of all the main lines. We also need commitments from the unions on higher productivity and industrial peace. There is still time for the Government to offer a new deal to the railways, and a new beginning. The alternative is the rapid decline of the present network.

On this Bench we believe in the vital importance of a modern and extensive railway system, sustained by adequate investment, with efficient working practices, good industrial relations and a significant level of public subsidy. We regret the hurried Serpell Report, and I urge the Government to produce a plan for British Rail that takes account both of the wishes of the passengers and of the needs of industry.

6 p.m.

Lord Bancroft

My Lords, I am happy to oblige the noble Baroness in the sense that I shall be striking a discordant note. I shall be striking a note which will not be in entire agreement with some of the remarks made by noble friends on the Cross-Benches. That, I think, is a happy privilege of being a Cross-Bencher. We are indebted to my noble friend Lord Marsh for introducing the debate with enormous expertise, experience, great wit, great eloquence, and considerable extravagance. I agree with some of what he said but by no means all.

I agree with him particularly in his thought that we really need an informed public debate on the future of the railways—informed by facts and by figures and not, as he said, by sentiment and prejudice. Then, when we have had the great public debate, and the Government, in the light of the advice given by Parliament, having taken decisions, let action follow, let the board get on with it and let the Government get off its back. No doubt these were the board's intentions in asking for an urgent inquiry and an early report, and no doubt similar good reasons moved the Secretary of State for Transport to agree to the board's request.

We have been told that there was agreement with the board on the composition, the terms of reference and, as it might seem to some of us, the rather absurdly tight timescale that was set the committee. It is therefore odd that during the four weeks between the Secretary of State's receiving the report and his transmitting it to the board forthwith, the media should have carried stories about it virtually every day, stories which were obviously the result of heavy, mischievous and, as it turned out, inaccurate leaking. Those leaks were obviously designed to discredit the report in advance. Indeed, it was argued in another place that they were designed to bury it. In that event one could perhaps give the leaks an epigraph: Cover the report's text: Mine eyes dazzle: It died young". But I do not think it is going to.

It seems to me discourteous not only to Parliament but to others that the leaking encouraged the media, understandably enough, to, as it were, "camp it up" at the expense of the report. After the pitch had been so carefully rolled, or after the patch had been so heavily manured, it was only to be expected that even before publication, let alone immediately on publication, before anyone had a chance really to read the document, there were remarks such as "horrifying", "grotesque", "disastrous", "burn it", "insensitive, cruel, out of touch and anti-British". These are the very words. Were they referring to a coven of witches, or to an army corps of the Queen's enemies? It was Churchill—Charles, not Winston—who wrote: Though by, whim, envy, or resentment led, They damn those authors whom they never read". When eventually your Lordships were allowed to read the report for yourselves I emphatically do not recall reading a piece, as we were rather led to expect, from the manifesto of, I think it is called, the Official Monster Raving Loony Party. Instead, we read a document—and I am referring to the majority report—which devoted nearly 50 pages to an analysis of possible cost savings on a railway broadly at its present size. Just over 20 pages consisted of illustrative options for reductions in the size of the network. Of these 20-odd pages eight were entirely given over to maps and a diagram. The reality was very different from the pre-publication fantasy.

As some noble Lords have recognised, the committee faithfully—who knows?, some noble Lords clearly feel too faithfully—observed their agreed terms of reference, whatever one may think of those terms. They were charged to look at finance against a very tight timetable, but they were mindful of wider considerations, as they mention: Our report is concerned with railway finances, in accordance with our terms of reference. But we hope it will be considered in the context of wider transport and other policies. Indeed, we consider that to be essential if the grounds for providing financial support for the railways are to be made clear. Our function, in the 7 months available to us, has been to mark Out opportunities and options, not to develop them in detail". As I have said, there is a recognition that the committee were observing these terms of reference. They were not required to look at the social value of the railway—that is very much a matter for political judgment—and in any case they had no time. Nor were they required to make recommendations, plans, or proposals about network size, but rather to set out options. On reflection, I myself believe that the use of the word "options" in the terms of reference was a mistake. It would have been better if they had simply been described as "illustrations". Again the committee seem to have recognised that, when they say on page 66: To avoid misunderstanding"— though clearly they have not been successful in avoiding misunderstanding— (e.g. the use of particular figures and diagrams out of context), we should emphasise first that the 1992 Network Options are no more than illustrations". My own view is that some of the illustrations have a useful educational effect in demonstrating to those who wish to cut the railway network drastically that such large cuts are simply not on. Some of the diagrams and maps here make that abundantly plain. They are ludicrous.

Many other criticisms of the report have been made. Most, if I may say so, have been dealt with in another place. The report does not recommend reductions in safety standards. It does not recommend the 40 per cent. increase in commuter fares. It does not come out against further mainline electrification. It is not anti-British. It is all here. I have it flagged up, but I shall not weary your Lordships with the details. As to the appointment of the consultants and whether or not that was a breach of propriety, no doubt the noble Lord the Minister will answer that when he comes to reply. It is not my duty tonight to defend the Government at all.

Many of the facts and figures are not new. As many noble Lords will recall, particularly my noble friend Lord Marsh, there was the 1976 consultative document on transport generally, but it covered the railways, too, by Mr. Crosland and published by Mr. Shore, and the 1977 White Paper published by Mr. Rodgers. But this report at any rate draws together up-to-date facts and figures in a pretty comprehensive way, to provide yet again a stepping stone—one of a number—towards a real debate and real decisions about the future of the railway, instead of, alas, as has happened all too often, pretend debates and decisions. These have not been the fault, I hasten to say, of successive board chairmen or Secretaries of State but, rather, of the unwillingness of the public and interested groups affected to approach this important subject with the rationality and objectivity it deserves and demands. Despite what my noble friend Lord Marsh and others have said, there is still a great deal of understandable emotion lying about.

The report asks us to face a number of nasty facts, such as the need to look for cost reductions, even more than revenue increases, because the elasticity of demand is very high; such as the need to note that of a mixed bag of cost reductions totalling £200 million mentioned in the report relating to 1986, no less than £147 million were put forward by the board and £74 million by the committee; such as the need, for example, to be aware that the taxpayer stumps up £900 million a year so that railways can carry 6 per cent. of total passenger miles each year, and that on provincial services the average subsidy per passenger mile is 22p.

Is all this value for money? I do not know. Cannot the country discuss it sensibly and come to reasonably lasting decisions, taking into account a number of factors which are mentioned in the report, like the guaranteed bus services, if there are to be any more closures; like special Government help on transitional costs, whatever they may be, and we shall no doubt hear what they are going to be, with more decentralisation and local choice? Need there be—thank goodness, not in this House—wounding attacks on the competence, patriotism and integrity of men appointed to draw these unpleasant facts to public attention?

Earlier I used the phrase "rationality and objectivity" but I wish to add a further word, "speed". I confess that my heart sank slightly when I heard the Minister say that the Government were not going to be rushed into hasty decisions, or some such hallowed phrase. There has been an enormous amount of debate about the railways. As the noble Lord, Lord Ezra, remarked, there have been no fewer than 20 reports since the railways were nationalised. It is time to end the uncertainty from the point of view of management, staff, public and all. So let us have an informed debate, let us have some decisions, sooner rather than later, let us have some action, and then, as I said earlier, let the board get on with its job.

6.13 p.m.

Lord Ferrier

My Lords, with others, I am grateful to the noble Lord, Lord Marsh, for introducing the debate in the way he did. It was a relief to me because I did not know which way he was going to bounce, and I was only too glad to find that I could largely agree with his remarks about the report. I was surprised and sorry that he said he had no sentimental attachment to the railways. The remark of my noble friend Lord Nugent about the magnificence of the railway engine made me look up my Rupert Brooke and read again his line about there being among the things he had loved, the keen, unpassioned beauty of a great machine". I admit that that is sentimental, and we are adjured not to let sentiment enter into the matter.

The noble Lord, Lord Marsh, deplored the terms of reference of the committee, although my noble friend Lord Lucas did not agree on that. The noble Lord, Lord Ezra, in his interesting maiden speech, gave an idea of what he thought the terms of reference should have been. I did not go quite all the way with what he said on that, but they would have been better than those which led to the report we are discussing.

In the course of my Indian career I had a close association with railway staffs, finance and operations, but I shall return to that before I conclude. I have an anecdote which I feel is apt to the debate. It fell to me on one occasion to accompany a senior, highly responsible Indian, with a background of government service and ministerial experience in finance, who joined the board of the company which I was serving. He came with me to look at a cement factory in the centre of India, never having had anything to do with heavy industry. It represented a panorama of heavy industrial plant, with busy roads, railways and quarries, and he exclaimed, "How very expensive!" I recall my reply, "No, sir. Costly but not expensive". I repeat that anecdote because it led to many interesting discussions with him in the following years.

