HL Deb 25 February 1998 vol 586 cc727-66

5.52 p.m.

Baroness Thomas of Walliswood

rose to call attention to the state of the railways; and to move for Papers.

The noble Baroness said: My Lords, before beginning my remarks, I should like to thank the large number of Members who have decided to speak in the debate. In particular, I extend a welcome to the noble Earl, Lord Leicester, who will make his maiden speech. I am also delighted with the support that I am receiving from my noble friends. We can look forward to some expert contributions.

This debate is certainly very topical. We daily await the response of the Government to the failure of London and Continental Railways to fulfil its contract to build the Channel Tunnel Rail Link. At some time in the not so distant future (are we entering into the Civil Service lexicon again?) we shall have an announcement from the Government as to their plans for an integrated transport system. The inquiry into the Southall disaster last year has been postponed because the matter is sub judice pending a possible criminal prosecution; but until that postponement it filled a lot of media space in the past few days. This week's "Panorama" was devoted to the problems of two TOCs and there has been a plethora of reports from OPRAF, the rail regulator and many private organisations and pressure groups about the aftermath of privatisation, the present levels of service and investment, or containing advice about what should happen next. Hardly a day passes without a news story, usually a damaging story, about the railways.

In introducing this debate, I do not wish to enter into an argument over privatisation as such. Yet the current state of the railways is greatly affected by the results of privatisation, and I and my noble friends are bound to refer to those. My main theme is the need to expand the use and infrastructure of our railways in the context of an integrated transport policy. I shall also discuss the difficulties which the fragmentation of the network and the services put in the path of ensuring that the public interest is reflected in what actually happens in terms of service provision and network enhancement.

The environmental case for rail taking an increased share of passenger and freight movements is widely accepted. People understand and desire the benefits of reduced congestion, reduced air pollution and reduced wear and tear on our road system. At the same time, the safety case for rail is very high indeed. In theory, if all passenger journeys were transferred from road to rail, deaths would be reduced from 3,500 to 100 per annum. The greater use of the railways can also play its part in developing and redeveloping town and city centres, which chimes well with the Government's planning approach laid out in their recent Green Paper.

All in all, there is a strong public interest in maintaining and expanding rail services. But the current structure inhibits those objectives. For example, if we examine the infrastructure, the responsibility for maintaining, improving and presumably extending the track rests with Railtrack; but residual railway lands which might be needed for that are still in the ownership of the British Railways Property Board. Again, with passenger services divided among 25 different franchises it is possible for overall performance apparently to improve while important pockets of sub-standard service remain.

A recent report from the Association of Train Operating Companies (ATOC) highlights some of those improvements, including better standards of performance in the National Rail Enquiry Service, ATOC's development of a code of practice for the safety aspects of stations, car parks and trains, increased levels of satisfaction and a required investment in 2,052 railway coaches, of which half are to be in service by the year 2000. All of those are welcome. However, it is noticeable that most of the service and infrastructure projects are outside the south east, and in particular outside the Surrey, Sussex and Kent areas, where levels of satisfaction among commuters are extremely low. Equally, it might be hard to persuade commuters on the "misery" lines from the north into the City that their services are really improving. Delays, cancellation and overcrowding are a normal part of life, together with elderly rolling stock which is dirty within and without.

No wonder the national press, most of whose journalists live within the London commuter zone, finds bad news stories easier to come by than good news stories. I was alarmed to learn while doing the research for this debate that, of Connex South Central's 600 slam door trains, not one is due to be replaced during the period of its contract and that Connex South Central is the only train operating company which does not expect to reduce its fleet of slam door trains. So while one may admire the initiative of TOCs, which are increasing cross-country services in the Midlands or improving the stations which they lease, one cannot ignore the current under-performance of commuter services into London and the very large numbers of people who are affected by those poor services. Moreover, because of the separation of contract compliance and regulating functions and the curious way in which standards are built into the contract process, it is difficult to compare the levels of performance between different train operating companies. That is vividly illustrated by the most recent publication from OPRAF on customer satisfaction, which indicates different levels of benchmark for each company and different methods of measuring satisfaction, with different criteria as between one company and one element of service and another. Common criteria, benchmarks and assessment processes are urgently needed.

The financing of rail services and improvements in the infrastructure currently depend on high levels of public subsidy. It is the high track rents made possible by these subsidies which enable Railtrack to commit itself to historically high levels of overall investment; for example, the modernisation of the west coast main line signalling system. But what will happen to investment as subsidies begin to be phased out? Stop-go investment was a curse under the nationalised system. Does the new privatised system remove that curse? Certainly, the failure of London and Continental Railways to fulfil its contract in respect of the Channel Tunnel rail link is not reassuring. It is, in our view, essential that the Government ensure the full completion of that project. Not only would the completed CTRL make a contribution to environmental objectives, but the commercial benefit of the new line is not to be realised unless it is carried through Stratford and on to King's Cross-St. Pancras.

There are other areas in which an expanded or restored network would enable the operating companies to fulfil public needs and expectations. For example, Heathrow Airport is the largest single generator of traffic in the United Kingdom and one of the largest single generators of traffic in the whole of Europe. Most of that traffic comes in by road. Yet with a relatively minimal reinstatement of existing tracks and chords, together with some new build, it would be possible to link most of south and south-west London, and the outer southern suburbs, to Heathrow by rail with enormous benefits to congestion on the M.25. But obviously if existing but unused rail land were to be lost, that option would also be lost.

