HL Deb 04 March 1991 vol 526 cc1195-241

3.1 p.m.

Lord Ezra rose to move, That this House takes note of the Report of the European Communities Committee on A New Structure for Community Railways (3rd Report, HL Paper 11).

The noble Lord said: My Lords, I regret to say that the noble Lord, Lord Shepherd, who was due to open the debate, has a bad attack of 'flu and is unable to be present. This is a matter of great regret not only to him—we wish him well and a quick recovery—but also to me, as at the last minute I have been asked to take his place. I hope your Lordships will bear with me in that I have to combine two speeches in one; namely, the speech that I had prepared for delivery later in the debate and the noble Lord's speech in introducing the report.

There are many who believe that the railways are facing a period of potential revival. I happen to be one of them. There are a number of reasons: first, the increasing congestion that affects other forms of transport—I need refer only to road and air transport—and secondly, the environment. Although the committee has not dealt specifically with the matter, it is the case that railways cause less environmental damage than many other forms of transport, particularly road transport. It is worth noting that after we had completed our report the German embassy in London issued a press release. This stated that Germany was trying to reduce the impact of transport on the environment, not least by encouraging rail transport. It also stated that Germany was adopting measures to protect the environment on the "polluter pays" principle and that in this regard the railways offered many advantages. One important form of integrated transport, say the Germans, is to collect goods by road, send them the main part of the journey by rail and then deliver them to their ultimate destination by road again. Perhaps the Minister who is to reply can state how this country is ensuring the development of transport policies which similarly reflect the need to meet environmental concerns.

With the approach of the single market, modifications in railway developments throughout the Community will be needed to meet the challenge. A more specific aspect in our case is progress towards the completion of work on the Channel Tunnel. The committee has previously considered the place of the tunnel in the United Kingdom transport network. In our report Transport Infrastructure we saw the tunnel as a key to bringing to Britain the "railway renaissance" which we note is under way in the rest of Europe. We tried to avoid getting too far into the political controversy surrounding the link through Kent, although paragraph 91 of the report drew attention to the fact that: The United Kingdom is already on the periphery of the Community and … there is an urgent need for an enhanced network of infrastructure links between all regions of this country and the Continent via the Channel Tunnel and ports". In this context, I, like many in the House, was concerned to see reports in this morning's Financial Times that there will be no express passenger services to the Continent from any city in Britain other than London. The committee has already drawn attention to the harmful effect this could have on the regions of the United Kingdom, which are becoming isolated from the heart of Europe. I should be very much obliged if the Minister in his reply can tell us whether this is the truth of the matter. If so, it is a matter much to be deplored.

The report of the committee considers the recommendations of the Commission which are wide ranging. We decided to concentrate on three aspects; the managerial and financial autonomy of the railway system; high-speed trains; and combined transport. I should like to deal with those three issues.

Deliberation on managerial and financial autonomy formed the bulk of the committee's work, as the title of the report reflects. In paragraph 71 we support the greater autonomy for railway companies proposed by the Commission which is already under way in the United Kingdom. But the report stresses that the railways sometimes provide "a necessary social service" which creates a dilemma for railway companies not faced by their competitors on the roads or in the air. When we reflect on the position in the United Kingdom we see that ever since the war the conflict of interest between making the railways viable and providing a social service has dogged the development of our railway system.

Our report concludes that a mechanism for public service obligations needs to be developed in all member states along the lines of the Commission's proposal for contracts. Part of the public service obligation in the United Kingdom is moving towards such a system: we welcome that. No doubt the Minister will tell us more about it. We see a need for government and other public authorities to define and specify more clearly the level of social services that the railways are being asked to provide. Can the Minister say whether he is satisfied that an adequate balance between public service and commercial autonomy is being achieved? What further plans are there in that direction?

The second Commission proposal we considered in detail would allow free access to the railways for any authorised operator wishing to run trains. We accepted evidence from the railway companies that there would be numerous technical constraints to such developments, but we concluded that those considerations need not preclude a degree of access and that there is impressive evidence of a latent demand for rail transport of freight and that, given a legally guaranteed right to operate services and satisfactory charging arrangements, a number of private companies and joint ventures are likely to come forward. The committee therefore concluded that as soon as possible a right of access should be made available for any company to run international freight services in the Community.

The second main plank of the Commission's case is a proposal to separate responsibility for infrastructure from responsibility for operations; that is, those who manage the infrastructure need not be the only people who run the trains. The committee believes that this will help achieve the Commission's objective of competition on the railways and improved service to the consumer. Paragraphs 81 to 83 draw attention to technical and operational constraints on such a separation. The committee drew the important conclusion that those who run the infrastructure must be responsible for safety and for organising the timetable to meet the competing demands of operators.

The committee's main conclusion was that responsibility for rail infrastructure should remain that of the state, except in certain limited cases such as dedicated links to airports. That is because the cost of railway infrastructure far exceeds the revenue it can raise in financial terms. But there are also benefits to users, such as reduced congestion, and to society as a whole, environmentally. The committee recommends that such benefits should be taken into account in this country as they are in Sweden, which was visited by members of the committee. We recognise that the issue of dividing the infrastructure from operations has a wider impact than the mere statement of principle in the case of the United Kingdom with the possibility of the privatisation of the railways. We hope that that factor will be seriously borne in mind by the Government if privatisation takes place.

I turn now to high-speed rail lines. Members of the committee did not scrutinise this part of the Commission's proposal in great detail as we were awaiting the results of its expert study into a Europe-wide network of high-speed trains. I have already mentioned the United Kingdom's position regarding the Channel Tunnel, and especially the links to the United Kingdom's regions. That caused us serious concern. Can the Minister say whether the Commission's experts are looking at the matter and, if so, when the results of the study will be published?

As regards combined transport, paragraph 51 of the report gives the definition used by the Commission. It reads: Combined transport is a system in which goods are loaded on to a load carrier at the point of origin and unloaded from it at the destination and the carrier is transferred at least once from one mode of transport to another on the way". The committee welcomed the Commission's proposals for tax advantages for combined transport; but it also called for a more positive approach to grant-aiding investment where justified by social benefits. Can the Minister say whether the Government have any plans to reform the Section 8 grant system under the Railways Act 1974 to take account of such benefits?

Members of the committee also considered some of the physical limitations on a Europe-wide system of combined transport. The most important problem we identified was the incompatibility between the United Kingdom loading gauge and that used elsewhere in Europe. Can the Minister say whether there are any plans to study the costs and benefits of converting a limited section of the United Kingdom network to the European gauge? In particular, will he accept that converting a line from the Channel Tunnel to the industrial heartland of the Midlands and the North-West, as recommended in paragraph 97 of the report, would help to alleviate some of the concerns of those regions?

The committee emphasised the importance of an efficient, well-managed and well-planned railway network integrated throughout Europe. But the report concluded: That vision is far removed from present reality where national boundaries continue to place obstacles in the path of international services". The low level of traffic presently moved by the railways is regrettable. We believe that the prospects ahead, the needs of the environment, the congestion in other forms of transport, the approach of the single market and the construction of the Channel Tunnel offer us an enormous opportunity. The question is: will we seize that opportunity? I look forward to hearing the Minister's response. I am very pleased that so many noble Lords have agreed to take part in the debate. I beg to move.

Moved, That this House takes note of the Report of the European Communities Committee on A New Structure for Community Railways (3rd Report, HL Paper 11).—(Lord Ezra.)

3.15 p.m.

Lord Nugent of Guildford

My Lords, I should like first to thank the noble Lord, Lord Ezra, for his admirable speech, and for moving the Motion to take note of this report, which was readapted at such short notice and which took the place of the speech we would have heard from the noble Lord, Lord Shepherd. I much regret the fact that the noble Lord is not able to be here today. I hope that he will soon recover from the 'flu.

I should like to begin by thanking the Commission for its proposals. It is not always the case that proposals from the Commission are as adventurous and as welcome as these. I should also like to thank the noble Lord, Lord Ezra, his colleagues on the Select Committee, and especially the noble Lord, Lord Shepherd, for this most interesting report.

For a change, the starting point of the argument is that these days when transport is one of the major features of our lives in the Western world—and mass transport at that —road and air transport are congested to a point where we all suffer at times and consider that a solution to the problem should be found. However, in this scenario, rail transport alone is substantially underused.

I agree with the underlying comment in the report that the existing structure of rail ownership and organisation in this country and in other European countries, on a monolithic national basis under government ownership, is too rigid to permit the experiments with new forms of rail services which have been recommended and which might meet some of the ever increasing demand for transport.

However, the idea of privately operated companies working on state-owned track and signalling systems is a new one—except in the case of Sweden—and obviously has attractions. In the light of our experience of privatising road transport, passenger and freight, which in the main has turned out for the benefit both of the customer and of the taxpayer, we should certainly feel encouraged to carry out an experiment in the UK with this new idea for rail. The experience in Sweden, of which the report gives us a very ample picture, is an encouraging precedent. The existing national management structure could not undertake what is required in the proposal.

Having been a daily commuter for many years, I must say that I am very conscious of the endemic weaknesses in the rail structure, especially the weakness of management and the lack of staff loyalty. All too often, that feeds through to commuters by way of cancelled and disrupted services which cause immense inconvenience and hardship. Such disruptions happen sporadically and at any time of day. During, the recent light snowfall, which measured only two or three inches in the South-East, the situation was appalling. Normally at peak times we have five or six trains per hour. However, on one occasion the hourly service was cut down to one very short train. The overcrowding in that train was horrendous. Indeed, if an inspector had been on duty at the time he would have said that it created a danger and three-quarters of the passengers would have been taken off the train. However, I suppose that we should have experienced the same conditions in the following train.

Any private company wishing to run the system would have to compete initially for the contract. I am sure that it would be able to do the job better but if it did not it would lose the contract. I agree with the Select Committee's conclusion that the burden which rail has to carry to meet social needs could best be met by inviting competitive tenders from private companies, as has been done in connection with uneconomic passenger road services. However, in this case Her Majesty's Government would be paying a subsidy.

The report is certainly right on a point to which the noble Lord, Lord Ezra, called attention so lucidly; that is, the latent demand for rail transport of freight which might be expected to attract private companies, especially if it could be connected with other member states in the Community which are making a similar development so that there would be a prospect of a high-speed European freight rail service. That would be very attractive and there is no reason why it should not be achieved one day if all member states co-operate.

The report discusses some of the substantial technical problems to which the noble Lord called attention, particularly the loading gauge. I was interested to hear the comments of the noble Lord, Lord Ezra, on that and the question which he put to my noble friend Lord Brabazon who is to answer the debate. I shall be interested to hear the answer because this is a serious problem. However, it seems to make an argument that for the first experiment which I hope our Government will make with this idea, the western region should be chosen because it has less contrasting gauges than the other regions and might be less difficult to adapt to the European loading gauge standards. However, the report believes that there are mechanical solutions to the problems.

As the noble Lord told us, there is the major problem of separating responsibility for the infrastructure—that is, the track and signalling from operations. The report gives a very interesting picture of the solution in Sweden. I am especially grateful for the appendix which sets that out so clearly. Two points must be made. First, the rail system in Sweden is very much simpler than ours. The second point, with which I am sure the noble Lord will agree, is that the Swedish experiment seems to be developing satisfactorily but is still in its infancy.

However, the Select Committee concluded that the difficulties can be overcome and a satisfactory relationship between the track authority—necessarily a state corporation—and the operating companies could be worked out. I hope that my noble friend Lord Brabazon is able to tell us that Her Majesty's Government will accept that recommendation. I hope that after the next general election, whichever party wins, the government of the day will set up an experiment as quickly as possible in at least one region.

An essential point is that a national corporation for track and signalling must be set up, with the necessary strength in engineering, financial and management quality to restore our railways' tradition of safety. All noble Lords will remember the terrible Clapham disaster. That revealed a weakness of management and supervision on the electrical side which was horrifying. Therefore, no expense must be spared to ensure that all aspects of engineering are constructed and maintained to the highest standard.

I conclude by thanking the noble Lord, Lord Ezra, for deputising so ably. I thank also the noble Lord, Lord Shepherd, for producing a very interesting report. However rapid development may be, I doubt very much whether I shall see it in the southern region in my time.

3.24 p.m.

Lord Lucas of Chilworth

My Lords, I thank the noble Lord, Lord Ezra, for his comprehensive summary of the activities of your Lordships' Select Committee. Like the noble Lord and my noble friend Lord Nugent, I am sorry that the noble Lord, Lord Shepherd, is not able to be with us this afternoon, most particularly because he devoted a good deal of personal enthusiasm and energy to his chairmanship of the committee which for my part made the subject of the work much more interesting than perhaps is true of some sub-committees.

The report is more interesting to a wider readership than your Lordships, particularly in that the commission's proposals set down some innovative and rather different ideas which deserve much wider discussion. I hope that your Lordships' debate this afternoon and the report will make a contribution to that wider discussion.