That is a distinction which we should bear in mind as it applies to the report that we are discussing. Is the £960 million of subsidy to the railways costly? Yes. But is it expensive? I doubt it. It is not money down the drain. It cannot be. There must be some contra-entry, and it would be interesting to find, as the researches that arise out of this debate go forward, if other countries have managed to extract any factor in regard to that contra-entry, the value of the contribution to society which the railways make. We all agree that there is not a country in the world that does not have to subsidise its railway system. What do we mean by that? It means that they have to pay more than the railway itself intrinsically produces in net revenue. As our thinking goes on, I should like to see if we cannot arrive at some arrangement so that we do not regard this subsidy to the railways as money down the drain, because it is not. We have not devised—and certainly Serpell has not devised—an estimate of that contra-entry from the railways, and I shall apply my mind to the terms of reference which the noble Lord, Lord Ezra, indicated might have been more suitable.

In the original presentation of the report to the other place, as repeated by my noble friend Lord Lucas, the object of the exercise has been to regard a number of options and produce additional discussion and research. I regard the report as being a rather myopic exercise carried out from a metropolitan standpoint. Certainly that is the feeling I got when, like my noble friend Lady Elliot, I looked at Options A and B. But where do we go from here? That is what we are debating.

What about the £150 million-worth of rolling stock and locomotives intended for the St. Pancras/Bedford line, but now lying idle? Is that costly, or is it expensive? I should call it expensive—grossly expensive. It is nearly incalculable, and such incidence varies directly with distances from the metropolis, and is difficult to measure from area to area.

Personally, I regard the report as valuable work in recording and attempting to analyse the relationship between finance and the present railway system, which is what the committee was asked to do. As I have said, it is a pity that Option A and Option B gave us all such a shock, but they are only illustrations. The oft-declared object of the exercise is to provide an opportunity to debate the matter.

Try as I can, I can find only one completely uncertain factor that to my mind has a vital impact on the whole consideration, and that is the paramount influence of the trade unions on the whole problem. When the noble Lord, Lord Underhill, held up a copy of Labour's plan for an integrated transport system, I thought of my old friend, the late Lord Stonham. I recall 20 years ago his speaking from the Front Bench here, introducing with enthusiasm his party's plan for an integrated transport system. I had only recently joined your Lordships' House, and I well remember thinking, "By jove!—if that is the thought of the party that is opposite, I am going on the Cross-Benches". But it never came off. It was ruined by the trade unions, the influence of which Lord Stonham had discounted.

We must realise that the question of the trade unions is a problem that is an integral part of the considerations that we have to face. I think your Lordships will agree that, judging from what we saw in the paper this morning, the trade unions' influence is in a very fluid state. There are now five or six unions connected with the railways. As I see it, no adequate assessment of the future of the railways can be made until the proper place of the trade unions has been, as it were, crystallised. I look forward to the debate which my noble friend Lord Boyd-Carpenter is to initiate on the 16th of this month on the Green Paper, Democracy in Trade Unions. This democracy must be established beyond a peradvanture before the development of the railways can be assessed; at any rate, that is my view.

In presenting the report to the other place my right honourable friend the Minister said that if there were to be a change of policy it would be after informed debate—which confirms what we have just been saying here. In criticising the unions, as I have done, and in saying how important is a settlement with them in considering the matter that is before us today, I am not "union bashing". When are we going to get rid of this silly, rabble-rousing catch-phrase? How many thinking people suggest that we can do without trade unions? We cannot, and we do not want to.

Nor is expressing such a view "Thatcherism", nor "Tebbitism", nor "Ferrierism"; but it is "man-in-the-street-ism", and "woman-in-the-kitchen-ism". The trade unions themselves want some rearrangement, and that is why there are now six unions in the railways, instead of four. The policy in regard to unions is the policy of Her Majesty's Government presided over by the Prime Minister, Mrs. Thatcher, and I trust that we can look forward to at least another five years of this situation. In my view a reference to "Thatcherism" is unqualified claptrap. Let us have done with the term.

Before I sit down I propose to put to your Lordships one or two minor matters, bearing in mind that I am not only an enthusiast for the development of transport in general but that, like my noble friend Lady Elliot of Harwood, I am a regular traveller on British Rail, covering many miles a week. I have often collaborated with the noble Lord, Lord Lucas—to whose winding-up speech I look forward—in promoting road development and road safety. Transport is of overpowering importance, and the railways have a vital part to play in the whole set-up.

How can we recapture the sense of pride which used to attach to the railwaymen? The noble Baroness, Lady Stedman, has talked about how the railwaymen "walked tall". Of course they did. Why do they not still "walk tall"? Is it perhaps because respect for them has been so impaired by the recent strikes? Are the uniforms, especially the awful headgear that they wear, sufficiently distinctive? Should not the élite—the engine drivers—be more distinguishable from their mates? I think of the drivers of the "crack" trains on the continent, dripping with gold lace and "scrambled egg". This all has some bearing on the railwaymen's approach to their trade.

Can we develop further the names of our "crack" trains—the "Brighton Belle", the "Master Cutler"? There is a "Flying Scotsman"; and I think I am right in saying that on the west coast route there is the "Royal Scot". It seems to me that that is an important factor in our affection for the railways, though I wish that the "Flying Scotsman" left Waverley and King's Cross at 10 o'clock, as it has done for about 100 years. It now leaves at 10.25, or some equally unattractive-sounding time.

There now seem to be more or less ample supplies of passengers' luggage trolleys. This has been a great advance in recent years. But cannot the public address systems in the stations be improved, and the operators better trained? What about recording some of their announcements in the stations with noises off, and then playing them back to the men who have made them, so that they can hear what they sound like?

I said that I would return to railway development, with which I have been associated. Could the private financing of "feeder railways" be considered? The system that we had in India might be adopted in this country, and if I can assist in this I am at the Minister's disposal. Can we look forward to an increase in the establishment of rail buses? When I put that point to one of the British Rail people who kindly came to see me, he said, "There are 20 already being manufactured. Two are already at work in Yorkshire", and I think he said that there was one in Shrewsbury. We had a diesel-electric rail car system on one of our narrow-gauge "feeder railways" in 1934. It was a very interesting design. Metropolitan Vickers built it. It had a driving unit which was easily removable and replaceable with a unit which we kept in good trim at the base headquarters of the line.

I still think that we could do without any more expenditure on the Channel Tunnel. There are so many other things that have to be done. Further, I think the APT has done its best for a time. Again, there are plenty of things to do in other ways. I have had a complaint from somebody who was at the investiture at Buckingham Palace yesterday. They came down by train on Monday. On the way down, they wanted to see the Islands of Lindisfarne and so on, but they could not see out of the windows because they were so dirty. Perhaps British Rail might have been more careful about that, though it may have been the water shortage to blame.

Finally, have we had enough time for the whole problem to be debated? I think not. It is only six weeks since the report was presented to the other place. I am only too glad that the noble Lord, Lord Lucas, has said that he would regard this as the beginning of further discussions. If we are going to have to settle with the unions, then there is going to be plenty of time for our discussion of other matters. I close by quoting part of what Mr. Eyre said in the other place when he wound up the debate: The real task of the House now, as well as of the Government, British Rail and, indeed, the country at large, is to look to the future in a constructive spirit and address themselves to … the kind of railway we neat and can afford".—[Official Report, Commons, 3/2/83; col. 510]

6.32 p.m.

Lady Saltoun

My Lords, I love my husband, my children and my cat, but, unlike the noble Lord, Lord Marsh, I love trains. Some of the happiest moments of my childhood were spent either in them or playing with them. I find them intensely romantic, unlike aeroplanes, so I find the decline of the railways in the last 25 years very sad as well as extremely inconvenient. It is rather like seeing an old boyfriend become senile. As the noble Lord, Lord Marsh, has asked the Government to make up their minds on what they want from the railways, I propose to tell the House what I, as a frequent traveller, want from my railways—and am not getting. When the ordinary passenger like me does not get what he wants, then he travels by other means where they exist; and that is what a great many people, including myself, have done. They have travelled by air instead, and other means available.

What do they get when they travel by air that is so attractive? Airports provide car parks, porters, trolleys, seats. They are warm, have clean loos, a variety of shopping facilities, banks and so on, and reliable, if not gourmet, refreshments. They provide better help for aged or disabled travellers, facilities for babies and small children and care for children travelling unaccompanied. If an airline keep you waiting, they apologise and sometimes tell you why. If they keep you waiting long enough, they even give you a free meal or a drink "on the firm". They welcome you aboard the aircraft with a smile, look after you in transit and bid you farewell in the hope that you will have enjoyed your journey. They keep their aircraft clean so that you do not arrive at the other end feeling as if you had either been up a chimney or down a sewer. Should you have to change or cancel your journey, they cheerfully change your ticket or refund the price without demanding a certificate from your overworked doctor to say that you had bubonic plague that day and without treating you like a naughty child. If you telephone to book a seat or make an inquiry, not only is the telephone usually answered properly but they are even helpful.