So far I have spoken largely of passenger services, but there is also great public interest and commercial benefit in expanding the role of the railways in freight movements. Yesterday I attended a meeting of the all-party Rail Freight Group at which the importance of completing the CTRL and thereby releasing pathways on the existing tracks for freight was once again emphasised.

Equally, documentation I have received from other freight organisations indicates their interest in investment in modernising the loading gauge so that the network can accept trains carrying 9 foot 6 inch containers and improving the possibility of carrying piggy-back road trailers by rail. One major company concludes that where the network capacity is concerned: There is at present no clear strategic planning approach which can look beyond relatively short-term commercial horizons". So if there are problems and if the public interest, possibly supported by public funds, needs to be injected into the equation, how might one achieve those objectives?

One thing that needs to be done is to create an even playing field between the railways and their chief competitors—private motor cars. Interestingly, some of the methods by which this could be done would also generate funds for investment in public transport, including the railways. We believe that the motor licence fee should be reduced, possibly in a way that rewards owners of more economical cars, while motorists should be asked to pay the full costs of using their cars via increased taxation of petrol. In places where congestion is particularly damaging, road pricing might be introduced. Local highways authorities could be enabled to monitor and recuperate the fines for illegal parking.

All three of those measures would generate funds which could be hypothecated for use to support public transport. They would have the additional benefit of doing so at the level of both national and local government. I think it is generally agreed that co-operation between the public and the private sector is necessary to achieve the best results. No doubt others will have good ideas for creating what we believe to be the desirable outcome of partnership between the public and the private sector.

In responding to today's Question about London Transport, the Minister suggested that the Government were seeking such a partnership in that context. I hope we may take it that that is a good augury for future decisions.

Another element of our approach is the creation of a single rail authority to take over the role of both the rail regulator and OPRAF, as they have recently been modified by the Government. We think this would help to bring public interest into the system of franchise negotiation, standard and target setting and increase the "fit" between that and the regulatory machine.

Equally, we also hope to see an element of strategic planning of rail capacity and the establishment of clear priorities for improved services so that, for example, hard pressed London commuters could benefit as well as the inter-city passengers.

Many Members of this House have told stories during debates about railways and some may do so today. In The Times yesterday, a letter appeared in which a woman told how she went to Chester station to meet a train arriving at 1935. She queried the meaning of the message on the TV screen: "Expected 1951 on time". She was told that the train was currently running late but might arrive on time. After the train arrived 35 minutes late, at 2010 the screen still showed the same message. This time she was told: "Sorry love, the man who does the TV goes home at seven o'clock". She concluded: "Come back British Rail, all is forgiven".

Liberal Democrats do not want to return to the past. We recognise that our preferred option for privatisation which would have involved retaining Railtrack in public ownership is no longer a possibility. But we still insist that railways have a key and expanding role to play in an integrated transport system that is safe, user friendly, accessible and environmentally sustainable and which reflects the public as well as the private interest.

We acknowledge that the Government have begun the process of improved regulation and planning, but we would prefer the creation of a single rail authority which would replace both. We think that a partnership between the private and the public sector is necessary to ensure investment that satisfies the public interest as well as making economic sense.

We suggest that only a transparent fiscal regime can both ensure that the real costs of all modes of transport are appreciated by users and that the higher costs levied on the use of motor vehicles are seen to be devoted to the improvement and upgrading of public transport.

It is up to the Government to convince us in the next days, months and years that they have the determination to take the decisions that can make our railways work for us. I beg to move for Papers.

6.5 p.m.

Lord Berkeley

My Lords, I congratulate the noble Baroness, Lady Thomas, on instituting the debate and on what I thought was an expert and thoughtful speech about the problems facing the railways. Perhaps I may first declare an interest as chairman of the Rail Freight Group and an adviser of Adtranz. I welcome the opportunity to have this informed debate which is much needed. I wish to concentrate on the strategy for growth in the railways. I would like to ask and, I hope, answer the question: does the present arrangement require some modification to deal with a growing railway, to deal with investment and priorities rather than the static and declining one which was the basis of setting up the structure five or six years ago?

We have growth in the railways now. Passenger traffic is up 7 per cent. I believe that Connex South Eastern was up 17 per cent. Rail freight increased 15 per cent. if we exclude coal. As all noble Lords know, passengers and freight share the same tracks. There is every indication that this growth will continue. On the passenger side, the noble Baroness, Lady Thomas, and many noble Lords have mentioned the serious overcrowding on passenger services. On freight, it is a different problem with the temporary lack of equipment for rail freight because of the growth. But that is being made good by new investment, we hope.

So the challenge for the railways now is how they deal with growth. The first necessity for passengers is usually longer trains. That seems to be constrained by the charging regime and the inability or unwillingness of ROSCOs to invest in new trains. It is the easiest solution. Another alternative is new construction, of which the Channel Tunnel rail link is the most pressing. As the noble Baroness, Lady Thomas, said, it is necessary.

The third alternative is to increase capacity on existing lines. That usually means signalling, which is seen as the great white hope for the future for cost effective increasing of capacity and on which most upgrades of capacity are now based. I wish to pose the question whether the signalling industry, as it is at the moment, has the capability, with the client—which is usually Railtrack—to deliver on time and on budget. I see signalling as very much the Achilles heel of the railways industry at the moment. There is such a shortage of signalling engineers that some design is being done in Australia, presumably on the Internet, although I do not know. There is a real shortage of signalling engineers at the moment. That is because the present signalling is old, its life has expired, there is a lack of previous investment and so on. It is the cause of the capacity problems and it is the solution. Is the railway industry equipped to deliver? In this House we have talked about the Jubilee Line, this new moving block system which will not work for several years and the west coast main line which is an even more exciting example of a moving block system on four tracks simultaneously which will happen some time in the future. It needs to happen.

