§ 5.40 p.m.
§ The Minister of State, Department of Transport (Lord Brabazon of Tara)
My Lords, I beg to move that this Bill be now read a second time. I am pleased to be able to present to your Lordships a short and straightforward Bill which contains only three clauses. It does two things: it raises the statutory limit on the British Railways Board's outstanding indebtedness, and it sets a new ceiling on the public service obligation grant which can be paid to the Board by the Secretary of State.
The Bill illustrates the Government's anxiety to ensure that British Rail has the resources it needs to provide an attractive and efficient railway system, and to maintain its current record levels of investment. This investment is financed in a number of different ways. Partly it is funded from internal receipts. These come from passengers and freight customers and from the sale of property and other assets. We also fund much of BR's investment in the supported passenger sectors through PSO grant. But the rest has to be funded through borrowing.
Each year, we set BR an external financing limit, or EFL, for the following year. That limit is the total of BR's grant and borrowing requirements, and represents the total call which the board is making on the overall total of public expenditure which my right honourable friend the Chancellor is able to make available. It is announced each year by him in his Autumn Statement.
In his last Autumn Statement, my right honourable friend announced that BR's EFL for 1991–92 would be £1,122 million. This was already the highest EFL 821 which BR had been given for a number of years. It was over 50 per cent. higher in real terms than the EFLs set for the two previous years, even after taking account of the increases made in those EFLs part way through each year. That reflected the needs of BR's growing investment programme.
By the spring of this year, however, it was becoming clear that the downturn in the economy was having a serious effect on BR's revenues, and the board came to us with a request for an increase in its EFL. After considering BR's financial requirements in some detail, we reached the conclusion which my right honourable friend the Secretary of State announced on 19th June—an increase of £400 million to £1,522 million. At the same time, he announced that he would not be requiring BR to meet its £316 million overshoot on last year's EFL from this year's provision, as would normally be required. This announcement therefore represented an increase of over £700 million in the resources available to British Rail—a very generous figure, given all the competing pressures on public expenditure. The revised EFL of £1,522 million is 50 per cent. higher than the out-turn for 1990–91. And it is double the out-turn for 1989–90 even after allowing for inflation.
We are now taking the necessary steps to ensure that BR can take full advantage of the revised figure which we have announced. We have already sought provision in the Summer Supplementary Estimates for additional PSO grant of £185 million, taking the total for the year to £743 million. We also have provision for about £23 million of level crossings' grant. So we will be paying BR at least £766 million in grants in this financial year. It may be more than that.
Clause 1 of the Bill deals with the borrowing side of the equation. Ever since the British Railways Board was established by the Transport Act 1962, its borrowing powers have been subject to a statutory limit. It is important to understand what this limit is. It is not a limit on the board's borrowings in any one year. The statutory limit is a limit on the aggregate amount of the board's outstanding debts at any point in time. Each year BR takes out new loans from the National Loans Fund to fund part of its investment programme. Each year it also makes repayments on loans which have been taken out in previous years. It is the net effect of all these transactions which determines the board's aggregate outstanding indebtedness at any point in time.
It is common practice for the statutory borrowing limits of nationalised industries to be set in two stages, with an initial limit prescribed in the Act of Parliament concerned and a second, higher limit which can be introduced by order subject to affirmative resolution of the House of Commons. The two limits in the BR legislation have been revised a number of times. The current limits were set in 1982 when the initial limit was set at £1,100 million and the higher limit at £1,300 million.
As a result of the board's increased investment programme, the existing limits are no longer adequate, and the time has come to raise them. On the basis of the revised EFL which we have now agreed, it is clear 822 that BR will need to borrow more than the existing limit of £1,100 million allows before Parliament returns from the Summer Recess. They may even need to borrow more than the maximum of £1,300 million to which we could raise the limit under existing legislation. We have therefore decided that it would be prudent to introduce new primary legislation to set completely new limits. The new limit which the Bill sets immediately is £3 billion, and there is a power to raise it to a higher limit of £5 billion by affirmative resolution of the House of Commons in the normal way.
We are also taking the opportunity, in Clause 2 of the Bill, to revise the existing statutory ceiling on PSO grant payments to British Rail. This is a different type of ceiling from the statutory borrowing limit. It is a cumulative ceiling on the total amount of PSO grant aid paid to BR since a given date. The payments in each individual year are added to the total of the payments made in previous years, and it is inevitable that the ceiling will sooner or later be exceeded and need to be replaced.
The grant ceiling was first introduced, along with the PSO grant, in 1974. In 1978, the ceiling set in 1974 was abandoned, and a new ceiling set for payments after the end of 1978. We are following that precedent. Under Clause 2 the existing ceiling will cease to apply to payments for periods ending before 1st April 1992, and a new ceiling will apply to payments for periods after 1st April 1992.
Like the statutory borrowing limit, the legislation imposing a statutory grant ceiling has always provided for a two-stage ceiling, with an initial ceiling and a higher ceiling which can be introduced subsequently by affirmative resolution. We have once again followed precedent in that respect. Clause 2 of the Bill introduces a ceiling of £3 billion for grant payments after 31st March 1992, with a higher ceiling of £5 billion which can be introduced by affirmative order.
The current limits for borrowing and grant have had a long life. The last primary legislation was in 1982. The borrowing limit in particular at £1,100 billion is now small by comparison with British Rail's annual turnover of well over £3 billion. And it is very small by comparison with the scale of BR's investment programme over the next few years. So legislation to increase the current borrowing limit was inevitable. We have taken the opportunity at the same time to set a new grant ceiling.