If British Airways and other airlines can do this, why cannot British Rail? I will not harrow your Lordships with details of the suffering endured by some of those who fall into the hands of British Rail. The noble Lords, Lord Somers and Lord Ferrier, have already mentioned a good many of these appalling horrors. For years past, British Rail's attitude to passengers has been rather like that of the Master of an Oxford college who said, "The place would be fine if only there were no undergraduates". They have done all in their power to get rid of passengers by freezing or boiling them, starving them, herding them like cattle, making them so late that their journey sometimes became not only unnecessary but totally useless. They have deprived them of trains by the well-known means of running the trains at times when they were of no use to anyone and then axing the service on the grounds that no-one used the trains. And very successful they have been in getting rid of the tiresome passengers.

The trouble is that it is much more difficult to regain customers that you have lost than it is to build up a clientéle in the first place. I wonder to what extent it would now be possible to claw back the custom that has been lost in the past. Be that as it may, this country must have a system of public transport which will serve the whole country properly; and by "the whole country" I mean to include places like the north of Scotland (where I live) which some Englishmen have never heard of.

For us in the north, where, in winter, trains can still operate in conditions which make road and air travel difficult or impossible, the railways are vital if we are to be able to carry on business as usual all the year round. Of course they will run at a loss, but, if the country cannot afford it, it will come very hard on a large area which is not inhabited only by sheep but by people, many of whom are taxpayers, too. Buses are all very well, but try taking three small children on a long journey in a bus with no loo and you will have problems.

There is just one other point which worries me. I hope that the noble Lord, Lord Lucas of Chilworth, can say something about this in winding up. To what extent is the Ministry of Defence dependent upon the railways to move men and freight in the event of war? In the second world war they were vital—and, of course, there were then alternative routes so that should one be unusable through enemy action the train could go round by another route. Now, there are not alternative routes to the same extent. I think that the demands of defence should be considered carefully before any decision is made about the future of the railways. The Serpell Report did just touch on this. It is very important.

Lord Ferrier

My Lords, before the noble Lady sits down, on her reference to war, I suggest that that is part of what I meant by "conra-entry". The railways should be paid something for that provision.

Lady Saltoun

My Lords, that sounds a very good idea

6.39 p.m.

Viscount Buckmaster

My Lords, I must declare an interest, a very personal one. From the age of eight onwards, and perhaps it may have been even from the age of six, I have been crazy about railways, unlike my noble friend Lord Marsh. Although I have spent a great part of my life abroad, I have kept in close touch with developments at home through the admirable columns of the Railway Magazine and I do not think that I have missed a single issue since the early 1930s. I hope, therefore, to offer a few comments and suggestions from the standpoint of the dedicated railway enthusiast and amateur historian. But before doing so, I should like to say a few words about us railway enthusiasts.

One rather interesting thing is that, so far as I am aware, railway mania is confined to the male sex. With the greatest respect to my noble friend Lady Saltoun, I have never met a single lady who could distinguish one railway engine from another. But I am delighted to tell your Lordships that British Rail have recently engaged the first woman train driver—indeed, the first woman ever to drive a train on a British railway. That is, after all, a tremendous achievement.

We railway enthusiasts—whether we be little schoolboys with our grubby notebooks and stubby pencils, furiously recording the numbers of the engines as they whizz through a station, or perhaps sophisticated connoisseurs of railways, gazing through a murky carriage window to record the passage of the mileposts with a stop-watch, or perhaps collectors who are prepared to pay literally hundreds of pounds to buy the nameplate of a steam locomotive long since dead—all of us, including poets like Betjeman, who have written so admirably about the railways, other writers, photographers, artists and so on, not forgetting the spendid connection between the railways and the Church, tend to overlook one very important fact: that our great pride and joy, the railway, is a very greedy animal. He requires a great deal of money to keep him going—and that, after all, is what our debate this evening is all about.

I will not produce any comments on the Serpell Report itself. My noble friend Lord Marsh and many other noble Lords who have spoken have done so in great detail. But, if I may, I would recommend to your Lordships what I think is quite the finest commentary on this extraordinary report, and that is one published in the Railway Gazette for March, produced by a man who is an acknowledged expert in the technical field. Seen through the eyes of a railway enthusiast, the Serpell Report is a horrible hotch-potch of ill-considered ideas and it makes no attempt to chart a course for the future. To my mind—and this has been touched on by many of your Lordships this afternoon—the most damaging feature of the report is that it gives no indication of how the railways can attract more passengers and therefore bring in more revenue.

I wish to examine four spheres in which I think there is scope for considerable improvement. They are: speed, the reopening of certain stations, the provision of information, and staffing. Let us take speed first. This is to me a wholly wonderful subject. I must confess to your Lordships that travelling fast in a train gives me the same sense of elation as, and perhaps even greater than, I derive from listening to great classical music. But of course this afternoon we must consider practical and not aesthetic arguments, and, as your Lordships are very well aware, every railway system, from the year 1825 onwards, has realised that the best way to attract passengers is by providing fast trains. The French do it now with their train de grande vitesse, travelling at nearly 200 miles an hour on a specially constructed track. The Japanese have their Bullet train, which takes only three hours to cover the 300 miles from Tokyo to Osaka. Even the Egyptians are now ordering a Turbo-train, which will cut the timing between Cairo and Alexandria (a distance of 130 miles) to one and a half hours.

As has been clear from the past, when railway systems have found their fortunes failing they have adopted revolutionary measures to restore their battered finances. I am thinking particularly of three examples. In October 1914, Holden introduced on the great Eastern Railway the famous Radical Alterations Timetable, which completely transformed the whole timetable by introducing magnificent suburban services. Then in 1932 we had the introduction of main line electrification on the Southern Railway, and in 1937 there was the introduction of the high speed steam trains, made possible by the wonderful work of Sir Nigel Gresley with his A4 Pacific which hauled the "Coronation", which, as some of your Lordships may remember, covered the journey of 393 miles from London to Edinburgh in exactly six hours.

Since then we have had more recent developments, some of which have been mentioned by your Lordships—the introduction of the 3,300 horse-power Deltic locomotive, the electrification of the West coast main line and, above all, these wonderful High Speed Trains. Your Lordships may like to know—I hope that my noble friend Lord Marsh will correct me if I am wrong—that there are now no fewer than 95 of these high-speed units in operation, representing an investment of £300 million, and they are 40 per cent. of all Inter-City journeys. But—and this is the point—while so much development has been put into these High-Speed Trains, many lines are still lamentably a bit slow, and indeed some of the services are even slower than they were before the first world war.

If your Lordships will allow me to cast one last, longing look behind, I would invite you to examine the timetables for 1910. Indeed, if any of your Lordships suffer from insomnia I can recommend no better remedy than the 1910 Bradshaw. Brighton, as you probably know, is 51 miles from London, and in 1903 the journey was accomplished in an hour. What is the time now, 80 years later?—58 minutes. Aylesbury, of course, has lost its express service and the time is now 58 minutes as compared with 54 minutes in 1910. But the most fantastic example of all—one which I feel is of tremendous importance—is the case of Stratford-on-Avon. What greater tourist attractions have we in this country outside London and Stratford? How do we get there? How indeed! The only rail service advertised is from Paddington via Oxford and Leamington Spa. It takes between one and a half and two hours, and often involves two changes.

What was the situation in 1910? We then had no fewer than three different routes to travel from London to Stratford-on-Avon: from Euston, from Paddington and even from Marylebone, travelling by a carriage which was slipped at Woodford Halse. 'What a glorious thought! And that marvellous train took only two hours and six minutes, which is something like 27 minutes faster than the present timing. It is true, of course, that you can reach Stratford by bus, but the service is bad. I know there are operating problems and I will not weary your Lordships with those; but I feel it is questionable whether we should concentrate to such an extent on high-speed rail to the detriment of the slower cross-country services.

I would say that Beeching did a good job, but he was a judicous pruner, whereas Serpell, especially in his more extreme options, is a slasher and even an uprooter. What I would very strongly recommend to the noble Lord the Minister is that he gives very careful consideration to the restoration of the rail link between Coventry and Stratford-on-Avon, which would then connect with the express mainline electric services from Euston. Possibly, this line could be operated, as several noble Lords have suggested, by a private company.

Let me turn to the reopening of stations. There are, in the West of England, four very important towns with a very considerable tourist potential, which have no railway services at all. They are Wells, with its famous cathedral, Tewkesbury with its abbey, Oswestry and Shaftesbury. They are famous towns and all four are tourist attractions. The problem with Wells and Tewkesbury is that they were on branch lines, which it would not be practicable to reopen, but the same does not apply to Oswestry and Shaftesbury. They are on railway lines which are now used, not by fast trains but by stopping trains, and I should be most interested if the noble Lord the Minister could tell me why such stations are not reopened.

