British Coal and British Rail (Transfer Proposals) Bill

HL Deb 18 January 1993 vol 541 cc749-75

4.56 p.m.

Proceedings after Third Reading resumed on Clause 1.

Lord Clinton-Davis moved Amendment No. 3:

Page 1, line 10, after ("power") insert ("subject to subsection (1A) below").

The noble Lord said: My Lords, it may be for the convenience of the House if we take also Amendment No. 4. This is a matter which we touched upon in an earlier debate. The issue was to be dealt with in further consultations, as the Minister said at the time. It is important that we return to it, because my understanding is that the consultations have not yet been completed. In effect, we are seeking to probe further. We do not intend to divide on the issue so everyone who is not directly affected by or interested in the issue can go home.

The strict purpose of the amendments is to exclude from the Bill's provisions any actions concerning rail services supported by a PTE. It is of course important to probe the implications of the Government's proposals for rail services in metropolitan areas outside London.

PTAs and PTEs—together with British Rail in respect of rail services—have responsibility for public transport in their areas. Local rail services are operated by regional railways, but the PTAs and PTEs say where they should operate and provide the financial support required for them. The amendments are prompted by the continuing uncertainty over the future important role of the PTAs and PTEs and the importance of local rail services. They are critically important to enable metropolitan authorities to contribute towards a reduction in the impact of urban transport on the environment. They are also important for a number of other reasons, not least the retention of a clear and decisive local interest in relation to those rail operations.

It is interesting to note that, in a number of discussions on rail privatisation generally that have taken place, the Prime Minister himself has indicated his support for action to create a local and regional identity for rail operations and operators. That strong regional identity, even though he may not be entirely aware of it, is clear in relation to the services supported by the PTAs and the PTEs. It is clear in relation to the network of services provided, even the publicity which they promote, and in the frequent use of distinctive local livery.

Since we previously debated the issue a joint publication has been issued by the regional railways and the AMA, of which I am current president and of which my noble friend Lord Underhill was president until November last year. The document is entitled Signals for a Better Future. It gives emphasis to the significance of the partnership which exists between local government and British Rail, with its impact on the economy and the environmental quality of the metropolitan areas.

I shall précis the report's conclusion. The argument is that the document presents rail as one of a number of cogs in the local and regional transport machine but a vitally important cog. The conclusion states: An important benefit of the partnership between regional railways and local government is that railways are looked at alongside other aspects of transport policy. The result is a coherent and cost-effective strategy". I made that point during our discussions on an amendment tabled at an earlier stage of the Bill.

It is important to note that those are the views of the regional railways and not only of the AMA. What do the regional railways bring to the situation? As rail operators they bring considerable professionalism and expertise. In conjunction with local highway and planning authorities the PTAs and the PTEs have the ability to determine appropriate rail investment and support in the context of the overall transport needs of the areas for which they are responsible and their accountability to local taxpayers. There is a close working relationship with the regional railways and each PTA and PTE. The PTAs and PTEs can monitor the standard of service provided and take action where appropriate. All those factors have been proved to be efficient and to work to the advantage of the local communities and regions. So why place all that in jeopardy? The system has not been proved to be found wanting and the Government have yet to make out their case.

There is considerable anxiety that the benefits of the current arrangements will he lost as a result of the Government's proposals. At best the PTAs and the PTEs will be obliged to cope with a more bureaucratic regime with less direct control over the rail operator. A relationship will be based on contractual lines alone rather than on a common policy goal. At worst, the quality, the scope and the cost of urban transport systems, in particular those affecting rail services, could suffer as a result of the new access and charging regime.

When the issue was discussed in Committee the noble Earl said: the PTAs and PTEs will continue to be responsible for specifying the services to be provided in their areas. Services will continue to be run under contract, initially by BR. The franchising authority, taking the PTA/PTE specification, will be responsible for franchising those services to private sector operators".—[Official Report, 1/12/92; col. 1285.] We said that we were not satisfied with that, and some improvement has since been made by the Secretary of State.

The issue was raised further by my honourable friend John Prescott. He wrote to the Secretary of State, who stated that the PTEs would be jointly involved with the franchising authority in specifying and letting any franchise contract covering services for which they are responsible. He went further than the noble Earl was able to go and I am glad that he did so. I do not blame the noble Earl because he must take instructions on these issues from the Secretary of State. Of course the Secretary of State was talking about an involvement in letting. Unfortunately, that does not close down other areas of uncertainty.

We agree with the AMA and the regional railways that the successes which were set out in the document to which I have referred should be built on. The PTAs and the PTEs should be able to participate in decisions taken by the franchising authority as to how Section 20 services should be grouped in a franchise and about the scope of the business to be franchised. That goes further than the vague phrase "involvement in letting".

They should be able to participate in the short-listing of respondents to invitations of interest in franchises and the assessment of any repackaging proposals. They should be able to participate in negotiations between the franchising authority, Railtrack and the regulator relating to train paths, timetables and so on. The PTAs and the PTEs should be able to specify in detail the services which they wish to support and determine precisely how they feature in franchises. They should be able to determine all fares and the services which they subsidise. They should be able to set performance standards for services which they support, monitor performance on those services and, where appropriate, impose penalties. They should be able to participate in decisions on any service developments and enhancements relating to services which they support. They should have a right of appeal against any decision taken by the franchising authority or Railtrack affecting local rail services. We also take the view that they should have a financial guarantee via the Section 20 bolt-on for any commitments entered into as a result of the inclusion of local rail services in a franchise.

We ask the Government to specify where they stand on those issues because there is a lack of clarity. Is the Minister in a position to explain in more detail than he was able in Committee how under their proposals the Government see the role and responsibility of the PTAs and the PTEs relating to rail services? I beg to move.

Lord Teviot

My Lords, in Committee I discussed with my noble friend the bureaucracy of the system. He told me implicitly—and I believe him—that bureaucracy will not occur and everything will be straightened out. We must wait for the main Bill. However, I wish to address your Lordships on a new issue.

My right honourable friend the Prime Minister has declared that he wishes to see railways with a clear local identity. I agree with that implicitly. The only railways which have a local identity at present are the local passenger transport executive networks in the metropolitan areas. The trains and the stations have their own livery and are marketed as a local network. That has been achieved because the passenger transport authorities and the passenger transport executives are already effective as a franchising authority.

I wish to ensure that their role is in no way diminished by denationalisation. The creation of the franchising authority as a separate body could cut across the direct relationship between the PTAs and the PTEs, which pay for local services, and the railway which provides them. I see no reason for the intervention of the franchising authority, which already has a successful relationship.

Lord Underhill

My Lords, perhaps I may comment briefly on the speech made by my noble friend on the Front Bench. He has made out a powerful case for the amendment which also stands in my name. As my noble friend said, since we last discussed this matter there has been the publication of the joint report by the Association of Metropolitan Authorities and the regional railways. We did not have that when this matter was discussed previously. That document not only praises the work which has been done, but it sets out in complete detail the various schemes carried through by each of the PTAs and the PTEs. I hope that the Minister will take that into consideration when he replies.

In addition, paragraph 39 of the White Paper published in July went out of its way to stress how much the valuable co-operation of the PTAs, the PTEs and the railways was appreciated. I hope that the Minister will keep those two points firmly in mind when he replies because that co-operation between those bodies and the railways system is vital. Nothing should be done to impair that for the future.

