HL Deb 20 May 1986 vol 475 cc154-64

4.14 p.m.

The Parliamentary Under-Secretary of State, Department of Transport (The Earl of Caithness)

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

"With permission, Mr. Speaker, I should like to make a Statement about the announcement British Rail are making to their trades unions at the Rail Council today about their future arrangements for manufacture and maintenance of rolling stock.

"We have set British Rail the objective of modernising the railway: to that end we have agreed a massive investment programme. Over £400 million of new rolling stock has been approved over the last two years, and some £700 million is planned to come forward over the next five years.

"As the House must realise, new modern designs of rolling stock require less maintenance and repair. For example, on average two of the new sprinter vehicles are able to replace three old DMUs and each one requires 30–40 per cent. less maintenance than its predecessor. So overall there is a reduction of 50–60 per cent. in the BREL maintenance workload for that service.

"Similarly the new Class 87 electric locomotives have much higher availability than the designs of the 1960s which they will replace. Again, two new vehicles will replace three old ones, each requiring less maintenance; so again there is a dramatic fall in workload.

"As a result, capacity reductions within BREL have been occurring for a number of years. I regret to have to tell the House that the same factors of workload reduction are the major reason for BREL's announcement to their unions this morning that they expect further job losses over the next three years. These are the subject of the normal processes of consultation with the unions.

"BR announced in January that a new build and heavy repair group would be set up and separated from maintenance and repair and that the latter would be brought closer to the operation of the railway.

"The main elements of the new build and repair group are Crewe, York and the two works at Derby. Here the numbers employed will to some extent vary with the orders obtained—and some export orders are coming through—but there is expected to be some decline in employment as lighter maintenance work is transferred elsewhere.

"In the maintenance group of works, BR's proposals are as follows. At Eastleigh BR believe that productivity can be improved and overheads reduced sufficienty to enable the works to continue with its present job of refurbishment and heavy overhaul of Southern Region third rail electric stock—but over the next three years up to 500 jobs may go.

"Doncaster will continue to carry out wagon manufacture and wagon overhauls, and will also become a major maintenance depot for locomotives and other rolling stock. Doncaster will also become the site for BR's new national store for supplying spare parts to BR depots. Together these proposals mean lower levels of employment at Doncaster—down over the next three years from the present level of 3,100 to between 1,430 and 1,690.

"Wolverton will become a major maintenance depot for a wide range of coaching stock, and as an interim measure will complete its programme of electric train refurbishment. But over the next three years employment there will decline from the present level of 1,900 to between 650 and 850. Glasgow Springburn will become a regional maintenance depot for ScotRail with jobs for about 200 people. Job losses in regional depots will amount to about 300 a year, as was envisaged in BR's 1985 plan. Thus BR's new estimate of manpower requirement points to reductions of between 4,200 and 5,000 jobs in BREL over the next three years, together with 1,750 previously notified to the trades unions.

"Both the Government and British Rail are deeply conscious of the consequences of these changes for a large number of staff and their families. The board intend to appoint a senior director to co-ordinate measures to help those affected by the changes. He will work with BREL in redoubling their efforts to find alternative employment both within and outside the industry for those displaced, and to develop retraining programmes. British Rail will be recruiting some 20,000 people over the next three years to jobs in all departments of the railway. BR will also be approaching the local authorities with a view to setting up, or supporting, in each area a suitable development agency on the lines that BREL has done with considerable success at Shildon, Horwich and Swindon. They will provide financial and other support through these agencies for job creation schemes."

My Lords, that concludes the Statement.

Lord Underhill

My Lords, I am certain that the House will be grateful to the noble Earl for repeating the Statement. However, I think all noble Lords will appreciate that this is one further devastating blow for British Rail Engineering Limited, and not only for BREL, but also for the towns concerned, bearing in mind that most of them are already suffering from very high unemployment and from lack of manufacturing employment. I think this is the third year that we have had an announcement in Parliament on cuts in BREL. I believe we were told in 1985 that the announcement made then was expected to be the last on any cuts, but now we have this further announcement today.