My question is: has the industry given up testing and trialling the new systems on little used branch lines before going into such high profile financially and in the public eye with lines such as the Jubilee Line and the west coast main line? It concerns me greatly that they are going into this without any testing. It is the first time in the world that such systems have been used—and on the west coast main line—and we have spoken of that enough in this House.

I move on to the question of passenger, freight and investment. If we look at Railtrack's revenue in round numbers, the company receives around £2 billion a year from passenger revenue and £200 million from freight. Of that passenger revenue, all but around £400 million is subsidy from the Government. It is not surprising that the passenger railway needs subsidy; it is the same the world over. It may be called a social charge on the Government. But freight is not subsidised.

If one ignores the subsidy and looks at the way in which the money goes into Railtrack, it amounts to £400 million of non-government money for passengers and £200 million for freight. That is the way that I look at the balance of priority between passenger and freight in terms of how Railtrack should look at its investment. I do not recommend any change in the structure, but it concerns me that the passenger TOCs are able to reserve their capacity 10 or 15 years ahead, whereas freight generally reserves it only a few months ahead, when it knows where the traffic will come from. When one has a system where demand is growing as it is at the moment, he who applies for capacity last appears to have to pay the bill for any upgrade. It is unfair that the last person happens to be freight—my interest—just because passengers have long-term contracts and freight does not. I believe that a new mechanism is urgently required for sorting out the problem.

The rail regulator has a major part to play in ensuring that Railtrack invests and invests wisely for both passenger and freight. But, as the noble Baroness, Lady Thomas, mentioned, is that enough? Is it reasonable to expect Railtrack to look 20 or 30 years ahead to growth, to new markets, speeds and frequency of trains? They may do—I do not believe they do at the moment—because they have a commercial interest. But the regulator has a growing role in making sure that the investment is targeted correctly and that the Government's proposal for a strategic rail authority should include some means of investment in strategic signalling, land and so forth for the future. There is an argument for investing in a way where some of the revenue could be returned to the industry after a time when the investment starts giving a return in operation. For instance, a lump sum, to start with, could go round the system and it would help to get things going.

In conclusion, the railways are growing. Industry should not be subject to major upheaval. I welcome the Government's policy. I suggested a few small changes, but the biggest change that I welcome is the change in the attitude of the Government who are committed to expanding the use of the railways for passengers and freight. I await the White Paper with great interest.

6.13 p.m.

The Lord Bishop of Blackburn

My Lords, I too thank the noble Baroness, Lady Thomas of Walliswood, for introducing this debate. Unlike the noble Lord, Lord Berkeley, I come to the debate as an amateur, being one of those people, not least clergy, with a lifelong fascination for railways.

When I was a child that greatest of all railway bishops, Eric Tracy, wrote in my autograph book, "Good spotting. Stick to your Sunday school". On the whole people want to like railways. They spend millions of pounds supporting preserved lines and we need to create the conditions so that they are moved from seeing the railway as an exceptional leisure time activity to being that normal means of transport it is in many parts of Europe.

Intelligent people accept that the railways as a system of transport which can move people in large numbers and freight in large quantities, make both economical and environmental sense. It has to be done and the Government must help to make it happen. The quality of life in our land is literally being destroyed by the daily choking experience on our roads. According to the British Lung Federation, air pollution from road traffic affects over one-third of the population, killing as many people each year as road traffic accidents and costing £11 billion. Increasingly, road rage is a sad by-product of overcrowded roads. Time and money is being lost and the quality of life impaired; physical and mental health is being adversely affected by frustration.

So we want our railways to work. It makes sense. But it seems that when it comes to railways we give full range to the British disease of pointing up and even embellishing the problems and the failures of the system and rarely celebrating its achievements. As a frequent traveller on the west coast main line, which badly needs new track, new signals, new rolling stock—you name it, we need it—we await the promises of Virgin Trains and Railtrack to be delivered. We have the bright red carriages now before us as hope for things to come.

I could regale your Lordships for many hours with stories of missed meetings and being late home through delayed trains. But how often do I speak of when the train is early into Euston or Preston as it was both ways last week and seven minutes early at lunchtime today; or on my recent journey from Blackpool to Cambridge, three companies and every connection on time? How often do I compare the relative comfort of sitting in a delayed train with refreshments available and the cheery announcements becoming ever more interesting as to why we are held up, with the utter frustration of sitting for hours in a traffic jam in isolation on the M6 with no idea of what is wrong or when we may move?

We want more people to travel; more companies to send their freight by rail. That needs important investment from both the public and private sectors. It needs an integrated transport policy by which the Government promote rail travel. But if that is to happen, it also needs more good news stories about the rail services to overcome the built-in resistance of switching from the car to rail where that is possible. There is a fine balance to achieve between genuine criticism to bring improvement to our rail system and that endless criticism which in itself creates a self-fulfilling prophesy.