This is a modest, sensible and prudent measure which gives full effect to the EFL increase announced recently, and I commend it to your Lordships.
§ Moved, That the Bill be now read a second time. —(Lord Brabazon of Tara.)
§ 5.47 p.m.
§ Lord Clinton-Davis
My Lords, the House will be indebted to the noble Lord, Lord Brabazon, for his explanation of the Bill. I propose to follow the advice of the Secretary of State in another place who said at Second Reading:The Bill is primarily a technical measure, but the debate on its Second Reading gives the House an opportunity to 823 spend a relatively unusual amount of time debating the railways in the United Kingdom".—[Official Report, Commons, 11/7/91; col. 1100.]We do not have a relatively unusual amount of time in this House, but that is how I intend to approach the matter. Perhaps I may say at the outset that it is a Bill for which, from the first, the Opposition promised its support in order to facilitate its enactment as rapidly as possible, not taking account of the time involved with my speech.
Speed is of the essence because the completion of British Railways' current capital investment programme would be in dire straits if the moneys provided for in the Bill were not forthcoming. The Minister did not say that in express terms but he implied it. Since 1979 a succession of Transport Secretaries, Ministers of State and Parliamentary Under-Secretaries—most of whom have disappeared like snowflakes in summer—have presided over a national transport system which is disgraceful. The order of the day, which is recognised by the present Secretary of State, but not necessarily by his predecessors in terms of the railway system, has been too much congestion, shabbiness, lack of safety and unreliable services accompanied by poor pay and low morale as far as the staff are concerned.
That represents a serious impediment to our being able to take advantage of the industrial potential that will be opened up by the single market in 1992 and beyond. If anyone should believe that I have been unduly harsh in my condemnation of what has occurred, perhaps I may pray in support an assortment of views given by Members of the Government party in another place. I am not permitted to quote, but I hope that I will fairly summarise them. They utterly condemn the Government's railway policy.
"My impression", said one, "until a few weeks ago was I hat the Government had no transport policy other than the quest for profitability regardless of all other considerations". Another said, "Up to the present they have had a half-hearted approach to the railways". Again, "I detect change but it is nervous and hesitant about going further; that is to say, about providing the enormous resources that are needed in terms of investment capital". That was said during the course of the debate on this Bill in another place. So the words that I have used are modest compared with the indictment that has fallen from the lips of some of the Government's own supporters.
It is no accident that our transport system, and the railways in particular, should have fallen into this state of decline. I believe it flows directly from attitudes which have been displayed by government over the past 12 years—I do not want to be churlish about. the present Secretary of State—at least until the past few weeks. I believe it stems from the former Prime Minister's prejudice against railways. Again, those are not my words but those of a Conservative Member in another place. We are now paying the price for that ideological bias.
What happened, particularly after the Serpell Report of 1983, was that the Government concluded that an efficient and effective railway system could be operated by providing less money. They neglected to 824 observe that in no other major industrial nation do enterprising and innovative railway services, both freight and passenger, manage to run without far greater government support than has been provided here, particularly when it comes to research and development and the provision of new rolling stock and equipment and the ordering and provision of new lines.
France is an example where, whatever may be the colour of the government, they have successfully developed the TGV (train de grande vitesse). They are investing over £21 billion in more than doubling the size of that network over the next 20 years. France and other member states of the European Community are not engaging in the modernisation of old Victorian networks; they are building brand new lines. I know from my own discussions back in the time when I was a member of the Commission—but it is even more true today —that such governments are astonished that against the backcloth of the challenge presented by the Channel Tunnel the Government's policies in this country have been so limited, particularly in the provision of new lines.
The fact is that our railway system has been deprived to a far greater extent than any other major systems in the European Community. Again, that is not simply my view, it is the view of the Select Committee on Transport in another place, as well as the view of the Monopolies and Mergers Commission. The result of these policies of neglect has been poorer service and higher fares than those in the systems of our major competitors. For every pound that we spend on subsidising our railway system the West Germans spend £5 and the French £4.70. If we adjust for the size of the railway system—the figures are only fractionally less startling—the Germans spend £4.10 and the French £4.30. So there is no escaping the conclusion, which clearly this Secretary of State has reached, that British support has been paltry.
The effect is that it involves a seriously prejudicial impact on our industry. If we are to perform well in the Community we have to be able to transport our goods and our people to the best possible effect and by means which are least likely to damage the environment. Over the years British Rail has not been permitted to play the role that it could play in mitigating the huge congestion costs for which our country pays so dearly. Indeed, there is no level playing field (to use that ghastly phrase) between the railways and road haulage when it comes to land use —the use of the infrastructure over which they run.
There is no equality of treatment between road and rail when they have to compete for scarce funds. No proper balance sheet is kept which acknowledges the huge costs that are imposed on the nation in terms of accidents and congestion on the roads when 5,000 people are killed and 250,000 injured each year; that is roughly the population of an entire London borough being maimed or killed each year. Then there is the cost of enforcement and pollution and the lack of convenience. All those matters are not included in the balance sheets.