The Earl of Caithness

My Lords, first, perhaps I may say how nice it is to welcome the noble Lord, Lord Underhill. We have debated transport matters on many occasions in the past and I am delighted by his intervention today. We shall consider carefully the representations made to us and study them with great care.

The Bill before us enables BR and British Coal to act in relation to proposals put forward by the Secretary of State. The effect of the amendment is to reverse that in one area. It seeks to preclude BR from acting in relation to any proposal which might have the effect of disturbing existing Section 20 agreements between PTEs and BR. I am sure that the House will agree that to put an arbitrary constraint on what proposals BR may act in relation to is quite wrong.

As the noble Lord, Lord Clinton-Davis, reminds us, we discussed the position of the PTAs and the PTEs in Committee. At that time the noble Lord tabled amendments which sought to impose a duty on BR to consult PTAs and PTEs about any proposals put to it which related to Section 20 agreements. This amendment would preclude BR from doing anything in respect of any such proposal. I am sure that the House will agree that the whole matter has become rather contradictory and confusing. Nevertheless, I understand, given the noble Lord's position as president of the AMA, that the noble Lord, Lord Clinton-Davis, takes a keen interest in the position of the PTEs and PTAs in that regard and that he intends to probe government policy.

In doing so, the noble Lord mentioned the uncertainty of our policy towards PTAs and PTEs. I have found that rather surprising because we have made very clear our policy toward the future involvement of the PTAs and PTEs in the procurement and specification of railway services in their areas. Our proposal is that the PTAs should continue to set the policy for local rail services in their areas, that the services should continue to be specified and subsidised, where necessary, by the PTEs, and that the PTEs should be jointly involved with the franchising authority in specifying and granting any franchise contract covering services for which they are responsible.

I believe that that answers many of the questions and worries expressed by the noble Lord, Lord Clinton-Davis. I hope also that that will give some reassurance to my noble friend Lord Teviot. I took a careful note of what he said and would wish to study that in the Official Report. Clearly there will need to be some changes to existing arrangements under Section 20 of the 1968 Act, not least because it will in future be private sector franchisees, rather than BR, which provide services for the PTAs and PTEs. It will therefore, inevitably, be necessary for us to look, with BR and with the PTAs/PTEs themselves, at the Section 20 agreements the PTEs have with BR, to see what needs to be done to ensure that services can continue to run smoothly in PTE areas.

If the railway network fitted neatly within PTA boundaries, it might be easier to argue that each PTA should be made a local franchise authority. However, as I know my noble friend Lord Teviot knows, that is not the case. Many of the trains which serve PTA passengers run beyond a single PTA area. It would not be sensible, operationally, to think of letting franchises covering only parts of a service. Provisions will be included in the main privatisation Bill to give effect to our proposals. Therefore, we shall have many opportunities to consider those at a later stage.

5.15 p.m.

Lord Clinton-Davis

My Lords, I thank the noble Earl for his reply. I shall certainly consider that. I have already indicated that the amendment aims to probe the matter further. Equally, I hope that the Government will pay careful attention to the points which I have raised in today's debate and which I am sure will be reiterated to him in the further consultations which will take place—if not with him then with the Secretary of State in the not too distant future.

I am not at all satisfied that there is a strong case made out by the Minister to change the situation. That is the burden of the argument raised by the noble Lord, Lord Teviot. The burden is on the Government; it is not on us. It remains for them to substantiate the case which I do not believe they have done so far. However, this has been a useful exchange and I hope that it will provide a good basis for further discussions which will take place and that the Government may yet come to the conclusion that the wider role of the PTAs and PTEs, which I describe in my earlier remarks, is consistent with their programme. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 4 to 6 not moved]

The Earl of Caithness

My Lords, I beg to move that the Bill do now pass.

Moved, That the Bill do now pass.—(The Earl of Caithness).

Lord Clinton-Davis

My Lords, it is rather strange that the Government have been in such haste to enact this Bill. They are unable to wait for the report of the Select Committee in another place which is inquiring into pit closures, although that is imminent. They are unable to wait for the interim report of the transport Select Committee on privatisation in another place which is due this week. It is odd that that should be the case because the Secretary of State revealed recently that it would take 12 years to complete the privatisation process, semi-privatisation, commercialisation or call it what you will. I noted, however, that in our debate on 15th December, the noble Earl, Lord Caithness, said that this was a genuine privatisation proposal so that he has nailed his colours to that particular mast.

Whenever we have sought to probe the Government's intentions in detail, whenever we have sought to establish vital safeguards through the amendments which we have proposed, as I said earlier, we have been told repeatedly that this Bill is the wrong vehicle. The vehicular argument is the one often used by Ministers in distress. We are told that it is merely a Bill to enable British Rail and British Coal to prepare for privatisation, to secure advice, and so on.

I submit that equally repeatedly the Government have missed these essential points. In order to carry out their functions properly, those advising the nationalised industries need to form a sensible assessment of the assets and liabilities of those industries. They need to understand the implications of the proposals. It is not only noble Lords on this side of the House who suggest that there is a lack of clarity in the Government's proposals. The CBI has said that the proposals lack clarity and detail. How is it therefore that those advisers can undertake their tasks with the care which is required?

The noble Lords, Lord Ridley and Lord Young, and the noble Viscount, Lord Whitelaw, who have hitherto been very strong proponents of the concept of general privatisation, have questioned the desirability and practicability of these proposals. I also say that this House should have been much more privy to the thinking of the Government—if in fact one can so dignify what is going on in their minds—and therefore the amendments that we have put down, which have sometimes been wrongly characterised as wrecking or inappropriate by Ministers, have not yielded the information to which we were entitled. I grant the Ministers that there have been exceptions to that. They have chosen to be more forthcoming about some things rather than others.

The other matter to which I want to refer at the outset of my remarks is that it was extremely unwise —I hope it will not constitute a precedent—for these two industries, separate interests and separate concerns, to be taken together in this Bill. I remember that the noble Lord, Lord Boyd-Carpenter, raised one or two question marks about that in an earlier debate, and he was right. I hope that the Government will say that it will not be repeated.

One other matter that relates to the issues raised by my noble friend Lord Donoughue earlier concerns consultation. The issue that was raised by my noble friend is relevant to all areas of consultation undertaken by this Government. Their bona fides are in doubt. That has been made clear as a result of this extraordinarily trenchant judgment on the part of Lord Justice Glidewell.

It is interesting to note that on 1st December (at col. 1275 of Hansard) the noble Earl, Lord Caithness, just a few days before that judgment, said: These amendments refer to consultation, but I do not think this is something that needs to be imposed on either British Rail or British Coal because they will be fully aware of their obligations in this respect". He went on: Let me reassure the Committee that we too are aware of the importance of consultation". That was not the view taken by Lord Justice Glidewell. The Minister ought to reflect further on what he had to say on that occasion.

I do not propose to say much more about coal, except to ask the noble Earl to answer the question I put to his noble friend, who then passed the question on to him in the earlier debate. I hope the noble Earl will take that up. I think he has forgotten it. If the noble Earl indicates that he can remember the point then I need not reiterate it. I see that he does.

I turn now to the rail issues in relation to this Bill. We have urged the Government to think about an integrated transport policy. It would be nice to think of this Government embracing a sensible transport policy. In a sense it would of course require them to cross the Rubicon, but the trouble is that they would not have the infrastructure or the transport to do that, and that constitutes something of a problem.