I begin at the end. I draw your Lordshps' attention to the general conclusion and the last sentence of paragraph 99 on page 22. In that sentence the committee urges British Rail and the Department of Transport to think more widely about the Commission's proposals as a whole. It is all very well to say that, but one must look at the evidence which came before the sub-committee. I appreciate that it is very difficult to put an accent on the oral evidence as distinct from the written record. There were instances—I shall return to this in a few moments—where the quality and enthusiasm which some witnesses demonstrated during their evidence provided the committee with rather wider thinking than is usual.

In his opening remarks the noble Lord, Lord Ezra, commented on what he called the renaissance which appears to be evident on the European Continent. In paragraphs 67 and 68 the committee draws attention in particular to the two reasons why we should think in the wider context of the Commission's proposals. I select the two major points of those two paragraphs. Paragraph 67 states: There is a growing perception of rail as an environmentally friendly mode of transport". Your Lordships will recognise that I am usually more anxious about the rights, privileges and responsibilities of the road user. Even that somewhat selfish group of people recognises that there is an environmental benefit to be derived from the use of rail. Indeed, the haulage industry has always been a keen supporter of the use of rail and is no less firm in that resolve today.

The tragedy is that the service offered by rail as an alternative is not there. I do not wish to follow my noble friend Lord Nugent in his opening remarks when he discussed domestic issues. It follows that if the service is not provided domestically, there is very little hope of either a passenger or freight service being provided on this side of the Channel which will enable us to link up with any grander rail network in Europe. Indeed, it is fair to say that the committee was conscious of some of the evidence which suggested that if we were not very careful, as a peripheral nation to Europe we would be left on the periphery, with no links which would enable us to enjoy the benefits of a transcontinental rail network.

Secondly, paragraph 68 of the "Opinion of the Committee" states: Another factor working in favour of rail is the urgent need to resolve congestion on the roads". That is evident not just in the United Kingdom but in some other parts of Europe. It is against that background, that the Commission put forward its proposals. I believe that in general the proposals will strike a sympathetic chord with all transport users because of the enormous costs, if nothing else, of road congestion.

In paragraph 23 the committee condenses the evidence of the comparison of investment between road and rail. It states: but the Department of Transport nevertheless refused to assess road and rail investment on a comparable basis". Unless such a comparison is made there will be little hope of introducing tax systems to encourage a shift or the right kind of investment. The taxpayer pays for the roads but I do not believe it is yet a fact that road pays its track costs, and it cannot possibly be seen to cover those costs if one takes the social and environmental cost benefits into account. On the railway side, however, such a cost-benefit analysis is made only at the earlier stages but is then abandoned for monetary considerations. That cannot be the right way to proceed, and nor will it encourage the railway—whoever runs it—to provide the necessary infrastructure.

In relation to "Freedom to Provide Services" the Commission proposes: Any railway undertaking … shall be granted access on equitable conditions to national railway infrastructure in the country of its establishment". There is nothing wrong with that. We heard ample evidence that there are companies and consortia which would like to provide general services and some specific and special services. However, they are denied that right. I shall return to that point when I deal with British Rail's evidence. Again, that cannot be a good thing.

Mr. Rees, head of Inland Transport (DGVII) of the European Commission, when talking about the separation of infrastructure said that such a move would allow railways to exploit their "very considerable technical ability" to compete with other modes of transport. The view of Mr. Hope of Railway Gazette International, whose evidence impressed the committee, was, There is a yawning gulf between what the railways are theoretically capable of—based on energy inputs for example—and what they actually deliver in a highly competitive market". Those are powerful words. However, Mr. Welsby of British Rail, although supporting the Commission's intentions, saw the proposals for separating infrastructure and operations as "at best imperfect". He said: The track authority would not only have to control and own the rails and the signalling"— the committee did not disagree with that— but would also have to be responsible for operational control—the speed, frequency, passing and timetabling of trains"— again, the committee did not disagree with that point of view— reliability of operations, 'reconciling the different aspirations of different operators' and technical standards. A monopoly of control of operations of the system was needed 'for safety and general operational reasons'". That is nonsense. Those of your Lordships who care to look at British Rail's evidence may be interested to see that, although there was a powerful team assembled to give evidence, but one man (Mr. Welsby) gave the evidence. I found that the evidence was negative. He spent his time defending the position that British Rail currently adopts; that is, sectorisation. In my language, that amounts to the restatement of independent profit sectors.

A number of press releases have been issued reporting a number of appointments of a wide variety of no doubt able men to the managing directorships of a variety of subsidiary companies. I wonder how they, with the profit motive assigned to them, will lead to a divergence of different views and different operating conditions without leaving the whole in something of a mess. In the four-page press release of 29th January 1991 headed, BR is stretched but well-placed to meet European challenge —Sir Bob Reid", I pick out only two pieces. The chairman, Sir Bob Reid, set out his requirements for a European policy. He said that there has to be a, transparency in financial structures for all forms of transport, including clear identification of who should pay for uncommercial services". That is fine. He discusses the proposed separation of the management of infrastructure from railway operation and says: That simply will not do. Superficially it is attractive—with different operators providing competing services over the same track. Maybe there was a time when railway technology was simple enough and traffic density low enough for that to work. But the railways today are not like that". Why not? There is enough technical back-up to provide a complex service. If different people want to operate specialised services, I see no reason why they should be denied the opportunity. The committee's opinion on that matter is clear. It says in paragraph 79: But nothing we have heard has convinced us that such a move is so totally impractical to be rejected out of hand". That is what Mr. Welsby and Sir Bob Reid have virtually done.

I turn now the "Summary of Conclusions and Recommendations" on page 23. Paragraph 100 discusses the Commission's proposals and says that they are welcome, and, contain positive suggestions for improving the competitiveness of Europe's railways". I consider that to be an important conclusion. Paragraph 102 states: Railways should become more commercially independent and financially autonomous". Paragraph 109 states: Social and economic cost-benefit analysis should be applied to railway investment decisions". In conclusion, the recommendation in paragraph 106 states: There is evidence of problems facing the Commission's proposals to separate responsibility for infrastructure from operations. These are not so great as to make the proposal totally impractical; and such a separation could also make it easier to achieve the Commission's objectives of a more efficient railway service to the consumer". It is to the consumer that all the railways should devote their attention. One sometimes has the feeling that the railways in this country are run by the railways, for the railways. As for the passengers and freight, the devil take the hindmost. If the Commission's proposals do nothing more, they draw attention to the need for a radical overhaul of the basic principles underlying the structure of rail transport.

3.40 p.m.

Viscount Hood

My Lords, perhaps I may add my words of sympathy to the noble Lord, Lord Shepherd. I know the immense amount of work he has put into this excellent report. I wish to add a word of congratulation on the deftness of the noble Lord, Lord Ezra, in combining two good speeches into one very good one.

I wish to restrict my few comments to the structure. It is perhaps the main subject in the Commission's report and the title of the Select Committee's report. First, I shall deal with the justification, which is largely competition. Competition is good for the consumer, but I am sceptical about the realities of competition for railways. The history is a sad one. In the United States years ago there was real competition of structure and operation. Trains were leaving New York and arriving at Chicago at the same time, running on essentially parallel lines.

That is history. It has all gone. Today there is a limited number of large railway groups and competition is very limited indeed. This has been accepted by the United States Government, who, as we all know, are keen on competition. I do not believe that railways are a good business. Again, the history is of horrendous losses; the balance sheets of the remaining profitable companies, mostly in the United States, are a mere sliver of the money which has been put into them. That is despite the great land areas which were made over to companies like Union Pacific at the original foundation of the company.

I do not believe that anyone would suggest that there should be duplication of infrastructure; I question whether there should be significant duplication of operating assets. Arrangements should be made with different railways by businesses in this country for the best possible use of existing equipment. I do not question that. However, duplication is what real competition would be and I doubt whether it would be best. The Channel Tunnel is not a good example. It is a special case. Its infrastructure is owned by the company. The three railways concerned are, by agreement, proposing a regulated service over the Channel Tunnel line. Moreover, the Channel Tunnel will be a monopoly for 50 years. That is basic to its financing.

Likewise, the Heathrow Expressway—and I had something to do with that in the Select Committee —is a special case. It is a short railway, partly leased from British Rail and I hope it will be partly built by the company. However, it is a year since the special committee reported; the legislation is still in the Commons and there was a fairly tight financial deal at the outset. Costs have been increasing and revenues tending to go down. That is merely an aside. I am sceptical about competition.

On the other hand, the advantages of running the business as a whole are obvious. In any important railway there is capital expenditure and necessarily a direct relation between the fixed assets and the operating assets. If a line is electrified, money must be spent on electrification and engines. It is better, I should have thought, for the always difficult decisions to be taken by one group of people rather than two. There may be differences on the basic assumptions involved. Thus I should have thought it best for the foreseeable future to leave the structures as they are throughout Europe and not try to tear them apart.

I am in total agreement when the committee says that a railway cannot be expected to earn a fair return on all its assets. There are duties of a social nature which must be performed. These would best be created by contracts which can be incorporated in the budget of a railway company and used as the appropriate discipline for management in the way in which any good business is run.

To carry matters to the finesse suggested by the Commission in the term "cost-benefit" I find much more difficult to understand. I give an example from British Waterways, since I was a member of its board some years ago. The operation is simpler and clarifies the point in my mind. When I was with the organisation, only one waterway could in any way be deemed to be commercial and that was the Aire and Calder Canal on which there were coal mines and power stations. The coal was transported from one to the other by canal. All the other waterways lost money; some lost more than the gross revenue. It is difficult for a businessman to deal with that equation.

The cost was evident; the benefit was much more difficult to decide. Canals are a part of the environment. What are they worth? To the enthusiast they are worth unlimited sums; to those less interested, much less. What happened was that in an annual discussion with the Treasury an amount was agreed which seemed reasonable in the context of national finance. No doubt year by year it was adjusted upwards in line with inflation. That achieved the objective, but it must have involved a minute cost-benefit calculation.

I do not believe that a complete restructuring is wise. Vertical integration should remain. No doubt there would be vertical divisions of the railway. There does not need to be an exact structure now and we do not need two separate organisations. The social costs should be evaluated as best they can and contracted for, giving a financial discipline. All encouragement should be given to private businesses to deal directly with the various railways on the Continent in order to obtain the best possible terms.

3.48 p.m.

Lord Tanlaw

My Lords, I wish to echo the noble Viscount's compliments to the noble Lord, Lord Ezra, in managing to combine the two speeches in one. It also reflects the immense hard work and dedication of the committee in preparing and producing the report.

First I must declare an interest, which, I regret, keeps me away from the Chamber too often. My private companies are involved with the realities of third rail electrification and high-speed current collection equipment for heavy and light railways in this country, on the Continent and elsewhere in the world.

In declaring my interest I should like to feel that I speak on behalf of many other private and public companies in the railway supply industry which have a special interest in discovering whether there has been any change in the attitude of Her Majesty's Government towards implementing a rail transport policy more related to the 21st than the 19th century.

Sadly the report that is before us this afternoon seems to indicate that nothing has changed. All previous reports produced by noble Lords and honourable Members in another place came to the same conclusion. All the reports produced so far have implied the same thing in one form or another; that is, that our rail system, both track and rolling stock, is outdated, undercapitalised and uncompetitive with roads. The third report of the European Communities Select Committee is no different. It comes to precisely the same conclusion as other reports that have preceded it.

I and other noble Lords will recall the twenty-first report of the European Communities Select Committee of 1988–89 entitled Transport Infrastructure; first report of the Science and Technology Select Committee of 1986–87 entitled Innovation in Surface Transport; the second report of the Science and Technology Select Committee entitled Innovation in Surface Transport—I seem to recall preparing papers for these reports, as other noble Lords have done—the first report of the European Communities Select Committee of 1981–82 on combined transport and the good old Serpell Report which sank without trace ever since we debated it in this House. That was a dreadful report and I recall saying that it was destined to gather dust on a shelf somewhere in the building. It has remained unread and unloved. I have the titles of a few more reports produced in another place. I have several pages of notes devoted to them, but I shall not tire noble Lords by reading them out.

However, rather than refer to past reports and past words which say the same old thing, I have given notice to the Minister of four questions that I wish to raise in the debate. I look forward very much to hearing his reply. The first concerns the transparency of accounts procedures. That is a rather boring subject but it was raised by the CBI and other bodies in the evidence given for the report. It is, however, a relevant matter. Will the Minister kindly confirm whether it is BR's current accounting policy to depreciate locomotives and rolling stock over 30 years? It is my understanding that 30 years is about the maximum period.

