HL Deb 24 October 1983 vol 444 cc46-53

5.16 p.m.

Lord Lucas of Chilworth

My Lords, with permission, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Transport. The Statement is as follows:

"The Government have listened carefully to the wide public debate on the Serpell Report and in particular to the views of the Select Committee on Transport. What emerges strongly from that debate is that it is for the Government to give the railways a clear framework and objectives, and for the British Railways Board to direct and manage its business in the light of them. Accordingly, I have today sent to the chairman of the board, Mr. Reid, a statement of the objectives which the Government wish him to pursue. Copies are available in the Vote Office and I will arrange for it to be published in Hansard.

"An efficient railway has a vital part to play in the transport system, but it must give its customers value for money. By giving customers the services they want at a reasonable cost, the railway can secure its own future, and the people who work in the industry can feel pride in their work. British Rail has already begun to introduce really significant improvements, to which I want to pay a warm tribute. The firm objectives I am now setting are designed to further that process.

"The board's latest corporate plan is clearly going in the right direction and the objectives I have set Mr. Reid build on it. In its 1983 plan, the board envisages a requirement for central government grant of about £635 million (in 1983 prices) by 1988. I am setting the chairman the objective of achieving that target—a grant requirement of £635 million in 1983 prices—two years sooner.

"The objectives I have set for the chairman make plain that it is not our intention that the board should embark on a programme of major route closures. This puts paid to the scare stories about the network, about which we heard so much following the publication of the Serpell Report.

"This does not rule out the board proposing changes locally, where they make sense. It is for the chairman to consider new forms of guaranteed and subsidised substitute bus services, where appropriate on local transport and value for money grounds.

"The freight, parcels and inter-city businesses can and should work to a commercial objective. The Government believe that rail freight has strong environmental advantages over road freight. So we want as much freight as possible to go by rail, within the financial target for the business, which is to achieve a 5 per cent, return by 1988. The scheme of Section 8 grants for rail freight facilities will continue.

"The board's plan envisages an increase in investment from present levels. I shall support worthwhile investment which relates directly to the financial and business objectives we have set.

"The railway is operating in a highly competitive market. So it is to the board's advantage to obtain rolling stock wherever possible by competitive tendering and to rationalise excess capacity within BREL as soon as possible. I have asked the chairman to complete by the middle of next year a review of the options for the future of BREL, including the operations for privatisation. All the options will be examined on their merits.

"Greater private sector finance and involvement can help to improve services for customers and keep down costs. I have therefore called on the chairman to continue to seek greater private sector participation in the development of the railway.

"The statement of objectives confirms the Government's intention to privatise Sealink, and it also calls for improvements in the railway's industrial relations machinery. With these objectives, the way is clear for the board to manage the railway so that it gives the country the good quality, efficient, service which we all want."

My Lords, that concludes the Statement.

Lord Underhill

My Lords, I thank the noble Lord for repeating this further Statement today, and also for letting myself and, I assume, other Lords concerned have a copy of the Secretary of State's letter to the chairman of the board, which fills in some of the gaps in the Statement. I find both the Statement and the letter to the chairman of the board disappointing except for the reference to the fact that the Government will not be pressing for a programme of major route closures.

Naturally, all of us want to see an efficient railway system, but in this Statement there is little encouragement for British Rail. So many points arise that it would require a full-scale debate on the position of rail in our transport system to deal with all of them. I shall take just a few. Why is there nothing in the Statement about investment except, in the letter to the chairman of the board, a trite statement that the Government will be sympathetic to any request for investment for financial and business objectives? There is no reference to a consideration of investment on social or environmental grounds.

Why is there nothing in the Statement about electrification? Your Lordships will recall that the Serpell Report dismissed main line rail electrification in one brief paragraph. Why does nothing appear in the Statement? The objective of the Government as to the public service obligation grant is to reduce the grant so that it takes effect two years earlier than the board envisages in its corporate plan; but the intervening years between now and 1986 will also present problems. Can the Minister confirm that a Statement has been made in the other place today making a cut already in the PSO for the ensuing year? Does that not present serious problems?