It was only after the Bill had reached its Committee stage in this place that the Government issued their White Paper. But it was not as something that cast a great deal of illumination on the way in which they propose to deal with the myriad problems that they have created for themselves; and it is odd that it should have taken so long after the Bill had been introduced in another place for the Government to deign to do that. Of course when it comes to coal they have not done it even now. What they did was to declare a variety of objectives consonant with their prejudices and then endeavoured later on to tack on the reasons for undertaking that course. It is an unconvincing exercise that has been widely condemned in the serious press and by a number of their own supporters, as I have already indicated.

What all of us want to see is a British railway system that functions as a national service and an efficient and safe service of high quality, with profitable services helping to maintain the less profitable ones. Cross-subsidisation is an integral part of any transport system if a network service, and one which in part operates as a social service, is to be maintained, and as a service too that contributes to a sensible and integrated transport system and environmental policy. We are not just after a change of livery or televisions being on trains. It is a fundamentally different approach.

We recognise that there is a need to inject private capital into the system. It is done in France. It is done elsewhere. It should be done on a wider basis than it is currently done in this country. There is nothing wrong with importing experience and expertise from the private sector into British Rail management. These matters are critically important to aid investment and to help to sustain the railway manufacturing industry, which currently is in dire straits. I want to come back to that later.

Against that background it is fascinating that, in contrast with every other privatisation introduced by this Government, where the White Papers or Green Papers have always given emphasis to the question of greater investment, the framework element of investment has been singularly missing. It is dealt with rather casually in the White Paper in paragraphs 42 and 43 in relation only to infrastructure. Yet there is a massive investment famine so far as railways are concerned.

I referred in an earlier debate to a report that had been commissioned by Transport 2000 through its very respectable consultants, Steer Davis Gleave. That report concluded: There will be a risk of further reduction in investment for a number of reasons: fragmented decision-making between Railtrack and train operators; difficulties in buying or leasing rolling stock; higher track charges, especially for freight; and conflicts between franchising passenger services and allowing open access to the tracks". These are charges that have been made not only by me, as the Minister well knows, but by many others, and which have never properly been refuted by the Government.

Despite the investment problem the autumn spending statement projects spending in grants and loans halving over the next three years. It has been reported—and perhaps the Minister will comment on this specifically; I hope it is not true—that even the £150 million that has been allowed for leasing new trains cannot be taken up because British Rail cannot afford the repayments.

There is uncertainty too over the unnecessary diversion of privatisation, which is already causing the situation to deteriorate much further. The lack of any framework for new investment and for co-ordinating electrification or signalling schemes between Railtrack and different train operators will almost ineluctably lead to further serious decline in the quality and perhaps even the quantity of rail services. What we need is a huge change of priorities in our transport investment expenditure—moving a good deal from road to rail—particularly in the light of this Government's environmental objectives, which are hardly mentioned in relation to the White Paper.

I turn then to the question of network benefits. Despite assertions to the contrary, there is no evidence at all that the Government intend to protect the network benefits that prevail at the moment. Will the Minister give an undertaking that there will be statutory protection for a national timetable and for national information systems? Will he give assurances that railcards and other network fares schemes will be retained? What will he say, if anything, about discount through tickets? Those are important as 40 per cent. of current rail journeys are made on discount fares or railcards which would involve more than one franchisee. Will those be protected? I am not speaking merely of protecting through tickets at standard fares. My understanding is that the Government assert that no protection is required because these measures are in "the interests of operators". However, bus deregulation—that is hardly a good precedent for privatisation of the railways —has established that network information and fares schemes are not in the market interest. For example, Manchester Metrolink, which is a privately run train scheme in Manchester, has already decided that it wants to have nothing to do with British Rail national timetables.

There is another problem in this regard. The regulator's remit is to promote competition and to protect network benefits. Unless this is clarified we could find a situation where agreements on timetables, connecting trains, information and fares between different companies could be debarred altogether as being anti-competitive. That is precisely what happened in the bus industry as a result of the intervention of the Office of Fair Trading.

I come next to the question of bureaucracy and the lack of accountability. I realise a lack of accountability may have certain attractions for this Government. My noble friend Lord Cocks referred to this point forcefully on Second Reading. He may well wish to say something more about that. There is a proliferation of different authorities and the scope for buck-passing and indeed for legal argument will be immense.

As regards track charges, we have no idea what will be required in this regard. I believe that Railtrack is supposed to make a return on assets of 8 per cent. Will this operate as an incentive to disinvest and to close lines? Freight trains at present pay only marginal costs when sharing track with passenger trains and the same applies to local trains using InterCity track. Do the Government have any plans to protect this system? If not, under the new regime we could easily see costs rising for these services, leading to higher subsidies, higher fares and higher charges or—the alternative is stark—reduced services.

Most track investment is expected to be financed through the charges according to the Government, but they pay no attention to the fact that competition from other modes of transport—the railways do not represent a monopoly—will mean that railways will be further prejudiced. The only way out of this problem would be for the railways to be treated on the same basis as roads. However, the Government show no inclination of doing that.

A track charges regime is crucial to the future of freight. Freight is disappearing because of BR's objectives requiring rail freight to be profitable. Other areas which will be left to the operators will include staffing on stations and making trains and stations more accessible and safer. If they find that economies in these areas are required because they will not be given priority, the outlook for passengers will be very bad. As regards investment, network benefits, the organisation of the regime, charges, freight and passenger needs, huge problems persist. Those problems have not been addressed either in the documents issued by the Government hitherto or, what is more relevant, in the debates we have had.

I referred earlier to the railway supply industry which is in crisis. There are 9,000 jobs at stake. Because of investment problems British Rail is placing no new orders. Without orders at home the prospect of winning overseas orders is virtually non-existent. There are doubts now as to whether this industry can survive beyond 1994. Will the Government stand idly by and allow this vital industry to go to the wall?

My next point has been referred to on previous occasions. To use the expression of Lord Justice Glidewell it is a wholly irrational decision on the part of the Government to refuse to allow British Rail, with its expertise and experience, to bid for franchises. That makes no sense whatsoever. It is not just noble Lords on these Benches who have raised this matter. Many other independent people have also raised it.

In my first conclusion I refer to the questions of which I gave the Minister notice earlier today. However, I have raised these points in previous debates and I have not yet received a reply from him. On 15th December at col. 512 of the Official Report I asked the Minister to inquire into a point which excluded British Rail from being able to tender. I asked the Minister whether that would infringe Community law. He promised to look into the matter. What is the position? Is there a possible contravention of Community law here or not? If he says there is not, I should like to know why not.

There is also the matter of the EC acquired rights directive to which I referred on 30th November at col. 1239 of the Official Report. I asked the Minister what effect that directive would have as regards workers changing employment from a public utility to a privatised company. I drew attention to a recent ruling in the European Court of Justice to the effect that the United Kingdom regulations implementing the directive were inadequate. The regulations restricted the protection to workers in commercial ventures. The European Court of Justice decided that was unlawful. The Government had claimed wrongly that the regulations had always covered the public sector. What is the position on that matter now? The Minister has had a long time to consider both those points and I hope he will comment on them this afternoon.

I am glad to see the report issued by the Health and Safety Executive. I am also glad that the Minister in another place—I believe it was the Secretary of State —indicated that the Government accepted all the proposals. The Health and Safety Executive is, however, saying in effect that a more dangerous system could be introduced on privatisation unless the Government control the position carefully. Why countenance such a change at all if it contains any major risk?