There is good news, as we have already heard this evening. Freight companies like English, Welsh and Scottish, in imaginative ways are clearly increasing the amount of freight carried. Proposals for the so-called "piggy back" system for heavier lorries should be backed to the hilt so that those lorries can be taken off our roads. We need to encourage that developing partnership at local level between local authorities, the rail companies and keen local people which has led to increased passenger services, sometimes with exceptional results in terms of the numbers using them—for example, on rural lines as in the Ribble Valley where I live, or on the Huddersfield to Sheffield line where I lived previously. However, I sometimes think that companies seem to go out of their way to kill that local enthusiasm. Promotional efforts are wrecked by the wrong carriages, the train not turning up or whatever.

As a vice-president of the Railway Development Society I urge support for the suggested moratorium on the sale of the track bed of former lines, that which remains. They have a potential for being re-opened in a new age and not least as freight lines which would take traffic off our rural highways. For example, in the Peak District immense profits would come in all directions if the 20 miles of track between Buxton and Matlock were relaid.

As a countryside commissioner for England I am well aware that that is a challenge as the pressure mounts for more sites for housing in the coming years. Let us not underestimate the huge problems which years of under investment in the railways and perhaps the lack of political will to face the issue have created. But there is great potential, not because people want to move from the door-to-door convenience of the car, but because slowly but surely we are realising that health, the quality of life, and the beauty of the countryside is being destroyed before our eyes by over-dependence on road transport. I hope that this debate will increase that awareness and that the Government, as they promised, will give more attention to this subject and, indeed, risk perhaps some short-time unpopularity to shift resources from road to rail transport.

6 19 p.m.

The Earl of Leicester

My Lords, I read in one of the obituaries of the late Enoch Powell that he was always nervous before a speech. If he was nervous! It is a great honour to speak in your Lordships' House and I very much appreciate that privilege.

I, too, am indebted to the noble Baroness, Lady Thomas, for initiating the debate and for her very kind words of welcome. I confess that I am in awe of her detailed knowledge and I shall therefore speak in rather more general terms. My knowledge of the railways is limited to travelling on them a lot and to having led in the early 1980s a couple of deputations from my local authority to lobby various transport Ministers for better road and rail improvements in my part of Norfolk. But I am enthusiastic about the railways. That enthusiasm, I readily admit, is probably because I travel frequently on what I believe are two of the most competently-run lines in the country—the East Coast line to Scotland and my own local one from King's Lynn, via Cambridge to London. I admit that I would perhaps not enjoy travelling on the line on which I know the noble Baroness, Lady Thomas, is forced to travel. I understand that the level of service is appalling and is getting worse.

I can remember the so-called levels of service that we endured 20 to 25 years ago. I remember the old gateway to the east, Liverpool Street Station, with all its exotic sights, sounds and smells, where there were generally at least three ticket inspectors at the barrier. Their job was to check your ticket but they did not think that was their job. They much preferred to talk and joke among themselves; and if after waiting meekly for a while you decided that you had had enough of that and walked through the barrier, there was a very loud yell after you, something rather rude was said and they hauled you back. Now there are not three ticket inspectors at the barrier. There is not one. But there is one on the train who is generally charm personified. He or she now says, "Good morning" or "Good evening", "Please" and "Thank you", thus making life so much more pleasant all round. I can remember dinners on the train to Scotland which should never have been dignified by that title. There is nothing particularly difficult about producing edible food on trains, but they just did not care. Now, what a change! I really almost do not mind paying for my dinner now.

I know there is a lot wrong with the railways, stemming no doubt in part from the rush to privatisation and perhaps especially in the way Railtrack is constituted. I believe that it can almost hold the train operating companies to ransom with its track access charges. A very good example is Virgin CrossCountry. In the last year of British Rail ownership passenger receipts for that sector of the line were £102 million. Virgin now has to pay Railtrack access charges of £100 million and it has to pay another £50 million for train leasing, train maintenance and station maintenance. So it is small wonder that it needs a subsidy of £120 million in the first year of operation. In fact, as we all know, of the £2 billion paid in public subsidy to the train operating companies, half of that goes to Railtrack.

But there is good news as well. Railtrack tells us that it will have spent £10 billion—an enormous sum of money—by the year 2001. One of the reasons it is spending that amount of money is that there is a new spirit of optimism in the railways. For instance, the Chiltern Line is doing so well that it has persuaded Railtrack to re-lay 18 miles of double track between Princes Risborough and Bicester North, 20 years after it was singled, thus enabling Chiltern to double the frequency of its trains on that line. There are orders for brand new stock: 44 four-car units for London, Tilbury and Southend, the old misery line—it probably still is—and eight new eight-car trains for Gatwick Express. Those are only two of the new orders. Great North Eastern Railways is increasing passenger traffic to such an extent that, if it continues at this rate, in two years' time it will run out of not only trains but track as well.

Lastly, I turn to the Cinderella of the railways. We have heard from the noble Lord, Lord Berkeley, some interesting facts and figures. What he did not tell us was that between 1945 and 1995 the amount of freight carried on the railways fell in every single year except 1984. This year it has gone up for the first time. The noble Lord mentioned a figure. That has been almost entirely due to the vigorous pursuit of business shown by English, Welsh and Scottish Railways. It has even persuaded those high priests of super-efficiency, the supermarkets, to move some of their gods—I should say goods—by rail. Mind you, my Lords, the supermarkets have made so much money that I would not be at all surprised if they had their own gods.

Since October Safeway has been moving 10,000 cases of soft drinks a week by rail—not much, only 40 lorry-loads off the roads every week, and still a long way to go to fulfil EWS's aim to increase freight by rail from the miserly 6 per cent. that it is at the moment to 15 per cent. of total freight traffic. What an enormous environmental benefit that will be!

