British Rail: Rolling Stock Valuation (Hansard, 27 November 1995)

§ The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen)
My Lords, the aggregate price which has been agreed for the companies is in the region of £1.78 billion. The net book value of the rolling stock at 31st March 1995 was just over £1.84 billion. The purchasers were not asked to give specific undertakings as to the continued use of the stock, since approximately 92 per cent. of vehicles are currently on lease for periods of up to 10 years.

§ Lord Peyton of Yeovil
My Lords, while it is always possible that my noble friend may be right, perhaps he will be good enough to look at the net book value because I am rather surprised at the low figure he has given for that. Does it not seem rather odd, in view of the fact that the rolling stock was sold at something of a bargain price which will result in enhanced profits, that there is still no requirement for those enhanced profits to be invested in the purchase of fresh stock?

§ Viscount Goschen
My Lords, I am pleased and not a little surprised that my noble friend acknowledges the possibility that we might be right on some of these issues. We are sure of that figure, but I shall of course check it yet again. But I believe that the figure of some £1.8 billion which I have for the net book value is the 458 correct figure. As to the question of whether further strings should be attached to the sale of these ROSCOS, we did not feel that that was appropriate. It was a commercial bidding process and we believe that the price paid was an appropriate one.

§ Lord Carmichael of Kelvingrove
My Lords, I agree with the noble Lord, Lord Peyton, who of course, as a former Minister of Transport, knows a great deal about such matters. However, a recent Minister of Transport, Mr. MacGregor, priced the rolling stock at £3 billion, whereas, as the Minister said, it has been sold for about £1.8 billion. It seems to be quite correct to say that the Government may have got a bargain because, Mr. Roger Ford, the editor of Rail Privatisation News, writing in The Times on 10th November, said: This has to be a good deal for the taxpayer. We have got rid of a fleet of trains, two thirds of which are geriatric, to the private sector for not a bad price". The really important question is: is there any guarantee that there will be investment in new rolling stock, and will the rail regulator have some power to ensure that the trains are of sufficient quality and sturdiness to carry the loads that they are being asked to carry?

§ Viscount Goschen
My Lords, I believe that the reference that the noble Lord made to the £3 billion refers to the question of the cost new rather than to the net book value. In terms of guarantees, it is important to remember that it is absolutely in the commercial interests of the rolling stock companies to invest and invest fully in rolling stock. For the first time there will be a competitive leasing market. We believe that the rolling stock companies—there are three of them now—will compete for investment opportunities. Of course, there are no additional barriers to entry to other companies coming in to participate in the leasing market.

§ Lord Haskel
My Lords, will the Minister respond to the second part of the question posed by the noble Lord, Lord Peyton; namely, what undertakings have been given by the purchasers as to the rolling stock's continued use? What undertakings have been given by the rolling stock purchasers that the equipment will continue to be used?

§ Viscount Goschen
My Lords, I specifically answered that question in my original Answer. I said that the purchasers were not asked to give specific undertakings as to the continued use of the stock as approximately 92 per cent. of the vehicles are currently on lease for periods of up to 10 years. The vehicles are tied up in long leasing arrangements. Therefore, there is no need to extract guarantees from the purchasers that they will continue to agree to the leases.

§ Lord Marsh
My Lords, will the Minister accept that many of us feel that questions of the type that have been put and, if I may say so, the supplementaries, are unfair? Noble Lords are fully aware—as, indeed, are the noble Lords, Lord Peyton and Lord Carmichael of Kelvingrove—that the Government have no negotiating position in the area. They will have to meet whatever they are asked to pay eventually and that is what they are doing. However, given the enormous cost 459 implications of the matter, are the Government still absolutely certain that the method they have chosen for achieving their objective is the best that there is? If such unexpected problems keep arising and they cannot find a better way to approach the matter, would it not be in everyone's interest to drop the whole business?

§ Viscount Goschen
No, my Lords; I do not believe that that is the case. I believe that we have the best method of addressing the very considerable problems that we have had on the railways. It is the best way of encouraging new investment in the system and the best way of introducing structural change so that we end up with a better railway, offering better services and better value for money for the taxpayer. I do not believe that the sale of the rolling stock companies was a problem; I believe rather that it was a success. It was the largest direct sale privatisation that there has been so far. Moreover, the proceeds were considerably in excess of those predicted by most commentators.

§ Lord Richard
My Lords, is the Minister aware that there is now a smell of the poll tax about rail privatisation and that the more vehemently government Ministers continue to express their faith in it, the more we are prepared for a retreat?

§ Viscount Goschen
My Lords, unlike parties opposite, we believe in our policies and we continue to support them. It is our view that this rail privatisation is the best way to encourage better services for the travelling public. We shall continue to pursue the interests of the travelling public and of the taxpayer.

§ Lord Pearson of Rannoch
My Lords, would my noble friend the Minister be able to use his influence with the purchasers to supply at least one extra sleeping car on the railway line to Fort William which, having been saved with great difficulty, is fully booked from now until Easter?

§ Viscount Goschen
My Lords, if the line is fully booked, my noble friend will not be able to travel on it—unless, of course, a lot of those bookings were made by him and his family. I believe that we have fully rehearsed the issues surrounding the sleeper services and that they are not especially relevant to today's Question.