We believe that privatisation may lead, and indeed is likely to lead, to much higher fares and will damage accessibility and levels of service. We believe in a united, unified network for passengers. We also believe that there needs to be a sustained investment in expansion, in the modernisation of trains and in infrastructure. We believe it is important that improvements and not cuts in services should be made. That is what the nation is really looking for but the Government have not begun to make out the case for change.

I now come to my final conclusion. I wish to thank all the local authority bodies, trade unions, consumer bodies, transport industries, transport interests and others who have given us such important support throughout the passage of this Bill. I wish to thank our own researchers in this place and our own Back-Benchers in this House for the help they have given to us throughout the course of the Bill. Even though we have often fundamentally disagreed with the Ministers I thank them for the courtesy they have yielded to us. Above all, I thank my noble friend Lord Donoughue for his constant support and help—I hope it has been mutual —in the work we have undertaken during the course of this Bill.

5.30 p.m.

Lord Boyd-Carpenter

My Lords, I find myself in a position of some emotion at this stage of this Bill for the following reason. Unlike a certain number of noble Lords, I was in this Chamber—then another place—when the measures were carried which nationalised both the railways and the coal industry. I recall with a measure of pleasure the fact that on both those occasions I ventured to warn the House —that is, the other place—that that was a disastrous decision that would in due course have to be reversed.

Therefore it gives me some pleasure that we have now reached the stage at which Her Majesty's Government are asking the industries concerned to undertake work in preparation for denationalisation. That shows that if one waits long enough one generally achieves a satisfactory outcome, although in this case I had to wait a long time.

I hope that the noble Lord, Lord Clinton-Davis, will not regard it as offensive if I say that many of his, as always, well argued points will have to be dealt with, and which will no doubt be deployed and will have to be answered, when the denationalisation Bills come before your Lordships' House. However, it seems to me that at this stage there is comparatively little obligation on Her Majesty's Government to answer those save to say, as I would venture to say, that they are all matters which the industries have to consider now under the duties which are being imposed on them, and that your Lordships will certainly have to consider them when the privatisation measures appear.

Lord Clinton-Davis

My Lords, I thank the noble Lord for allowing me to intervene. As he knows, I always enjoy his contributions. If there is a great deal of doubt, uncertainty and lack of clarity—to use the CBI's term—about the proposals, that does not help the professional advisers who are supposed to advise British Coal and British Rail during their consideration of the ways in which privatisation may take place.

Lord Boyd-Carpenter

My Lords, I agree entirely. There are serious points which will have to be considered. However, it is surely not the noble Lord's argument that at this stage of the Bill, when we are considering the Motion that the Bill do now pass, that the whole procedure of asking the authorities for those industries to consider the steps that need to be taken for denationalisation should suddenly be dropped. It is quite clear that everyone's mind is now directed towards the serious problems which arise in connection with denationalisation, particularly in connection with the railways.

We have reached a stage at which it is surely right to ask the industries concerned to think about the matter and to give the Government, the country and your Lordships' House their views as to the problems. When the Bill to privatise the industries comes before your Lordships' House, we should then consider the arguments and come to a decision whether those arguments should prevail. I always listen to the noble Lord's arguments with interest; but I suggest with great respect that at this stage to deploy a great deal of argument against privatisation will not be of great assistance. It will not assist this House and will certainly not assist the industries concerned.

I shall not say anything about the coal industry. For reasons with which your Lordships are familiar that is becoming quite a small industry, and whatever happens I am afraid it will become smaller. However, the rail privatisation will be a matter of great practical importance.

There is one problem which I hope the railways board will consider. As a frequent rail traveller, I know that British Rail seems to have lost the concern that it used to have for the well-being of passengers. If one travels by British Rail, one finds a certain detachment towards the interests and comfort of passengers. That is quite different from what one finds if one travels by air and from the care which the airlines take of their passengers. I have some experience of that because, as your Lordships may recall, I was chairman of the Civil Aviation Authority and I studied how the airlines worked. There is also much more concern for the comfort and well-being of passengers on coaches on the roads.

If one travels through Paddington Station, as I frequently do, one is left standing in a large, chairless arena, almost always waiting for the time when a train is due to depart to be indicated before one can proceed towards the platform. There is an atmosphere which suggests that British Rail does not care much for the comfort or well-being of its passengers.

5.45 p.m.

Lord Taylor of Gryfe

My Lords, what right does the noble Lord have to make such generalisations about British Rail services? I speak as a former member of the board and someone who travels 500 miles from Scotland to London every week and 500 miles back again. My experience is totally at variance with the generalisations which have been made against British Rail personnel.

Lord Boyd-Carpenter

My Lords, I am very glad that the noble Lord travels comfortably. I should hate to think of his doing anything else. I can only speak from my own experience. I mention in particular the experience of those who have to use what used to be the old Great Western system. At one time, under private enterprise, that was probably the best and most comfortable section of the railway system. Now there is not only a very low standard of efficiency in which punctuality is virtually unknown, but there also seems to be a disregard for the comfort of passengers. I do not think that that is unique to the western section of the network. I think that it is certainly true of the southern section. I believe that the noble Lord is right and that some of the lines to Scotland still retain some of the old approach to the care of passengers; but I assure the noble Lord that that is not the general experience. It is, alas!, not generally the case.

It is very important that an organisation which has to cope with passengers should have some concept of care for them and should demonstrate that care. It is only in that way that traffic will be built up in the way that we all want to see it built up.

I do not think that we shall achieve that under public ownership. Once all those in an organisation, from the board at the top to the most junior person working at the lower levels, realise that in the future their living depends on satisfying the needs and wishes of the public, there is a much greater chance of having a system which will be efficient in itself and in due course will become reasonably profitable.

I leave this thought with your Lordships. One has to induce a commercial approach in British Rail, a desire to attract custom and to interest the public in British Rail, and one must induce an interest in the public. In order to achieve that I believe that some form of privatisation is necessary.

The precise form of privatisation is a difficult question. No one who has studied the matter believes for a moment that privatising British Rail will be anything like as easy as was the privatisation of a good many other organisations. The fact that there is only one railway track will be a factor of special difficulty. There will be very real problems, which I know your Lordships will discuss fully when the privatisation Bill comes before this House.

However, we are not there yet. We have only reached the stage of considering the Government's extremely sensible proposal that the board should be asked to consider what action should be taken preparatory to privatisation; and that in the light of that consideration the Government should come to a decision as to what is to be put into the privatisation Bill. When that Bill is considered, I am perfectly certain that we shall have vigorous controversy. However, I am also sure that we shall be discussing a Bill of the very greatest practical importance to this country.

No one can travel by rail, as the noble Lord opposite states he does, without being worried by the weaknesses of the system. The noble Lord, Lord Clinton-Davis, referred to the cancellation of various proposals. There was the announcement in the press recently that proposals for additional safety expenditure had been postponed. Those are real problems which indicate that the present system is unsatisfactory and requires to be changed.

The substance of the changes will be a matter for the next Bill. I hope and believe that they will be sensible. I hope and believe too that they will centre on the ordinary, commercial approach of a satisfied customer holding and supporting a satisfactory organisation. In considering the duties which we are imposing on it by this measure, I hope that the board will have that approach very much in mind.

Lord Howie of Troon

My Lords, I do not wholly recognise the picture of Paddington Station, if I heard the noble Lord aright. I find it far from cheerless. It has been refurbished and painted. Its general aura of cheerfulness has been greatly increased. It contains a statue—although it is not a good one—commemorating Isambard Kingdom Brunel. If the noble Lord has been as miserable, as he seems to have been at Paddington Station, he could always have gone into the hotel where happiness can be purchased quite readily.