Any vehicle has a depreciation period in a set of accounts. When it has reached that time limit, it is accorded a nil value in the accounts. Any vehicle, whether it is a road vehicle, a rail vehicle, a bus or an aeroplane, that is run past its design life and past its depreciation period can be kept running but at vast and inefficient cost to the operators and the users of the vehicles. That leads me to my second question.

Is the noble Lord in a position to inform the House what percentage of British Rail's fleet of locomotives, passenger coaches and freight cars has exceeded its depreciation period or is more than 30 years old? I do not understand why I cannot find any reference to this matter anywhere. I am sure the Minister will have no trouble in replying to me. What is the replacement policy of British Rail? How is it funded? Is it adequately funded or is British Rail still relying on ridership—that is, making the ticket payers pay a high cost for riding on the railway—to finance replacements? That is mixing income with capital. Only incompetent businessmen ever indulge in those two fatal mistakes. If they continue in such a fashion, they do not last very long as businessmen. What is the policy regarding replacement? If there is a replacement programme, will the replacement vehicles be allowed on European railways? Will they be able to cope with that, and will they be licensed to travel at high speeds of over 300 kilometres an hour? It would be helpful if the Minister could offer us some guidance on that point.

I now turn to a minor but detailed point that came to my attention while I was carrying out research for this debate. I have also given the Minister notice of this question. Will he inform the House what the current state of play is as regards Ashford International Passenger Station which is situated at the mouth of the Channel Tunnel? Has the situation changed in any way from that depicted in a letter dated 18th October 1990 from the Member of Parliament for Thanet, Mr. Jonathan Aitken, to the Secretary of State for Transport? Mr. Aitken stated: there was no chance of the station being built by June 1993". That is the opening date of the tunnel. I hope the Minister can say something about that matter. When in the course of my work I travel to the Continent, people tell me they cannot believe that it is impossible for us as a nation to build a railway station when we have constructed a Channel Tunnel which comprises one of the largest and most complex civil engineering projects that has ever been undertaken this century or at any other time. Despite that enterprise, we seem unable to build a railway station to deal with passengers leaving the Channel Tunnel. The problem seems to be planning procedures. I suspect that those procedures have been wrongly used to try to delay the building of the station for some political reasons which another noble Lord referred to. That situation is pathetic and reveals gross incompetence of a national kind.

Why are the Government not doing anything about that matter? Why is it that we cannot build a railway station when we can build a high-speed tunnel underneath the Channel? The tunnel is highly complex and people have risked their lives in building it. The construction programme is reasonably on time. That matter must affect the attitude of the Commission. The report refers to a handout that it is hoped the Commission will provide. It is hoped that the Commission will give us some money to build a high-speed link or a Berne gauge line. We do not have the latter and I gather that we shall not have one. Why should the Commission give this country money if we cannot even build a railway station? We have made no attempt to build a high-speed link to the Channel Tunnel. We have made no attempt at least to widen our bridges. I agree that that is an expensive procedure, but there are other lines that could be used. There is, for example, the central line that runs up the spine of this country and is virtually unused. That line would be perfectly suited to a broad gauge track. Why therefore should the Commission give us a penny? We have done absolutely nothing to meet the challenge of the European rail system. I have insisted on the example of Ashford station because that seems to me to epitomise this lack of effort. I hope the Minister can give me a satisfactory reply.

Will the Minister also confirm that a director of British Rail said at a function of the Royal Society—a science and technology talk—that both InterCity passenger and freight trains on the United Kingdom side of the tunnel would be unable to exceed an average speed of 100 kilometres per hour, or 60 miles per hour, by the year 2000? Many noble Lords will be aware that in France and in other parts of the Continent inter city trains travel at 300 kilometres an hour now. My firm can provide equipment for those trains, as can other UK firms. We may ask what is so important about speed. Some may ask why we should frighten horses or disturb the squires' pheasants in Kent as trains pass by. But many business people are fully aware of the many advantages to be gained from higher speed trains. Those advantages are to be gained mainly on the freight rather than on the passenger side of the business.

However, there is another factor which concerns equipment makers. I refer to the equipment that was mentioned in the report, of wagons with small bogies. In my view it is unlikely that these wagons can be used on the Continent. One obvious reason for that—I am surprised this was not referred to in the report—is that there is nowhere in this country where freight wagons or passenger coaches can be tested at speeds of 150 kilometres an hour or more. Therefore it is unlikely that our continental friends will use equipment that has not had high-speed use while in service. There is not even a test track for that equipment. I am proud of the fact that I am developing, together with British Rail, high-speed equipment. However, we have nowhere to test such equipment. There is no high-speed track and there is no intention of building one. Yet we have to compete with foreign equipment suppliers. The Minister responsible for transport stated on 19th February 1991 in a speech delivered to a seminar of the Institution of Mechanical Engineers on the railway industry in the international market: Our railway industry should therefore be well placed to take advantage of an upturn in the rail sector. One needs only look to our near neighbours in Europe to see that the competition will be fierce; but that can only be healthy for the industry as a whole in the longer term". There is competition in providing equipment for high speed trains. Equipment companies have to face the problem of deciding whether to move onto the Continent to continue their business or to change their business.

I note that the noble Lord is going to China to sell railway equipment. What will he say if, as I hope they will, his Chinese hosts show interest in buying high-speed railway equipment but say, "Where have you tested it? How long has it been in service?"? We do not have any high-speed rail equipment in service in this country because we do not have a high-speed rail track. Nevertheless, I wish the noble Lord well. All of us in the industry look forward to learning of his success on his return. The quality of engineering in this country is capable of matching any requirement in the railway industry anywhere in the world. That has been proved everywhere except in our own country.

Have any members of the committee and has the noble Lord ever travelled on a high-speed train? If not, why have they not done so? I hope that a member of the committee will stand up and say that he or she has have travelled on a high-speed train. I am sure that noble Lords have done so because otherwise how can they talk about a high-speed route when they do not understand it and have never experienced it?

The questions which the Commissioners in Europe are asking us and the industry to look at are relevant. How can we collect electrical current efficiently at speeds over 300 kilometres an hour? How can the driver cope with speeds of 400 kilometres an hour? We are not dealing with theories. We are dealing with the realities of a rail system that will be operating on the other side of the Channel by the year 2000 while our Inter City trains will still be stumbling along at an average of 60 miles an hour.

Someone has to ask what is the point. There must be some logic to it and no doubt we shall hear about that from the noble Lord. Companies are having to deal with the realities of high-speed transport—the transport of the future, which does not pollute and which is needed more than any other throughout Europe. That is recognised throughout Europe, as the committee and its report have shown.

In view of the complete lack of experience in this country of either building or running a high-speed rail route, will Her Majesty's Government now consider employing SNCF, the French railway company, as consultants for the job if and when it is undertaken? I ask that question because I have a suspicion that British Rail or whoever will be responsible for the task, whenever that may be, runs an acute risk of making the same initial costly mistakes as were made originally on the Continent. We should bear in mind that the French railway system was in far worse shape than our rail system is today when the French set about the task. We have no relevant experience. We are out of touch. That comes out in this report and in countless other reports. For goodness sake—as we have with the tunnel—let us employ as consultants people who are managing a railway and get going.

The railway supply industry long recognised and frequently complained of the fact that the right honourable lady the former Prime Minister did not use the railways. Nor did she support their modernisation, but gave preference instead to the motorways in this country. For the railway supply industry today the right honourable lady Mrs. Thatcher is history. Can the noble Lord the Minister of State for Transport now say whether or not the right honourable gentleman Mr. John Major is pursuing the same negative transport policy of the past 10 years?

If the noble Lord cannot announce a new Berne gauge route as part of government policy in order to allow high-speed passenger and freight traffic to link up with the Continent of Europe from all parts of the country and not just one part, not only I but the railway supply industry must assume with much regret that there has been no change in the stagnant rail transport policy pursued by this Government for the past 10 years.

The same must also apply if the noble Lord states either directly or indirectly that the £3 billion required to be spent annually over the next 10 years to update the rail industry will not be forthcoming. If he says instead that as a result of the report and this debate yet another study of some sort is to be undertaken before such spending can begin, in my book that is confirmation that there has been no change in Her Majesty's Government's rail transport policy and the report is destined to be put away to gather dust with the rest of the reports on this unfortunate subject.

4.4 p.m.

Lord Teviot

My Lords, it is very difficult to follow the amusing and authoritative speech of the noble Lord, Lord Tanlaw. It is a pity that your Lordships do not hear him more often. I shall speak on a different aspect of the subject.

I should like to thank the noble Lord, Lord Ezra, for introducing the debate. I agree with other noble Lords that it is sad that the noble Lord, Lord Shepherd, is not present today. I should like to thank the noble Lord and his committee for a report which is extremely comprehensive and readable, as far as it goes. However, there are many innuendos and questions still to be thoroughly investigated.

The premise for the restructure of the Community railways is the Swedish experience, which indeed appears to have been a happy one so far. In my opinion that proven experience is the reason why the United Kingdom and the committee need to look further.

As my noble friend Lord Hood said, railways in Great Britain have never been wholly reliable. Much as one dislikes denigrating one's own country, our performance has been bad compared with that of our European neighbours, although from time to time they too have had their problems. Only last summer in the very hot weather I travelled on the Dutch railways. As in this country, rails buckled and chaos ensued. The provision of information was abysmal. However, I must stress that each country's problems are unique and one cannot treat like with like but must base one's theories on certain common factors.

If one believes the comments of newspapers and Punch cartoons, railways were far from efficient in the 19th century when they enjoyed almost a monopoly of traffic. That experience led to the disappearance just after the 1914–18 war of smaller railways and the formation of larger railways in 1922. Some may say that they enjoyed a heyday for a period but even those companies suffered before they were nationalised in 1948.

The only chink of light is that the Commission's proposals would provide a new experience. Previously a railway has always operated on its own track. That point has to be thoroughly looked into. If there were competition there could be possibilities, as in the Swedish experience.

I shall touch briefly on certain points that do not appear in the report. I must congratulate British Rail on its excellent forward-looking, imaginative and aggressive marketing policy, and especially on introducing schemes to encourage people to travel by rail off-peak and at weekends. However, one wonders how that established success would work in the face of competition. My noble friend the Minister may be able to enlighten us on that point.

The Transport Act 1985 deregulated buses. I now concede that that has enjoyed limited success. Costs have been reduced but outside London there has been a drop in the number of passengers carried. However, the provision of information and co-ordination of services has been very poor. British Rail has had to stop providing information on connecting bus services at rail-heads because of the unreliability of the bus timetables. Any new legislation would have to ensure that proper information was provided. That would have to be done through primary legislation or codes of practice. Penalties would have to be paid by operator; for not running services unless there were exceptional reasons for their not doing so.

In this country there is heavy congestion of rail services. I shall not talk about the grand trains to which the noble Lord, Lord Tanlaw, referred—although I agree with much of what he said—but the ones that most of us have to travel on daily. I live in the south of London where there is great congestion. British Rail's performance in the recent bad weather —which has been mentioned by my noble friend Lord Nugent of Guildford—was appalling. It is all too easy to blame the lack of investment and capital resources. Whatever the reason, the matter must quickly be put right. The worst factor was the lack of information.

There is now an intercom at all stations which is centrally controlled. Messages are not always clear but the machinery exists. That aspect can be improved. Passengers waiting at unmanned stations late in the evening can and must be informed of late-running and cancelled trains. One wants to know that arrangements are being made to overcome the inconvenience in the event of cancellations. Surely, if people know why they are being delayed they will mind less, but to be stuck at a station not knowing what is happening is dreadful. I know it is very difficult for British Rail to divulge information in the case of security alerts, which sadly have happened recently, but where it would be safe to do so it would be helpful to state the exact position of trains on the track.

The last point I make is to ask for guidance. What would happen to subsidies given to urban services in passenger traffic authority areas? After the deregulation of buses, there were misgivings which, happily, have proved unfounded. One would hope that that situation will continue.

Finally, this is an excellent, well thought-out and worthwhile report which deserves maximum consideration but should be left just on amber light.

4.12 p.m.

Lord Lyell

My Lords, I have great pleasure in following my noble friend Lord Teviot. He introduced a note which deviated slightly from the main thrust of the report.

All owe a huge debt to the committee for its work and to the noble Lord, Lord Shepherd, who sadly is not in his place today. Those speaking this evening should congratulate the noble Lord, Lord Ezra, for the excellent way in which he combined both his own views on everything received in evidence and performed admirably what I call the captain's job.

For my own part, I was interested in this very readable report. I must say I long to hear a lot more of the committee's visit to Sweden; but perhaps not today. It may be various items have been laundered out of the report. Nevertheless, it was interesting as far as it went.

As your Lordships will see, the Commission's report covers four main points: high speed trains; combined transport; the public service obligation; and railway structuring. I start with the new structure for the Community railways. It makes good sense to examine both financial and management autonomy; but I am somewhat curious about British Rail's input into this particular affair and also their requirement to earn an 8 per cent. return on investment, although I think that figure is shared by at least one other member state's railway.

