HL Deb 17 July 1989 vol 510 cc618-23

6.5 p.m.

The Minister of State, Scottish Office (Lord Sanderson of Bowden)

My Lords, I beg to move that the Bill be now read a third time.

As no amendments have been tabled at this stage of the Bill's proceedings, I should like to remind noble Lords of the main purposes of the legislation. The first is to make provision for the privatisation of the Scottish Bus Group. The Bill gives the Secretary of State the power to draw up a disposal programme for this purpose. In doing so, his main objective will be to promote sustained and fair competition in the bus industry.

Deregulation has introduced a competitive market and has made bus operators more efficient and responsive to their customers. Bus services have been increased and new types of service, such as minibuses, have been introduced. Rural services have been broadly maintained. There is therefore no reason to delay completion of the process of ending public ownership and control in the industry. We wish to replace a large, dominant public sector bus operator with nine independent operating companies, together with Scottish Citylink and the SBG Engineering company.

A second objective of privatisation is to encourage wider share ownership in the bus industry. Noble Lords will by now be familiar with the measures we intend to take to promote employee participation. We shall be giving financial assistance with the development of a management-employee bid in each company. I am encouraged by the interest which is already being shown by management and employees in the subsidiary companies in developing bids. We shall also give a preference, when considering bids, to those where the shareholding arrangements provide for a significant element to, be held by employees. We hope that these measures will not only increase share ownership but will also help to further the competition objective by enabling independent locally based companies which are responsive to local needs to be established.

Whatever the shareholding arrangements, however, no overriding preference can be given irrespective of the price offered. The Government will require to account properly for the disposal of the bus companies which are public assets and a bid will only have a good chance of success if a realistic price is offered.

The Bill provides for a statutory disposal programme to be drawn up. This will be published. The programme will set out the units to be offered for sale, the timetable and the arrangements for inviting and considering bids, including the basis on which a preference will be given to bids involving significant employee participation. Other matters will include the safeguards to be applied to property disposals—a subject which has exercised many noble Lords during the passage of the Bill—and on preventing a single buyer from purchasing too many bus companies, both of which are matters the Government take most seriously. The disposal programme will also deal with pensions and employee travel concessions arrangements.

It is not yet certain when the disposal programme will be published or when sales will begin. The disposal programme will however be published as soon as possible after the legislation comes into force. On this basis it is likely that offers of companies for sale will begin around the end of the year, and we would expect the disposal programme to take about a year to complete.

The other main purpose of the Bill is to provide for the transfer of the ownership of Caledonian MacBrayne to the Secretary of State. The decision that Caledonian MacBrayne should become a company owned in the first instance by the Secretary of State reflects the fact that it is a company providing life line ferry services on the west coast of Scotland which, taken overall, are not profitable and require a subsidy of about £6 million a year

A new board for the company will be appointed consisting of around six to nine members. They will have a wide spread of commercial and shipping experience and will include some people with first hand knowledge of the islands served. The Government will wish island residents to be among those appointed to the board. No options for the longer term will be ruled out from consideration by the new board but there is an overriding proviso that any future arrangements must ensure that at least the present quality of service to the islands is maintained.

The board will, in the first instance, be asked to look at the possibility of transferring the Gourrock-Dunoon and Wemyss Bay-Rothesay services to the private sector. It will also be asked to consider whether the ferry company's headquarters might be moved closer to its main area of operation.

In Committee we made four small but necessary amendments to ensure that the Bill can achieve its objectives. Once the bus companies have been disposed of and Caledonian MacBrayne has been transferred to the Secretary of State's ownership the Scottish Transport Group will be wound up.

The Bill is an important measure for the people of Scotland. It will lead to more competition in the bus industry and an opportunity for those who work in it to seek to participate in its ownership. It will enable a new board to be appointed for Caledonian MacBrayne with the power to re-examine the basis of the company's operations to see how they can be improved to the benefit of the islands.