However, I wish to make this point on the privatisation of British Rail. I draw attention again to an objection which I have made previously in the House. It is about the proposal to create a track authority as opposed to the authorities with which we are familiar. I have cited how the railways began in the early part of the 19th century with a track authority with franchisees on the Kilmarnock and Troon line in 1812, on the Stockton and Darlington line in 1825, and on other railways at about the same time. The modern method of running a railway was devised in 1830 on the Manchester and Liverpool railway. By comparison with the track authority system which had been used in the earlier railway systems, the modern method was quickly shown to be preferable. Indeed two Select Committees of this House demonstrated that quite clearly in the 1840s or thereabouts.

I believe that we make a mistake in returning to a track authority system. Nowhere else on earth is such a system used to any great extent. I know that little bits exist here and there on Amtrak. I know that the Swedish railways run a small part of their system in that way. Such a system would be a sizable error. I sincerely hope that the Government will have second, third or even fourth thoughts before they embark on that mistaken path.

The Government's proposals in the Bill for the coal industry are part of a strategy. They are an economic strategy extending their ideology of privatisation. However, they are not an energy strategy. That gives me great disquiet. An energy strategy, rather than an economic or financial strategy, is required which is aimed at energy and practised through reorganising the coal and other energy industries.

I make two points. The first is a brief quotation from a paper which has been sent to me from the Management Centre at the University of Bradford. It is a paper by Jonathan and Ruth Winterton on the strategic implications of proposed colliery closures. The quotation itself cites Schumacher in 1960 when he was the economic adviser to the National Coal Board. What Schumacher said is extremely interesting and should be reflected upon. He stated: The concepts of 'economic' and 'uneconomic' cannot be applied to the extraction of non-renewable resources without very great caution… To eliminate the losing factory means the elimination of waste. But to close the losing colliery means merely to change the time sequence in which finite resources are being used… It is a policy of doubtful wisdom and questionable morality for this generation to take all its best resources and leave for its children only the worst. But it is surely a criminal policy"— that perhaps goes a little far; "mistaken" would be a better word— if, in addition, we wilfully sterilize, abandon, and thereby ruin such relatively inferior resources as we ourselves have opened up but do not care to utilize". I do not wish to stress that point any further.

The economic strategy on energy seems to me improper in one specific sense. The problems of the coal industry in relation to electricity arise because we now use gas as a secondary rather than a primary fuel. I regard that as inherently wrong. I speak with the background not of an economist or a chartered accountant, but of an engineer. We have a duty upon us to utilise finite resources to their best capacity. That does not mean merely their cheapest capacity. If we have an energy resource, it is incumbent upon us to use that energy resource in such a way that we obtain the maximum efficiency from it; that we produce the most energy—it can never be 100 per cent.—from the fuel at our disposal.

So far as I can make out, if natural gas is used to make electricity a secondary fuel, we achieve about 30 per cent. efficiency from it on a good day. On the other hand, if gas is used directly we achieve at least 60 per cent. efficiency or rather more. By using gas to produce electricity, we throw away 30 per cent. of its thermal efficiency. That might make economic sense to a chartered accountant but it does not make sense to anyone who believes that when we are dealing with a finite resource we should use it to its best advantage.

The Government's policy in regard to rail privatisation by the track authority is mistaken. The Government's insistence on utilising gas as a secondary rather than a primary fuel is also mistaken. Beyond that, the Government are probably doing a good enough job.

6 p.m.

Lord Ezra

My Lords, we have been debating a technical Bill with a limited objective, as the noble Lord, Lord Boyd-Carpenter, reminded us. It was nevertheless to be expected, as the subject of the Bill was the privatisation of two major enterprises, that a number of major issues should have been raised. I am sure that that did not come as a surprise to noble Lords on the Front Bench opposite.

I wish to start by expressing my appreciation of the way in which Ministers dealt with matters, sometimes at considerable length. It was most helpful to us, even though we did not entirely obtain the answers we wished.

I am at one with the noble Lord, Lord Clinton-Davis, when he regrets that the two industries are being dealt with in one Bill. In my opinion, this led to a most untidy debate; we dodged about from one issue to the next, half on one, half on the other. Sometimes issues were linked, sometimes they were not. It would surely have served the Government's purpose far better if we had separated the two entirely so that those who participated in the railways debate would have been people who knew about the railways and those on coal would have been people who knew about coal.

Furthermore, I am in serious doubt as to whether the coal part of the Bill should have been brought forward at this time. We have been told repeatedly that the reason is that without this Bill empowering the managements of rail and coal to consider privatisation and employ consultants there would be no powers for them to do so. I am afraid that I cannot accept that. If the noble Earl and the noble Baroness will kindly look up the Coal Industry Nationalisation Act 1946, they will find that it is a remarkably short Act. As the noble Lord, Lord Boyd-Carpenter, will, I am sure, recall, it empowered the board to do all those things which it considered to be right in the interests of the industry. With a prospective Act of privatisation, surely if it were put to legal experts they would be empowered under that Act to have a serious look at the implications of privatisation. Therefore, in my opinion, this does not add anything to the powers that the board already has.

Furthermore, there should have been a delay because of all that has happened since we had our Second Reading on 16th July. When after the Summer Recess we moved on 30th November to the Committee stage much had happened. Again, I feel that it would have served the Government's interests far better if the present problems over the coal industry had been dealt with and then the Bill had been introduced. We should then at least have known what the background was against which a possible privatisation measure was to be introduced. Thus we have had an untidy and difficult debate over an issue which should have been relatively straightforward and simple.

During the course of that debate, as I mentioned, the Government commented on a number of issues raised. I should like to itemise the major issues which I think were raised and on which the Government gave varying degrees of assurances as concerns the coal industry. I shall naturally look forward to seeing those assurances carried out, as I am sure that they will be, when we see an eventual privatisation measure.

The issues include pensions. Everyone agrees—the Government totally agree—that particularly for coal they are a vital issue because half a million people are involved in pensions which they either now receive or which have been deferred because of the rapid closure of the industry.

We were also given assurances on safety that high standards would be maintained, whatever changes in ownership took place. On research, we were assured that vital research, particularly on clean coal technology, would be continued. We were assured that the high environmental standards which are enjoyed at present in the coal industry in its nationalised form would be continued, although the issue that seemed to me to remain in doubt was whose was the responsibility for the environmental impact of previous mining operations. At the moment that responsibility rests with British Coal. With whom it would rest when the assets are sold to some third party remains to be determined.

On concessionary coal, we were given a formal assurance that it would be continued. We were told that the coal industry social welfare organisation would continue. We were given general assurances on redundancy payments for future closures. Today we discussed consultative procedures, particularly in relation to closures. That is quite an important list.

If all those matters are introduced, as I am sure they will be, in the proposed privatisation legislation, it might be difficult for some to visualise how a third party could do any better with all those obligations than the present management. Therefore we shall have to see how, with all those restraints and obligations, nevertheless the transfer of ownership could be considered worth while. That is a question to which we shall come later.

I wish to conclude by saying that we shall obviously return to this on several occasions. We shall debate the whole coal issue again when we have received the forthcoming White Paper. We shall look at it again when we have the proposed legislation.

I end with a plea. I made this request at the time of the Second Reading and repeat it now: I hope that before the Government put their proposals for the privatisation of coal forward in the form of legislation they will let us have a White Paper as they did in the case of the railways. Then we shall be able to debate it fully before we reach the legislative stage.