There is quite a lot in the report which deals with the new Swedish system, which is a particularly good example. However, reading the account of the committee's visit to Sweden together with the evidence submitted to it, it seemed to me that we and the report might not be comparing like with like. Sweden is very similar geographically to Scotland rather than Great Britain as a whole. It is a fairly large country with a not very large population.

British Rail are to be congratulated for looking at the prospect of private undertakings running various parts of their business and even competing with them in particular areas. One example quoted in the report is Foster Yeoman, which I understand is a very large building firm with quarries in the Mendips and has gone as far as to provide its own locomotives. They use existing British Rail track, signalling, facilities and crew. Quite how passenger services would work on the basis of sharing of facilities requires a little further thought.

In that connection, I hope there will be no similarity with Heathrow air services and the sharing of landing slots and take-off facilities. If your Lordships go to Heathrow on Friday night and wish to fly to Edinburgh they will find it quite interesting. The dramas at Heathrow can compare with what has sadly been taking place at London termini in the past month or so. That point is briefly covered in the report; but nevertheless they go a little way into that aspect.

Freight competition is already present and working on British Rail's track; and examples of that abound in the report as well as the evidence. If we look at paragraph 29 of the evidence given to the committee, we find that Mr. Richard Hope (of whom I have heard before, and whose work I have read) lays stress on what he regards as, the separation of infrastructure from operations", and how it can, unlock the potential of Europe's railways to relieve the pressure for more trunk roads to carry long-distance lorries". That was one of the key elements of the report which struck me.

The Swedish concept is promising. However, apart from the problems already mentioned, we ought to consider some aspects of the system in the United States which are in the report. Does that have something to offer, in that the Amtrack structure enables various operators to rent the track and infrastructure? It is very nostalgic to read in some of the evidence of the good old Denver and Rio Grande Western, the Burlington Northern and the Southern Pacific lines. Sadly, there is no reference to the Atchison, Topeka and Santa Fe line. Nevertheless, all of these individual operators and undertakings have something to offer to British Rail and European railways in terms of how they combine to use infrastructure in an efficient and competitive way.

However, neither the Swedish nor the United States examples given in the report have to overcome the difficulty which we have in Europe of frontiers and occasionally customs examination, let alone the state monopoly of railway undertakings and the problem of member states and railway undertakings having to come to a decision upon charges for using the infrastructure which lies within their jurisdiction.

Your Lordships will see from paragraphs 47 to 50 of the report an excellent reference to the high-speed rail network, together with a startling comment from the Commission which seeks progress on a network from Edinburgh to Palermo. That might concern me and perhaps even the noble Lord, Lord Taylor of Gryfe. He and I both share that part of the high-speed network of British Rail, though whether we go to Palermo I do not know. The committee also seek progress on the provision of a network stretching from Lisbon to Berlin and to Athens. That might be a little more interesting, though what the rate of progress would be, I do not know. As a concept it is admirable. Once again Mr. Richard Hope provides us with a beautifully worded caution (in paragraph 49 of the report), together with the different priorities perceived by the Suppliers of the network—that is, the financial, environmental and managerial considerations of each member state of the Community.

The noble Lord, Lord Tanlaw, will not be surprised to know that I am not a member of the committee. I am afraid that I have not yet travelled by TGV in France at 300 kilometres per hour. Whether one is able to eat, sleep, drink or do anything else at that speed I am not sure, let alone at 225 kilometres per hour which is the speed British Rail are hoping to provide between London and Leeds. However, it is clear that a high-speed European passenger network will require considerable investment in new infrastructure, signalling and the like. Of necessity, all of that will have to be done on a European basis, or at least on a European-compatible basis.

The existing infrastructure in the United Kingdom can provide some excellent service and provides competition with the airlines. I shall cite just the Edinburgh to London journey by high speed train. There is a train every hour from 7 o'clock in the morning until 6 o'clock in the evening. There are three or four supplementary trains on the half hour. That compares favourably with the service from London to Glasgow which is thought to be the core route and, according to the report, provides valuable competition to the airlines.

However, I stress to noble Lords—and particularly to the noble Lord, Lord Tanlaw, who may not entirely agree with me —that the service between Edinburgh and London is based on track which over the years has been consistently improved but which was designed and built for the Great Northern Railway, the North Eastern Railway and the North British Railway in the 19th century. Apart from a minor by-pass of the Selby coalfield, that track goes right back to the 19th century. Yet trains are being run, and I understand that on the summer service they will be running from Edinburgh to London in four hours. That is not quite an average of 100 miles per hour, but is on an existing 19th century base with a track which will be updated.

Lord Tanlaw

My Lords, I thank the noble Lord for his comments. However, the point is that British Rail hopes to get the sleeper train. One of the problems is that it will need the large Motorail sleepers, which are big coaches, if it is to go into Europe and span out across the whole of the European continent. If the trains are not able to go through our tunnels, one will not be able to catch a Motorail in Edinburgh or Glasgow to be able to go to Palermo.

Lord Lyell

My Lords, I shall not follow the noble Lord in that train of thought. I was thinking mainly of the high speed passenger networks. If he wishes to discuss the tunnels, I can have a talk with him over the tea cups.

Noble Lords may have heard my views before on the comparison between British Railways' InterCity system and comparable systems in Europe. The noble Lord, Lord Tanlaw, mentioned France. When he looks at the existing intercity system in Germany and at Switzerland, I think that he will find that there is only one winner; namely, British Rail. I hold that view and I slick to it today.

The main thrust of the report and what everybody is discussing this afternoon is the reference to combined transport. That returns us once again to the environmental advantages. My noble friend Lord Lucas referred to paragraph 67 of the evidence about the growing importance of environmental advantage, together with some financial advantage, in moving freight by rail wherever possible. But the concept of combined transport, as we see it set out, is defined as moving freight and goods and changing what they call the "mode" of transport at least once. There is a great deal of evidence about movement of freight and goods by rail in Europe. But there is a necessity for dedicated rail sidings and even spur lines to particular factories, firms and commercial centres. Certainly France and Germany have them.

Before we start to discuss improving the freight network, the United Kingdom has one problem in that our network has been reduced enormously. I understand that there are something like 15,000 separate rail freight sidings in each of France and Germany, whereas there are approximately 1,500 in the United Kingdom. Even if freight trains were to be encouraged back to British Rail, there would still be a major problem. There are some enormously efficient container depots on British Rail. Nevertheless, there remains the main problem of frontiers between member states and transnational freight. That point was discussed by the committee.

However, the main core of the problem which has to be overcome for combined transport relates to the United Kingdom loading gauge. I found fascination with the Berne plus gauge together with something called W6. Reference to those can be found on pages 49 and 50 of the evidence. According to the evidence given by Mr. Rees, the gauge was larger than the Berne system yet, according to him, the W6 loading gauge was compatible with British Rail. He said that freight traffic runs on the existing network to that particular gauge.

What would appear to be the solution to this problem of trying to attract more freight on a European gauge back to British Rail? The first solution would be to build new track. It is pointed out (at page 81 there is some evidence produced by British Rail) that it would cost approximately £1.3 billion for a limited line built on the Berne dimension from—of all places—Lutterworth to the Channel Tunnel. The noble Lord, Lord Tanlaw, made reference to that and to the Great Central Railway.

I looked at the map this morning (I do not look at too many maps) and I saw on the Ordnance Survey map what is called a site of a disused railway. It seems that Lutterworth is on the M.1 motorway which, so far as I understand it, uses the existing track line of the old Great Central Railway all the way to Leicester. So either one digs up half the M.1 and puts back the railway, or one has to construct new tracks. But even if such a large amount of money were to be spent, would it be the ideal solution? Would the Commission be able to give any financial assistance in a feasibility study, let alone in building the track itself?

There is a second alternative to try to overcome the problem of the differing loading gauges. In paragraph 61 reference is made to four wonderful systems. I was interested to note one, called the Powell Duffryn system, with very small wheels. According to some of the evidence, these particular trucks should be limited to speeds of 100 kilometres to 110 kilometres per hour. But at the moment in France freight is moved at 160 kilometres per hour, which is approximately 100 miles per hour. The noble Lord, Lord Tanlaw, seems to think that within our life span freight will move at 300 kilometres per hour, which would he quite interesting. Paragraphs 61 and 62 of the report point out that there is some possibility of adapting freight transport and combined transport systems so that freight can move from large centres in the United Kingdom to France.

Perhaps I could just take one example of a nation that is mentioned fleetingly in the evidence but which is not part of the Community. Nonetheless, it impinges very greatly on Community travel. I mean Switzerland. There is a new plan in Switzerland—it is spelt NEAT, and goes by the name of Neue Alpine Auto Transport. The Swiss Government have committed 10 billion Swiss francs, which on today's rate of exchange is something in the region of £4 billion, to that particular new form of combined transport, moving freight under the Alps. A completely new rail tunnel of 42 kilometres under the St. Gotthard Pass is planned. It is also planned to improve the Lötschberg Tunnel so that it will be able to take piggy-back transport—that is to say, lorries on load-overs, for 24 kilometres. That is all for an outlay of £4 billion. The Swiss believe that that is a main priority, but they have the Alps and the Jura, which we do not.

I find the report of the committee immensely interesting. It is readable and, above all, thorough. The witnesses provided evidence which was clear and helpful to me and, it seems, to the committee. I conclude by thanking the noble Lords, Lord Shepherd and Lord Ezra, and the committee, for all work that they have done. I support particularly the thrust of their recommendations in paragraphs 90, 91 and 112 on combined transport.

4.29 p.m.

Lord Elibank

My Lords, I too should like to congratulate the noble Lord, Lord Ezra, and the committee for a most excellent report. It is very interesting to someone like myself who is a complete layman in the matter.

One phrase in the report mentioned today by a number of speakers is that we are on the periphery of Europe. That is an obvious truism. We are an island; we have been on the periphery for many thousands of years. However, in the past our position as an island had not hindered us so far as concerns trade and the movement of passengers and people. In the old days there were ships and sail; then came steam. There are a number of excellent ports around the coast of this country from which it has been possible to forward our trade as a great maritime nation through a number of centuries. Then came air transport. The chief air route in the world is the transatlantic bridge between the United States and Europe. We have happily been the European end of that bridge. And from Heathrow, the busiest international airport in the world, the services have radiated to other European countries.

To some extent this has bred a false sense of security in our approach to our European competitors and friends, because rail is going to be and indeed is quite different. We are, and have been, on the periphery of Europe in regard to rail for at least 100 years. The rail system of Europe has functioned perfectly well without us and if it continued to go only as far as Calais, that would be perfectly satisfactory to the continentals. It follows that we have to attract continental freight and passengers to this country. We have to attract them positively rather than adopt the relaxed and rather laissez-faire attitude which we have had as a nation for 20 or 30 years.

I was a member of a committee considering a private Bill in your Lordships' House and examining the connection which British Rail was seeking to build between the Channel Tunnel and London. In the middle of the committee's hearings the fast link was postponed for a while. So what was initially thought to be a temporary link now assumes elements of permanency. British Rail is making outstanding efforts to cobble together some form of makeshift line system which will enable trains to travel from the Channel Tunnel to London at a reasonable speed, but it will not be something of which we as a nation can be in the least proud. Passengers and freight, after reaching Calais from other parts of France or from Belgium on the superb trains about which we have heard, will then be transferred to our rail system with its thick commuter traffic in Kent, and will have to proceed at the fastest rate which can be managed on that line given the rollingstock available and the volume of traffic. This is a far from satisfactory state of affairs.

One feature which it seems to me is most necessary to make our rail system attractive has been mentioned by a number of speakers. It is the loading gauge. Continental trucks and wagons apparently cannot pass through our stations and under our bridges in their present form. The committee very properly looked at this critical area and concluded that the modification route was fairly unattractive both to ourselves and, more importantly, to our associates on the Continent, who would be most unlikely to welcome, or perhaps even to permit, the sort of modified trucks that are envisaged with, as I understand it, small wheels.

This seems to a layman a quite unacceptable permanent solution although it might have to be adopted as a temporary measure for a number of years. It seems quite clear that we shall have to modify our stations, bridges and lines to take continental traffic no matter what it costs. Any such statement normally results in a throwing up of hands in horror and an almost unlimited bill. No doubt it will be very expensive, but you can to some extent stagger your payments. It is not essential for all the lines in Britain to be adapted to the Berne gauge overnight. It is clearly essential that the lines from the Channel to London should be so adapted and it is highly desirable that there should be a line from London running up through the Midland cities within reach of the northern cities to Scotland. However, that can be programmed to some extent in accordance with the money available. It is important to have a firm declaration of intention and a programme that will be stuck to. I do not believe that this is an option we can take or leave. If we want to be integrated into the continental network for passengers and freight we have to act.