There is also the possibility of reopening some rural stations as unmanned halts. I am thinking, particularly, of the reopening of Needham Market on the main line from Ipswich to Norwich. It is a fascinating little village, which I visit quite frequently. When that station was reopened about seven years ago, the whole of the population of that part of East Anglia benefited enormously. So there is a considerable possibility for the reopening of stations, not on main lines where there is a continuous passage of fast trains and where the flow would be disrupted, but on the smaller lines. They could be reopened as unmanned halts.

The third area which I want to examine is information. Several noble Lords have mentioned this subject. I shall not deal with staff, because that aspect has been dealt with quite extensively, but perhaps I may say a few brief words about railway indicators and the labelling of trains. I have looked at railway indicators all over the world and it is a fascinating subject of study for me. Of the big ones in London, by far the best is Euston. It is quite superb. It displays all the information clearly and accurately and is capable of coping with any problem.

King's Cross is quite good. Paddington is adequate, but it has a horrible habit of displaying the information only when the train is actually at the platform, and one often gets a whole horde of travellers gazing anxiously at an empty board only a quarter of an hour or so before the departure of their train. Waterloo has a very serious defect; the arrival indicator is totally supine. During the great frost of 1981–82, it packed up completely, only to announce at one time that the 0840 train from Bournemouth would arrive at Platform 99 at 001 hours. But even in normal times, this indicator is totally unreliable. Many times I have arrived at Waterloo up to a quarter of an hour late, only to find the indicator smugly announcing a punctual arrival.

Now for train boards or destination boards. One thinks of those glorious train boards that we had before the war on the Cornish Riviera and other trains. Very few railways now provide proper boards, with the great exception of the Western Region, which has little labels. How comforting, reassuring and helpful they are; in particular, to our anxious Aunt Agnes, who can comfort herself by knowing that she is, in fact, bound for Paignton and not Penzance.

I shall not range over staff. I do not want to criticise British Rail staff, many of whom do an admirable job. But I wonder whether they all have the dedication which their predecessors had before the war, or, indeed, the dedication of many of the staff on the Continent. I remember once asking a member of the staff on a French train which was running late whether we would arrive on time, or would be late. He said, referring to the possible late arrival, "Mais c'est impossible" One does not get the same feeling in Britain.

Perhaps I may mention, very briefly, the tremendous dedication to service which the staff of those early railways had. When Sir Nigel Gresley introduced the "Silver Jubilee", which travelled at over 90 mph, covering the distance from London to Newcastle in four hours, the whole project, from its inception to the inauguration of the service, took exactly six months, whereas British Rail's high-speed train took six years. If there is any lack of morale among British Rail staff today, the Serpell Report will do nothing to cheer them up.

As I look at the clock, I feel like the driver of a British Rail train running against time, but I can assure your Lordships that the home signals of the terminus are in sight. Perhaps I may take this opportunity, since I have not had the opportunity of doing so before, to apologise to your Lordships for the inordinate length of my maiden speech last year. But I could, perhaps, say in my defence that all my last six speeches have been in the region of 10 minutes.

Even if one is not a railway enthusiast, a railway can still be a great and glorious thing. It is, after all, a reflection of national pride and industrial skills, and it fulfils vital social and economic needs. We gave the world railways and, for many years, we led the field in every sphere of railway development. What we need now is a feeling of pride, and there is no lack of energy and enthusiasm among the staff. But what we lack is vision, and I fear that vision is totally lacking in that lamentable Serpell Report.

If any of your Lordships lack vision for the future—and, after all, we have been told that without vision a people perish, and I would say that without vision British Rail will perish—I would recommend that you look not at the great railway works of the past, such as St. Pancras Station, Brunel's Saltash Viaduct, and so on. I would recommend you rather to look at the southern portals of Primrose Hill tunnel, situated a mile and a half north of Euston on the main electric line. If you look at those portals now, neglected as they are, still encrusted with the smoke from those gallant steam engines which toiled up the Camden Bank, you will say, no doubt, "What a ridiculous extravaganza! What a futile folly!" But what a superb symbol of confidence in the future!

7 p.m.

Lord Auckland

My Lords, two excellent maiden speeches and the most stimulating speech of the noble Lord, Lord Marsh, who opened the debate, have turned this into a very thought-provoking session. I join other noble Lords and noble Baronesses in my love of trains. My mind goes back to the journeys from Euston to Kingussie in Inverness-shire or from Euston to Sterling, particularly in the days of the steam train. Oh, how they are missed, in my view! But that is another matter.

I should like to deal with two aspects of the report: first, Scotland, and, secondly, commuter traffic. As I look around your Lordships' House at this relatively late hour, I see here some of those who debated the Beeching Report. That was a much more workmanlike and much better thought-out document than Sir David Serpell's report. Nevertheless, Sir David Serpell, within the terms given to him, has undoubtedly done his best, although not a particularly convincing best.

Turning to Scotland, the Highlands and Islands Development Board has spent a great deal of money upon developing, north of Glasgow and north of Perth, districts like Lochaber, the Aviemore Centre, Ross and Cromarty and other districts as far up as Caithness. One needs no knowledge of geography to recognise that when the weather is bad one cannot get coaches, buses, cars or lorries along the roads. But one can get through on the railway. It is not only passenger traffic with which we are concerned; it is also a question of freight traffic. The Dounreay power station at Thurso is an example in point. To keep our export and home production going we must have good public services, particularly good railway services, to Scotland and to Wales, particularly to North Wales. Places around Barmouth and Dolgellau have a great deal of industry. It is essential that there, too, there should be good railway facilities.

I turn now to the commuter, to use that rather ghastly American word. Since 1954 I, along with many others, have been travelling from Surrey to London. An annual season ticket from Epsom to London costs now in the region of £600. This is roughly the cost of a return flight, in somewhat more comfort, to San Francisco. At page 16, paragraph 2.18, Sir David Serpell says that half of the revenue of the south-eastern region of British Rail comes from season ticket sales. He argues that the season ticket holder is subsidised, and continues: We doubt the economic justification for the size of the present season ticket discount. In our view, it warrants thorough examination, the results of which could benefit the revenue of the sector". Of course it would. Those who work in the City of London or in the West End and who travel from Basingstoke, Box Hill, Weybridge, or Hampton Court can of course travel by motor car, but we are constantly exhorted, quite rightly, not to cram the roads of London with motor cars, particularly when there is only one person in the car. People must therefore travel either by rail or by bicycle. In bad weather, however, those of advancing years, in particular, find this to be a rather frustrating experience.

Since 1948 I have spent all of my time in commerce. If our essential workers in commerce are to get to their destination, they must rely upon public transport. If, as Sir David Serpell seems to suggest, the subsidy were to be removed or drastically cut, this would have a very adverse effect on our balance of payments in such industries as insurance, banking and accountancy. People travel from the commuter belts of Surrey. Essex, Hertfordshire, Kent and Hampshire—to name just five—in order to carry out that kind of job. Sir David Serpell's reckoning is not, therefore, particu- larly logical. Season tickets will go up further in 1984. Therefore, the cost of travel will go up further. British Rail's 1981 report showed the number of passengers carried: 2 million passengers on 18,000 long-distance and short-haul trains.

Although I have condemned Sir David Serpell's report, as has practically every speaker so far, I believe that we must try to improve the bad industrial relations on our railways. Whether this is the fault of the railway unions or of the railway management is not the question. We have to face the fact that on certain occasions it is the fault of both. Much is made by certain sections of the media of the bad industrial relations which exist on our railways and, indeed, in other parts of the public and the private sectors. One remembers the very serious strike last year when British Rail lost a number of passengers. Consequently, revenue suffered. Therefore, it is absolutely necessary that there should be some improvement along these lines. Unless we can improve industrial relations, not only on the railways but elsewhere, reports such as those produced by Sir David Serpell may not receive acclamation—rather the opposite—but they do bring about a certain amount of fact-facing, unpleasant though it might be. But if we are looking at this from an economic point of view, it nevertheless contains realism.

I shall conclude by quoting from a report from Sir Peter Parker, who has done a superb job as chairman of British Rail. He has had his brickbats and his shortcomings, but taken as a whole he has been an outstanding chairman. To use his words: As I have said, productivity alone is not enough to generate the funds we need but is the key to unlock our potential and the public confidence to put money into a growing concern". Those who operate our railways and those who use our railways have a large responsibility to carry out those very wise thoughts.

7.11 p.m.

Lord Mountevans

My Lords, I do not know whether it is a unique experience, but it is certainly a happy one for me this evening to be able to begin my contribution to a debate on a nationalised industry by having a chance to congratulate two maiden speakers when one of them—the noble Lord, Lord Ezra—was for many years that very nationalised industry's largest customer. The other—the noble Lord, Lord Prys-Davies—brought to his remarks perhaps a more parochial but nonetheless specialised and appealing point of view. I hope that it will be my privilege to be led down those tracks by them again on many occasions in the future.