I understand that in 1981 the staff numbered 35,000. Today the figure is about 22,000. With the cuts of 1,750 which the Statement says were announced previously to the trade unions, plus the 4,200 to 5,000 jobs announced by this Statement, the staff of BREL will be reduced to some 16,000, a reduction of well over 50 per cent. in a period of just a few years.

The Statement refers to the fact that over the next three years British Rail will be recruiting some 20,000 people to various jobs; but it does not say what kind of jobs these will be. One must bear in mind that the BREL staff consists mainly of skilled personnel—personnel with great design experience and expertise. There is little in the Statement about the manufacturing side. When a Question was asked in your Lordships' House recently on sprinters or super sprinters, or both, I referred to the fact that some 2,000 DMUs were required to replace stock which was constructed in the 1950s and early 1960s. These need urgent replacements.

The Statement suggests that the maintenance section is to be brought closer to the operations of the railway. I cannot quite understand that; I thought that this was so already. But why not bring the build closer to the operations of the railway, or have the Government given up hope of BREL and lost their confidence in the expertise displayed by the BREL staff hitherto?

Is it correct that in addition to the DMUs that have to be replaced there is urgent need for the Freightliner wagon fleet to be replaced? Is it correct that some freight business is being lost because of the lack of replacement of the Freightliner wagon fleet? Why not have a phased manufacturing programme for BREL? Why not decide over the next few years to have so many replacement DMUs and so much replacement of wagons, instead of relying on vague market forces to deal with the situation?

There is also to be a Channel Tunnel with fast passenger trains and fast freight trains. Are the Government preparing to use BREL for that development, or is it not considered worthwhile to look so far ahead? We are told also that the numbers employed on the new build section depend on new orders. I have said that that can be done by proper phasing and proper planning, using BREL as a building unit. Is it correct that despite all the expertise in BREL it has succeeded in obtaining only 30 per cent. of the international orders for which it has applied? If so, how can that position be improved?

The Statement mainly concentrates on the question of maintenance and repair. Can we really rely upon the statements in the document which were repeated more than once that less maintenance will be required on new equipment? Some of us can recall that it is not so long ago since maintenance was cut in some regions—in the South-East region by as much as one-third—with disastrous consequences. The unions and their personnel have co-operated in productivity. I do not think that the Government will deny that.

The Statement says that this announcement was discussed with the trade unions today. Can we be told what was the response of the trade unions? The whole Statement seems to be a tragedy for BREL, a tragedy for the towns concerned and a tragedy for the expertise of the personnel engaged in BREL at the present moment.

Lord Tordoff

My Lords, while thanking the noble Earl the Minister for repeating the Statement perhaps I may say that we on these Benches view it with considerable sadness, as one must when manufacturing jobs are once again disappearing in this country. I should like to probe one or two points in addition to those made by the noble Lord, Lord Underhill. The first is the question of export orders. The Statement is very laid back on the subject of export orders. There is no indication that the Government intend to do anything to assist British Rail in obtaining further export orders. What is holding back BREL from obtaining further export orders? Is it credit, or are there other problems?

There is a curious statement about Doncaster which I frankly do not understand as the logic of it does not seem to hang together. With something of a flourish the Statement says that Doncaster will continue to carry out wagon manufacture and overhauls, that it will also become a major maintenance depot, that it will also become a site for British Rail's new national store for supplying spares, and that together these proposals mean lower levels of employment. There seems to he a certain lack of logic there in that employment will go down over three years from the present level of 3,100 to between 1,430 and 1,690. What will happen to those places that do not get new business? It is deeply depressing.

There are one or two points in the Statement that one has to applaud. I refer to the appointment of a senior director to co-ordinate measures to help those affected by the changes. One desperately hopes that these will be as effective as some of the measures taken by British Steel have been. But in relation to the recruitment of 20,000 people, is there any intention to give priority to the people who are being laid off at the moment, or is it likely that the 20,000 jobs, as the noble Lord, Lord Underhill, has suggested, will be less skilled than the jobs that are going for the time being?