The only other point in the report I wish to comment on is combined transport. When we consider railways, not only the inter-continental ones but those in our own country, for carrying passengers or freight, they suffer obviously from one grave disadvantage. Passengers or freight have to go from the start point to a terminal; from a terminal on to the railway to another terminal; and from that last terminal to the final point of destination. There are exceptions as regards bulk freight and so on but, generally speaking, that is true. This seems to me to be a fundamental and profound disadvantage from which all railways suffer. My noble friend Lord Hood mentioned the lack of financial success of railways throughout the world and I suspect that that is the main reason why, on the whole, railways are unprofitable.

The only way to assist, it seems to me, is by engineering ingenuity. Somehow it has to be possible to move loads and passengers from their original point of departure on to the railways very quickly, very readily and very cheaply. I would think that this is primarily an engineering problem, although the report suggests that some taxation measures might assist. It seems to me that until the problem is overcome the railways will be at a permanent disadvantage. Owners of freight wanting to move that freight from A to B will always prefer a lorry, just as all passengers will always prefer a car, if they have one, rather than making a three-tier journey. That is less true over long distances; but over any reasonable distance the railways will always be at a disadvantage until combined transport movement can be made much more effective and efficient than it is at the moment.

We all wish the railways well, and for the reasons that have been mentioned in the debate. They have a great advantage environmentally and also in relation to the extent to which they ameliorate the gross overcrowding on our roads and on our airways. We wish them well, as I say, and in that light I can only congratulate the Commission and the committee for focusing the spotlight upon different problems.

4.38 p.m.

Lord Renwick

My Lords, I too am sad that the noble Lord, Lord Shepherd, has been unable to open this debate today. I agree with the comment of my noble friend Lord Lucas that he provided enormous enthusiasm for this inquiry. I should also like to mention Simon Burton, our clerk, because this is the last report he did for Sub-Committee B and we have had very good support from him over the years. I wish him well in his elevation to new pastures in this House.

We were confident of being able to rely on the noble Lord, Lord Ezra, to give a very sound background. He and other speakers have detailed the Commission's proposals and the opinions of our committee compiled from written and oral evidence between July and November last year. It seems much longer than two and a half months since the report and its recommendations thumped down on our desks around Christmas last year. But time is remorseless. I am told, and shall be grateful for correction or verification from the Minister, that the draft proposal is likely to be accepted by the Council of Ministers by a qualified majority no later than June of this year.

It is to be hoped that British Rail is ready for the implications of such a decision. I am told that acceptance is assured. I am sure that British Rail is not ready for anything so radical. I resist the temptation to make any reference to the recent less than mild winter conditions if only because I, luckily—unlike my noble friend Lord Nugent—had no personal experience of train travel over that time.

I find it helpful to remind myself of the reasons why such a relatively small proportion of our freight is carried by rail and whether this Council resolution is likely to change the situation. The first must be the sheer convenience of road transport. For passengers as well as freight, the temptation simply to climb into a car or to load up a van or lorry is so strong that the lure of public transport or freight rail must outweigh that convenience by a number of factors.

The first of those is price. It must be made either too expensive to travel by road or much cheaper to go by rail. Realistically, I predict a combination of the two. The privilege of using a car will have to be properly priced, just as is the convenience of sending goods by road. At the same time, public transport has to become more competitive, comfortable, convenient and reliable. Above all it has to become fashionable, for short journeys or for long, to prevent what I do not believe any of us wish to see—the virtual pricing out of private motoring.

The same revolution must be made in the carriage of freight. The cost and convenience of rail freight, or at least combined transport, must be made—by a combination of quite radical changes in attitudes and working practices with advances in technology and management skills—irresistible or at least very tempting to would-be road hauliers. Again, it must not be by pricing alone that our roads are relieved of speeding juggernauts, although we must all accept that there will be some element of that.

I referred to technology. Such are its characteristics that we are seldom able to predict how technology will assuredly help to ease even our transport problems. Improvements in communications are already revolutionising the ease with which rail networks can be managed—for instance, by reducing the safe distance between trains, thus greatly increasing the capacity of track. Computers can handle in seconds the vast amount of information that is necessary to manage rail movement.

Trains are being developed which can operate at far higher speeds and with far greater reliability and no longer, I am assured, will British Rail buy second best goods. I understand that it is now choosing new rolling stock for the comfort of its ride as well as other considerations. I wonder what other criteria it used to use. I am sure that regular commuters could tell me.

New materials are being developed which give greater strength and have better insulation properties for less cost. That is the same as saying that they give more safety, comfort, economy and reliability. New technology is also being developed to enable goods to be transferred more easily from a road trailer to a rail wagon and to keep the goods refrigerated over thousands of miles. Perhaps our great markets at Nine Elms and the new Spitalfields at Stratford will be supplied overnight by rail with fresh vegetables from Spain or Italy.

However, for that to happen, more needs to change than the gauge of the lines, as we have heard from other speakers. There has to be a change of attitudes among those who run our railways, or a change of team. There has to be a new incentive, an instilling of commercial acumen and recognition of necessity, a desire to compete and the management skill to offer a service that will attract custom from other forms of transport.

French Rail has done so, at least with passenger trains. I am sorry that we did not ask the SNCF for evidence. I believe that we should have learnt a great deal. I am told that even though French Rail is still state owned, it has developed routes for its TGV which have created their own custom in competition with road and air travel. The TGVs run fully booked, give a positive return on investment, and have rejuvenated the economic activity of the cities to which they run from Paris. Good communications always promote trade. It constantly amazes me that that simple lesson still has to sink in with those who have the task of managing our communications infrastructure.

On the freight side, we understand that France has over 10,000 industrial freight sidings for the embarkation of goods. What was formerly West Germany has 15,000, and goodness knows how many more the East European countries have. Great Britain has 1,500. Perhaps I may quote Mr. Hope, editor of Railway Gazette International for the third or fourth time in the debate. He points out that: It is necessary to establish companies who are able to use the railway tracks in the same way as the road haulier uses the road". Only then will our European friends, let alone this country, make full use of the massive rail infrastructure that has existed for the most part for well over 100 years. Other forms of transport, by road, air or ship, have competed successfully with rail for well over 50 years. However, we now recognise environmental problems. Roads and airways are becoming saturated. We are soon to become joined to the mainland of Europe with a rail link through the Channel Tunnel. Those are the opportunities that the European Commission has recognised. I hope that Her Majesty's Government will also recognise them.

4.46 p.m.

Lord Mountevans

My Lords, I too am most grateful to the noble Lord, Lord Ezra, for so ably acting at short notice as a locum introducing the debate. I have the utmost sympathy for the noble Lord, Lord Shepherd. I am grateful to his committee for its excellent report; and to the EC for its stimulating discussion proposals.

The first matter that attracted my eye—as it did so many other speakers—is the need to enable European railways to compete for freight. The notion that three railway managements have control over the transit of a goods trucks from Paris to Lisbon, each having different degrees of autonomy, with three different sets of government attitudes and three different subsidy regimes, serves only to provide a situation of incredible complexity. If one wants icing on the cake—because there is some technical discussion—there is the break of gauge between France and Spain.

The noble Lord, Lord Ezra, reminded us that we need greater management autonomy. Commercial freedom to act is essential. It is also essential that such commercial freedom is ongoing rather than at the whim of changes of government. As the committee and several speakers have stated, we need a clear definition of what must be viable and what must be seen as socially necessary. Having established that definition, how do we pay for what is socially necessary?

Given that definition, we clearly need transparency of accounts. I congratulate those members of the committee who visited Sweden on the production of the breakdown of Swedish Railways' operating income which appears on page 28. Those figures have never before been available in any Swedish rail report. One must also congratulate them on the subsequent figures on how the track authority will be funded and how it will apply its funds.

In another context, the accounts of French Rail are not desperately transparent. I should love to know this: I have been told by French Rail that it receives subsidies for defence, social purposes, compensation for infrastructure charges, pension schemes and to enable it to write off interest. It receives subsidies or contributions also from the local départements in terms of certain services; and it derives benefit from the selective employment tax in Paris, which is one reason why Parisian local transport is often held up to us as such a good example. Transparency of accounts will make the whole understanding of European railways, and thus the way that we develop and progress, much more feasible.

The committee was greatly interested in freedom of access. Here, I feel, British experience is of note in that we already have the formidable work done by Foster Yeoman in providing its own locomotives and rolling stock, relying on British Rail only for drivers, signalling and track. Amalgamated Roadstone followed exactly the same route. We have the charter trains whereby British Rail is hiring a locomotive and driver to companies such as Ford, to fertiliser manufacturers, oil companies and to the coal industry. In addition, we have a limited degree of charter operation, or access for passenger trains; in particular, the Venice-Simplon Orient Express and those trains run by the Steam Locomotive Operators Association. I believe that we lead Europe in terms of the number of railway goods wagons that are in private ownership.

I turn to the committee's wish, which I share, for greater consideration of the track authority concept—BV—as developed in Sweden. I believe that the concept is right for Sweden for a number of reasons; I fear also that it may be wrong for Britain for different reasons. Perhaps greater consideration is called for rather than an absolute cut off. Sweden has a fairly isolated system with only five land frontiers. I admit that Britain has only one. By European standards five land frontiers, one of which is practically defunct in rail terms, makes Sweden fairly isolated. Those land frontiers that are open are with Norwegian neighbours and operate through-pricing, through-locomotive work, through-rolling stock and crew work, which have been around since I started writing about it in the 1960s. Even the voltage is the same. A lot of pan-Scandinavian benefit has been derived.

The second point in regard to the Swedish set-up is the historic attitude that exists towards administration and subsidy of public transport. Before the track authority was set up an aviation authority controlled licensing, airports, air traffic and slots as well as administering subsidy to almost all domestic aviation. As the report reminds us, the roads authority had a road fund income which more than covered investment and maintenance. However, it did not cover the social and specifically the accident costs incurred, though it found time to cover the ferry administrations. There were a considerable number of subsidised ferries. Practically every bus that ran in Sweden was subsidised. The underground trains were subsidised; the few tramways that existed were subsidised. One could almost say that, with the exception of intercity aviation between the very large cities, if it was in the Swedish national timetable it was subsidised.

The Maritime Authority subsidised coastal shipping apart from the ferries. They were regarded as floating bridges and therefore part of the road network. What was more natural, therefore, than to set up a track authority looking after infrastructure subsidy and, it was hoped, staunching the ever-growing demand for railway subsidies? A big black hole is not a term one reads often in a Select Committee report, but it appears on page 30.

The commercial, or operating railway, was given a remit to run services profitably, either on its own account or at the expense of county transport authorities; or, as happened in one case, at the expense of the Government. If they could not be persuaded to do that they were under no obligation to run the services. Perhaps that is why one is beginning to see signs of closure in Sweden and, more importantly, signs of long distance bus substitution over routes of 300 to 400 miles.

To facilitate the achievements of the profitability remit the operating company was allowed to retain ancillary businesses such as freight forwarding, ferries and bus companies. The situation in Britain is rather different. Those noble Lords who worked the transport patch will remember that British Rail's remit is its core business—running railways—and that is its only remit.

There are other ways in which the situation in Britain is different. Subsidy is not available to civil aviation or to coastal shipping save in terms of estuarial ferries and the highlands and islands services. Long haul coaches are not subsidised. Nowadays there is only selective subsidy for short haul stage carrier work. On rail we have Intercity, freight and parcels on a no-subsidy remit. The network subsidy is being reduced. Only the provincial network is seen as requiring an ongoing element of support.

Another difference between Britain and Sweden is the sheer complexity of the business. BR runs 16,000 services per day; Swedish railway services run around 2,500. Most of British Rail is at least double track. In Sweden it is rather less than 10 per cent. In this country we take for granted half-hourly and hourly services. In Sweden there are almost no routes outside the conurbations which enjoy the hourly frequency of the Intercity service; I believe that there are only two.

I do not wish to see the track authority concept dismissed out of hand. I agree to a certain extent with my noble friend Lord Lucas. The concept deserves further study both within British Rail and on a wider national level. However, I foresee problems, one of which is safety. The evidence of Mr. Hope was impressive. He has been quoted several times. It surprises me that in his written submission, when describing the situation in the States, which uses running powers—a variant of the track authority concept—he did not say that over the past two or three years there have been one or two horrific disasters. I am sure that it was a conscious decision to omit that information. One disaster near Philadelphia involved the death of 70 people.

I am concerned about slots. That topic has cropped up en passant once or twice in our debates and one thinks of Oxford where Intercity runs an hourly service from Reading or beyond to Birmingham and beyond. The network runs suburban services to London and to Banbury and Bletchley. The provincial line runs services to Worcester and Hereford. There are bulk freight carriers transporting all the coal that goes into the Didcot power station. There are wagon and container freights and parcels. If there is a track authority who will allocate priorities for that traffic? Will it simply become an auction with the weakest going to the wall?