I believe that the railways have an exciting future. I agree, as I am sure everyone here does, that the activities of the operating companies need to be regulated. But it is a question of degree. Too heavy a hand, and we will strangle them. Let us instead get the regulatory mechanisms right and allow them to flourish and the consumer to benefit.

6.27 p.m.

Lord Alderdice

My Lords, I regard it as a particular honour and privilege on behalf of the House to congratulate the noble Earl, Lord Leicester, on an extremely fine maiden speech. It was positive, articulate, well-informed and entertaining. It was very welcome indeed. It might even have been welcome at an earlier stage, for the noble Earl succeeded to his father in 1994. I notice that his family motto is "He is prudent who is patient". He has been very patient indeed and his speech was full of prudence—nothing that one would not have expected from someone who in various forms has represented his community for something in the region of 20 years. I very much hope—I am sure I am speaking for other noble Lords too—that we will have the benefit of his wisdom and prudence, and his patience with some of the rest of us, much more frequently in coming years. We all convey our congratulations to the noble Earl.

Like him, I wish to thank my noble friend Lady Thomas for the opportunity to speak on this important matter. It is a topical one. It is a matter of great concern and not just from a negative point of view. Stories of difficulties on the railways are legion and possibly always have been. But I should like to raise one specific issue in the realm of public transport and the railways. I refer to the importance of the integration of rail and other forms of transport.

There are those who are partisan for the railways. There is nothing wrong with that. There are all kinds of attachments, emotional, environmental and economic, in support of the railways, and there is much to be said for them, particularly when one thinks of the transport of people and goods over longer distances. However, it seems to me that one does not need to be partisan only for the railways to see their great value. If they are integrated with other forms of public transport they can together provide positive opportunities for us in creating an economically successful and environmentally sustainable future transport system.

Integration involves not only railways but buses. I refer not only to the large buses of the double-decker variety that we see outside your Lordships' House, but also to smaller buses, flexi-buses and indeed to the guided bus routes which are completely devoted to the buses, ensuring that they are able to be much more rapid in their conveyance of passengers and therefore much more attractive for people to take than resorting to private cars, as so many of us often do. Those forms of transport are much more useful in the confined town and city atmosphere than railways sometimes are. What is important is that they are linked to the railways so that people can move easily and readily from one form of public transport, convenient in a more confined space, to another form of public transport, one particularly adapted to the longer stretches. It is that opportunity to pull things together which has been a little lost in the frenzy for privatisation.

In my own part of the world, where the railways have stayed within public ownership, transport in the form of the railways and the buses—the rural bus as well as the urban bus—has been concentrated in one holding company called Translink. Therefore it has been much easier to exploit that kind of co-operative venture than would have been the case had it been split between disparate companies. If not all the companies have goods for gods, certainly a lot of them have the financial recompense for a bit of a god, rather than one that is necessarily best for the community as a whole.

I would make a plea that we give some attention to rail transport. I believe there is a powerful appreciation within the community as a whole and I sense it tonight in your Lordships' House, that the railways deserve attention and resources and have a real contribution to make. I would also make a plea that this should not be done in isolation from other important parts of public transport. They must all work together, with interfaces and linkages with each other, so that it is possible for our citizens to pass smoothly and without difficulty or hiccup from one form of public transport to another. They should be sufficiently well integrated so that that can be a thoroughly successful and appealing alternative to the private car, which is otherwise, for most of us, the most integrated and convenient form of transport. A viable alternative in integrated public transport would require co-operation among the various forms of transport, with the railways being upgraded, together with other forms of transport.

I am grateful to my noble friend for this opportunity for a debate and hope that this notion of integration may gather as much momentum as the notion of the railways coming back to their former glory.

6.32 p.m.

Lord Cadman

My Lords, I, too, congratulate the noble Baroness on introducing this subject today. The state of the railways is indeed a topical subject, what with the financial problems of the CTRL, the impending modernisation of the west coast main line, plus the ThamesLink 2000 proposals, all of which are in some way linked together.

A couple of years into privatisation has resulted in much potential improvement, with some £500 million to be invested in around 450 new train sets comprising over 2,000 carriages. In addition, some £2.5 billion is to be spent on infrastructure improvements. Unfortunately, it seems to be proving difficult for some of the train operating companies to aspire to their customers' expectations. We should remember that for the past 50 years the railways have been run under public control, with all that that entails, accountable to the government of the day and subject to the Treasury and PSBR requirements.

Suddenly, all is changed. The railways are released, almost, into the world of being accountable to shareholders and their customers. The Government are not really involved, except in a degree of regulation and some considerable financial assistance which—and this is an important point—is finite. It is controlled and reducing over the length of the train operating companies' franchises.

Some train operating companies who have inherited modernised infrastructure have found it easy to attract new business, so much so that they have run up against capacity problems. One can cite here Great North Eastern and Chiltern Rail. Both are constrained by the length of their franchises, which are for seven years, and by physical constraints. It seems to take three or four years to acquire new trains. Thus, in a seven-year franchise, to sign a lease agreement on trains that have a life of 30 years is not good business practice. Should they not regain the franchise after seven years, what happens to their investment? Perhaps they just will not make it. They will carry on with what they have, and simply price off demand. This is what went on before. It does not work and it will make nonsense of any future integration.

