British Rail: Fare Increases (Hansard, 4 November 1992)

§ Viscount Goschen
My Lords, Ministers were consulted on the British Rail fares increase due to come into effect on 3rd January 1993 in view of their role in setting British Rail's financial framework and objectives.

§ Lord Stallard
My Lords, I thank the Minister for that reply, but it begs some obvious questions. Why did the Government apparently not question these horrendous increases of up to 9.5 per cent. at the same time as contemplating limiting the wage increases of commuters to 1 per cent.? Why should the cost of the recession, which I understand was one of the reasons for these increases, be borne by the commuters who are in no way responsible for the recession, which is quite clearly the Government's responsibility? Is it not a fact that between them the Government and British Rail have made an outrageous mess of the whole British Rail service?

§ Viscount Goschen
My Lords, increases above the rate of inflation are justified by the needs of British Rail and London Transport for additional revenue to help to meet the costs of maintaining services and investment. It is only fair that travellers should make their contribution.

§ Lord Mellish
My Lords, with respect, the Government's main policy is to control inflation. It is hard for us to believe that they did not say to British Rail,"Look, keep the fare increases to the rate of inflation or below it". Instead of that they have allowed the fare increases in some instances—I have a number in mind—to go well above the rate of inflation. Why?

§ Viscount Goschen
My Lords, the increases in fares are required for investment in British Rail. That is the primary reason.

§ Lord Taylor of Gryfe
My Lords, are the complicated and complex proposals for the privatisation of British Rail likely to result in increases or decreases in fares? Has any cost benefit analysis been made of these proposals?

§ Viscount Goschen
My Lords, the aim behind the privatisation programme is to encourage efficiency and innovation. These benefits should come through the system to the fare-paying traveller.

§ Lord Clinton-Davis
My Lords, I hope the House will forgive my Clinton croak—too much campaigning is the problem. Is the Minister aware that, quite apart from the new increases contemplated, British Rail charges just about the highest fares in Western 1427 Europe? Is he further aware that we have just about the oldest stock on our railways and just about the lowest investment? Is that not a matter of great concern to the Government? Is it not far more important than the question of the ownership of British Rail'? What are the Government proposing to do about it?

§ Viscount Goschen
My Lords, fare levels reflect the proportion of costs met by the fare-payer rather than by the taxpayer through subsidy. We do not accept that the international examples of more heavily subsidised systems are the right model to follow.

§ Lord Boyd-Carpenter
My Lords, is not what was said by the noble Lord opposite as to the state of British Rail the most powerful argument for getting on quickly with denationalisation?

§ Viscount Goschen
My Lords, I quite agree with my noble friend.

§ Lord Tordoff
My Lords, does the noble Viscount agree, as a world expert on railways and transport, that the French railways are in many ways more efficient than the British railways?

§ Viscount Goschen
My Lords, I can only repeat what I said earlier. We believe that the other international and more heavily subsidised systems are not the correct model for us to follow.

§ Lord Jenkins of Putney
My Lords, is the Minister really saying, as I understood him to say, that it is the Government's policy that the fare paying passenger should not merely carry the additional day-to-day expenses of British Rail but should also be responsible for its capital expenditure? Is that the Government's policy?

§ Viscount Goschen
My Lords, the Government are committed to a high quality, safe and efficient rail service. But this service must be paid for. This is a question of the distribution of the burden between the rail traveller and the taxpayer.

§ Lord Barnett
My Lords, if the explanation is that the fare increases were allowed because investment was needed, why did not the Government permit a larger fare increase to allow the even higher investment that is also needed?

§ Viscount Goschen
My Lords, the reason is that this is a question of balance.

§ Lord Campbell of Alloway
My Lords, my noble friend referred to privatisation. Can he say whether in any of these privatisation agreements a mechanism for the control of fares will be built into those arrangements?

§ Viscount Goschen
My Lords, where there has been more than one operator on a route, competition will keep fares low. The fares of operators which enjoy monopoly power will be controlled through the franchise contract.

§ Lord Clinton-Davis
My Lords, is it not a fact that, under the franchise contracts, for a very long period of 1428 time subsidies will be paid by the taxpayer through the Government to those franchisees? Is that an equitable way of doing this?

§ Viscount Goschen
My Lords, indeed it is.