It could be said that the track authority concept works in the air. Of course it does; but there is competition. Two or three airlines fly from Sydney to Melbourne at a given time. Unfortunately, that is only in the peak period. If one wants to travel at any other time there is nothing. I suspect that the noble Lord, Lord Chapple, explored that argument in an earlier debate. A similar situation exists in the States. There is all the competition that one could wish for provided one travels at the time nominated by the competing carriers. Safety is paramount.

Finally, investment has to be considered. We have flirted with a new high-speed network in Britain, which I believe is unnecessary to save between the Channel Tunnel and London. I feel that British Rail's existing Intercity high-speed services, provided that they can be matched between Waterloo and Kings Cross, provide both the frequency and speed which many European railways could not manage.

In Sweden we are told that the track authority is willing to invest £1 billion over the next decade. However, the operating company has put in bids for £4 billion. Where will the truth lie? Will investment be demand-led, as the operating company would like it to be? Or will it be cushioned from demand, which I should not like to see happen, by being purely in the hands of the track authority? How successful will the track authority be in raising money? The report states that it has not been able to raise private funds to pay for the Stockholm version of the Arlanda link.

Perhaps I may return briefly to the high speed railway and the Berne gauge. The conflict that exists between our need for a Berne gauge railway and some people's wish to see a high speed railway deserves a report on its own. My own choice would be Cheriton to London high speed and then, it is to be hoped, Berne gauge. Who will pay for it? I do not believe that we can pay for it. Perhaps it will be the EC. If so, what about that dreaded word "additionality"?

5 p.m.

Lord Tordoff

My Lords, we have had a very wide-ranging debate. We have been from Scotland to Palermo and to Sweden and back. It has been a very useful and helpful debate on an excellent report. Like everyone else, I wish to congratulate the noble Lord, Lord Shepherd, and also regret his absence with 'flu, which is very debilitating. I hope that he recovers quickly and will be back in our midst as fast as can be. If he had to look for a safe pair of hands to pick up the ball and run with it he could have found no one better than my noble friend Lord Ezra. I congratulate him on making two speeches in one. It was a seamless garment.

I take this opportunity to note that, as regards Sub-Committee B, one of the members who does not participate in the report is my late and lamented noble friend Lord Lloyd of Kilgerran. I take this opportunity to say how deeply saddened we are that he is no longer with us. I know that noble Lords on all sides of the House will miss him on such occasions in dealing with this kind of report because of the expertise that he brought to the subject.

Like the noble Lord, Lord Nugent of Guildford, I also thank the Commission. I would not necessarily give its suggestions a mark of 100 per cent. but it has opened up a very interesting and wide-ranging debate. It is one that should not be shut off until we have explored every part of it. I am not sure that the noble Lord, Lord Underhill, will go along with those sentiments. Having read the evidence of the National Union of Railwaymen, I believe that it takes a rather less sanguine view than most of us.

However, there is no question but that this report is timely. Transport is a very important part of Community activity. It accounts for 7 per cent. of employment in the GDP and an amazing 40 per cent. of public investment. I was astonished when I saw that figure but apparently it is true. Transport also accounts for 28 per cent. of energy consumption within the Community. Despite the delays to road vehicles costing between 400 million and 800 million ecus per annum at internal frontiers alone, the environmental cost of pollution and the horrendous figure of 50,000 people killed on the roads of Europe—we should remember that we are here talking about a European dimension and not simply a UK one—and 1.6 million people injured, the proportion of goods travelling by rail has halved in Europe since 1965.

That cannot be right. Therefore it is right and e proper that the Commission should address itself to this matter. It is also wise that our Select Committee embarked on this study. It is a time of opportunity for railways. Paragraph 101 of the Select Committee's report underlines that. Like the committee, I welcome the proposals made by the Commission with a degree of modified rapture. There is no doubt that increased commercial independence and financial autonomy for operators as against the owners of the track may be controversial, but the more one looks at the matter the more attractive it seems to be.

In Blackpool last year my right honourable friend the leader of my party drew attention to the desirability of going down that track. When he said that there was considerable in-drawing of breath by those who had not thought the matter through. There is no doubt that the separation of infrastructure and operation is an idea which is banging on the door at the moment. Of course there must be safeguards, particularly in relation to safety. The noble Lord, Lord Mountevans, referred to the problems that have occurred in the United States. There are clearly signalling and timetabling problems. The noble Viscount, Lord Hood, referred to the dangers of trains leaving and arriving at the same time.

I think the committee has gone some way to covering that problem in discussing the question of slots. It is not an easy problem to solve but it is surmountable. I am sure that the committee is right to leave the subject in the hands of the infrastructure body. One doubts whether such a scheme would be possible in the crowded areas of South-East England. There may be ways around the problem but one can foresee enormous difficulties in such a crowded area. However, such a scheme would be possible elsewhere. We should examine much more closely where that might be.

Like the noble Lord, Lord Lucas, I read the handout from British Rail in which Sir Bob Reid said that the proposals simply would not do. He told us that the various components were so intertwined that attempts to separate them are likely to prove at best impractical and at worst unsafe. I hate to say it, but he would say that, would not he? It is time for us seriously to study these proposals and to bring a fresh light to bear. I am glad to say that the party of which I am happy to be a member is in the process of producing a Green Paper, Vehicles for Change. It is not available until next week when it has its press launch. It is probably safe to say that many of the matters contained in the Select Committee's report may be in the Green Paper when it is unveiled next week. The subject will be debated at our spring conference in Nottingham the following week.

We believe that the private operation of some trains would help to expand consumer choice and increase efficiency of service. On basic principles we on these Benches would not immediately quarrel with the conclusions in the report. There is clearly a need for caution. As the noble Lord, Lord Mountevans, said, the Swedish situation is not directly comparable. Mr. Richard Hope is constantly being mentioned in this debate and he is a great guru on these matters. His evidence is worth reading in detail.

Perhaps I may include a small anecdote on that subject. There was an occasion when my noble friend Lord Holme of Cheltenham was invited to attend a well-known early morning radio breakfast programme. He expected to be asked questions about the latest problems of the alliance as it was then. He was surprised to discover that the lead in was a discussion about the latest report from British Rail. It was only when the gentleman said, "Now, Mr. Richard Hope, could you give us your views on this?", that the then Mr. Richard Holme had to say, "I'm sorry, I am no expert on railways". Mr. Hope's evidence is impressive, as the noble Lord, Lord Lucas, said. He suggests that the matter is not straightforward but he does not dismiss it out of hand.

It is important to follow the point that he made; namely, that freight is where we should start. In some ways that is where the greatest need is. We are talking about Europe and not just our domestic situation. Freight is the subject on which progress can be made, particularly with the opportunities that have been opened up by the tunnel. It is deeply depressing that we shall be unable to take full advantage of the Channel Tunnel because of, first, the lack of a high-speed link and, secondly, the lack of traction vehicles which can work north of London.

When I went to a meeting of the All-Party Channel Tunnel Group I was appalled to hear British Rail say that it was not at all sure that the rolling stock will be available to take advantage of the Channel Tunnel when it is opened because the people building the locomotives are unable to ensure that when they go north of Willesden they will not turn all the signals green as they go past. It is apparently an electronics problem. Along with members of the All-Party Channel Tunnel Group I had the honour and pleasure of discussing the matter with the Secretary of State. The Government say that this is only a temporary problem and that people will simply have to change platforms at Waterloo. That is not good enough.

The great advantage of the Channel Tunnel is that people can get on trains in Edinburgh, Manchester, Liverpool and Glasgow and go straight through to their destinations in Europe. If that is to be denied them, then the attraction of the Channel Tunnel disappears for most of them. It is no good the Government and British Rail saying, "It's not our fault. It is the fault of the locomotive manufacturers". If the Government's defence procurement was as bad as British Rail's procurement system we should still be fighting in the Gulf with very little chance of winning. On this matter as on other matters such as engines which do not like a certain type of snow and brakes that are affected by falling leaves in the autumn, as if this were some new phenomenon, British Rail's procurement system leaves a lot to be desired.

At the end of the day we shall have much more road congestion when we had hoped that the Channel Tunnel would alleviate much of it. Once people have got themselves organised to go by road and move goods in that way they will continue to do so. Here is an opportunity which is being missed. Mr. Hope's evidence is very important and should be studied in great detail by us all.

We certainly agree with the committee on two basic points social and economic cost benefit must be included in the analysis when decisions are being made. British Rail has commented, again in a handout that it has used this approach in a few cases: London, the PTE areas, Cardiff and the east-west crossrail. But when one reads the small print it seems that it has only included journey time saving and reduced congestion. It has not been putting into the cost benefit equation the overall environmental impact in relation to the output of gases, the influence on the greenhouse effect and all the other considerations which ought to go into it before decisions are made.

British Rail sometimes gives one the impression that it sees freight as a necessary evil. Its freight terminals are coming on but slowly—it has now designated one or two. Perhaps I may again make a plea for my part of the country. There is to be no freight terminal south west of Bristol. As Speedlink is being taken away from us, what are people down there supposed to do? It adds up to the fact that British Rail is not frightfully interested in freight. That is one reason why I should like to see the committee's proposals, particularly in relation to freight, implemented in order that other people who see a market there are given the opportunity to try to exploit that market.

We have had a considerable amount of discussion on the subject of loading gauges. British Rail is doing nothing to improve the situation. In this case I think it is right to say that improvement cannot be achieved by current funding methods. That is at the heart of the problem. British Rail is right to point to the Section 8 problems. There is also Section 42 of the Channel Tunnel Act which prevents public money being put into that link. That section should be repealed.

There is need for a proper study of a spine route in this country bringing a route up to UIC standards. I well understand the impatience of the noble Lord, Lord Tanlaw, in a remarkable speech, to which we all listened with admiration. The Government would do well to listen to him because it is crucial. He is probably better able to be decisive on this issue than the rest of us because he knows the background facts and figures. I shall go no further today than to say that there is an absolute need for a clear study to be put in hand immediately to find out where and at what cost such a spine route could be put in place.

Do the Government really want to be part of the European Market after 1992 so far as concerns transport? If they do, they should welcome the committee's report absolutely and unreservedly. If they do not, the alternative is that we remain as a declining offshore island. It is as important as that.

Lord Lucas of Chilworth

My Lords, before the noble Lord sits down, perhaps I may ask him one question. He quite reasonably drew your Lordships' attention, as did my noble friend Lord Mountevans, to the fact that the Swedish railway set up is not comparable to that of the United Kingdom. But would he not agree that the separation of the infrastructure which has been achieved in Sweden has demonstrated quite conclusively where the money goes and which part of the system has the bottomless pit—those are the words used? There is something in that set up which is worthy of study in other European systems, notably in our own.

Lord Tordoff

My Lords, I agree with the noble Lord that in principle—I hoped this had come across in what I was saying—this is something we must study. Whether it is directly applicable is difficult to tell on the basis of the Swedish experience, because Sweden has nothing like the concentration of rail traffic that exists in the South East of England. Certainly it is a useful starting point. One must bear in mind that basically the two Swedish companies are still state-funded and are not necessarily directly private enterprise companies, although one of them is moving that way. I agree with the noble Lord, Lord Lucas, that it sets up a very useful indicator that we should be looking at this much more seriously than we are at the moment.

5.17 p.m.

Lord Underhill

My Lords, like other noble Lords, I much regret the absence of the noble Lord, Lord Shepherd, and wish him well. I know how much he was looking forward to this debate and of his pride in the report which we are considering. I congratulate the noble Lord, Lord Ezra, on his opening speech. It has given us an opportunity to see the breadth of the interesting and valuable report before the House.

The European Commission's emphasis is on proposals for the development of international rail services. The proposals have relevance to British Rail but the debate goes wider. It is recognised that road transport is dominant throughout the Community and that the carriage of freight and passengers will continue to be mainly by road. We all accept that. But the Commission takes the view that there is scope for railways to play a much larger part in Europe's transport. I understand from the report that the committee accepts that as well. We have increasing congestion in road and air; we must also take account of the important environmental benefits which increased rail transport could bring.

The Commission's proposals are directed to providing opportunity for rail to help relieve these problems. The report indicates that the committee considered both the relevance and the practicability of the Commission's proposals. I shall endeavour to avoid any doctrinaire attitude.

Paragraph 7 of the report refers to the Commission's conclusion. It reads: A new regime reconciling the public needs with the need for efficient management is now necessary'. That view is endorsed by the committee in paragraphs 102 and 103 of its report. There is emphasis on the fact that railways cannot at all times be required to make a financial return on their investment and that railways must run uneconomic services which are required by the public sector. I hope that the Minister will be able to answer my next query. If not, perhaps the noble Lord, Lord Ezra, will be able to do so. I should like to know what the words "while maintaining market discipline" mean. If we are to consider the running of uneconomic services, surely we cannot talk a great deal about market forces.