Finally, may I say that at the back of all this is the fact that the Government have been putting British Rail under considerable financial pressure for a number of years and that perhaps a little less stringency in that direction might help the situation until times are rather better? With the right honourable gentleman the Secretary of State in another place saying yesterday that something like £800 million of railway orders for the Channel Tunnel were being held up by delays in the progress of the Channel Tunnel Bill, would it not be wise just to hold back some of these redundancies until we know what is the position on the Channel Tunnel?

It is a depressing Statement. Certain measures are being taken to try to alleviate the situation, but at the end of the day it is another massive attack on manufacturing industry in this country.

The Earl of Caithness

My Lords, I am grateful to the noble Lords, Lord Underhill and Lord Tordoff, for their welcome of the Statement—

Lord Tordoff

My Lords, with all due respect to the noble Earl the Minister—and I wish him no harm—we do not welcome the Statement. We are grateful to him for repeating it.

The Earl of Caithness

My Lords, I apologise to the noble Lord. That is a more accurate description. That is what I was trying to say.

The noble Lord, Lord Underhill, asked me a number of questions. He asked me whether the Government had lost confidence in BREL. The answer is certainly not, and nor have British Rail; but it must adapt to the changing circumstances in which it has found itself. As the noble Lord will know, there has been a substantial inquiry and a discussion about the future of BREL, and we hope and look forward to seeing a vibrant BREL from now on. The noble Lord asked me about replacement DMUs. This is already taken into account in the £700 million for further rolling stock which I mentioned in the Statement.

I am grateful to both noble Lords for raising the question of the Channel Tunnel because this is an opportunity for BREL in the future. Many hundreds of millions of pounds worth of work is available for British Rail and for BREL within the figures, and I would very much hope that both Opposition parties would seek to extol the advantages of the Channel Tunnel and the opportunities that this can give to BREL.

With regard to export orders, the present export order book stands at some £34 million. BREL is making a major effort on this front. Last year it put in for some £580 million of tenders and indicative bids, and the staff made more than 400 trips overseas. I am pleased that as a result of the work that BREL is doing we have good news in that it has just won a £5 million contract with China.

So far as concerns the Government, we are offering encouragement in every way that we can through visits overseas. Indeed, when I was on a shipping visit to Greece I also saw the appropriate Minister with regard to railways. As the House will know, we have given a £700,000 grant to help develop the international coach, but as the House will know also, the export market is a fiercely competitive one—but we are pleased with the new initiatives of BREL.

The noble Lord, Lord Underhill, asked about the trade union response. I hope that it will be a positive response, to work with the director appointed by BR to examine what further help can be given. BR are proposing that a further £3 million be spent to help local development agencies which, as the noble Lord, Lord Tordoff, said, have been successful elsewhere. The sooner that the unions and BR work together with the local authorities, the easier it will be for everybody.

The noble Lord, Lord Tordoff, asked about the 20,000 people BR will take on in the next three years, and whether, if there are suitable jobs, those who are unfortunately made redundant now will be able to take up some of those 20,000 jobs. I am sure that BR will be the first to encourage that.

4.30 p.m.

Lord Dean of Beswick

My Lords, having listened to the Statement repeated by the Minister, I ask whether he does not understand that the trade unions representing those employed in BREL and on the railways in general are incessantly being told that these will be the last jobs reductions and that if the redundancies are accepted, it will make the railways fitter, leaner, and more able to compete? The trade unionists I know who work in the industry will not accept that it is the final answer, because they have been told that before.

I should like to put one or two questions to the Minister. It is true, as the noble Lord, Lord Tordoff, said, that the statement regarding Doncaster has a double meaning. It begins by painting a glowing picture of the future, but the end result will be that the workforce will be cut by 50 per cent. That is in an area that already suffers extremely high unemployment levels. South Yorkshire has some of the highest unemployment in the country. I believe that the same can be said of Springburn in Scotland.