We worry about suggestions that are made in terms of declining standards of safety that always follow 825 every railway accident—King's Cross, Clapham, Purley, Bellgrove and, just a few days ago, Glasgow. We need to be concerned about these matters and to be satisfied that steps are taken to mitigate the incidence of tragedies such as these. We need to be satisfied that they are not associated with any lack of resources. However, we need to put these issues into their proper context because the numbers killed and injured in rail tragedies do not begin to compare with the slaughter on the roads.
The Government normally produce statistics like a conjuror produces a rabbit out of a hat, but today is something of an exception and I commend the Minister for that. The trouble is that the rabbit bears little resemblance to the experiences of the travelling public day in and day out. The House will have heard the Minister often enough seek to draw comparisons with previous governments, going right back to the earlier days of the 1970s. What is clear beyond any peradventure of doubt is that over the past 12 years or more this Government have enjoyed the uncovenanted benefits of North Sea oil revenues which have been denied to all their predecessors, Conservative and Labour alike—a fact which is singularly omitted in all the boastful claims that are made.
The truth is that the Government stand indicted out of their own mouths—out of the Citizen's Charter, which is not so much a Magna Charta as a Minima Charta. The charter provides the clearest indictment of the Government's failures when it refers to all the inadequacies of the railway services that it is going to cure. But the Government have been presiding over this situation for the past 12 years. I welcome the change of heart, though I am not sure that there is much meat in the document. However, that will give rise to debates on future occasions when we shall discuss this wonderful no-cost programme.
Lack of cleanliness and reliability are one thing, but fares that are far too high—a factor that is not even mentioned in the Citizen's Charter—is another. I suggest that the report should be laid not so much at the door of bad management, though undoubtedly that does occur, but at the deliberate policies of Ministers over the years. Therefore, why should not the Government be fair and consistent and allow travellers to attack the organ grinders rather than the monkeys?
Why in the Citizen's Charter, in terms of the remedies and compensations that are to be offered, is nothing said about the needs of disabled citizens travelling on British Rail? What about the needs of women travellers? Those are very specific and need to be addressed. What about an independent safety inspectorate? Those are three of the more important points that are totally omitted from that remarkable document.
It would be absurd to believe that the Government did not have adequate warning of what was to befall our railways. In the early 1980s the then chairman of British Rail, Sir Peter Parker, was warning that real dangers lay ahead if the rolling stock was to become more antiquated and if investment programmes were not substantially enhanced. For the first two years of 826 the Conservative Government the programme was rolled back, not advanced. That need is even more important today. There can be no more glaring example than the needs of British Rail in relation to intermodal freight, a point which has been given added emphasis by the development of a Channel Tunnel. This and so many other important developments in a railway system comprising some 11,000 miles simply cannot be financed out of, or substantially out of, British Rail's revenue.
Nor is any answer to be provided by reducing that network continuously, although that might be a way of making its current account much more profitable. As was said in the Second Reading debate in another place by a Conservative Member, the smaller the network, the more profitable it can become in economic terms—but the real question is whether that would be in our national interest.
Spending priorities are important. British Rail claims that it needs far more than the Government have been prepared to provide. In recent weeks the Government have done very much more than they had done over the previous period. The Secretary of State had indicated a clear commitment to the enhancement of rail transport. All that is to be welcomed. But we need to know the consequences in practical terms of enacting the Bill. What will be the priorities to be deployed by British Rail in consultation with the Government? Will the Heathrow express link be helped? What about the Manchester airport link? What about the Ashford international station? Will more progress be made in terms of creating greater compatibility of gauge for track and wagons with those on the Continent? That is important if trains are to travel across Britain to distant parts of the Continent without loads having to be transferred. What will those priorities be?
Our very strong belief is that our railway system must be given much more support to enable it to catch up with the neglect of the past as well as to face the challenges of the future so as to play a much more significant role in our economic and transport policies. A network of rail services must be retained and enhanced in a way that corresponds to our national requirements and helps our national prosperity. To achieve that, long-term planning, rather than the "ad hocery" in which even now the Government engage, is vital. That is the antithesis of what has been practised —certainly until the present Secretary of State entered the scene—following Serpell, whose majority report was, in effect, calling for savings on maintenance and signalling. All that was in unhappy contrast to the conclusions reached by the minority of the Serpell Committee who called for a 20-year plan, a proposal different from what the Government had in mind.
The policies have been manifestly wrong. It has been wrong to reduce the PSO grant over the past two years. To allow the service to run down, to observe that there are then serious deficiencies and then to suggest that the answer must be privatisation is a time honoured tactic of this Government. They speak a great deal about privatisation but they do not say much about what it really means. If it means joint ventures with the private sector, there is no problem 827 for us. If it means allowing the private sector access to the railway system, it is happening already. It does not represent a problem for us. We would go on to encourage it. But do they really mean competition between passenger trains using the same tracks? In that connection I shall cite the salutary words of Mr. Richard Hope, an acknowledged expert on railways, when he gave evidence to the European Communities Committee of your Lordships's House on 25th October 1990. He said:I am not aware of any situation in the world where there is effective competition between passenger trains using the same tracks".As a Conservative Member of another place put it: "It is phoney competition that will not result in the running of a better railway service".
We need to face up to real problems and not rely on those phoney solutions. What is needed is real commitment to the railways, as has been demonstrated in other member states. Joint ventures and partnerships and some change of rules regarding borrowing requirements are to be welcomed. Equally, what would also be welcomed is a change of heart about the infrastructure programme for the European Community This encapsulates the way in which, over the past few years, the Government have considered the whole railway and infrastructure problem. When the Commission sought to advance a pragmatic, non-ideological attitude about the infrastructure to fill in the missing links in the community, the Government's response was opposition. It is fair to say that they were not alone. The overwhelming majority of the capital will have to be provided by the private market. But there is a major role for public capital too—as a catalyst for attracting private finance and as the sole instrument where private finance finds that vital areas of infrastructural development are unattractive.