Lord Mason of Barnsley

My Lords, I am pleased to follow my noble friend Lord Ezra, especially as I wish to deal solely with the coal industry. I am totally opposed to the Bill. I find it unbelievable that a government could seriously contemplate introducing a Bill which paves the way to privatise the coal industry when the energy industries, by the Government's making, are in such turmoil. Every sector—gas, nuclear power, electricity and coal—is unsure of its future, a turbulence created by the political stupidity of the President of the Board of Trade. His statement of 31 pit closures caused shock waves throughout the country. It was shocking and politically naive, with no Cabinet consultation and totally disregarding the rules of pit closures and of government legislation. It is inconceivable that one Minister could make so many mistakes, create a people's revolt, with national demonstrations, and be proved to be so utterly wrong. One wonders how he has survived. In any case, confidence in the man will never be the same.

The Government have been plotting and planning the rapid run-down of the coal industry in recent years, hoping to leave a rump of highly profitable pits for the privateers. For example, recent government legislation has given the open-cast coal mining industry the right to expand production from 15 million tonnes per year to 25 million tonnes. The extra 10 million tonnes of output would close 10 pits.

The Government gave the signal to the energy industry that coal could be imported without any restriction on tonnage. Therefore we now have 12 million tonnes of cheap coal coming through the ports of Britain. Much of it is quarried coal, open-cast coal, lignite, brown coal, some based on cheap labour and some tonnage subsidised. There is no doubt that it is unfair competition against the British coal industry. That affects another 12 pits.

The Government are continuing to import French nuclear power. It is equivalent to the annual output of five coal mines. Then there was the decision to allow North Sea gas to be burned in our power stations—a premium fuel in preference to British Coal's power station coal. Every conversion to gas or a new gas station cuts back the demand for power station coal.

What is also most galling is that it is publicly known —and the European Commission is aware of it—that the German deep-mined coal industry is heavily subsidised. Where are the British Government's protests? The Germans survive with subsidies while our own industry is being sabotaged by a series of deliberate government measures designed to create a privateers' paradise in the energy market.

Expanding opencast coal mining means the loss of 10 pits; cheap coal imports (12 million tonnes) loses another 12 pits; French nuclear power is equivalent to five pits. Twenty-seven coal mines have been closed or are closing as a result. There is also the fact that with the imports of fuel from abroad, we are constantly adding to our unemployment figures. We are importing unemployment: 17,000 jobs are going with those coal mines alone from the imports of coal and nuclear power from France. And there are the knock-on effects from the loss of 35,000 jobs. We are also concerned about the future security of coal supplies.

In the haste to prepare for the privatisation of the coal industry, the Chairman of British Coal presented a plan to the President of the Board of Trade to close 31 pits—two-thirds of the industry—leaving 20 coal mines. Perhaps a dozen might survive at the end of the century. To shut them down in a mad rush, contrary to all the rules, with the 90-day consultative and review period totally ignored, was dictatorial and bombastic. But it has turned out to be an act of the worst political ineptitude in parliamentary history. Were these acts not all a preparation for privatisation? Just a handful of pits were to remain, having weeded out the uneconomic and the marginal coal mines; also having rigged the market.

There has been a further humiliation for the Government, as referred to in my noble friend Lord Donoughue's opening remarks. Eight coal miners with the National Union of Mineworkers and with the National Association of Colliery Overmen, Deputies and Shotfirers and the Union of Democratic Mineworkers challenged in court the Heseltine Statement. A judgment was delivered ruling that decisions by Heseltine and British Coal were unlawful. They were made without any consultation with the unions and were in breach of Section 99 of the Employment Protection Act 1975, and from October 16th 1992 of Section 188 of the Trade Union and Labour Relations (Consolidated) Act 1992. It was stated that the decision to close the first 10 pits without any independent scrutiny was irrational. Mr Justice Hidden made it clear that these problems had to be resolved within the law and not outside it. The whole episode was an unlawful act.

With all this going on, British Coal's blunders, ministerial misjudgments and illegal acts by Ministers, should a Bill be going through this House? Should this happen when there is so much uncertainty about the coal industry's future, and while numerous committees of inquiry are sitting: the Select Committee on Employment, the Select Committee on Trade and Industry, the John Boyds American consultative inquiry, the Government's internal inquiry and the eventual White Paper? It is nonsense to move a Bill through this House at this stage with all these inquiries going on and as yet no conclusions. There has been an independent report from the European Parliament's public policy advisers stating that the Government's controversial plan to close 31 mines is based on short-term thinking. The consultants calculate that production costs for Britain's deep mines could be cut by a quarter on average over the next few years as new technology is exploited, making British coal cheaper than the upper price band on the world market. A premium to ensure security of supplies would make it cheaper still.

I believe that the series of reports which we are awaiting will come to similar conclusions. Therefore, in the light of this series of government blunders, mistakes, misjudgments, illegal acts over the coal industry and the unease throughout the energy sector, how can this House give this Bill its blessing today? I do not believe that it should, and the Bill should be thrown out.

6.15 p.m.

Lord Underhill

My Lords, at the Second Reading of this Bill I was given the responsibility of making the opening speech in opposition to the proposals in the Bill. By Second Reading on 13th July we had not received the White Paper. We went very hurriedly into the Committee stage and subsequently the Report stage.

At Second Reading I said that this Bill had all the hallmarks of the Government's obsession with privatisation. Nothing said during the whole passage of this Bill, including the speech of the noble Lord, Lord Boyd-Carpenter, has removed the view that I held at Second Reading. When eventually we had the White Paper, it was clear that there were many blanks and that the Government did not know how they were going to proceed with the steps of privatisation. Perhaps I may say—this point will come out when we have the Bill before us—that the real issue is modernisation with adequate finance, not privatisation. We have been told time and again—and it has been repeated this afternoon—that this Bill does not give British Coal or British Rail powers to implement privatisation. What it does is give them the power to consider these proposals and make preparations for privatisation.

I listened very carefully to the noble Lord, Lord Boyd-Carpenter. He said that discussions that are taking place will help decide what is to be put in the Bill. Now we are told—and on this occasion I am prepared to believe the press because there must be some government leakages—that the Bill is to he published soon: this Friday. If the present Bill, which empowers discussions to take place and proposals to come forward, has not yet been approved, how the devil can the privatisation Bill be published this week? We have not yet passed this Bill which gives powers for the discussions to take place. If discussions have taken place, what consideration has been given to the various points raised by Members, including two Members of your Lordships' House on the Conservative side who expressed great anxiety over the Government's proposals? What view has been held by the umbrella organisation for some 80 user-groups which have expressed worry over the proposals for privatisation?

The Government have said that the proposals being brought forward in the Bill will bring in management skills. I believe that nothing can replace the skills of railway management which exist in British Rail today. It is not just my view. Paragraph 3 of the White Paper pays tribute to the progress made by British Rail and notes that the efficiency of British Rail compares very favourably with other European railways. Later on the Secretary of State, at Second Reading in the other place, went on to pay a tribute to the dedicated management and workforce of British Rail.

The suggested management skill to be brought in over and above the railway skills that exist now in British Rail is to be supplemented by a very involved bureaucracy. I shall not go into all the details; but various authorities, we are told, are going to be established, presumably by the Bill. They will arise from discussions with British Rail. Yet the discussions with British Rail are supposed to be encouraged and developed as a result of passing this Bill this afternoon. We understand that decisions about what will be the various bureaucracies have already been taken. Yet this Bill has not been passed. We understand that certain people have been approached as appointees to the various authorities. Names have even been mentioned. Yet the Bill has not been passed today. It has not had Royal Assent. If the discussions could take place on all these things now, why do we have this Bill? We have wasted a few weeks. If the Bill is necessary, why are such decisions being taken now?