What is behind it all? The Government consistently tell us, Ministers tell us, the Prime Minister has been telling us recently, and so has the Secretary of State, that high wages are the cause of the job losses in manufacturing industry. I would be surprised if many of the people employed in the manufacturing section of British Rail enjoy high wages compared with other industries. I say with a great deal of sadness, as an ex-engineer who used to make steam locomotives many years ago, that the people now being made redundant will not, if my information is correct, enjoy the greatly enhanced redundancy payments that the NUM is able to negotiate, or that the people representing steel workers can negotiate.

Some employees will have spent a lifetime working in railway engineering workshops, working on behalf of the community. In comparative terms they will draw very poor redundancy payments. I say to the noble Earl that both he and the Government must stop hiding behind the facade of retraining. What will an adult who has been trained as an engineer do when he is thrown on the scrap heap? What will he retrain as? Will it be for the great vista of service industries that the Secretary of State for Employment keeps mentioning? Are we really to believe that engineers of more than 40 years of age or 50 years of age will want to retrain as wine waiters or waiters for the tourist industry? That is a lot of nonsense. They already have a special expertise that is being thrown on the scrap heap. I wish that, just for once, the Government would view the matter in its proper context and not try to disguise a very bad cake with attractive icing.

Lord Taylor of Gryfe

My Lords, this is a very sad Statement. Last week we heard about British Shipbuilders and—

Lord Stoddart of Swindon

My Lords, what is the Minister's answer to my noble friend?

The Earl of Caithness

My Lords, perhaps I may respond now to the noble Lord, Lord Dean of Beswick, and clarify the point about Doncaster. The existing work is declining, as the noble Lord knows and as the House knows. However, there are three facilities that will be located there. One is the wagon building, which is part of the new build group. The second is the national store. The third is a light maintenance depot. Those will help to stabilise the position at Doncaster in the future. If there were not those facilities, the situation might be even worse than that about which I have had to tell the House today.

With regard to the continuing decline that the noble Lord mentioned, it is very difficult to have it both ways. If one wants to have a modern railway with modern rolling stock that lasts longer and requires less maintenance, it is very difficult in those circumstances to continue employing a workforce of the same size as previously, when there is not the work there for it.

Lord Taylor of Gryfe

My Lords, I was saying that this is a sad Statement. Last week we had a loss of jobs in British shipbuilding, which is another traditional industry of this country. Today we are faced with further redundancies in the railway building industry, which is an industry with a proud tradition and a long record, whose locomotives are operating in all parts of the world and particularly in the former colonies, in the Commonwealth.

It is rather different from shipbuilding in so far as in attempting to attract orders for shipbuilding we inevitably have to compete on an international basis, while in the case of railway building we are in control of the market. British Rail engineering workshop is the 95 per cent. supplier to British Rail, and therefore we have a special responsibility. The programme of £400 million for new rolling stock over the past two years is not adequate; neither is the promised programme of £700 million spread over the next five years. I regard that as being wholly inadequate.

It might be acceptable if we had a modern railway, but we do not have a modern railway. We have a great deal of clapped-out stock. We have DMUs that are more than 20 years old and require replacement. If one makes comparisons of the investment programme of £700 million spread over five years with that of any Continental railway, one sees how far short we are in our investment programme. It would be far better to invest in building new railway stock to provide a better infrastructure in a modern railway system than to pay unemployment benefit to people for doing nothing.

I ask the Minister this question. New agencies are to operate with existing agencies in attracting new employment. That is becoming a somewhat crowded field. The British Steel Corporation has its own agency, the coal mining industry has its own agency, and last week in regard to shipbuilders a new agency was announced for attracting employment. I ask the Government to look at that aspect, because it will result in many people spending a lot of time advertising the advantages of this and that to the benefit only of advertising and public relations agencies. It would be far better to boost the existing agencies, such as the Scottish Development Agency, rather than cut them at this stage; otherwise there will be duplication in attracting new employment.