Let us try listening to what these operating companies have to say instead of threatening them with greater regulation. Some had mistakes have been made, but remember that all these firms are having to learn as they go on. Perhaps too many people have been let go. Let us get some of them back to provide some customer service. Let us be positive and say that there will be improvements. Let us be positive about increasing the length of some franchises. It will make better financial sense.

What about freight? This is one of the success stories of privatisation. Remember that the competition is with road, not with other freight companies. It is therefore no surprise that one company has taken most of the operation. So successful have they been in attracting new business, simply by being positive, that they have almost run out of capacity. There are plans to triple their business in 10 years.

The capacity of the whole railway system is going to be a problem. There may well be a necessity to regulate but, of course, that was not envisaged at the time of privatisation. British Rail had given up on freight. Freight was not really in the music of privatisation at all. However, the potential was realised and we have GWS and Freightliner providing most of the services. Remember that they do not receive any public subsidy, so the risk is theirs alone. They are having to start almost from scratch.

The motive power is so unreliable that they have had to acquire some 250 new units. It is interesting to note that American builders can produce a loco within about one year of receiving the order. The first of these locos is due here at the end of next month. They are investing in some 2,500 new wagons of various types. To achieve this the railway works at York has been acquired, again by an American company. It may sadden some of your Lordships that UK builders are not more involved. Actually, they are pretty well full up with other business. American diesel loco technology is just about the best there is, and these locos are going to be much quieter in operation than those we have been used to.

There are two other points I should quickly like to reinforce. The first is the CTRL. It is vitally important that this project is completed in its entirety, as approved by Parliament, and as quickly as possible. Despite what your Lordships may have heard in some sections of the media, this project is not all about saving half an hour on a trip to Paris. It is all about increasing capacity for other traffic, especially freight in the south coast area and south east generally, properly connecting the rest of the UK with the Channel Tunnel and achieving much regeneration of east London and north east Kent in the process. It should not be reduced to the status of an SNCF branch line by curtailment.

The other point is so-called surplus railway land. I propose to revisit this subject on another occasion. I should like to stress that the apparent rapid disposal of this asset is causing considerable concern. The rail freight market is expanding rapidly and there is going to be a real need for rail-accessible land to be made available for depots and loading facilities.

It is vital that local authorities and the Government are made aware that once these sites are lost it will be almost impossible, given planning problems, to replace them. All those involved in the railway freight market are agreed that something needs to be done quickly. They are all working together to identify sites and present their case. I hope that the Government will listen, because otherwise their much vaunted integrated transport initiative, to which I look forward, will be more or less useless.

6.38 p.m.

The Earl of Mar and Kellie

My Lords, I believe that the new age of the train is standing in the station. The environmental case for railway operation is better than ever. The question is: will we get on that train and enjoy the benefits, or will the train be cancelled because the system is in too much of a muddle? I do not blame the Government for the fragmented and unstable structure of the UK rail network—at least, I do not at present. I will allow the Government some time to come up with a rescue plan for an industry which should not be ailing. Mr. John Prescott's review towards an integrated transport system will have to bite on some tough bullets, but it will be worth it.

I would like to speak about Scottish and Irish railways. Scotland enjoys passenger train services provided by four TOCs: National Express, Scotrail, Sea Containers GNER, Virgin West Coast and Virgin Cross-Country. Freightwise, Scotland is also served by Wisconsin Central's EW & S, and any other private company that chooses to run its own freight trains. The infrastructure is owned by Railtrack who operate it as a Scottish division.

It has to be regretted that the earlier contractions of the network leave the Scottish network with only two points of contact with the rest of the GB network, at Carlisle and Berwick. The loss of the Edinburgh to Carlisle line (the Waverley route) will show up increasingly in the future. However, all is not doom and gloom. Scotrail has announced several improvements. These range from bicycles going free—again; new stations at Dalgety Bay and at Drumfrochar; 47 new three-car train sets have been ordered; promotional fares are offered on the Dumfriesshire line; a new morning commuter service from Dingwall to Inverness has been announced; increased services between Bathgate and Edinburgh and in May 2000 there will be the start of a quarter-hourly Edinburgh to Glasgow service.

This mix of rural and urban commuter, shopper and tourist sector improvements reminds us of the very varied nature of providing a better service within the diversity that is Scotland. The range is from tackling urban and inter-urban road congestion and its associated environmental pollution to the provision of services in the remoter areas.

Finally, Scotrail has a lot to live up to, following its award as the best train operating company and the £5 million prize for doing so from the franchising director. Perhaps I may sum up the Scottish experience of the other companies thus: I live in Clackmannan, which is admirably placed 35 miles from Edinburgh and Glasgow. There is competition for my business on the Anglo-Scottish routes. At present GNER wins hands down. But, after looking at the Virgin-Railtrack plans for the upgrading of the west coast main line, as encapsulated in PUG 1 and PUG II, I believe that there will be a serious choice. Equally, I applaud the decision to increase the loading gauge on the west coast to accommodate piggyback freight trains. Like the reservation of the noble Lord, Lord Berkeley, mine has to be the introduction of transmission-based signalling to a major main line without it having been tested and developed on a minor line beforehand.

I would now like to cross the North Channel. In Northern Ireland we have a publicly-owned railway. As the noble Lord, Lord Alderdice, has said, not only has NIR been integrated with the bus network to form Translink, it has also upgraded the international service in conjunction with Iarnrod Eireann. A quick view of the rail network of Ireland cannot help but notice the decimation in the border areas. Fortunately, progress in inter-governmental relations has paved the way for improvements. Had that arrived earlier, then the old Ulster transport authority would not have earned the soubriquet, "Ulster's Track Abandoners". The new Enterprise service is a symbol of the better relationship on the railway and also a symbol of European investment. The two systems now run a modern two-hour service between the two capitals, albeit using French train sets powered by Canadian diesels.