Although I understand the emphasis on autonomy for railway management, our rail transport must be co-ordinated with a national transport plan covering all transport modes. I note from the report that the CBI made the observation that British Rail is already more autonomous than most Community rail undertakings. Paragraph 15 of the report states that the head of the inland transport directorate of the Commission pointed out the problems that arose because railways knew the amount of grant only at the year end and year by year. We are told that he went on to say that the United Kingdom had gone further in introducing the concept of multiannual programmes. I believe that all of us appreciate the fact that, even though we have these multiannual programmes, they are not firm commitments for subsequent years.

The Commission's proposals accept the need for a system of public service obligation covering unremunerative services. Two issues are raised. The first is the introduction of fixed-priced contracts; the second is the proposal that uneconomic services should be based on a social cost benefit analysis. The report shows that many witnesses were critical of fixed-contract proposals; I cite the evidence of the Institution of Civil Engineers. At paragraph 72 the committee states: We recognise that this creates a dilemma". The proposals for fixed-priced contracts and the social cost benefit analysis change must be considered together. I was pleased to note the reference to the useful experience of grants made by a number of passenger transport authority executives under the Section 20 agreements with British Rail for much needed passenger services—the system whereby the PTAs make grants to BR under special agreements. That was introduced under the 1968 Act. However, any contracts made under the proposals must include reference to the quality of the services which have to be provided.

It is clear from the report that many witnesses expressed concern about the present difference in criteria for determining road and rail schemes. They urged that both should be treated on the same basis. The cost benefit analysis is applied to road investment, but British Rail is required to earn a return of 8 per cent. on investment in infrastructure and rolling stock. A great deal of evidence, including that of the Institution of Civil Engineers, the Chartered Institute of Transport and the Town and Country Planning Association, was presented in support of the much needed change. Very regrettably, as set out in paragraph 20 of the report, the Department of Transport justifies the present practice and is critical of any proposal for social cost benefit analysis to be applied to rail as it is to road.

In various debates, noble Lords have pressed for social benefits to be taken into account. I am pleased to see that the committee supports that view in paragraphs 71 and 72 of the report. In addition, I should point out that "social benefits" must include environmental considerations.

In its evidence the CBI presented two tables. The first dealt with rail investment as a percentage of GDP from which it will be seen that only Greece has a lower figure than the United Kingdom. The second dealt with the financial support to rail as a percentage of GDP. That showed the United Kingdom at the foot of the list. Throughout all the discussions on finance in the report, there is no reference to the issue of whether consideration should be given to the rights of British Rail to raise loans on the market. That would greatly alter its present financial position.

There are problems in the Commission's proposals for right of access to the railway system. The committee recognises that in paragraph 104. It states that there are technical constraints, but that these do not preclude a degree of access. It is certain that arrangements must be made in connection with international services, especially cross-boundary services, for freight. There has been some criticism of British Rail in connection with freight. I recall the excellent exhibition which I visited and the video presented at that time which was entitled, "Rail Freight '89". BR did its utmost to try to secure additional freight work. The point regarding international agreement is emphasised in a Labour Party document entitled Moving Britain into Europe, produced in addition to our general transport document.

The committee points out that in the United Kingdom private companies are allowed access to the BR system. Moreover, reference was made to the position of Foster Yeomen. Such arrangements are very limited and are carried out under the supervision of BR crews. We understand that at present two-thirds of the freight wagons are privately owned. However, despite that fact and the position of Foster Yeoman, the situation is totally different when considering the suggestion that there should be free access to anyone who puts in a claim to run any British Rail system. Indeed, it ignores all other factors; namely, safety, common sense, time tabling and so on.

I move on now to consider the separation of infrastructure and operations as proposed by the Commission. The committee dealt with this at some length; indeed, in no fewer than 14 paragraphs. Paragraph 88 indicates that the committee's conclusion to approve the proposal is drawn mainly from development experiences in Sweden. The account of the committee's visit to that country, as the noble Lord, Lord Mountevans, said, is extremely valuable and useful. The committee accepts that the rail network is simpler in that country than it is in the United Kingdom, a point knowledgeably made by the noble Lord, Lord Mountevans.

In paragraph 35 the committee says: A number of technical problems could … arise". If one looks through the evidence given to the committee, it will be seen that there was very little support for such a separation. Reference has been made to the evidence given by Mr. Richard Hope. The report states that he has been editor of the Railway Gazette International for 20 years and that he has travelled extensively and examined the performance of railways in no fewer than 67 countries. Therefore, he has gnat experience and knowledge. He is not a person standing at the Dispatch Box whose information must be limited. He says: Virtually all the world's railways have been organised on the basis that track and trains form a single transport system and must be under common management. One does not lightly throw aside 160 years of near universal experience". That is not to say that we should be stick-in-the-mud and never move. But we should take into account evidence presented to the committee.

British Rail drew attention to the increasing interdependence of infrastructure and operations. I noted the lengthy evidence given by the British Rail chief executive Mr. John Welsby. As could be expected, British Rail said that it wished to retain the present integrated system. However, the evidence put forward should not be lightly passed aside. The Central Transport Consultative Committee put forward the view that separation would not be in the interests of consumers. That is explained far more fully if one reads the whole of the evidence.

The Department of Transport, which I have criticised already on another aspect, stated at paragraph 41 that it thought that the Commission's aim was to encourage international services but that that in no way required the proposed separation of structure from operations.

In view of the Commission's aim to encourage international services, I must refer to the evidence given by the Community of European Railways. As most noble Lords will know, that is a body of the 12 rail undertakings of the Community states with the addition of those from Austria and Switzerland. Paragraph 36 states: The technical aspects are so cohesive and enmeshed … that European railway companies do not see how splitting the railway companies into an infrastructure company and an operations company could be possible". In its recommendations at paragraph 106 the committee concedes that there is evidence of severe problems in the proposal for separation. However, it suggests that the problems are not so great as to make the proposal impractical. Without being unfair to my noble friend Lord Shepherd, who is not with us, he said in his evidence that problems were there to be overcome. If I said that as regards certain aspects of Labour Party policy, I should be asked for considerably more detail.

In the committee's report there is no reference whatever to a previous report on traffic infrastructure presented by our EC committee in 1989 and debated in your Lordships' House in December that year. That report made no reference to the possibility of separating structure and operations. However, it considered the possibility of a European infrastructure agency and a Community infrastructure fund on which our debate at that time mainly concentrated.

I agree generally with paragraphs 47 to 50 which detail the Commission's proposals for the development of a high-speed network. There are obvious economic advantages, particularly as regards freight. I welcome the suggestion at paragraph 89 that the Community of European Railways should be expanded to take in EFTA countries and nations in the former eastern bloc.

I have had the good fortune to visit the Swiss tunnels. I was able to travel there on the TGV and can testify to what some noble Lords have said about the smoothness and efficiency with which the TGV operates. I note the remarks of the noble Lord, Lord Tanlaw; we should heed what he said.

I echo and endorse what the noble Lord, Lord Ezra, said about today's report in the Financial Times. British Rail has suggested that it may be impossible to run international trains beyond Waterloo. So those who have been looking forward to the Channel Tunnel affording better access to the North, the Midlands, Scotland and other parts of the country will have their hopes dashed. Will the Minister say whether the report is correct? If it is, what attitude will the Government take in discussions with British Rail to see whether the position can be changed? If finance is the problem, the Government must consider seriously bringing forward legislation in order to cancel out Section 42 of the Channel Tunnel Act. The last thing the people of this country want to see is the killing of possible developments and encouragement to the British economy as a result of failure to develop international transport beyond Waterloo. A person travelling from Scotland must make his way to a London terminus and then cross the capital to the international terminus at Waterloo. That cannot be right.

As regards failure to deliver equipment, referred to by the noble Lord, Lord Tanlaw, perhaps I may refer to a report in today's press of redundancies at BREL. Perhaps BREL is capable of taking over the manufacture of some of the equipment which has been delayed. Perhaps it has available also the skilled workmen.

Paragraphs 22 and 97 on combined transport are welcome. I recall an earlier report on combined transport in 1981–82 which was debated in your Lordships' House in January 1982. That report emphasised that unless proposals to encourage piggy-back lorries remained unchanged, they would be harmful to the development of containerisation. Many noble Lords looking at present conditions may believe that to be a rather strange conclusion.

I welcome the maximum possible development of combined transport. It will make intermodal transport of freight economically viable. On previous occasions it has been stated that the Freight Transport Association does not mind which method is used for the transport of freight but makes it quite clear that for longer distances, freight by rail would be more economically viable and would be seriously considered by many transporters. In addition, combined transport would make a valuable contribution to environmental benefits. I am certain that those in Austria and Switzerland who are plagued by continual lorry traffic from other parts of Europe would welcome that sort of development.

I join with the noble Lord, Lord Ezra, in urging a revision of the criteria for Section 8 grants for freight facilities. The present criteria restrict possible developments. As some noble Lords have mentioned—and I echo what the noble Lord, Lord Ezra, said—the matter badly needs attention. I hope that the Government will give it that attention.

As has been indicated, this matter is affected by the problem of the UK rail gauge. Paragraphs 58 to 64 are devoted to the topic. Great attention was paid by the committee in its questions on the problems. The opening sentence of paragraph 58 is important. It states: Britain's track gauge is the same as most other Member States: there is no difference in the distance between the two rails". The report then points out that the real problem is that the loading gauge in the United Kingdom is different.

British Rail has looked at the matter and said in its evidence that it was satisfied that it does not present a problem for the development of the intermodal market for cross-Channel freight. It is satisfied with its plans and considers that small-wheeled wagons will do the job. It has committed itself to £100 million expenditure for such equipment. However, in its recommendation at paragraph 112 the committee expressed concern over that intention. It recommends that a thorough study be commissioned by the department into the possibility of converting a limited section of United Kingdom track so that the European or Berne gauge can be used.

I have looked at the Labour Party document entitled Moving Britain into Europe to which I have referred. I find that the Labour Party is in favour of such a study. It means considering the practicability and costs of such a conversion. We cannot make a decision unless we have the study. I hope that the department will accept the report's recommendation and move quickly towards commissioning a study into whether we maintain the present position, whether British Rail's small-wheeled wagons provide a way out, or whether there should be a study to see whether the track in certain areas can be converted to use the Berne gauge.

We have had a useful debate. The Minister has many points to answer. I am sure that had the noble Lord, Lord Shepherd, been here he would have been delighted by the many contributions made on this valuable report.

5.43 p.m.

The Minister of State, Department of Transport (Lord Brabazon of Tara)

My Lords, perhaps I may start by endorsing remarks that other noble Lords have made about the report we have had from the Select Committee. I may add my congratulations to the noble Lord, Lord Shepherd, and the other members of the committee. I regret that the noble Lord is unable to be here this afternoon and I wish him a speedy recovery. I also congratulate the noble Lord, Lord Ezra, on picking up the baton at such short notice and opening the debate with such skill.

I am grateful to the committee for the opportunity it has provided for a debate on railways of a more far-reaching kind than we are perhaps accustomed to have. As the committee has pointed out, the European Commission has shown a sense of vision that is all too rare in discussions about railways. Even if some of us feel that there are some respects in which the Commission's vision is a little fanciful, much of what it has had to say in tempered by practical realism.

We have had an interesting and stimulating debate. The Commission's initiative in publishing at the end of 1989 its communication on railway policy reflects the widespread revival of interest in railways, and not just in Europe. But the revival is of very recent date. As recently as 1986, the Commission White Paper on the single European market, which had quite a lot to say about transport, made no mention at all of railways; but railways have now risen up the Community transport agenda. That is because in the past few years a number of factors have come together to create a greater public awareness of the potential of railways in the Community transport system.

There is the internal market and the growing realisation that railways have historically been very much nationally oriented and that that has hampered their efficient use for the longer distance transport of people and goods for which they are best suited, which includes transport across national boundaries. There are exciting developments in rail technology, epitomised by the French TGV trains and the big commercial success of the Paris to Lyon TGV route. There is growing environmental concern about the continuing growth of road and air transport and the realisation that in land use, in energy efficiency and in the minimising of pollution the railways have a great deal to offer. So far as the UK is concerned, there is the special additional reason of the opportunities that the Channel Tunnel presents of linking our rail network with that of the Continent on a scale never before possible.

The Government welcome much in the Commission's proposals and agree with a good deal in the Select Committee's recommendations. We entirely agree that the opportunities are there for the railways to increase their market share in the carriage of both people and goods.