Just as there has been an unquestionable advance in the way the present Secretary of State has looked at railways, I hope that the Minister will be able to say that the Government will examine the whole infrastructure programme of the European Community. That is critical to the future of the Community and all our citizens. I concede that the Secretary of State has belatedly recognised—belatedly for the Government, not for him—that our railways are in a position of crisis. He is perfectly reasonably, at this stage, engaging in crisis management. But we should recognise that crisis management is always expensive, that it follows abdications of responsibility which are always costly in the end. What we need—all of us, preferably operating together—is to strive for the best system, the most efficient, the safest and least polluting system. If a consensual approach is possible, why should we not try it? Some of the solutions will involve difficult measures so far as concerns the electorate. When I say that I do not believe that we should engage in the thin pretence that the Secretary of State for the Environment engaged in when he invited everyone to help him solve the self-inflicted problems of the Government in relation to the poll tax. I mean it genuinely. I think it can be done. It is done in other countries. It should be done here. I hope that that will be possible.
828 Having said all that, I believe that the Government are right to introduce the Bill. It is right too that all the proceedings on the Bill should be concluded in one day.
§ 6.10 p.m.
§ Lord Tordoff
My Lords, after that speech, I shall be brief. It is clear that the Bill is necessary. British Rail will run into the buffers between now and October unless we do something about the situation. I shall return to that aspect later. I cannot help, once again, noting the enormous interest that the outside world is showing in the debate. I should like to point out to noble Lords who are fresh to this place the little signs which indicate that interest. For example, it is always quite clear when a transport debate is taking place. The covers are on the television cameras.
There are just one or two points I should like to make. We welcome the Bill. Like the noble Lord, Lord Clinton-Davis, we welcome too the apparent change of direction which seems to have come with the new Secretary of State. We hope that that change in direction continues. I say that because, like the noble Lord, Lord Clinton-Davis, we believe strongly that the railways of this country must be boosted in order to shift passengers and freight off the roads.
I am not at all sure that British Rail always helps itself. Can the Minister say whether he is satisfied that it is doing sufficient at present in terms of collecting fares? It seems to me that BR has got itself into a vicious spiral. Underfunded as it is, it has resorted to making a large number of staff cuts. These are continuing; indeed, in some places, they are accelerating. One wonders whether those staff cuts have meant a loss of revenue through the failure to collect fares. It is obvious on InterCity trains that it would not be too difficult for people to dodge paying their fares. There is a tendency for the inspector to walk along the carriage inviting people to offer their tickets rather than demanding to see them. I have an unpleasant feeling that some people take advantage of that.
One wonders how the increased funding will affect the existing problems of British Rail. I shall mention just one or two. Many of the problems relate to the Channel Tunnel development. We need to know from the Minister, if possible today, when the Government expect to be able to determine the new link with the Channel Tunnel. I do hope that it will not be announced during the Summer Recess when Parliament will not have a chance to discuss the matter. There will be deep disappointment if no announcement is made before the House rises for the recess. Indeed, the people of Kent, who will have to wait another three months or so—that is, if it is to be explained in parliamentary time—will suffer another period of uncertainty, planning blight and all the other related aspects. We need a clear answer on where the link is to go.
Can the Minister say when Ashford will start? We discussed this matter on 1st July. It was not at all clear at that time what the programme would be. Again, we need to know. Further, what is the current position on the rolling stock for trains travelling north of London?
829 Have the difficulties been overcome whereby when trains pass signal points they turn the lights to green as a result of some electronic complication? I gather that that is what was holding up the development of the rolling stock. However, we cannot hope to have a proper rail network link into the Channel Tunnel until we have resolved such problems. In the meantime, as we know, people will have to change platforms at Waterloo in order to get from the North to Europe. That is not what the Channel Tunnel was designed for; it was designed to encourage people to board a train in Edinburgh, Manchester or Liverpool and go straight through to the capital cities of Europe.
Further, is there any news about King's Cross? Will the extra funding help in that respect? What news is there of further freight terminals? The one at Wakefield has been determined, but has anything further happened. For example, has any money been allocated for the building of that freight terminal in time to coincide with the opening of the Channel Tunnel? Again, it must be stressed that freight is one of the most important aspects of the Channel Tunnel.
I also remind the Minister that my noble friend Lord Holme of Cheltenham asked him on 1st July, at col. 769 of Hansard, when the review would be completed on the Ryrie rules. That is quite relevant to the Bill before the House in terms of funding. I believe that the Minister promised to write to my noble friend. But either he has not done so or the Post Office is becoming as inefficient as British Rail.
I really do not want to say any more. This Bill must go through quickly today. However, it is perhaps a reflection of lack of forward planning that we find ourselves in this sort of hurry and scurry two days before the Summer Recess. Surely, someone should have thought ahead and realized that British Rail would be more than a little short of cash in the coming year. One is surprised that we have to suspend normal processes in this House in order to get a Bill through quite so quickly. Nevertheless, I commend it to the House.
§ 6.15 p.m.