The Statement refers to freight services. Do the Government reject clearly the negative attitude of the Serpell Report towards the board's proposed expansion of the Speedlink freight operation service? Will the Government support greater devotion of resources to Speedlink as urged by the board itself? Do the Government reject the references in the Serpell Report to the board continuing only with the minimum possible levels of rail safety? Do the Government accept the need for track renewal and replacement of rolling stock? If so, how is this to be achieved?

The Statement refers to possible privatisation of BREL, and urges the advantage of obtaining rolling stock wherever possible by competitive tendering. Does this not ignore BREL's expertise and export potential? Do the Government reject the suggestion in Serpell that rails and rolling stock might be obtained from overseas sources? There is nothing in the Statement confirming that.

Reference is made to Sealink. Is it the intention of the Government that the ferry services will be sold separately? Or is it intended that both the ferry services and the docks will be proposed together? One is tempted to ask whether all the proposals on privatisation in this Statement might not meet the same fate as the Government's withdrawal of the private testing of heavy goods and passenger service vehicles, on which we have had no Statement whatever.

Lord Tordoff

My Lords, we are also grateful that the Statement has been repeated in this House. It is an important document. As already indicated by the noble Lord, Lord Underhill, it covers a wide range of issues, which makes it difficult (as the long list of questions that he has put shows) to handle a Statement of this sort in this way. I hope there will be an early opportunity to debate this whole subject, not just in relation to objectives of the chairman of British Rail but also the inter-relation between them and some sort of transport strategy for this country in the future.

British Rail will be glad to have some indication of the objectives that the Government wish to set for it. I doubt, however, whether they will be happy with some of the objectives in the Statement and the letter. We welcome the words on Serpell in paragraph 4. The paragraph is carefully phrased. It says that— It is not our intention that the board should embark on a programme of major route closures. Do the Government really mean that, or does the wording mean that the board should not embark on a major programme of route closures? There is a difference.

Does the Minister really believe that this Statement and the letter to British Rail will convince British Rail and its employees that there is a secure future for the railways that is both stable and hopeful? Like the noble Lord, Lord Underhill, I find the Statement very disappointing.

Does the noble Lord not recognise that the absence of any support for a significant electrification programme, which many of us have been awaiting for a long time from the Government, and the fact that there is still relentless pressure towards privatisation—in many ways, apparently, for its own sake—together with the overriding monetarist flavour of the document, make it an extremely disappointing and almost despairing document?

When we turn to industrial relations, mentioned in the letter to the chairman, does the noble Lord not agree that the greatest help to industrial relations on the railways would be to improve the morale of everyone involved by giving them some hope for stability, for a dynamic future and for development?

Lord Lucas of Chilworth

My Lords, I am grateful to the noble Lord, Lord Underhill, for his response, although I was a little disappointed by it. I am more particularly grateful to the noble Lord, Lord Tordoff, for his response. I should like to deal with some of the questions that have been raised. The noble Lord, Lord Tordoff, remarked that a Statement of this kind is very difficult to deal with, and that we should discuss it at greater length at another time. I am sure that the noble Lord recognizes that any arrangements along those lines must be made through the usual channels.

I can confirm that my right honourable friend the Secretary of State for Transport made an announcement in another place earlier this afternoon in regard to the PSO grant for this current year, 1983, in terms of £819 million plus adjustments. So far as the reduction of PSO by 1986 is concerned, the figure of £635 million is that which is contained in the board's own report and it was only after very careful consideration that the department came to the conclusion that a reduction to this figure, as set by British Rail for 1988, could in fact be achieved by 1986.

As regards the particular question on Speedlink, it is really for the board to develop Speedlink within the targets for the freight sector as a whole. It is a question of this type and an answer of the nature that I have given that demonstrate quite clearly the distance that the Government wish to have between themselves setting the objectives, and the board itself managing the railways in accordance with those objectives. It would not be right for the Government to say exactly how Speedlink should be integrated.

The noble Lord, Lord Underhill, spoke about rail safety. There can be no question—and I said this when we discussed the Serpell Report earlier in the year—of any reduction in the standard of safety. In fact the chief inspector's report which is to be published very shortly will show that last year has been one of the safest years on record. It would be the Government's intention and, indeed, the board's intention to ensure that such a safety record is maintained.