Much of the rolling stock on the Irish network is second-hand, usually ex-British Rail. There has been some admirable recycling, which underlies historic under-investment in NIR. For example, the Class 80 or Castle Class multiple units, were built on the salvaged underframes of scrapped BR Mark 1 carriages. How the managers of NIR must envy Iarnrod Eireann's new Japanese Sprinters, which now ply on the Dublin Western suburban routes, not to mention the Dart electric services on the coast. I wonder whether Railtrack has considered the adoption of CAWS (continuous automatic warning system) which is an in-cab computer signalling warning system used in the Dublin area. Might that system be compared with the transmission-based signalling system proposed for the west coast main line.

My final remarks have to be about the need for a sustained investment in the infrastructure and rolling stock. I see no reason why public funds should not be used. The benefits of a better railway network can be divided between users and non-users. Nothing will be achieved if the network is allowed to decline. The challenge for the UK government is to untangle the muddle in the network and allow it to thrive, as it cries out to do.

6.45 p.m.

Lord Hunt of Kings Heath

My Lords. I am most grateful to the noble Baroness, Lady Thomas of Walliswood, for initiating this debate. It seems clear that there is general agreement that the railways have an enormous contribution to make to this country, both in terms of our economic prosperity, the environment and the fast and effective journeys it ought to be able to offer to millions of passengers. The problem is that, as yet, we do not have a completely efficient and effective system in order to do that.

As the noble Earl, Lord Leicester, so eloquently said, over the past 20 to 30 years there have been improvements, and I would be the first to acknowledge that. But we also have to face the effect of privatisation and say that one of its adverse effects has been to undermine the national integrity of the railway system. There are many examples of that. They are the connections not now being held because they are operated by different companies; the accuracy of train information across the whole network is pretty poor; the complex fare structures that now exist make it sometimes very difficult for passengers seeking to make different return journeys across different company operators; the regulatory regime is often confused and patchy; and the sanctions available for poor performance are often inadequate. Finally, and most importantly, it seems that there is no focus for taking a strategic look at the development of the railways, not over the next two to three years, but over the next 20 to 30 years. The whole problem is summed up for me by the fast disappearance of cheap, walk-on fares in relation to many of the operating companies.

There was a very interesting report in yesterday's Independent which looked at the figures for fares between June 1995 and January 1998. In that period inflation rose by just over 9 per cent., but when one looks at the cheap fares, the Thameslink cheap day fare rose by 15 per cent.; the cost of the Midland mainline super-saver fare rose by 16 per cent. and the Virgin super-saver fare rose by 21 per cent.

I suggest that the price for privatisation has been paid for not by the people who drove that through nor by the railway companies or their shareholders, but by the travelling public. All these problems have been reflected in my own experience, living and travelling from Birmingham on many occasions and using the railway system. The noble Lord, Lord Berkeley, referred to previous debates in your Lordships' House about the situation concerning the west coast main line. I make no apology for returning to that subject.

The railway system is very important to the city of Birmingham. It was partly responsible for its development as a great industrial city. In its days as the engineering window on the world the railways played a very important role. It also plays an important role now in the current regeneration of the economic prosperity of Birmingham and the West Midlands. Thousands upon thousands of visitors go to the National Exhibition Centre, the Convention Centre and the National Indoor Arena. The London to Birmingham line is particularly important to them and to our economic prosperity and also in attracting further investment into the city. So having an effective, efficient, fast railway is vital to our economic prosperity.

However, the experience over the past 12 months has been anything but that. The charter standard for punctuality is 90 per cent. of trains reaching their destination on time. As many of your Lordships will know, the railways' definition of "arriving punctually" is rather different from that of most people. If a train arrives up to nine minutes and 59 seconds late, it is still counted as being "punctual". Even on that lax definition and standard, Virgin's west coast main line signally fails to reach it.

I took note of the right reverend Prelate's point about searching for good news. The good news that I found in last year's performance is that out of 13 four-week periods, Virgin managed to reach that 90 per cent. target on five occasions. The bad news is that it did not do so on eight occasions and that in the four weeks to 8th November last year, punctuality was just under 83 per cent. That has caused frustration, misery and discomfort to many people.

Again, I take the right reverend Prelate's point that the line has been starved of investment for 30 years, but if one looks at the causes of the problems and at many of the defects and delays, one sees that they involve engine failures, points failures and signalling failures. I would put that down as much to poor management and poor attention to detail as to investment problems.

The other issue to which I draw your Lordships' attention is speed. The Birmingham to London line is 113 miles long and the journey takes on average 100 minutes. However, the journey from Doncaster on the east coast main line, which is 156 miles from London, takes the same 100 minutes. I know that Doncaster, being bottom of the Third Division, needs all the help that it can get at the moment, but those comparisons show the striking difference in railway services in different parts of the system.

I welcome the intention of Railtrack and Virgin to upgrade the system. That is much needed. However, I am concerned that the intensity of investment will be in relation to the journeys from Euston to Manchester and Glasgow and that the spur coming off at Rugby for the journey to Birmingham is to have restricted investment. There is also concern that local railway services will suffer. I urge my noble friend the Minister to put as much pressure as she can on Virgin and Railtrack to ensure that the Birmingham line receives as much investment as other parts of the railway system.