My Lords, I should first declare an interest. The Bill before us is an important and welcome measure setting, as it does, the framework for meeting British Rail's borrowing and grant requirements over the next few years. I think that we are all agreed that the present situation is not a happy one. British Rail went from a profit of £270 million in 1989–90 to a loss of £11 million in 1990–91—a loss which reflected both reduced levels of economic activity, reduced demand and also the problems that British Rail's generally highly successful property operations were experiencing.
One cannot really be certain that this year will be any better. Customer revenues are falling away badly and the property market is still extremely poor. Therefore, while one welcomes the recent increase in British Rail's external financing limit by 36 per cent. to £1.5 billion, one would have wished to see BR's request for £1,862 million met in full. Without the missing £340 million, investment projects which have 830 already been mentioned such as the Heathrow Express, the Manchester Airport Link, Ashford International and Ashford-Ore electrification are all slipping. Those projects have not just local importance; they have international importance. They are all projects for the future. It seems to me that they serve to focus just how far British Rail has come over the past decade, not only in terms of ongoing investment but also in terms of customer appeal, efficiency and, indeed, of general appeal.
We must make the most of this Bill's opportunities for preserving investment momentum at the record £1.1 billion which we are hoping to see this year or perhaps—the other figure which has been quoted—£4 billion over the next three years. One has Sir Bob Reid looking—I think, perhaps, rightly—for £1.1 billion on average over the next decade. One wonders whether the powers in the Bill will be adequate to meet those requirements. We know the commitments and we know the slippages. However, there are other very large projects on the horizon, some of which have been mentioned. I refer to those such as Kings's Cross International, the Channel Tunnel link and British Rail's share of the costs of Cross-Rail which is very much more than just a tunnel under central London.
We must look to an ever increasing level of investment in safety. I know that the chairman and the leaders of the rail unions are all agreed on the matter. Whatever is vulnerable in terms of recession, we must make sure that safety investment is not prejudiced. Can my noble friend give any figures for projected safety investment over the next few years? Further, does he have any details as to BR's research into that most unpredictable of safety factors —the human one?
The noble Lord, Lord Clinton-Davis, mentioned several accidents. It is sad to note that most were caused by driver error; that is, a driver running through a red light. I know that there is co-operative research into that topic. Is my noble friend able to report any progress?
As has been said, the Bill deals with BR's external financing limit which is made up of grant and borrowings. One sees that last year's investment was funded inter alias 34 per cent. by borrowings and 24 per cent. by grant. The Government have set BR a target of eliminating grant for Network South-East by March 1993 and of seriously reducing grant payable to the regional railways by the same date. I wonder whether that target stands. If it does, investment could again be prejudiced. Furthermore, loss of grant could lead to increased borrowings. One must be worried that those could more quickly reach the limits set out in the Bill.
I have some reservations about the Bill, but in general terms I give it a warm welcome. Whatever one's hopes for BR, it needs a financial framework and that is what the Bill provides.
§ 6.20 p.m.
§ Lord Taylor of Gryfe
My Lords, as my noble friend Lord Clinton-Davis said, when this matter was discussed in another place the Secretary of State invited a general discussion on British Rail. My noble friend accepted that invitation. I do not propose to 831 repeat his wide-ranging comments. I spent some years on the British Railways Board like the noble Lord, Lord Cochrane, whom I see in his place. We travelled 900 miles each week by BR from our homes to the House. I have an abiding interest in BR and a fair amount of practical experience of how it works.
I welcome the Government's changed attitude to BR. I have considerable admiration for the new Secretary of State who presided over Scottish affairs until he was transferred to transport. It is nice to hear Mr. Rifkind's bullish statements in connection with BR's Future and his plans to increase investment. The only worrying feature about that is that I checked today how many Ministers there had been in the Department of Transport in the past 12 years. The number is eight. That means that the Minister who proposes the forward investment programme may find that he is no longer in post in 16 months or so.
The efficient working of a large industry such as BR depends upon a good understanding and working relationship between the chairman, the chief executive and the management. The railways have been denied that. Sir Peter Parker used to say, "I did not know what my targets were. My Minister kept changing. When I was appointed chairman, I did not know what targets I was supposed to meet". I am happy to say that since Sir Peter Parker's time BR's new chairmen have been given well-established remits and their performances can be judged against them. That is an improvement.
There is a good deal of public misunderstanding about BR's finances. The Bill proposes to give BR increased borrowing powers and deals with the PSO. When the press reports on BR, the usual headline is, "BR to get another £1.3 billion". There is a suggestion that BR is being given that money by the Government, whereas we are talking about a further loan to BR to finance investment. The Minister and BR should make that point clear. Incidentally, I was interested in the comment made by the noble Lord, Lord Tordoff, who said that BR should help itself. It should also advise the House from time to time. I telephoned BR this morning to discover whether it had any comment to make about the Bill. I received some information at about 10 a.m. this morning. I went to the PPO and asked whether it had BR's latest annual report. The staff said, "Does it publish an annual report, because we do not have it". BR has an obligation to keep the House somewhat better advised of its activities.
I wanted to make the point that we are talking about increased borrowing. The money is a loan and not a gift. What is a gift is the PSO grant. It is interesting to note that the PSO grant now is only half in real terms what it was in 1983. BR has cut its demand on the Treasury by 50 per cent. since 1983. Railfreight and InterCity now receive no subsidy. They are outside of grant. They pay their own way. People make comparison with continental railways. It is a compliment to BR that the Bundesbahn and the Swiss Railways now call their new high speed trains InterCity. They have copied BR's example.