As regards rolling stock, it must be good sense for the board to be able to look at all avenues and all areas for replacement of stock. That BREL has expertise, there is little doubt; that BREL has excess capacity, there is also no doubt. So it is not here a question of privatisation as such of BREL. Indeed, the Statement does not say that; what it says is that BREL has to be looked at, and where other privatisation can be achieved with greater efficiency and at less cost to British Rail, then that should be done.

I can only repeat to the noble Lord, Lord Tordoff, in slightly different terms that which is contained in the Statement with regard to route closures—namely, that this Government stand by the manifesto commitment about there being no programme of major route closures. The noble Lord, Lord Tordoff, also mentioned industrial relations. It is a fact that much of the industrial relations agreements and arrangements are over 30 years old. There have to be changes in the industrial relations machinery but those are of course for the board and the unions to negotiate. It has been widely recognised that the present arrangements are inadequate to cope with the need for rapid and smooth change. The previous chairman of the board in fact described the present industrial relations as being "too damned slow." That is why the statement of objectives calls on the board to secure improvements in this area.

Baroness Gaitskell

My Lords, may I ask the Minister what proof he has that privatisation will increase the efficiency of the railways? I see absolutely none on these lines.

Lord Lucas of Chilworth

My Lords, I am sorry that the noble Baroness, Lady Gaitskell, does not see any improvement opportunities offered by privatisation. I cannot offer proof. What I can offer is the view that privatisation is another means whereby the same, similar or a better service might be provided. It is for the board to look at the opportunities where greater efficiency and lower cost—in other words, a better service to the customer—can be achieved by this means.

Baroness Gaitskell

My Lords, the Minister has proved to me that he cannot say that privatisation will improve the railways in any way at all.

Lord Hatch of Lusby

My Lords, I am not sure whether the Minister is old enough to remember privatisation. It is not very long ago since the railways in this country were all privatised—

Lord Mottistone

Question!

Lord Hatch of Lusby

My Lords, I do not have to ask a question; this is a Statement. Does not the noble Lord realise that the nationalisation of the railway network in this country has brought great benefits to the traveller? I want to ask him in particular whether he would expand or explain what seemed to me to be a specially menacing reference to the Conservative Party's manifesto. When he talks about there being no major route closures, those of us who live in the rural areas begin to get very concerned. It is not the major route closures that we fear. We are already suffering and have suffered for many, many years from the Beeching cuts and the minor route closures which still continue. Can the noble Lord tell us specifically where the Government stand on this matter? Do the Government regard the rural railway system as a public service for the social good of the rural inhabitants, or do they regard it solely as a commercial venture which must pay its way? If they take that latter view then further closures in the rural areas are inevitable.

Lord Lucas of Chilworth

My Lords, I am very much obliged to the noble Lord, Lord Hatch of Lusby for his very flattering remarks and so I will take shelter behind them and say no. Provincial services, which take care of the rural services, the cross-country services—all those services which are not in London or the South-Eastern sector or Inter-City—take up by far the most of the PSO grant currently put at £819 million for this year. So it would be quite wrong for there to be any assumption that the Government see the rural services as having to make a profit: that is not so. It is for the board itself to determine where such services are uneconomic and can be substituted in another way by other services.

The noble Lord referred to Beeching and the cuts. In the suggestions which we discussed when we debated the railways and Serpell, there were further guarantees with regard to any substituted service. It will be for the board itself to arrive at its conclusions and to present them to my right honourable friend the Secretary of State for approval in the event of any closure.

Lord Cledwyn of Penrhos

My Lords, in his letter to the chairman, the Secretary of State says that Sealink will be privatised as soon as possible. Is the noble Lord aware that in a letter to me three weeks ago Mr. Tom King, who was then Secretary of State for Transport, said that Sealink would be privatised before the end of this year? I assumed that that referred to this financial year and not to this calendar year. So if Mr. King was right, Sealink could be privatised before the end of April. I wonder whether the noble Lord could first clarify the position and tell us precisely what the Government have in mind? Secondly, would he deal with the question put to him by my noble friend when he asked whether ships and docks were to be privatised together or separately? Can he say whether the Government still intend to privatise Sealink as a whole or in part? Will it be possible, for example, to separate the Welsh ports from the English ports? Is he aware that there is a great deal of disquiet, worry and concern in Harwich, Holyhead, Fishguard and all the other Sealink ports because of the uncertainty of Government policy on this issue?