I am interested in public transport in all its facets. I am a firm believer in railways, as well as a confirmed non-motorist; by choice, I hasten to add, and not as a result of the penalty points system. I welcome the opportunity given to us today by the noble Lord, Lord Marsh, to debate the Serpell Report and the wider context of British Rail. Several noble Lords have asked me whether I intended to put a British Tourist Authority point of view. I hastened to reply that I did not intend to do so. If I had any interest to declare, it would probably be that of a taxpayer and, I suspect, one of the last of British Rails's full-fare passengers. I have not aged fast enough to share with a number of noble Lords the benefits of a senior citizen's rail card—and yet I have aged too fast to qualify for a student's rail card. I am not gallant enough for a serviceman's card and my family does not qualify me for a family card. So what do I do? I pay the full fare.

As a non-motorist and a full-fare passenger, I reflect the interests of those many people who feel that we need a railway system, and that that system still has a major part to play in the life and fabric of this country. My interests in the report of Sir David Serpell and the majority of his committee have inevitably focused on the passenger side of British Rail's business, although I fully realise that one cannot look at passenger business in isolation. The board must, after all, find its revenues where it can.

I welcome this report as one of a number of documents which could—and I stress the word "could"—form the basis for sensible discussions, at the end of which a meaningful transport policy for this country might conceivably emerge. In the time scale available, Sir David and the other members of his committee did an impressive job of putting together data. As a source of information on British Rail in the early 1980s, I believe that both the majority and the minority reports will prove important. There is, however, more than just the gathering of data to any review. The data should be meaningfully evaluated before recommendations—or options, as they are called in the committee's terms of reference—can be made.

Furthermore, the committee should not have been asked to look at the railways in isolation. There are many other modes of transport, both public and private, available to the consumer and it is only by evaluating them all that Governments will arrive at a practical transport policy; a policy which, in the demands it makes on public resources, will satisfy the criteria posed by the myriad other calls being made on those resources.

The committee's terms of reference made specific reference to railways in Great Britain over the next 20 years". It seems to me that 20 years is a magical number, for it was in 1963 that Dr. Beeching, as he then was, produced what I consider to have been the last definitive review of British Rail in his first report, The Reshaping of British Rail. This was prepared against the background of the establishment of the British Railways Board in 1962, with its remit to run a commercially viable railway, breaking even after a transitional period without the aid of grant. By 1968 circumstances had changed. Viability was no longer believed possible and so the Transport Act 1968 enabled the Transport Minister to pay grant for unremunerative services—retention of which was justifiable on social and economical grounds.

Even this power proved inadequate in the fullness of time and the unpublished 1974 review led to the 1974 Act, which effectively subsidised the system as a whole. This is the situation in which we find ourselves today, save perhaps the contention made by Ministers on both sides that they can see no valid reason for subsidising inter-city transport. Meanwhile, the network had shrunk considerably and substantial route closures had created in the period 1964 to 1974 what I like to call the post-Beeching network.

Britain invented railways, and ever since Stockton and Darlington, private enterprise and nationalised railway undertakings have lived with the historical legacy stemming from this fact. As far as I can establish, our railways were also among the first to have trade unions. Throughout this century, or at least from the time of the Taff Vale judgment, successive boards of directors and Ministers of Transport have watched our railways wax and wane against the infrastructure facts and operational practices which stem from the railways' heritage and history. It is today that we live in, and today's question should not be one of options, but one of whether we are willing to pay today's prices for what I call the post-Beeching network. If we are willing to do so, then we must face facts; facts such as the one that estimated figures for last year suggest that revenue from consumers covered only 60 per cent. of British Rail's costs. Perhaps that was a bad year to take. Remember, 1981 was a year not distorted by industrial action in defence of outmoded and inflexible operating practices. Even then, revenue covered only 68 per cent. of operating costs.

On the passenger side of the business, the load factor in 1981 amounted to only 38 per cent. That was a "normal" year. Put another way, revenue income and grant paid by central Government and local authorities contributed to the funding of 62 per cent. of the passenger service product offered by British Rail but left unutilised by its customers. As users or taxpayers, we are all "customers" of the railways, whether we like it or not. Is the product we are being offered an adequate one? Is the price we are being asked to pay acceptable? How do we resolve this perhaps unanswerable question?

Although I disagree with many of the cost-saving proposals detailed on both the majority and minority reports, I do feel that the former, in Chapter 10, Section 14, went some way in pointing the way ahead. It suggests that the Secretary of State must specify the extent of the rail network and set strategic objectives for each of the management sectors that British Rail have now set up. It was also suggested that he should make clear his intentions as to financial support and the rationale under which he was providing that financial support. If this were to happen, British Rail would have a defined and strategic framework within which to operate. The onus would be placed fairly and squarely on the board to get on with the job, instead of taking day-to-day decisions or proposing longer-term policies, only to be told that the former were unacceptable or unfundable and that the latter must be rethought in the light of new rules laid down by the department, as happened in the joint study on electrification. The onus will be firmly placed on the board to justify its decisions and this will in turn hopefully lead to much tighter control and monitoring of day-to-day activities and operations.

Where the level of service offered far exceeds demand that level should be cut. What was right in 1967 is not necessarily right in 1983. If open stations save manpower and thus cut costs without loss of revenue, then open stations, perhaps with automatic barriers, must be another answer, but only if there is a cost-saving rationale and a better value railway. If there is to be capital investment, supported by grant, then that investment must justify itself in the short to medium term. Without a defined framework set by the Government and considerable enhancement of management performance by the board within that framework, the price of our railway network will, I think, cease to be acceptable to us, either as consumer or taxpayers. It is not inconceivable to me that we shall end up with Serpell Option A, the commercial railway. I should hate to see this happen but I do believe it is a possibility, and I believe it will remain a possibility until this country has a comprehensive transport policy, something which it has been lacking for far too many years.

7.22 p.m.

Lord Bruce of Donington

My Lords, we have had a long,very interesting and comprehensive debate today. Some may come to feel, after they have had the opportunity of perusing the proceedings in another place, that perhaps we in this House have gone far more deeply into the whole question than may have been possible, for a variety of reasons, in another place. For this opportunity we are, of course, indebted to the noble Lord, Lord Marsh, whose expertise in this field is very well-known, and whose evident sense of humour is deeply appreciated in a world that sometimes has a grimmer and more sombre aspect. We on this side of the House found his speech most attractive and we considered that it provided a very useful springboard for the remainder of the extremely good debate that has followed.

It was also a privilege for the House, and particularly for us on this side of the House, to have the opportunity of listening to the maiden speech of the noble Lord, Lord Ezra, whose long and distinguished public service is certainly appreciated in all quarters of the House and indeed outside. I myself found that with regard to most of his speech—I trust it will not act as a bar to his political advancement—I was in considerable agreement with him. We also had the pleasure of listening to the noble Lord, Lord Prys-Davies, making his maiden speech, and of him I could perhaps say that his speech enhanced the already high standard of speeches which we expect from noble Lords who have the advantage of coming from the Principality of Wales, and whose eloquence is a by-word not only in this House but also in another place.

My Lords, I find myself considerably puzzled by the attitude of Her Majesty's Government to the whole question of the Serpell Report. It rather seems to me, having read the proceedings in another place as well as listening to the noble Lord this afternoon, that the Government are at pains, almost imperceptibly measured in terms of days, but in miles when it comes to weeks, to distance themselves from the Serpell Report. Indeed they rather seem to me already to be bowing to the storm, of which we have had some precursors perhaps this afternoon expressed in more subdued terms.

I ask myself, and I invite your Lordships to ask, why, if the report requires to be given long and careful consideration, the committee in the terms of reference were required to report within six months, and it was agreed eventually to have another month in order to complete the work. This sounds like a matter of extreme urgency. I would tend to agree with the noble Lord, Lord Bancroft, in one respect; that is to say, that to expect a comprehensive report in so short a time places very considerable difficulties on the members of the Committee and indeed upon those firms of consultants, fortuitously connected with two of the members, who were entrusted with a good deal of the detailed work. Why, therefore, the sense of urgency?

Well, my Lords, the noble Lord can easily give a reply: because the Government are committed to saving large sums of money; they want to achieve savings for the public purse, and these are matters which are being pursued, from their point of view, quite properly with great rigour. Therefore, if opportunities for economies, opportunities for reducing Government support for the railways, arise, these should be pursued with all possible speed. I can understand the logic of that argument, but clearly it is not of universal application.

When I say that the amount of the United Kingdom's net contributions out of the Treasury into the European Community, largely for the support of the farmers, exceeds the amount of support for the railways, one wonders why the same urgency, the same sense of utmost public importance, should not be attached to giving highly trained professional firms, or a high-powered committee, the urgent task of examining just how it is that this waste of money, or this very large expenditure of money, can be reduced. One does not get quite the same sense of purpose behind it when it comes to expenditure within the European Community, which, as the noble Lord knows, goes very largely to the farming community, whose incomes last year, we are told by the Secretary of State for Agriculture, increased by 45 per cent.