It is a tribute to the management and the people who serve in BR that they have been able to accomplish this reduction in PSO. I saw the noble 832 Lord, Lord Marsh, in his place earlier. I hoped that he might participate in the debate, because I seem to recall that in his day BR had over 200,000 employees. Today the figure is 130,000. In 1979, in Sir Peter Parker's day, it was 182,000. BR has paid considerable attention to economies and productivity, and that should be recognised.
I wish to say one more thing about the considerable investment programme that is now being approved. The investment programme is BR's highest for 30 years, and that is to be welcomed. One thing worries me; and that is British manufacturing industry's ability to produce the rolling stock necessary to deliver up the £1.3 billion. I understand, for example that our rolling stock provision for the Channel Tunnel is well behind. Certain technical problems have not yet been solved. If the Continent prepares its side of the Channel Tunnel and has the rails in place, it would be a tragedy if British industry were not in a position to provide the necessary rolling stock. I hope that the Minister will give us an assurance on that matter, because the new investment programme that he is introducing today involves a high commitment to the Channel Tunnel as well as to BR's general responsibilities for keeping a national network going.
My noble friend Lord Clinton-Davis finished his interesting speech with a plea for consensus in running this great industry. That is one of the matters that I support. I am essentially a consensus politician. I very much regret, although it is probably inevitable, that in the run up to a general election, every issue will be politicised. Even accidents on the railways are sometimes exploited for political purposes. I resent that. I should like to have a consensus approach such as that proposed by the noble Lord, Lord Clinton-Davis.
I hope that we shall not get too bogged down in the debate about privatising British Rail. The experience of British Rail in privatising has not been happy. If there is one blemish on the record of the new Secretary of State since he took office it is his continual emphasis that he wants British Rail privatised at some stage. I hope that he will forget that arid, doctrinaire debate for a little while, at least until after the election. I remember when Mr. Nicholas Ridley was Minister and I was on the board. He insisted that we should privatise the British Transport hotels. That was a good idea and I supported the privatisation. Railwaymen are not good at running hotels.
However, it was a matter of party policy; it was a kind of macho thing to put 28 hotels on the market at the same time. That privatisation exercise attracted £40 million; today one could not buy a single hotel for £40 million. The company that bought the Gleneagles group reckoned that they got Gleneagles for nothing. When we talk about privatising, we should look at this example. We did not carry that out sensibly in British Rail, as we did it at the behest of a doctrinaire Minister.
I wish to say a word about the property board. It has been one of the great financial supports of British Rail. It has raised for British Rail about £2 billion in 10 years. Here again, there was the doctrinaire influence of Ministers from time to time demanding 833 that we must sell off all the sites, that we must get rid of these surplus sites. Some of them are the best sites in every town—city centre sites. Thus, we were pressed to dispose of them in order to satisfy the great privatisation hunger.
Only recently have we been able to develop sites in partnerships such as the great Broadgate development at Liverpool Street where British Rail managed to obtain an entirely new station out of the deal and £200 million up front. It also has a share of the rental revenues. That concept of property development would have made possible for British Rail a continuing income rather than disposing of prime sites to private enterprise, to make large amounts of money in property development. I hope that when we look at these matters we shall be able to approach the problems of financing British Rail in a totally non-doctrinaire manner.
The presence of the noble Lord, Lord Cochrane, reminds me, since I saw the debate in the other place, that British Rail debates are always an invitation to constituency members to complain about their railway service. I cannot resist saying that, although British Rail has done wonders in providing trains from London to Edinburgh which take four hours and 10 minutes—which is a great service—they have forgotten to connect stations beyond Edinburgh for people who live in St. Andrews, Dundee, or Aberdeen like the noble Lord, Lord Cochrane, and myself. The four o'clock train has been withdrawn which took people home to Aberdeen after a day in London. That service ought to be better planned. Having made that individual but important comment, I very much support the Bill; I hope that we shall not have an early change of Minister and that the impetus of the noble Lord, Lord Brabazon, and his noble friend will be sustained.
§ 6.35 p.m.
§ Baroness Denton of Wakefield
My Lords, I recognise, even in my novice state, that the Bill is largely technical, but I consider that the role of railways in our economy is so crucial that I wish briefly to mention some of my concerns. Unfortunately, all of us who travel as passengers have our horror stories, although I suspect that if there were a club for members who had missed appointments by courtesy of British Rail I should be chairman. Gradually I begin to admire the information system which tells British Rail when I am travelling.
The Citizen's Charter will, I believe, deal with several of our discontents. Unlike the noble Lord, Lord Clinton-Davis, I am not looking for special arrangements for women passengers. I believe that journeys should be safe for all passengers, of whom women form part. I hope that some of the borrowings will be spent on training. There is minimal value in reducing the booking office waiting times for the privilege of speaking to extremely rude personnel. I hope that while electrifying the lines, British Rail will galvanise their staff.
834 I hope also that British Rail's forthcoming passengers' charter will do something for the youngsters who buy a valid saver ticket from London to Glasgow for the privilege of sitting on the corridor floor much too often. I hope that the wearing of name badges will spread to those commuting British Rail staff who occupy seats on the peak hour trains, leaving full fare-paying passengers to stand.