Would he ask his right honourable friend to go further than this tenuous letter and to publish a proper White Paper on privatisation, indicating precisely what is to take place in the railway ports of Great Britain, which have a long tradition of service to the nation? Is he aware that they do not deserve the treatment which is being meted out to them by the Government?

Lord Lucas of Chilworth

My Lords, I am sure that the noble Lord, Lord Cledwyn, will forgive me if I say that I had no knowledge of the letter to which he refers. The noble Lord will of course accept that, to us in the department, there have been fairly traumatic changes in the last fortnight with regard to our leadership—traumatic in that there have been changes of emphasis, changes of style. I very much regret to tell him that I am unable to enlarge at all on the letter to which he refers. As regards ships and docks, I shall certainly undertake to convey to my right honourable friend the request that the noble Lord makes.

Lord McIntosh of Haringey

My Lords, in thanking the noble Lord for that interesting insight into personal relationships within the Government, may I presume to probe a little closer into the exact status of this Statement and the letter to the Chief Executive of British Rail? Am I right in thinking that this is a Statement which is headed "Letter to British Rail", but that reference to the Serpell Report comes in the first sentence of the Statement? Am I not also right in thinking that the Statement and the letter cover some, but by no means all, the recommendations in the Serpell Report, some of them in detail?

If that is the case, may we take it that this Statement and letter are now the definitive Government response on the Serpell Report and that we can expect to hear no more of the Serpell Report from Government in directions to British Rail? We should be grateful to have the Minister's confirmation of that simple point.

Lord Lucas of Chilworth

My Lords, perhaps I may tell the noble Lord, Lord McIntosh, that the Serpell Report has always been considered by the Government to be a discussion document; it set out to examine various factors. There is nothing underlying the letter that my right honourable friend has sent to the chairman of British Rail enclosing the rather formal statement of objectives which should give rise to the thought that appears to be in the mind of the noble Lord. Lord McIntosh, that anything Serpell may have said in that report has been singled out in terms of recommendations. After all, we do not see Serpell as listing a number of recommendations; it discussed a number of options.

Lord Elwyn-Jones

My Lords, can the noble Lord elaborate a little on what may be the political consequences of the traumatic changes in emphasis and style which apparently the Government have been suffering recently? It is a most intriguing oberservation and we should like a little more light to be thrown upon it.

Lord Lucas of Chilworth

My Lords, I am sure the noble and learned Lord will recall that I said, "We in the department".

Lord Hatch of Lusby

My Lords, with great respect I do not think that the noble Lord has answered my question. I understand that these are guidelines from the Government to the British Rail Board. I have not had the advantage of reading the letter. I asked him specifically whether it is the Government's policy to regard rural rail networks as a social service or as simply a commercial enterprise. The noble Lord has not answered that question and I certainly was not confining my attention to the South-East. There are many rural areas outside the South-East that require a railway service a great deal more than the commuters of the South-Eastern area.

Lord Lucas of Chilworth

My Lords, I think that the noble Lord has misunderstood me, and of course I accept that it is probably my fault in not having explained the matter adequately. The rural services are necessary, but not necessarily in the same form in which we currently see them. I say "not necessarily"; it is for the board to decide. Certainly I said that of some £819 million PSO grant this year, the bulk will go to the provincial services which take care of rural services. I should have thought that if the bulk of £819 million of grant goes in that direction, it would be seen that the Government regard the services as being necessary and not as just a commercial enterprise—otherwise they would not grant-support them to that kind of level.

Lord Underhill

My Lords, I am sure that the House does not want to prolong this discussion but the noble Lord kindly answered my question by saying yes, a Statement had been made in another place that the PSO grant for the ensuing year was reduced to £819 million. Will the noble Lord confirm the actual reduction, whether that has been discussed with the board, and what will he the effect on next year's working?

Lord Lucas of Chilworth

My Lords, I did not say that there had been a reduction; I said that my right honourable friend had announced a PSO grant of£819 million plus adjustments, and that announcement was made in another place a short while ago. I regret that, due to the pressure of business in your Lordships' House, I have been here most of the afternoon awaiting the opportunity to make this Statement and cannot comment further on what my right honourable friend has said in another place within the past one or two hours.