HL Deb 01 February 1995 vol 560 cc1488-90

2.39 p.m.

The Viscount of Falkland

asked Her Majesty's Government:

Whether they accept British Rail's decision that there is no commercial case for taking up their option to purchase more Networker trains for use in the South Eastern Region.

The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen)

My Lords, the commercial case is a matter for British Rail. It concluded that there was no commercial case for ordering further trains now on the terms offered last year by ABB Transportation. However, British Rail has indicated that it would want to re-examine the commercial case if an improved offer were received.

The Viscount of Falkland

My Lords, the commuters from Kent will not find that an encouraging Answer. Is the Minister aware that less than a year ago the Minister in another place, Mr. Freeman, welcomed the ordering from the York manufacturers of new rolling stock for the South East, and said that there was a prima facie case for renewing the rolling stock? How can that view have changed so radically within so few months?

Viscount Goschen

My Lords, our policy has not changed. It is still very much our policy to encourage worthwhile deals under the private finance initiative. As I said, BR has indicated that it will, without prejudice, consider any new offer, provided that it makes business sense and would be likely to fall within the PFI rules. BR's decision was a business decision based on an analysis of commercial costs and maintenance schedules.

Lord Astor of Hever

My Lords, is my noble friend aware that ABB offered a leasing arrangement which would not have breached BR's external finance limits and involved no capital costs to the taxpayer?

Viscount Goschen

My Lords, BR did not decline to pursue the ABB option because of pressures on resources. It did so because the deal no longer made any sense when BR took into account the comparative costs of the new trains and the cyclical maintenance schedules of the existing rolling stock.

Lady Kinloss

My Lords, will the Minister use his influence to urge the private finance initiative to get BR and ABB York around the negotiating table? If they could reach a satisfactory outcome for new Networker trains for the South Eastern Region, ABB York could stay open and 750 jobs would be saved, many of them highly skilled.

Viscount Goschen

My Lords, we value the existence of a thriving railway manufacturing industry. It is for BR to decide what equipment it needs and when. The private finance initiative has provided opportunities. Indeed, the previous deal, which was agreed under the private finance initiative, provided a great innovation in access to capital.

Lord Taylor of Gryfe

My Lords, is the Minister aware that ABB is a highly skilled operation which specialises precisely in this field? As a result of British Rail's decision, which it will review at a later stage, people in that company are being declared redundant. The ability to manufacture rolling stock, which is so necessary for British Rail, will be lost. Cannot we achieve a reasonable arrangement between British Rail and the manufacturer of rolling stock for a rolling programme that will keep people employed at what they do well?

Viscount Goschen

My Lords, I recognise the value of the ABB capacity and the work that it has done in building rolling stock. However, it is not for the Government to second guess the commercial decisions of BR as to when it requires rolling stock and what rolling stock it requires.

Lord Aldington

My Lords, is my noble friend aware that it is believed that within the past 18 months a promise was made by a Member of Her Majesty's Government that the rolling stock on the South Eastern Region, which is between 35 and 45 years old—older than my noble friend—would be replaced? How can a decision be taken on a commercial basis that does not replace such old rolling stock, which is causing the Eurostar to be held up and many passengers to doubt the safety?

Viscount Goschen

My Lords, any comments made on the matter by my honourable and right honourable friends were made in good faith and based on the then commercial case. It is for BR to make a decision. The carriages are old but they are well and safely maintained. BR will make a decision about when it needs a rolling stock.

Lord Clinton-Davis

My Lords, is the Minister aware that according to his judgment the carriages appear to resemble many of us in this House; old yet reliable? In his view of transport policy generally, what importance does he place on the unreliability and the inconvenience caused to so many passengers? Does he believe that those are important issues which should be taken into account? Does he agree with the view expressed by his honourable friend in another place, the Member for Ryedale, that to allow these works to close —that is what is at stake—would be the most perverse crime that the Government could commit against the people of York? Does the Minister have any sympathy with that point of view?

Viscount Goschen

My Lords, yes, I have sympathy with those who work in ABB and those who manage the plant. They have produced good rolling stock which has served the railways of this country. But I also recognise that BR, in making its commercial decisions, must weigh up the costs and benefits of new stock as against continuing the maintenance of its existing stock. BR has decided that the existing stock requires replacement in 1999.

Lord Clinton-Davis

My Lords, does the Minister suggest that the clammy hand of the Treasury had nothing to do with the decision? Is it correct that behind the mysterious talk about a commercial case, which appeared not to have influenced Ministers in the assertions that they made repeatedly last year, being convinced by the commercial case, the issue needs to be properly cleared up?

Viscount Goschen

My Lords, I cannot make the issue clearer. Our view is that which I have expressed. It was a commercial decision for BR and the question of revenue, as raised by the noble Lord, was not a reason for the decision.