As Liverpool Street emerges from its chrysalis in true glory, I hope that with the new borrowings British Rail will now pay attention to Birmingham New Street station. The city has built one of the finest convention centres in the world, but the conditions one finds on getting off the train at Birmingham would encourage most visitors to get straight back on again. I believe this to be one illustration of the seeming reluctance on the part of British Rail to work in close partnership with other organisations. At the time the Government authorised the initial £130 million to regenerate the Black Country, British Rail removed 13 trains from the timetable on which potential investors and future employees could travel.
It is the West Midlands which brings me to my feet today. The area is the heart of manufacturing industry. It sees the opportunities in Europe as enormous, but it knows that efficient servicing of these markets will be based on rail networks. Here I share common ground with the noble Lord, Lord Tordoff. I find it surprising and depressing that the site of a European rail freight terminal in the West Midlands has not yet been identified. It is already too late in the planning timetable and it is totally inexplicable to investors examining the possibilities of building factories in the area.
I believe that we need to support access to funds for British Rail. If we get freight off the roads and on to the railways, we save lives and improve quality. We save money and open new avenues for industry. However, we must pre-plan. Europe is now, not tomorrow. I have considerable respect for the chairman of British Rail. I hope that he and my noble friend the Minister will recognise the concern of those of us involved in regeneration that British Rail should use some of its new resources to give industry the infrastructure it so desperately needs, if it is to be the successful player in Europe which the Prime Minister foretells.
§ 6.38 p.m.
§ Lord Brabazon of Tara
My Lords, I am grateful to all noble Lords who have taken part in this short debate on what is, as my noble friend said, largely a technical Bill. I shall try to respond briefly but, I hope, reasonably comprehensively to the points that have been raised.
The noble Lord, Lord Clinton-Davis, as is his wont if I may say so, launched into a very critical attack on the Government's attitude to the national transport system in general and their attitude to the railway system in particular. He described the national transport system as disgraceful and the Bill as being just another bit of crisis management. He put the blame largely on the former Prime Minister's prejudice against the railways. However, he did say 835 that he welcomed the advance, or alleged advance, in our attitude to the railways expressed by the present Secretary of State. I would only say in response that we are at present investing in the railway system at the highest real level for 29 years. That investment was started during the term of office of my right honourable friend the former Prime Minister. It is certainly a much higher level of investment than that achieved under the party opposite in its previous term of office and even in its term of office before that. We can be proud of our investment record.
The noble Lord compared our investment proposals with those in France. I believe he said that France intended to invest £21 billion in the TGV system over the next 20 years. All I can say is that investment for this year on British Rail is expected to rise to over £1 billion. We do not perhaps look 20 years ahead, but if one extrapolates £1 billion over 20 years one reaches a similar figure to that proposed by the French.
§ Lord Clinton-Davis
My Lords, I am obliged to the noble Lord for giving way. The French are investing £21 billion in the TGV alone. In addition to that a vast number of new lines are being constructed. On the Minister's own figures the French are far in advance of us in terms of investment.
§ Lord Brabazon of Tara
My Lords, the noble Lord has made his point. We, of course, have plans for new lines in connection with the Channel Tunnel. I shall have more to say about that in a moment. The noble Lord also criticised the Citizen's Charter. I was glad that my noble friend Lady Denton welcomed the proposals within that charter. Of course, there is always room for improvement within existing resources as regards the way services are produced. I am pleased to be able to tell the House that British Rail will publish its charter commitments within the next month or two. Therefore, we shall see those commitments by the time we return from the Recess.
The noble Lord, Lord Clinton-Davis, and my noble friend Lord Mountevans referred to safety. That is an important issue. Last year British Rail spent £140 million on safety improvements. Next year it plans to spend more. My right honourable friend the Secretary of State has on previous occasions made clear that British Rail will not be short of money for safety improvements. The PSO grant has risen over the past two years by 25 per cent. The noble Lord, Lord Taylor of Gryfe, referred to that grant. The noble Lord quite rightly said that we should be proud of the fact that both the freight division and InterCity no longer require grants and are able to run on a freestanding and profitable basis.
International comparisons have been made. We should be proud of the fact that we do not need to give as high a subsidy to British Rail as is the case with SNCF or Deutsche Bundesbahn. As a percentage of GDP we give British Rail a subsidy of some 0.12 per cent., whereas both the French and the Germans—I am referring here only to what was formerly West Germany—give a subsidy of 0.63 and 0.62 per cent. respectively in total. One of the reasons that subsidy is low for British Rail is because British Rail's debt levels 836 have been low until recently. The debt levels have been around £200 to £300 million. In contrast SNCF had debts of around £10 billion after a substantial write-off in 1989. Deutsche Bundesbahn had debts of around £16 billion at the end of 1990. We can be proud of British Rail's figures in that regard.
The noble Lord, Lord Taylor of Gryfe, also mentioned efficiency. In 1989 total train kilometres per employee stood in France at 2,460 and in Germany at 2,570. British Rail managed a figure of 3,470. British Rail achieved a substantially better figure than either the French or the Germans of whom we hear so much praise. The noble Lords, Lord Clinton-Davis and Lord Taylor of Gryfe, both referred to the prospects for privatisation. I fear that on this matter there is no consensus between us. We on this side of the House remain convinced that, ultimately, privatisation is the right way forward for the railway system. We intend to proceed along those lines.
The noble Lord, Lord Clinton-Davis, and others, asked how British Rail would make use of the money to be made available by this Bill. We believe that British Rail should take responsibility for managing the railway network and planning investment. The Government discuss with BR the latter's overall financial requirements in the course of the annual public spending round. It is then for British Rail to determine its priorities within the resources available.