I am not arguing the case that there should be forthwith a detailed investigation into these matters. All I am saying is that when it comes to a nationalised industry there seems to be a sudden rush to the head of complete financial soundness. And indeed the terms of reference were couched in this way: To examine the finances of the railway and associated operations, in the light of all relevant considerations, and to report on options for alternative policies, and their related objectives, designed to secure improved financial results in an efficiently run railway in Great Britain over the next 20 years". The terms of reference were therefore very restrictive. They were not invited to consider social needs. They were not invited to consider the social consequences of any actions that might or might not be taken in regard to the railways. Their remit was financial, and the members of this committee followed their remit faithfully.

A firm of distinguished chartered accountants took part, and, as the noble Lord will be aware, firms of accountants, generally speaking, when they are asked to act and give financial advice upon an undertaking tend to regard the achievement of a profitable operation as being a very laudable objective. And why not? Indeed, the whole report has been couched with that in mind. Page 61 of the report gives their subjective attitude towards the whole matter. They say: Those seeking to justify public transport subsidies often rely on an assertive 'need' for transport. Demand is determined by people individually. The concept of need, however, is an elusive one which cannot be defined objectively or without contention". So we know what it is all about. It is a report which confronts the Government with the steps that the Government would have to take if they were to achieve financial profitability. It takes no account, save where it can be assessed in terms of money or the saving of money, of social need.

We have great responsibilities, and it is interesting to see how other countries approach this same problem. From the published statements that are made by members of the Government from time to time, and from the media, particularly the printed media—75 per cent. of which supports the policies of the Government—one gets a continuous diatribe against all nationalised industries. The very fact that they are nationalised means that they are subjected to continued abuse, to continued criticism, and the railways are no exception to this. One thing that hurts the normal mentality of those who support the party opposite is that any subsidy should be paid at all. Each new subvention by the Government is viewed with horror. Yet in other countries in Europe we find that the financial support expressed as a percentage of their gross domestic product is in many cases double that of the United Kingdom, and in some cases treble. I have the figures here, but I shall not weary your Lordships with them.

Why is it, therefore, that we refuse to take knowledge of this fact? Why is it that we seem to think that a loss to a nationalised railway system is something that has to be avoided at all costs, whereas our colleagues in Europe and in other parts of the world take an entirely different view?

Something must immediately be said. The main network of the railways in the United Kingdom was established over a half a century ago, perhaps even more than that. Great changes have taken place during that period. Even in the last 10 to 15 years great changes have taken place. The number of people who take holidays abroad, for example, is now much greater than it was even 30 years ago. There is no longer, for thousands of people, the annual trek to the seaside resorts. The age structure of the population of this country is now much different from what it was a long time ago. Many people live to far older ages and become more heavily dependent on railways. The whole industrial structure of the country has changed. Industries have moved, some are being established in new places and some have closed down. The movement of the population from country to town and the partial decentralisation into new towns has been accomplished during this period, so it would be wrong to expect that the railways of this country should be fossilised even into the condition in which they remained after they accomplished the main recommendations of the Beeching report. Clearly there has to be flexibility. We must not remain ossified.

Most of the speeches in your Lordships' House this afternoon have underlined the point that it is possible to be able to know the cost of everything but the value of nothing. Indeed, the speech of the right reverend Prelate the Bishop of Durham brought very vividly to our minds the social consequences, let alone the financial consequences, of a closure in that part of the country with which he has an intimate connection. For that instance there can be detailed thousands of instances all over the country where closures will produce social consequences, the financial effect of which is difficult to quantify. One does not know the extra cost even to the Exchequer of many of the disastrous events that are taking place in the country at the moment, let along those that are connected with the railways.

I shall not touch or elaborate on those many points that have been made by your Lordships this afternoon because to do so would be repetitious. But I venture to suggest to your Lordships that sooner or later—and I hope the noble Lord, Lord Marsh, will concur with me in this—a body of people, preferably representative of all kinds of people in our country and with a full knowledge of them, will have to sit down to determine the future of the railways within a fully integrated transport system. Sooner or later that has got to be done.

The last time there was a comprehensive inquiry was, I believe, in 1917. There have been a number of specialist inquiries since then, and there was the Beeching inquiry which took three years and came out in 1963. What I do think is that the Government should commit themselves to holding a really full-scale inquiry. I hesitate to suggest a Royal Commission but nevertheless the expertise which would be available to such a commission involving practically every interest in the country would at any rate produce a far more constructive whole than that to which the Serpell Committee report has been deliberately confined.

There is an alternative to that, and there are many precedents for it. The Government could agree to the setting up of a Select Committee with full powers to examine all witnesses within very wide terms of reference (possibly even wider, and perhaps a little more general, than those put forward by the noble Lord, Lord Ezra) to consider, for example, the role of British Railways within the needs of British society. This might be one purely general term of reference. But we as a country cannot and ought not to allow action to be taken only on the basis of the financial considerations that have been discussed at length in the Serpell Report. Other considerations will have to be taken into account.

I hope that we can have an undertaking from the Government that they will make no decisions about the future of British Railways or the railway transportation system generally without a far more detailed and, indeed, public inquiry into their future role and the consequences of any particular steps that the Government may be encouraged to have in mind as a result of this report.

I repeat that what we want within modern society is the railways to play their full part within a fully integrated transport system, but we require that they shall not only meet effective financial demand—because that is what consumer demand really means—but also the needs of that 40 per cent. of the population who in the past three years have borne most of the costs of the Government's experiment with monetarism. I am referring to the poorer and less privileged sections of our community to whom mobility is still important and to whom the ability to travel is still a release very often from the drudgery in which their circumstances compel them to exist. The term "effective consumer demand" smacks very much of the old competitive society: if you have the money, you can travel, but if you do not have the money, you cannot; if you have the money you can have your car and, if necessary, two cars, and you have complete mobility, but if you have not or if you live in a difficult part of the country, you are to be restricted. It is like saying, judged by the same token, that you should truncate the telephone service because in this country no rural telephone pays at all. The easiest way to make the telephone system more profitable would be to cut off a good number of its rural connections and abolish rural call boxes. Mercifully, nobody thinks of that yet because those connections provide a service.

It is to the objective of service, as has been emphasised by so many of your Lordships this afternoon, that we have to turn our attention when considering the future of British Rail. That is not to say that we should not provide the service as economically as possible, with the minimum financial burden not only upon the state but upon the user; but the objective should be to provide a service, not merely to take part in the commercial battle which was epitomised by Marx in the phrase, "the naked cash nexus twixt man and man". We should aim to serve, and our efforts, deliberations and, I hope, our conclusions should be directed to that end.

7.44 p.m.

Lord Lucas of Chilworth

My Lords, with the leave of the House, I should like to make some attempt to respond to the very large number of questions and points that have been raised this afternoon. As, indeed, the noble Lord, Lord Bruce of Donington, said, and as I think we all expected, we have had a very interesting and wide-ranging debate. I am most grateful to all Members of the House who have taken part in this debate and can assure them that, whatever shortcomings I may display in not being able to respond to every one, due note will properly be taken of everything that they have said. My Lords, too, pay tribute to the two maiden speakers, the noble Lord, Lord Ezra, and the noble Lord, Lord Prys-Davies. I would wish to come back, perhaps a little later, to some of the remarks that they made. I welcomed what Lord Prys-Davies said about the status quo and the need for flexibility in British Rail in the light of its size.

I set out in my opening speech the general background to the establishment of the Serpell Committee and some of the issues which the Railways Board, the Government and, indeed, Parliament now have to face. Picking up some of the main points, I hope that I shall make it clear that the Government do not intend to come to any hasty decisions on questions of long-term railway policy. I can give no instant comprehensive and final answers—nor, I think, in truth do your Lordships expect me to this evening—but the points raised will, as I said, be taken into consideration.

The first point that was raised by the noble Lord, Lord Marsh, was how much Serpell cost. That point has rolled around this afternoon. Subject to audit, the figure is £627,342.

Several noble Lords

Oh!

Lord Lucas of Chilworth

My Lords, I heard an exclamation of surprise, perhaps, or astonishment. Let us just look at the figure in context. It is a huge amount of money, but in 1982 the British taxpayer paid £900 million to British Rail in support and subsidy, which is about £100,000 an hour. Just over £627,000 for a consultancy represents less than half a day's subsidy and that does not seem to me to be an unreasonable price to pay to get a review of finances and an identification of £200 million savings which, with energy and efficiency, can be achieved within the very short term. Speaking purely as a business man, I like the return. It sounds quite good to me if I get my £200 million savings over the short period.

The noble Lord and a number of other noble Lords asked about the appointment of the consultants. Noble Lords know that this question has been answered in another place. The best thing that I can do is virtually repeat what my right honourable friend previously said. The procedures for the appointment conformed with the code of practice that was published in 1980. That provides for departures from the procedures of appointment in special circumstances. This was clearly justified in view of the special problems presented by the review of railway finances and the need for urgent and clear advice on complex financial and engineering issues in a field where few consultancy firms have the necessary expertise.