Springburn is at the heart of the railway industry, and it has a tradition. It is to be cut to 200 jobs, and yet regional aid in Scotland was cut by 50 per cent. last year. What sense does it make to set up these little individual agencies when the overall grant for regional aid is being cut in the areas to which I have referred? I should like to ask the Minister about the 20,000 jobs. It is no fun sacking skilled railwaymen and increasing jobs selling hamburgers at the Casey Jones in Victoria station. We ought to be looking at making use of those skills.

I shall make one other remark; it is to ask whether the Statement that has just been made has any relevance to the proposed privatisation of BREL, because I understand that BREL is one of the candidates for privatisation. If so, it means that the taxpayer is picking up the tab for the redundancies in order to make it an attractive proposition to the investment institutions, which take a very limited and short view on financial returns from investment. Will the noble Earl reconsider this question of privatisation with a view to retaining BREL as a business with some social responsibility?

The Earl of Caithness

My Lords, British Rail does want to make use of the very high skills of its work force wherever possible. I am sorry that the noble Lord saw fit to criticise BREL's efforts, which have been of enormous success at Shildon and Horwich.

Lord Taylor of Gryfe

I am sorry, my Lords, but the Minister seems to have misunderstood my comments; maybe it was my fault. I have a deep affection for BREL and for British Rail, which I served for 11 years as a member of the board.

The Earl of Caithness

Yes, my Lords, but as I was trying to point out, the noble Lord seemed to be criticising BREL's efforts in seeking to work with local development agencies because there would be too many of them. I think that we need to give every support to BREL for the management and the unions to work together with the local development agencies in this matter, because I am sure that that is the right way forward. With regard to privatisation, as the noble Lord will know, that is a completely separate issue and British Railways believe that the restructuring of BREL is needed irrespective of the future ownership of the company.

Lord Marsh

My Lords, will the noble Earl not agree that the contraction of British Rail Engineering has been taking place over the last 20 years under different governments and that the reason for this represents one of the basic problems of British manufacturing industry? Most of the British Rail Engineering workshops are well over 100 years old, are totally uneconomic and are designed for vehicles which bear no relationship to those which are manufactured today. Indeed, had we been able to modernise and rationalise those workshops many years ago, more people might have been earning more money as a result of their production today.

The Earl of Caithness

My Lords, I am grateful to the noble Lord, Lord Marsh, for those comments. I think that there is a great deal of truth in them. This is one of the problems of trying to achieve a modern railway with modern rolling stock; inevitably, alas, it will lead to reconstruction.

Lord Stoddart of Swindon

My Lords, is the noble Earl aware that over the past 10 to 15 years the employees in British Rail Engineering have indeed improved their productivity considerably, and the net result, certainly in Swindon and elsewhere now, has been the loss of jobs? Surely the problem is that the Government and British Rail are seeking to cater not for an expanding railway system, but for a contracting railway system. In fact, were they looking, as I believe they should be, for an expanding railway system, there would indeed be greater need for the British Rail Engineering jobs and facilities. Is the noble Earl further aware that after the decision was taken to close the Swindon railway workships it was discovered that there was not sufficient foundry capacity throughout the country to provide castings for British Rail itself and the foundry had to be reopened? Can we be assured that capacity in other railways workshops will not be closed so that British Rail will then find itself without the components with which to continue to run the railway?

Finally, may I ask the noble Earl to answer properly the question that was put to him by the noble Lord, Lord Taylor of Gryfe? Is it not a fact that in accordance with the Serpell Report the Government are now hiving off the new build capacity in preparation for selling it off or privatising it? Will that not be bad for British Railways and bad for the taxpayer? We need an answer to that question.