In conclusion, I should like to put on record my gratitude to the noble Lords, Lord Carmichael of Kelvingrove and Lord Tordoff, and the noble Earl, Lord Perth. Their contributions during the Bill's passage have been carefully studied by myself and my colleagues. I warmly thank them. I beg to move.

Moved, That the Bill be now read a third time.—(Lord Sanderson of Bowden.)

Lord Carmichael of Kelvingrove

My Lords, I should like to thank the Minister for piloting the Bill through the House, he knows that the measure is not popular on this side of the House. We have grave doubts about whether it is the proper way to go about improving services in Scotland. But the Minister has been most patient in his explanations and in his attempts to satisfy us on some of the points we raised.

As the Minsiter said, the Bill has a number of purposes involving the privatisation and disposal of the assets of the Scottish Transport Group. He suggested that competition would be the saviour of the Scottish bus industry. We do not know enough about that yet. We had deregulation some time ago: it is undoubtedly working well in some areas. In other areas it is not working as well. I am sure that the Minister's attention has been drawn to the comments made recently by the CBI in Scotland. It feels that although there may be a number of buses on the roads, there is insufficient timetabling and knowledge of where the buses are going. Those are points that we made during the Bill's passage.

Mr. Davis, chairman of the CBI in Scotland, made the point that the buses merely stated, "We are going your way". That is not terribly helpful unless everyone on the bus is going in the same direction. That is the type of thing that is happening. I do not know which bus is going where in Glasgow. I do not know the route. I may know that it is going from Milngavie to Easterhouse, but I do not know whether it is going down Broomielaw, Sauchiehall Street or where. If I get on at an intermediate stop, it is difficult to find out where the bus is going. I hope that the new companies will pay attention to that.

The mini-buses have so far been a success. As the Minister is probably aware, there has been great scepticism throughout the bus industry for the past 10 to 15 years about the viability of mini buses. I was convinced that mini buses had great disadvantages. We do not know whether a proper mini bus has yet been evolved. It must be one that will last the pace. That is the big question. An ordinary bus or coach would be good for 15 years, but we have not had 15 years to test whether mini buses can last the pace. If they do not, the capital side of the equation will be considerably damaged.

I support wider share ownership to an extent. I am worried when employees put all their nest egg in the same company. That is always a great danger. It means that they will probably try harder, but when the winds of change inevitably blow they may lose everything. That is always a worry.

I am glad that the Minister took to heart the points made by myself by the noble Lord, Lord Tordoff, and by the noble Earl, Lord Perth, about realistic prices and, in particular, safeguards for property. As the Minister is aware, we have a fairly agile and investigative press in Scotland, and that point is something we shall be watching with great care.

The Minister said that he hoped that one buyer would not have too many companies under its control at the end of the day. I am worried about the interpretation of "too many". He knows the type of groups about which I am speaking. It is something we obviously need to be careful about. From the information I have received from employees, it would seem that the pension arrangements are reasonably acceptable. I hope that that is the case.

We all know in Scotland how vital CalMac is despite the fact that it is regarded as a benevolent Aunt Sally by everyone on the west coast of Scotland. It is such a vital lifeline that it must improve rather than reduce the services it gives to the islands.

I have much less experience than anyone living in the islands, but as someone who uses the service frequently I do not believe that it is too bad. It may be that I have a lowlander's romantic view on boarding a CalMac boat to the Western Isles. I am glad that the Minister and the Secretary of State have taken it upon themselves to ensure that the service and the quality will be maintained and, if possible, enhanced as time goes on.

Whether the headquarters are in Gourock or Oban is something that I am sure the Minister and the Secretary of State will examine carefully. I have no preference so long as the service is maintained.

Although we have not spent as much time on the Bill as we should have liked due to the psychological pressure that there is on us at the end of the Session to ensure that we get things through, we have done a reasonably good job in obtaining assurances from the Minister. We sharpened up the points made in another place and throughout Scotland to which the Minister and the Secretary of State will have to pay heed as the privatisation and the disposal go ahead. In the meantime, I again thank the Minister and all those who have helped put through the Bill.