The noble Lord, Lord Tanlaw, the noble Lord, Lord Underhill, and others, I think, asked particularly about the experience of R. Travers Morgan and Partners on railway consultancy matters. The department is very familiar with the way in which they have worked on highway schemes and railway matters because they have carried out work on railways in Australia, Latin America and for British Rail. The noble Lord, Lord Marsh, questioned the appropriateness of appointing to the committee members whose firms were providing consultancy advice. The noble Lord, Lord Tanlaw, pointed out that Sir David Serpell was a member of the Railways Board. I should like to correct that impression. Sir David Serpell was a member, but he relinquished his membership immediately and, therefore, at the relevant time he was an ex-member of the British Railways Board—quite a proper situation.

My right honourable friend the Secretary of State decided that the committee should have the benefit of the personal contributions which both Mr. Butler and Mr. Goldstein could make towards the consultancy support of their firms. He judged that this arrangement would best ensure that the committee received advice of the highest quality quickly and with the minimum risk of misunderstanding between committee and consultants.

The noble Lord, Lord Bruce, asked in particular about haste. Yes, there was some haste because the review was first requested by the board in autumn 1981. They argued then that the levels of finance being made available to them were insufficient to enable them to meet their responsibilities in the longer term and there was a need, they felt, for a thorough review of their finances. They argued in particular that existing levels of investment were insufficient to maintain quality of service over the network. The position was somewhat complicated by the discussions on the PSO grant to be paid in 1982, but certainly by March 1982 the Secretary of State announced his grant and at the same time appointed Mr. Butler to have a look at the rail budget and the board's plans. In May the committee itself was announced and it was hoped that its work would be undertaken in six months. Yes, there was some haste about the matter; it was necessary to get the matter under way as quickly as possible.

The noble Lord, Lord Tanlaw, introduced the rather interesting question as regards track maintenance being the responsibility of the state. Of course, we would wish to consider that type of situation, but in doing so we would have to bear in mind the argument discussed in the report that separating operating and maintenance decisions might be harmful. The noble Lord spoke also of the Tyne and Wear Metro scheme, about which we have heard a fair amount in the last few days. We welcome that form of integration which is exemplified in Tyne and Wear. That type of planning, if properly implemented, can provide considerable benefits. However, the costs involved in that scheme have been very, very high indeed, and continue to be very, very high. The operation is not a fully economic operation—I do not think that anyone thought that it would be. However, that is the type of service that must be looked at when one is talking about integrated service in terms loosely encapsulated in the phrase "value for money".

Let me apologise to the noble Baroness, Lady Stedman, for not being in my place at the beginning of her speech. I am quite sure that my colleagues have told me that which I missed. The noble Baroness and others raised questions about safety. The Serpell Report did not advocate reductions in safety standards. It did, however, raise questions as to whether the board could run the engineering activities more economically without jeopardising the standards. It raised a number of points that would have to be considered. Let me make it quite clear and give the positive assurance that neither the Government nor British Railways would contemplate in any way reducing the high safety standards which British Railways customers have come to expect.

The noble Lord, Lord Underhill, the noble Viscount, Lord Buckmaster, and others talked about British Rail engineering as also did the right reverend Prelate, and I should like to return to the points that he made in a moment. The Serpell Report argued that vehicle specification and design processes needed to be restructured to provide a more coherent approach to specification, design and construction. Rather more specifically, it said that the board should focus their attention on the selection of design concepts leaving the detailed design to vehicle builders. The APT £50 million project was an example—at least it was in my view—of fixing the specification before the objective had been recognised. In terms of engineering practices that must be wrong.

So far as the close-down of Shildon is concerned, the Government cannot accept or substitute their own commercial views for that of British Rail. It is for British Rail as the commercial company to make decisions of that type—that is, ordinary management and commercial decisions. There are, of course, social implications, and the board are very well aware of their responsibilities within that area. But there has been an over-capacity in a number of British Rail engineering establishments. The close-down does not arise in any way whatever from Serpell; it is purely a commercial and necessary management decision to maintain those other establishments which might be in even greater danger.

I enjoyed very much the speech of the noble Lord, Lord Ezra, who said—and this point was also brought out by the noble Lord, Lord Bruce of Donington—that he would have liked to have terms of reference rather different from those which the committee had been given, and he read out his preferred terms of reference. The noble Lord, Lord Bruce, said that he wanted the grand inquiry. I must say that the terms of reference which the noble Lord, Lord Ezra, has described, and indeed any grand inquiry, would have seen another three or four years of indecision, because that is what it would have taken. I do not give the noble Lord, Lord Bruce, any guarantee or any assurance whatever that decisions with regard to railways will not be taken before any kind of inquiry. We have to make decisions, and decisions have already been made and are being undertaken by the British Railways Board as a result of Serpell.

The noble Lord, Lord Auckland, the noble Lord, Lord Ferrier, and I think the noble Baroness, Lady Stedman, raised in very general terms the relationship between the Railways Board and the trade unions. I do not want to go into that matter at great length. Sir Peter Parker has said several times lately that the machinery of negotiation, which dates back to 1956, has not proved adequate to keep pace with change. But of course it is absolutely up to the board, with the unions, to make any changes in their negotiating machinery. The Government have no standing in that matter, but I am quite sure that many of us would in fact like to see changes. When I referred to changes in our May debate, I was really looking for changes in attitudes. Some of the attitudes go back to those Victorian days, the days which the noble Viscount, Lord Buckmaster, relished with such joy—the edifices and the ramblings through Wells in Somerset. So, indeed, does some of the thinking with regard to what has to be done for the 1980s, the 1990s and the mystical year 2000. One would really look forward to that.

Two themes have dominated this afternoon's debate. One is the need to put the policy of the railways in the context of transport generally, and the other is the transport needs of particular areas, especially the countryside and places remote from the main centres of population and industry. It was the noble Lord, Lord Bancroft, who made it quite clear—and I was encouraged by most of what he had to say about the report—that there are important issues of Public expenditure in relation to value for money which must be faced and which Serpell has rightly brought before the public, Parliament and Government. That is exactly what we are looking for.

My right honourable friend made it quite clear to Parliament that the debate had to be broadened beyond the finances of the railway. It involves a reexamination of objectives for the Railways Board, the structure of the railways, and other questions. He said: Such is the relationship between road and rail and subsidies for public transport generally, the introduction of private capital, the relationship between British Rail and the private sector". The noble Baroness, Lady Stedman, asked for the Government's views on the options that she had read in the report. She said that she did not want massive cuts, but wanted expenditure to be cost effective, and that is what we want. We can agree with her there.

Lord Tanlaw

My Lords, if the noble Lord the Minister would give way, on a point of clarification, when he quoted his right honourable friend in another place, and in answer to the noble Lord, Lord Bruce of Donington, he made a clear statement that they are not even a basis for decisions. Was he referring to the options to which the noble Baroness, Lady Stedman, referred, or was he referring to possible ways in which to reduce expenditure? Because in another place the Minister seemed to say that the report is no basis for decisions of any kind whatever. That seems to be contrary to what the noble Lord has just said to the noble Lord, Lord Bruce. I should be grateful if he could clear it up.

Lord Lucas of Chilworth

My Lords, if I can clear it up I shall be delighted to do so. I do not have that Hansard at my elbow. When I was talking about the contribution of the noble Lord, Lord Ezra, concerning terms of reference, I said that if one adopted those terms of reference the inquiry would take very much longer. I coupled that with a reply to the question asked by the noble Lord, Lord Bruce. He was talking about a Royal Commission or a grand inquiry—a far deeper-reaching inquiry. He asked me to give him an assurance that no decisions would be taken with regard to the railways until that inquiry had taken place. I believe that was the question he asked me.

Lord Bruce of Donington

My Lords, if the noble Lord would give way, no, I did not intend to convey that. I asked for an assurance that until full inquiries had been made with full information being made available—I did not necessarily mean either a Royal Commission or, indeed, a Select Committee—no decision would be made. I certainly did not limit it to the appointment of a Royal Commission.

Lord Lucas of Chilworth

My Lords, I am very much obliged to the noble Lord, Lord Bruce, because we can certainly clear that up. My right honourable friend the Secretary of State has made it clear that Serpell forms an input to a major debate in both Houses of Parliament, with the public and with all the interested people. He wants that debate. When that debate has been completed—and I would not want to put a timescale on it—decisions might be made. But it does not mean to say that all decisions will be held up until that time, because that would be quite wrong. Certain decisions have already been taken by British Rail, which have come within the ambit of the report; they concern cost savings and so on. I trust that that answers the noble Lord, Lord Tanlaw.