The Earl of Caithness

My Lords, I have given the House an answer to that precise question of the noble Lord, Lord Taylor of Gryfe. I agree with his question—one of his many earlier questions—with regard to improved productivity by BR, and this is noticeable in an improving rail service. I do not think that he can accuse this Government of reducing the railways in any way whatsoever.

4.45 p.m.

Lord Harris of Greenwich

My Lords, I should like to ask the noble Earl about the agencies at Shildon, Horwich and Swindon which have been established by BREL with the support of the local authorities. The Statement referred to their success and that point has been repeated this afternoon. Can he tell us how many new jobs have been created in each of these three areas?

The Earl of Caithness

Indeed, my Lords; I am grateful to the noble Lord, Lord Harris of Greenwich, for asking the question so that I can explain the situation to the House. At Shildon so far 710 jobs have been found and the potential is to rise to 1,900 over the next two to three years. At Horwich the figure is 374 jobs and the potential will rise to 500 over the next two to three years. Unfortunately, Swindon was a late starter because, I have to say with regret, the unions did not talk to BR who could therefore not talk to the local authorities. However, discussions are now under way. At long last they have got their act together, as it were, and we are hopeful on this front too. That is why I say that if the unions and management can get together as soon as possible and talk to the local authorities and the local development agencies, we may hope for much quicker results.

Baroness Elliot of Harwood

My Lords, I speak as a customer of the railways. I do not think there is anyone in your Lordships' House who travels up and down on railways as much as I do—that is to say, twice a week almost every week. I am very keen on the railways and devoted to the staff of the railways who are always most obliging and most kind, and of course I am in the happy position of knowing personally a great many of them simply because I travel so frequently.

I should like to ask the Minister whether the cuts will mean fewer trains? The other day I had to travel fairly late in the evening on the Glasgow express from Birmingham to Carlisle. The train was absolutely packed and there was not a single first-class carriage. That did not matter very much and I did finally get a seat. The trains can be used, are used, and should not be cut down.

I come to my second point. If new railway stock is to be built—and I am not talking about engines because I know nothing at all about them but I do know about compartments, in particular sleeping accommodation—may I suggest that the railways ask the consumer for advice about design? The consumer knows something about comfort in compartments and sleepers and about how it could be improved. I should like to suggest that if there are to be new designs, the consumers should be asked to give advice on them.

The Earl of Caithness

My Lords, I think that both the questions of my noble friend Lady Elliot of Harwood are detailed matters for BR and I shall be happy to make sure that they are passed on to them. As a regular user of the railway the noble Baroness will realise that there has been substantial capital investment which has led to new and better rolling stock and engines and that there has been no shortage of investment under this Government.

Lord Parry

My Lords, as a footnote to the debate—I am sorry, I mean to the Statement; it is so easy to fall into these traps—may I ask whether the noble Earl the Minister will accept that a comparatively short while ago in Wales, for the best of reasons, a whole series of mineral train networks were paying off men and closing down and that those mineral railway networks are now the great little trains of Wales and the stock-in-trade of a new industry?

As the noble Baroness said, over the next few months the trains will be increasingly crowded as they carry tourists from one part of Britain to another and it is essential that the communities at which they end up are supported and sustained. Is the noble Earl satisfied that the level of payment mentioned in the Statement is likely to make up to a community what it loses by the closure of a rail network or the paying off the majority of its workers?

The Earl of Caithness

My Lords, with due respect, the noble Lord's comments bring us into a far wider ambit and concern the whole of British Rail and the network rather than BREL specifically.

Lord Underhill

My Lords, although naturally in our questions on the Statement we are mainly concerned with the position of BREL, the question asked by the noble Lord, Lord Harris of Greenwich, is important. We are dealing with human beings who are being displaced. May I take it that the figures that the noble Earl gave for Shildon and Horwich are new jobs for what were BREL personnel? Can he or the Secretary of State for Employment place in the Library a list of those jobs?

The Earl of Caithness

My Lords, I do not have the precise details for which the noble Lord asks, but I shall look into the matter for him.