We welcome the Commission's basic objective of making European railways more commercially independent and financially autonomous. The Select Committee has already acknowledged the progress we have made in the UK. We hope that the culmination of that process will be a privatised British Rail. While British Rail remains a nationalised industry there are, quite rightly, limits to its autonomy. The Government's role is to set the overall policy framework, financial and quality objectives and external finance limits and to approve major strategic investments. Within that framework, BR has considerable freedom to manage the railway, and it is for BR to set priorities. For the future, exchanging the disciplines of the public sector for those of the private sector will provide further benefits for BR and its customers.

As the Commission has recognised, in running a more commercial railway the UK has been showing the way in Europe. It may come as a surprise to some of your Lordships to learn that railway operators from other European countries have been coming to British Rail to see how BR does things and what they can learn.

I turn now to rights of access for railway operators. The Government see some attractions in the Commission's remarks on the opening up of access to the railway network, especially in the context of international services. The Commission's proposals on access are at an early stage and need to be clarified. The Commission is discussing its draft directive with member states. However, it seems that the general thrust of the proposals is to free access to the network, which is currently very restricted, both to encourage existing operators to develop new services (such as international services) and to allow new operators to enter the market. There are of course practical difficulties in liberalising access to rail tracks, as the committee recognises, and the problems are genuinely complex. Finding ways to overcome them will inevitably take some time; but the Government share the committee's view that the Commission's initiative in opening up that issue is to be welcomed.

The Select Committee has suggested that a useful precedent for how several operators can be charged for the use of a single infrastructure may be found in the charging arrangements for the use of the Channel Tunnel The tunnel certainly provides an interesting test-bed. Whether the arrangements that have been devised would be suitable for general application I do not know. But I know that they are immensely complicated and that in the usage agreement between Eurotunnel and the British and French railways four closely printed pages are devoted to the calculation of the charges for use of the tunnel.

As regards the provision of non-commercial services, we fully support the Commission's and the Select Committee's objective of greater transparency. Both the operator and the public authority should have a clear understanding of what is being subsidised and at what price; but there is a limit to the detail of what can be specified. A balance has to be struck in practice between the views of those providing the money and BR's judgment of the market and operating constraints. The Commission's proposals are still under discussion; but we do not envisage much change in our arrangements in consequence of them.

The proposals for separating responsibility for track and trains—if I may use that shorthand for infrastructure and operations—raise a number of very interesting issues to which many noble Lords have referred. The Government entirely accept the Commission's proposal that railway accounts should distinguish track and trains. That is a necessary concomitant of allowing freer access to track. But the issues become more complex when we move on to the next stage of separate responsibility. Before getting into the arguments, I should make it clear that the Commission's proposals as currently drafted require that responsibility for track and trains should be with different divisions of a railway undertaking. They do not require separate ownership, although the Commission clearly envisages that as one possible approach.

Two arguments are put forward for separation of responsibility: promotion of competition and establishment of a level playing field by government subsidies for track. Let me first say briefly why I believe that the level playing field argument is not persuasive. The key requirement for fair competition between modes is that users of each mode pay their full costs, either directly through fares as on the railways or indirectly through taxation as with road transport, where use cannot be directly charged for. Different transport modes do not need to be organised identically to compete fairly. The important factor is to ensure that in each case all relevant costs are captured and paid for.

The better argument for a split of responsibilities is that competition between train operators would be promoted if no train operator had control over the track; that is, if there were a track authority. But this potentially attractive solution brings with it a number of problems. The committee's report recognises that it would not be appropriate to split operations and infrastructure for dense commuter networks. We are considering these questions very carefully, both in relation to the Commission's proposals and to the privatisation of British Rail, where separation of responsibility for infrastructure is one of the options that has been proposed. Our objective must be to arrive at solutions which will work in practice and provide the passenger or freight customer with the best possible service at the best possible price.

The privatisation of British Rail is relevant to a number of the issues raised by the Commission. The Government have decided that it would be right to privatise BR in due course, but we have reached no conclusions yet on the form or timing of privatisation. No structural options have been ruled out.

I turn now to investment appraisal. The Select Committee, perhaps partly influenced by its examination of the Swedish experience, on which my noble friend Lord Mountevans gave us the benefit of his great experience, recommended that social and economic cost-benefit analysis should be applied to railway investment decisions. This is not the moment for a learned disquisition on a subject which has exercised great economic minds for many years. As a simple politician perhaps I can make three simple comments.

First, in the United Kingdom at least most transport needs are clearly more appropriate to either road or rail, so elaborate cost-benefit analysis would not affect the decision. But where there is a real choice —for example, with the new links to Heathrow—both modes are considered and cost-benefit analysis is used. However, for the majority of schemes, the value of investment appraisal is rather to test the viability of projects and to rank them within each mode.

Secondly, an investment should be and normally is appraised on financial grounds. We depart from that only if there is no direct charging structure by which to make the user pay or if there is reason to think that there are significant external costs or benefits which should be reflected in the appraisal. Both those factors are present in road investment schemes. With railways, there is a ready means for ensuring that the user pays. We believe that, at least as far as inter-city and freight are concerned, the externalities are very small.

Thirdly, we see no case for putting public money into rail investment where no clear external benefits can be demonstrated. Any such subsidy would serve only to distort the level playing field. It would result in the wider economic distortion of making transport cheaper than it should be, which far from improving the environment would be likely to damage it.

It follows from what I have just said that the Government do not support increased Community funding of rail infrastructure investment. We support the concept of the development of a network of high-speed rail links in Europe, essentially for passenger trains. We are playing a full part in the work that is going on in Brussels under the Commission's guidance to define an appropriate network of high-speed lines and to identify and resolve the technical difficulties in the way of effective high-speed international passenger services. The group examining these questions made a first report to the Council of Ministers in December and is continuing with its work. But we believe that investment in this network would have to be economically viable, and we shall be looking very critically at any proposals for substantial Community contributions to bring it about.

On combined transport, on which my noble friends Lord Lyell and Lord Elibank concentrated, again the Council of Ministers has asked the Commission, with the assistance of member states and other interests, to identify the measures required for the creation of a European network and the conditions under which it could operate effectively. That will not be an easy task. There are many different views about what needs to be done and how. The United Kingdom will again be playing a full part in this work. I note the Select Committee's comments about the limitation of the Section 8 grant system for encouraging the transfer of freight from road to rail. In answer to the noble Lords, Lord Ezra and Lord Underhill, we have been reviewing the system and will announce our conclusions before very long.

My noble friend Lord Renwick asked when we could expect acceptance by the Council of Ministers of the proposals to which I have referred. The Council is most unlikely to accept all the Commission's proposals this June, not even by a qualified majority. It may agree the instruments on combined transport and on public service obligations; both would be in a watered down form from the original proposals. The Council has also welcomed the work done so far on the high-speed network; but at present it seems unlikely that agreement can be reached as early as June on the directive on railway structure and development. Much discussion has yet to take place.

I also note the committee's suggestion that the Government should commission a thorough study of the costs and benefits of converting a limited number of routes to European gauge for freight traffic. It is true that only fairly rough calculations have been done so far, though it is quite clear from them that the cost would be very high and the disruption extensive. I am sure that BR's initial strategy of using small-wheeled wagons for the larger continental containers is the right one. Whether it would be sensible to undertake a gauge conversion study relating to the longer term future is something which the Government might consider.

I turn now to the various points that have been raised, particularly with reference to the Channel Tunnel link. The noble Lords, Lord Ezra and Lord Underhill, referred to the report in today's newspaper about international passenger rail services beyond London. I can assure noble Lords that British Rail has every intention of providing through passenger services between places north of London and the Continent. There will, however, be a delay in providing daytime services. The special train sets required have proved very difficult to design to meet the stringent operating and safety requirements. The manufacturers, an international Anglo-French-Belgian consortium, have not so far been able to come up with completely satisfactory proposals on design and delivery. Thus it will be 1994 before these trains can be in service.

Meanwhile, British Rail is examining ways of running some services from the north into Waterloo to connect with the inter-capital trains to Paris and Brussels. However, British Rail hopes to have night passenger services running from beyond London when the tunnel opens.

The noble Lord, Lord Tanlaw, asked me about the comparative speeds of international trains. British Rail is upgrading the track and signalling, and passenger trains will be able to run at up to 160 kilometres per hour; freight trains at up to 120 kilometres per hour. That is the same maximum speed for freight trains that will be allowed in France.

The noble Lord also asked me whether British Rail rolling stock could be used on the Continent. Passenger stock will be specifically built because of the different power supply systems to which I have already referred and the safety requirement for the tunnel and platform heights and carriage widths. However, many of the existing international freight wagons will continue to be used through the tunnel. Some new wagons will be built especially for carrying containers since some containers on the Continent are larger than the international standard sizes that British Rail already carries regularly.

The noble Lord also asked me about the position of the Ashford international passenger station and whether the proposed station will be built and ready for use when the Channel Tunnel is due to open in June 1993. We are well aware of the importance that people in Kent attach to this station. The Government have only recently received British Rail's investment submission for it. We shall reach a decision as quickly as possible, but in recent months Ministers have confirmed their commitment to the station, subject to it being a viable proposition. I regret that I cannot give an assurance on when the station will open. Apart from the need for government approval, the speed with which contracts can be let and completed is outside the Government's control.

The noble Lord also asked me about the age of the British Rail rolling stock fleet and the write-off period. British Rail's accounting policies are set out in their 1989–90 annual report and accounts which were published on 4th July 1990. Asset lives of 15 to 20 years are used for rolling stock. British Rail is currently reviewing asset lives as part of a general change in its accounting practices. We must remember that these are accounting lives and they do not necessarily reflect the working life of rolling stock. I regret that the Department of Transport does not hold comprehensive information on the age of the BR fleet. However, we know that the average age of the Network SouthEast fleet has been reduced from 24 years to 19 years since 1985, and that by 1993–94 over 95 per cent. of regional railways' diesel fleets will be less than 10 years old.

I thought that the noble Lord, Lord Tanlaw, rather unfairly criticised the previous Prime Minister's commitment to the railway system. He asked whether there head been any change under the leadership of my right honourable friend the current Prime Minister. I would point out to the noble Lord that government plans allow British Rail to invest up to £4 billion in the next three years. That compares with an investment of £4 billion in the previous five years. That is a higher level of investment in British Rail in real terms than at any time since the early 1960s. If that is not a proof of commitment, I do not know what would satisfy the noble Lord.

Lord Tanlaw

My Lords, before the Minister sits down, I must say that he has been most kind in answering my questions. However, the question I asked was whether there is a programme of payment to British Rail. The figures the Minister has mentioned are exciting and interesting, but how can British Rail plan a future programme of re-investment and an updating of stock if it does not have a plan of capital finance coming in over a five to 10 year period?

Lord Brabazon of Tara

My Lords, I have given figures for the next three years. As the noble Lord will be aware, that is the length of time that government financial programmes work on. However, that does not prevent British Rail from planning further ahead itself. I cannot go further than that.

We have had a wide-ranging debate, and I have tried to deal with as many as possible of the varied matters raised by the Select Committee and by noble Lords during the debate. If I have failed to answer any specific point that any noble Lord has addressed to me, I shall, with permission, write to him.

The Commission has caught the tide of revived public interest in the potential of railways. It has stimulated governments, railway operators and many other interests to think more searchingly and freely about the role of the railways in the single market Community. The Government welcome that stimulus and recognise a kindred spirit at work in Brussels, even if we do not agree with the Commission on all points. The debate will continue. I am grateful to the Select Committee for its contribution to the debate, and for the opportunity we have had today to discuss these issues.

Lord Tordoff

My Lords, before the noble Lord sits down, I hope he will be a little more explicit on the subject of cost-benefit analysis. He indicated that this was used in some cases. One assumes those cases are rather rare. Does it take into account the proportionate cost to the public of the number of deaths that I have referred to? I mentioned that 50,000 people are killed on the roads of Europe every year. What contribution to that cost-benefit analysis is considered in relation to exhaust gases from cars and lorries and the impact on the environment generally?

Lord Brabazon of Tara

My Lords, I am afraid I cannot be more specific on that point at the moment. I shall write to the noble Lord with further details.

Lord Ezra

My Lords, I am sure the noble Lord, Lord Shepherd, will be very pleased when he hears of the unanimous tributes paid to his work as chairman of the committee. I hope that that will speed his early recovery. I wish to pay tribute to the Clerk of the Committee, Mr. Simon Burton, and to our specialist adviser, Professor Chris Nash of the University of Leeds. They both helped us significantly in our work.

The noble Lord, Lord Brabazon, in his wide-ranging response drew attention to the element of vision contained in the Commission's proposals. Sadly, that element has been lacking in our consideration of railway affairs over decades. Even if that vision, as put forward by the Commission, may not be entirely accepted, at least it can be invigorating. I believe the majority of us are railway buffs at heart. We genuinely want to see the railways succeed. This country was where the railways were born. Let us hope that we contribute significantly to their rebirth. I hope noble Lords will accept the Motion and note the contents of the report.

On Question, Motion agreed to.