The noble Lords, Lord Somers and Lord Tanlaw, and the noble Baroness, Lady Stedman, asked about bus substitution. The Government want to look at these ideas carefully—perhaps rather more carefully in the light of the Beeching bus arrangements, which were not perhaps entirely satisfactory. I shall return to that a little later when I talk about "integrated" transport systems.

Perhaps it was the maiden speech of the noble Lord, Lord Prys-Davies, which raised the fresh idea of involving the separate offices—the Scottish Office and the Welsh Office—in discussions of this kind. That is just the kind of suggestion which we are looking for. My noble friend Lord Ferrier asked whether privately financed feeder lines could be considered. Having known him for a number of years and having heard accounts of his activities in India, I wonder how much of his past experience we can draw on. The answer is that the Government would consider any practical possibilities if they would help to make the railways, as part of a transport system, more modern and more efficient. The Government are always ready to look at closer involvement with private finance.

The noble Lady, Lady Saltoun, asked me a question which I could not foresee and I have no answer at all. The Ministry of Defence, as a principal customer of the railways, has not advised me about what their requirements might be. I shall find out and I assure the noble Lady that she will have an answer. I very much enjoyed the tour of the noble Viscount, Lord Buckmaster, round the country. Although I might have expected the noble Lord, Lord Mountevans, to have raised the question of tourism, certainly his noble friend sitting near him has illustrated that.

Time is getting on and I want to be quite quick. The noble Lord, Lord Tanlaw, and others have argued that we must have an "integrated" transport policy. We hear this frequently. I should like to get quite clear exactly what we mean by "integrated". Is this the great buzz word of 1983: "integrate" this and "integrate" that? I am all in favour of integration if it means a more rational organisation of the different modes of transport at local level, so that buses serve trains, trains serve buses, buses serve ferries, airports, and so on, and they all have dovetailed timetabling. I am in favour of integration if it means breaking down the barriers between different modes and not sticking for ever to one mode because it has always been there; just because the railway line has always gone to Little So and So in the Marsh and has done so since 1890, there is no necessity for it to continue to do so. It need not be the most responsive or economical means of meeting any local need.

However, if integration were to mean—as some people would have it to mean—directing traffic, removing freedom of choice from customers or investing or subsidising without regard to effectiveness and value for money, then I am against integration. I think that the noble Lord, Lord Tanlaw, means exactly what I mean; that is, a dovetailing, a coordinating, of services to meet needs.

Lord Tanlaw

My Lords, if the noble Lord will give way, just so that there is no misunderstanding, I did explain very simply that a bus should meet a train and that there should be interchangeability of ticketing, and so on. I think that we are in complete agreement with that kind of integration. However, I totally disagree with the other interpretation.

Lord Lucas of Chilworth

My Lords, at least we agree on some part of the interpretation of "integration". I set out earlier this afternoon the Government's response to the Serpell options. I recognised that considerable fears were aroused in some rural areas before, and at the time of, the publication of Serpell. I fear that some noble Lords still have a lingering doubt with regard to these options. I repeat that these are illustrations of what could happen given certain circumstances. If we went back to Serpell and got them to wind up their little machine all over again we could get another series of them to illustrate under other assumptions.

Lord Marsh

My Lords, could the noble Lord tell us whether we should have to pay another £600,000 for that?

Lord Lucas of Chilworth

My Lords, I would not expect to pay £600,000 for a repeat performance. I believe that repeat fees are somewhat lower than the original. I have repeated that the Serpell options are illustrations, and it is right that people should understand that, particularly so far as the network is concerned. What we want to do is to widen the context in which we look at these rural and other transport services. I can put the matter no better than did my right honourable friend in the debate in the other place on 3rd February when he said at column 443: When considering rural transport needs it cannot be right to set our face against the best use of resources, new technology, alternative and different forms of service that are cheaper for the passenger and which, if they are applied, will save rural services that might otherwise be threatened. After 30 years with a single nationalised industry we have to consider from the top right through whether we have the right structure for modern conditions. We have to cultivate an open-minded approach to the possibilities of reform and innovation, however darling are the big engines of the 1900s and the timetables and railway stations of yesterday. We want a modern and efficient railway system. It has to play its part in the nation's transport system. We believe that railways have a good long-term future, but no one can guarantee forever any role of any mode. The railways can ensure that they make their contribution by running efficiently, achieving cost savings, maintaining safety, being responsive to customers, and being businesslike in their approach, giving customers and taxpayers value for money. They have done a lot, they can do more, and they themselves recognise that more needs to be done.

In this half-hour I hope I have covered many of the really important points. This is not to say, if I have not covered them, that they are not important. I again reassure all noble Lords that everything they have said, every point they have made, every suggestion will be taken note of most carefully. In conclusion, may I again thank the noble Lord, Lord Marsh, for initiating the debate. The Government have made it clear that they want a wide-ranging debate. They want to hear all the facts and arguments before long-term decisions are made. In that respect I am sure that this debate has been of great value and a great contribution to the wider debate.

8.14 p.m.

Lord Marsh

My Lords, I am conscious of the lateness of the hour, and I shall be brief. I should like to express my thanks to all those who have taken part in what has been a fascinating debate, highlighted by two first-rate maiden speeches from two colleagues whom we shall all enjoy having in our midst. It has indeed been a fascinating debate. At the beginning the noble Lord, Lord Lucas, asked whether people were prepared to pay what was effectively £40 per annum per family for the railway system roughly as it is. The evidence of this debate is, yes, they would. I think it is overwhelmingly the case. While it is possible for boffins in the Treasury and graduates in our great universities to produce econometric models which prove otherwise, heaven help the politician who tries to impose that policy. I should also like to express some sympathy with Sir David Serpell, who was trapped by the terms of reference and to some extent has been unfairly pilloried. Indeed, I carry that sympathy to the noble Lord, Lord Lucas. To say that he made the best of an unhappy job is to underestimate the sheer heroism of the role he played today.

The noble Lady, Lady Saltoun, drew a lot of comparisons with the airlines. In British Rail's defence, it is a long time since any train leaving Euston finished up in Havana, and the same sort of guarantees are not normally given by the airlines. The big problem—and it underlines the difference—is that no airline is running 30-year-old transport vehicles from stations 150 years old. The moment you try to change that you are into the question of investment and spending more money to try to produce a service which people will use. I am not surprised that in these modern days people are not attracted by trains which are sometimes not only just dirty but clapped out, to use the phrase. They are old-fashioned. There is a question there of possibly the need for more investment.

On this question of the cost of the report, I share the anxiety of noble Lords in this House who want to see greater control of public expenditure in many areas. It is no joy trying to sit on top of a nationalised industry with a bottomless bucket, and nobody believing that you can ever go bust. One of the things that the Government can do, and have done so far in relation to the nationalised industries, is to stop, as previous Governments have over and over again, frustrating their desires to make economies when they could. One of the great things about the last railway dispute was that the Prime Minister stood firm. It is in that way, giving the backing of Government to employers in the public sector, that gradually one can get rid of practices, which cannot be justified by anybody, whatever their political views, which exist in many of the nationalised industries. Therefore, I am in favour of that control.

But I come back to the point that £627,000 for a consultants' report for that job is scandalous. I give the noble Lord the credit of believing that he cannot have dreamed up that answer himself. Whoever did, whoever sits nursed away in some dark corner in Whitehall believing that the bigger the bankruptcy the more you pay the consultants, should be kept carefully a long way away from anything larger than possibly a village store—and I am not too sure about that. You pay consultants for the work involved, and that fee is outrageous in relation to any conceivable work which could have been involved here.

I also question the propriety—and I say this as no criticism of the individuals involved at all—that 50 per cent. of an independent inquiry is comprised of two senior partners who come from the very firms actually providing the advice and submitting the invoice at the end of it. No businessman, including the noble Lord, would have met that bill. He would have negotiated it, as one would any bill. Nobody ever pays the first bills that come from firms of accountants, with the greatest respect to the noble Lord, Lord Bruce. It is an immoral suggestion.

I am grateful to all noble Lords for taking part in the debate and for giving me the opportunity to introduce it. I think that the answer in this House from all different shades of view, different positions—there has been no political line at all—has been remarkable in the unanimity it has shown. It is high time that that unanimity was taken by Government and translated into action. I hope that those people who sit dreaming—mostly in the Treasury—of a day when they will be able to get rid of this monster and stop this enormous outrun of public funds will realise that that is an impractical aim. I was impressed with what the noble Lord, Lord Ezra, said. I had not realised that there had been 20 different examinations of the railway finances. The one thing I am quite clear about, having seen this report and participated in this debate, is that there is no conceivable case for a 21st examination of the financial state of British Rail.

I hope that the Government will come forward in due course and begin to face up to the need for a railway to continue into the future, and do so on the basis that it is one of those rare areas in British industry where it is quite clear that it can be taken out of the political arena. All it requires is ministerial courage to to do it. I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.

House adjourned at nineteen minutes past eight o'clock.