I should like to supplement one or two of the points made by my noble friend Lord Clinton-Davis. In relation to British Rail bids for franchises should not be permitted. The Government must explain the reason for that decision, particularly as we have been told that one of the major purposes of the Bill is to develop competition. I am sure that noble Lords would welcome an answer to that question before the Bill is placed before us.

Competition will take place when bids for franchises are made, in the same cockeyed way as the Government introduced competition for franchises in commercial television. Where will competition take place if the services and lines are franchised? There will not be one company competing with another company; there will be a complete break-up of the rail network. It would have made sense if the Government had decided to privatise the entire network, but for the reasons explained in the White Paper that was considered to be financially impossible. Therefore the British Rail network will be completely broken. Applications for franchises will only be made by companies that expect to make a profit on a particular service. The Minister for Transport, Mr. Roger Freeman, has made it clear that those services which do not make a profit will be run by British Rail. After the profitable ones have been taken away it will be more difficult to run the unprofitable services.

The Bill demonstrates the illogical thinking of the Government. I should like the noble Earl to explain why discussions are now taking place when the passage of the Bill has not been completed.

Lord Cocks of Hartcliffe

My Lords, in July during Second Reading of the Bill I raised the question of the regulators and how each successive privatisation adds to the army of regulators and how, with the best will in the world, they are bound to develop group behaviour. Competition will develop between them; there will be a career structure and there will be various pressures upon them. I asked the question: who will regulate the regulators? Here we are, six months on: there has been no discussion of that issue in Committee or on Report and the role of the regulators has hardly been mentioned.

My noble friend Lord Donoughue on 13th November mentioned the dilatoriness of the electricity regulator in regard to the economics of gas-fired power stations, the regional electricity companies and the contributions that have been made to the current problems in the coal industry.

My noble friend Lord Clinton-Davis on another occasion raised the subject of the advertisement that was issued by the Department of Transport for the post of regulator, which stated, "knowledge of public transport not essential". I do not make too much of that point, having been previously involved in a very minor way with the appointment of government Ministers to some departmental briefs.

No serious discussion about the matter has taken place. Some noble Lords were lucky enough to have points that they raised on Second Reading taken into account by the Government; I have had no such joy.

There is growing concern about the group behaviour. I illustrated my remarks on Second Reading by mentioning the photographs that appeared in the annual reports. There is further evidence about regulators developing group behaviour. The Independent on Sunday issued 1993 resolutions from local government, Whitehall and the utilities. The regulators of the utilities would be very peculiar if they did not get on the blower to each other and say, "I have had the Independent on; what will you say?" The gas regulator's resolution was, To get the best deal possible for British Gas customers". Then he adds a personal note. The Director-General of Ofwat stated that his resolution was: To keep prices down for customers, quality up, and the water companies on their toes". That is a public school phrase if ever I heard one. The resolution of the Director-General of Oftel was: To strive to ensure that more and more customers can choose telephone services that they want, and have the information on which to base their choice. There is no contribution from the electricity regulator. He possibly had cold feet because he has received a bit of a caning recently. However, there are substitute remarks from the Electricity Association and Nuclear Electric with which I need not weary the House.

That range of remarks can at best be said to be populist and at the worst sycophantic to the customers because I always understood that the question of regulation was about balance. The customers should be taken into account but there are other matters to be considered. The investors in the industry, Britain's industrial base, and the economic well-being of the nation should be considered much more by the regulators.

There is a growing awareness of that issue. The chairman of British Telecom, Iain Vallance, recently predicted the breakdown of regulation. He stated that such was the complexity and sophistication of some industries now that the question of regulating them was getting well beyond comprehension. His view was that the structure would break down. If that view is correct, then it is an extremely serious matter that should be examined before it gets out of hand. Further evidence appears from a report which recently appeared from the European Policy Forum, dealing with the question of the future of industry regulation in the United Kingdom. It reached the conclusion that there was, an urgent need for reform of the regulatory system in order to create a stable environment within which the management of the utilities could manage, the investors can invest without unexpected and unexplained reductions in their expected wealth and consumers could be protected from high prices and poor service". The matter was further aired in an editorial in the Financial Times that was headed "Reviewing the Regulators". The article began by saying that the time is ripe for reviewing the British system of regulating privatised utilities. It mentioned various issues that needed attention and stated that the clearest issue is accountability; that too often the process by which regulators reach their decisions is opaque; and that they are insufficiently accountable. It called for a thorough review which needed to be carried out openly and independently.

Finally, I should like to say to the Government that this is an issue that will not go away. The opportunity to explore it during the passage of the Bill has been wasted. I hope that the Government will consider that it is an issue that requires urgent consideration before further Bills are presented.

6.30 p.m.

Lord Donoughue

My Lords, the Bill has provided a fascinating and educational experience for me, if I may be excused for opening on a personal note. It is the first time that I have taken a Bill, or part of it, from the Front Bench and I begin by thanking the House for its tolerance and forbearance whenever my inexperience showed.

It was fascinating for a number of reasons. First, it was a hybrid Bill. On that point I immediately support what was said by my noble friend Lord Clinton-Davis and the noble Lord, Lord Ezra. That was not a good idea. It caused us a lot of trouble, as I imagine it did all sides of the House. In fact, the proposed privatisations of coal and rail have little in common. One is a domestic service and the other an industry based on an internationally traded commodity. We saw different people with different experiences who were interested in and wished to contribute to totally different aspects of the Bill. It was quite a muddle. I trust that the Government will not repeat that exercise in confusion.

Secondly, the Bill was introduced without a White Paper on coal and proceeded before the imminent review and Select Committee reports. That did and still does astonish me. Is it perhaps because in a White Paper the Government would have to set out their energy policy, and perhaps they do not have one? From that policy vacuum many of the Government's problems in the coal area arose. We hope that the promised review will finally produce a statement of coherent energy strategy; but we wait to see.

Thirdly, the Bill became a trial run for the real privatisation Bill still to come. I felt that that produced an imbalance in our respective approaches across the Dispatch Box. To the Government it was a small, narrow, technical Bill simply paving the way forward. To the Opposition, naturally—and I believe to many Cross-Benchers in this House and possibly to many people in the country—the Bill raised all the basic issues and principles concerned with privatisation. The Government tried to avoid and deflect those arguments at this stage. But I believe that it was right for us to raise those issues now, especially as there was no White Paper on coal. It should even prove helpful to the Government in marking out the nature and boundaries of the debate to come. However, we need more information from the Government; we need statements of their energy strategy and the role of coal within it. To conduct the passage of the Bill without that was ultimately indefensible.

A further striking aspect of the Bill's voyage, and to me the most curious—referred to by my noble friend Lord Mason—was the extent to which it was pushed through unchanged. All amendments were rejected. There was no modification in the approach or tone from the government side. They were totally unresponsive to, as though totally unaware of, the near-revolution of opinion occurring outside the walls of this House and indeed throughout the country.

Between the Second Reading of the Bill in July and today's Third Reading the Government have been forced to withdraw the Committee stage in this House and abandon or postpone their closure programme before the imminent threat of defeat in another place. They were heavily defeated in this House on coal policy. They have been forced to set up several reviews into virtually every aspect of their energy policy. They have effectively conceded that their electricity privatisation was disastrously misconceived and executed.