I am grateful for the welcome that the noble Lord, Lord Tordoff, gave to the Bill. He wondered whether BR was doing enough to ensure that it collected its fares properly. British Rail makes every effort to collect fares, as obviously it is in its interests to do so. Staff are paid a bonus incentive to collect excess fares on trains. Recently, penalty fare schemes have been introduced on some lines. It is hoped to introduce them more widely over the network. It is notable that nearly all European Community countries are moving away from ticket barriers and are relying on fare collection on trains. When I last travelled on a train last Friday not only was my ticket checked as I entered the platform but it was also checked during the journey and it was taken away from me when I reached my destination. Perhaps noble Lords may regard that action as a little excessive.
§ Lord Brabazon of Tara
My Lords, the noble Lord says that the staff did not trust me. In that case they did not trust anyone else on the train either.
The noble Lord, Lord Tordoff, asked me a number of questions, mainly related to the Channel Tunnel. As regards the rail link, we received British Rail's report on the rail link options on 3rd May. A decision on the way forward will be reached as soon as possible though not, as the noble Lord said, before the Recess. The project is a large one and we must consider the options thoroughly and carefully. We shall almost certainly wish to make a statement on the subject as soon as Parliament returns after the Recess.
As regards Ashford international passenger station, my right honourable friend received British 837 Rail's investment submission for that station at the end of January. The Government remain committed to the provision of that station. It is up to British Rail, following the increase of £400 million in its external financing limit—announced in June—to consider, in the light of the funds now available to it and its priorities, whether the works on Ashford international passenger station could go ahead quickly if they were approved.
The noble Lords, Lord Tordoff and Lord Taylor of Gryfe, referred to the Channel Tunnel trains north of London that are to run during the day. We have not yet received an investment submission from British Rail for those trains. British Rail has now received a tender from GEC-Alsthom which it is evaluating. The technical difficulties with the trains have been overcome, though British Rail has not decided whether to use trains which are capable of being split or shorter trains which would be able to use the platforms north of London. British Rail is currently seeking to negotiate a competitive price for the trains. Once we receive BR's investment submission we shall process it as quickly as we can.
The King's Cross terminal is linked to a decision on the Channel Tunnel rail link. It is also dependent on the progress of the Bill in another place. British Rail is continuing to develop proposals for freight terminals. We expect further announcements shortly. A delay in introducing this Bill has been referred to. We could not introduce this Bill until agreement had been reached on the revised EFL. That has been reached only recently.
My noble friend Lord Mountevans referred to future levels of safety investment. I believe I have already commented on that. I mentioned investment for this year and next year. Investment on safety in future years will, of course, be discussed with British Rail in the light of the board's proposals. As regards research into driver error, I believe British Rail accepts the conclusions of the joint study with London University and is implementing its recommendations on improved management, information and the training and supervision of drivers.
Regarding the PSO grant objectives for Network SouthEast and regional railways, the Government have made clear that the objectives are targets and not obligations. The chairman said recently in the annual report—which the noble Lord, Lord Taylor of Gryfe, will find was published on 2nd July and copies of which were placed in the Libraries of both Houses but I can certainly let the noble Lord have another copy—that the timetable for achieving the objectives would have to be reviewed. The Government stand ready to enter discussions with the board on that subject.
The noble Lord, Lord Taylor of Gryfe, with his great experience on the board of British Rail, gave us the benefit of his advice. I agree with much of what he said. I particularly agreed with his observation that accidents on British Rail have sometimes been politicised. That is a very regrettable step. During my time in the department I have had the misfortune to be involved with a number of different transport accidents. On every occasion the first judgments which 838 have been made have proved to be entirely wrong when the report on the accident has finally been published. It is much better to wait to see what the report has to say.
I shall not comment on the noble Lord's constituency points, and I do not believe that he expects me to do so.
My noble friend Lady Denton praised British Rail's developments at Liverpool Street and hoped that similar developments would occur at Birmingham New Street station. I hope that the board will take careful note of what my noble friend said.
Regarding freight links in the West Midlands, the region will have a Channel Tunnel freight terminal offering through freight services to the Continent. For 1993 British Rail plans to enhance the existing Freightliner terminal in Birmingham to service Channel Tunnel freight from the Midlands. To meet growth in the medium term BR plans to develop either an intermodal freight village at Bescot or construct a new intermodal terminal and freight village at Coleshill adjacent to the M6 and M42 motorways.
With those brief words I hope that I have covered most of the points which noble Lords made in this short debate—but I obviously have not!
§ Lord Tordoff
My Lords, I am sorry to intervene and I am grateful to the noble Lord for allowing me to do so. I asked him about the Ryrie rules. I remind him that he also had a mental block on the point at an earlier stage.
§ Lord Brabazon of Tara
My Lords, I apologise to the noble Lord. I am under the impression that I have written to the noble Lord, Lord Holme of Cheltenham. I can clearly recall having done so. However, I shall check on that.
§ Lord Brabazon of Tara
My Lords, I have not lost the letter, but I shall check to make sure that that correspondence is complete.
With those few words I commend the Bill to your Lordships.
§ On Question, Bill read a second time: Committee negatived.
§ Then Standing Order No. 44 having been suspended (pursuant to Resolution of 16th July), Bill read a third time, and passed.