Lord Tordoff

My Lords, perhaps I may make a short intervention. As I see that the people dealing with the Irish business tonight are now in their places, I can be brief. Whether they will be is a different matter. It is normal in your Lordships' House for transport matters to be dealt with by about four people, two of whom are here tonight. It is nice to welcome the noble Lord, Lord Sanderson of Bowden, to transport discussions. I am grateful to the House for having made me an honorary Scot for the purpose of the Bill. I have not found it necessary to call for simultaneous translation at any stage, for which I am most grateful.

I wish to add my thanks to those of the noble Lord, Lord Carmichael of Kelvingrove, for the way in which the Minister has dealt with the questions brought forward during the course of the Bill. I do not pretend that this is a Bill which we regard with glee. I believe that it contains within it the seeds of its own destruction. But only time will tell. I suspect that the price will have to be paid by the people of Scotland. However, we shall see what happens in due time when it will be no help for anyone to say, "We told you so".

A couple of points have emerged which are of benefit, one of them to my honourable friend in another place, Mrs. Michie. As I said at an earlier stage, my honourable friend is pleased that jobs will go to Oban, although that is not universally supported throughout the length and breadth of this House nor throughout the length and breadth of Scotland.

Secondly, the employee shareholding has been dealt with in a way which I believe to be much better than in the English version of the Bill. I hope that the Government have learnt something from the traumas which we had when the Bill was going through the House and from subsequent experiences.

In relation to asset stripping, dealt with at some considerable length in the course of the Bill, I am most grateful to the Minister for the way in which he has offered reassurance. I hope that what he has said will transpire. As we have said several times asset stripping has been a serious problem in England. It would be a great mistake if asset stripping were allowed to take place and if facilities for passengers were reduced simply in order to put money into the kitty for the large companies which may eventually build up monopolies in this field.

Having said that, I am most grateful to the Minister for the way in which he has handled the Bill and for the courteous manner in which he has dealt with all our questions. Reluctantly, we shall allow him to push the Bill on its way.

Lord Sanderson of Bowden

My Lords, I am grateful to both noble Lords, Lord Carmichael of Kelvingrove, and Lord Tordoff. I am very glad to welcome the latter as an honorary Scot for the purposes of passing the Bill through. First, perhaps I may deal with the points raised by the noble Lord, Lord Carmichael—particularly local bus services and the timetabling thereof. The department involved, the Scottish Development Department, is concerned about this. We are looking at possible ways of improving the situation. It may be that CSLA will be able to bring together the transport authoritites and bus operators to discuss how the improvement can be achieved. We have invited them to consider the suggestion to see whether we can make some improvement.

I am glad that the noble Lord welcomed the minibus services which are becoming very popular, particularly since they can penetrate housing areas with frequent services. Although minibuses have a shorter life than conventional buses, operators appear to find them operationally satisfactory. We believe that this is a very satisfactory situation.

As regards pensioners, I am glad that the noble Lord also seemed to get the impression that employees were satisfied. I understand that meetings of the members of the STG pension schemes have approved changes in the rules of the pension schemes to protect the interests of members. That is also very satisfactory.

As concerns the location of the headquarters, I made it very clear that the role of the new board would be to decide where the headquarters would be. I shall not enter into discussion on whether Gourock or Oban should be the place. However, I notice that the noble Lord, Lord Tordoff, was tempting me to do so.

Perhaps our most important achievement during the passage of the Bill through the house has been to underline the importance that we all attach to employee participation. I understand the attitude of the noble Lord, Lord Carmichael of Kelvingrove, that for those who put all their savings into the company for which they work it could be detrimental. However it is important that employees should be given a chance at least to put some of their savings into the business in which they work. We hope that it will be possible in many cases in Scotland.

I am sure that if the noble Lord studies what I said in answer to his questions at earlier stages in regard to those companies which may well win the various contracts, he will know that the Government share the feeling that we do not want too much of this industry in Scotland to be under the control of a few people. I have nothing else to say other than to reiterate my thanks to noble Lords who have taken part.

Read a third time, and passed, and returned to the Commons with amendments.