The Government's energy policy has been denounced as wrong by virtually all the media and industry commentators. The Secretary of State and British Coal have unprecedentedly been found guilty in a court of law of breaching the law, of acting ultra vires and acting irrationally. As my noble friend Lord Mason said, there has been a near-revolt in British non-violent style. In a way the earth has moved. Yet, the department and Ministers have not moved at all on the Bill. It is as though the House were totally blithely unaware of what was happening in the real world outside. The Bill was pushed ahead during all those eruptions but not a single word was changed; there was not the slightest modulation of tone. As we saw today, there were no concessions on due consultation or independent scrutiny as we and the courts demand. I find that striking and curious. I fear that it suggests a mixture of complacency and arrogance within the department which is not attractive and I suspect is politically dangerous for those making policies in their cocooned departmental bunker.

As the noble Lord, Lord Ezra, said, the Bill should have been postponed until the policy background was clear. Whether we shall ever see the two ill-begotten privatisation Bills for which this measure prepares the way, in whatever form, remains to be seen. I hope not. I believe that one can state with confidence that there is no widespread demand for them in the country or, I suspect, in the Conservative Party. What are they? They are the fag-ends of Thatcherism; the last least rational, least justified gestures to the dying dogma. But if the Government obstinately persist, they should be in no doubt that we from this side will resist with the utmost vigour. We will scrutinise with the greatest vigour the Government's proposals on the specific points we raised at Committee stage, which were excellently summarised by the noble Lord, Lord Ezra. I refer to pensions, safety, consultation, environmental obligations, and so forth. We shall return to those again.

I conclude with one of many pleasant courtesies in this House; that is, thanking those who have helped us during the course of the Bill. My noble friend Lord Clinton-Davis has already mentioned some and I endorse his comments. I thank him personally for his kindness and wisdom in guiding a raw apprentice such as myself. I thank also Robert McGeachy, our research assistant, who worked enormously hard to provide briefing in what was a constantly-changing environment, and those within the coal industry who unstintingly gave of their time to provide facts and figures and briefing when they were heavily engaged elsewhere.

I thank the staff of the House who assisted us in drafting amendments, where sometimes much skill and imagination was required to relate them to the legislative text. I thank also my noble friends for supporting us in speeches and Divisions, and especially in the fine speeches we heard this evening from my noble friends Lord Mason, Lord Underhill, Lord Kirkhill and Lord Cocks. The same thanks go to noble Lords on the Liberal Democrat Benches for their support. I particularly thank the noble Lord, Lord Ezra, whose modesty and charm disguise immense expertise in this area. Working with him, as we occasionally do across the gangway, has been a particular pleasure. I thank those on the Cross-Benches and those Conservative supporters who expressed sympathy for our case and especially those who voted with us on 19th October to defeat the Government. It was not actually a legislative stage of the Bill, but surely historically it was a political part of it.

I am also most happy to thank the Minister handling the coal side, the noble Baroness, Lady Denton, for her courtesy and helpfulness, which made my first legislative experience a pleasure. I referred to the fact that occasionally on these Benches we stretched the discussion to the limits of the Bill, raising issues which linked to the privatisation still to come. It was characteristically courteous of the noble Baroness to accept that with such good humour and she did her best to answer our questions. Of course, it was not only polite, but it was also shrewd—what I might call the cushion of her courtesy blunts our swords.

This may not be an entirely bad Bill in itself but it is not a good one and it paves the way for worse things to come. Its passage unchanged demonstrates that the Government are not listening to what the British people want. On this Bill and on any future proposed privatisation I believe that we speak for the British people. They do not want the privatisation of coal or rail.

The Earl of Caithness

My Lords, many of your Lordships may be forgiven for forgetting that this is a short Bill with a simple purpose; that is, to confer on British Rail and British Coal powers to enable them to prepare for the implementation of government proposals for the restructuring and privatisation of their industries. That is one reason why the two were linked together. Although it is a short Bill, your Lordships have recognised that it represents an important first legislative step paving the way for the main privatisation legislation to come forward at a later date.

However, the actual provisions of this paving Bill have generated little debate in your Lordships' House. Rather, our debates have in large part had an eye on future legislation which will be necessary for the actual implementation of the Government's proposals. In this respect my noble friend Lady Denton and I have made every effort to answer the points that have been raised. Indeed many of the debates had absolutely nothing to do with the amendments tabled. But we certainly went out of our way to try to answer the points that were raised. It is characteristic of the nature of the noble Lords, Lord Donoughue and Lord Ezra, to have thanked us for that. Those thanks are gratefully received. I agree with the noble Lord, Lord Ezra. We did not meet all his concerns but we certainly try to answer his questions.

Many of the issues raised by your Lordships are of direct relevance to the main legislation that will come to your Lordships' House for consideration in due course. Certainly, the 22-minute harangue of the noble Lord, Lord Clinton-Davis, against our proposals for privatisation falls into that category. Your Lordships will then have further opportunities to consider these matters when they are fully developed and in their proper contexts. The arguments of the noble Lord, Lord Donoughue, for separate Bills when we come to the main legislation have force. There will be separate Bills for each industry. But his arguments had little force for a paving Bill of two clauses.

I was interested to hear that my noble friend Lord Boyd-Carpenter, who has great experience in these matters, was in a state of some emotion. I hope it will not be long before he is in a state of something more than some emotion when we introduce the full privatisation Bill for British Rail.

On behalf of my noble friend Lady Denton I thank your Lordships for the contributions that have been made on the coal aspects of the Bill. There is an enormous amount of knowledge of the coal industry in this House which has been amply demonstrated in the discussions on the Bill. We have certainly benefited from the enormous experience of the noble Lord, Lord Ezra, and we have taken careful note of the points that he raised. The noble Lord, Lord Mason of Barnsley, will understand that now is perhaps not the time to have a general debate on the coal industry. I could not help but think when the noble Lord talked of pit closures that it was indeed Labour Governments which closed 313 pits, with a consequential reduction in manpower of 200,000.

On the rail industry too there is a great depth of knowledge which has contributed to some very interesting debates on the Government's rail privatisation strategy as well as a number of more specific aspects of the Government's privatisation proposals. In this context I should like to mention my noble friend Lord Teviot. Indeed I will continue the policy of trying to answer all the questions put by your Lordships in these debates even though they go wide of the mark. In doing that I wish to answer two points raised by the noble Lord, Lord Clinton-Davis. One related to the services procurement directive. I understand that the directive does not apply to concessions and would not therefore apply to franchises. Our policy of not allowing BR to bid for franchises would therefore not contravene the requirements of the directive. The noble Lord's second point concerned the acquired rights directive. He will of course recall that, contrary to what he said, I replied to him in letter form on 14th December answering the points that he raised on 30th November. I have a copy of the letter before me.

In all our deliberations the House has shown its usual courtesy to my noble friend and to me. For that we are grateful. We have much appreciated the constructive and knowledgeable contributions to the debates we have had. Our debates have provided ample demonstration of the interest in the future of the coal and rail industries and also the depth of experience in your Lordships' House. All those who have been following our proceedings will now have a clearer understanding of the issues.

I should like to thank all those who have helped us. I thank the noble Lords, Lord Clinton-Davis, Lord Donoughue and Lord Ezra, for their kindness and generosity. I look forward with great enthusiasm to the main rail privatisation Bill on which I can expect the same high quality of debate.

On Question, Bill passed.