I very much welcome the Government's intention to review and strengthen the regulatory process and to establish a railway authority which can ensure that we get the strategic direction that we require. I hope that we shall see the results coming through very quickly.

6.52 p.m.

Lord Palmer

My Lords, I too am grateful to the noble Baroness, Lady Thomas of Walliswood, for initiating this very important debate. I think that this is the first time that I have participated in a debate with the noble Baroness since I had the honour of congratulating her on her maiden speech back in November 1994. I would also like to add my congratulations to my noble friend Lord Leicester on his excellent maiden speech. Dare I say it, but had Peers by succession been barred from taking part in this debate, there would have been just four speakers.

Railways are very much in my blood on both sides of my family and indeed the first Lord Palmer was a director of the Great Western Railway for 47 years, 42 of which he served as vice-chairman. I must declare an interest as a frequent traveller on the Great North Eastern Railway Line. The chief executive happens to be a distant cousin of mine. As a child, I had much pleasure driving our steam engines, shunting our biscuits from our factory in Reading onto the main line.

As my voting record showed when we were debating the Railways Bill, I was dead against privatisation. The railways have played an incredibly important part in the success of our nation and it is amazing to think that in 1921, 735,000 people were employed on the railways, which represented 3.8 per cent. of the country's workforce. Today there are almost 67,000 people employed on the railways, which is just 0.3 per cent. of our total workforce.

In the main, it appears that GNER and GWR are performing well but the situation is still far from perfect. I believe passionately that the Government must do everything they can to encourage the rail companies to woo freight and passengers off the roads.

In 1923, 349 million tonnes of freight were carried on the railways and today this figure is just 101 million tonnes. I also believe that the large grocery chains should be further encouraged to transport more of their goods by rail rather than blocking the arteries of our road network. It is exciting that EWS has just started trading with Tesco, Sainsburys and Safeway. When travelling to Edinburgh from home by road, I can often pass six Asda trunkers in the space of 20 minutes. Today freight transported by rail accounts for a paltry 4.7 per cent. of total freight movement. However, things are improving and 15 months ago there were 18,000 freight trains running every four weeks. Today that figure has risen to 27,000—a great improvement, but there is still a long way to go. It is tragic and sad to think that the total national rail route today is almost exactly half what it was at its peak in 1933.

Before coming to the main point of my speech, I would like to air four small points. First, I urge the Government to get the rail companies to allow a greater degree of flexibility on tickets. I put my daughter on the 7.35 train to Exeter last week and was appalled at the overcrowding and yet people dare to complain about live exports of animals. I also would ask Her Majesty's Government to persuade the rail companies that return tickets should be valid for periods longer than one month. In addition, when new rolling stock is commissioned, there should be better provision for luggage.

Finally on these small points, I would like to reiterate the words of the noble Lord, Lord Ewing, at col. 167 of Hansard of 8th May 1996 when he deplored the fact that there is no station at Edinburgh airport. Bearing in mind that the people of Scotland have voted for a devolved parliament, a station at the airport must become a No. 1 priority.

It is encouraging that there has been a great improvement in rail infrastructure, particularly on the Great Western line. To give one small example, car park vandalism is down by 40 per cent. and in my native Reading by as much as 70 per cent. Industrial relations have greatly improved, and I believe the rail companies and the unions deserve much credit for this.

I believe passionately that our railway network has a buoyant future but that future is dependent on one thing, as other noble Lords have mentioned, and that is investment. One of the reasons that GNER is performing so well is that there has been a massive financial investment on the east coast line over the past 10 years prior to privatisation. Another reason for GNER's great success is the high calibre of its staff at all levels who have received excellent training. I think it is also worth mentioning the enormous change in the quality of food served on board and I reckon now that the food served on GNER can challenge any restaurant in the land. The main reason why the west coast line is so under-performing is that, as other noble Lords have said, there has been virtually no investment over the past 30 years.

One of the problems about financial investment in the railways, whether it be rolling stock or infrastructure, is that it has to be on a massive scale. To give one small example, a new nine-coach 225 set costs £15 million and has the capacity to carry 555 passengers. While some updating may be necessary along the way, the assets must be fundamentally sound for at least 25 years to give any realistic chance of a commercial payback. It must also be appreciated that the gestation period to bring forward a project on this scale would probably be two years, with a further three years to build. In that context, as the noble Lord, Lord Cadman, said, a seven-year franchise does little to encourage investment, and even one of 15 years could hardly be regarded as generous.

I have one final plea. The new regime must be allowed and encouraged to flourish, and be kept free of as many regulations as possible. Where there is regulation, it must be there to encourage competition, not to stifle it.

7 p.m.

Lord Methuen

My Lords, I too welcome this debate introduced by my noble friend Lady Thomas of Walliswood. I declare an interest in so far as I am a companion member of the Institution of Railway Signal Engineers, which is the professional body that is responsible for that subject.

The United Kingdom railway system forms a vital part of our transport system which is now in a critical state, as many other noble Lords have said. Our railways are essential to us from an economic and environmental viewpoint for the carriage of both passengers and freight. The critical state of railways is not just a UK problem; it is a Europe-wide problem. We debated this issue on 12th June of last year when the House considered the report of Sub-Committee B of the European Communities Committee on the Community's railway strategy. It is essential that the UK has an integrated transport policy which maximises its use of public transport. I make a plea to the Government via the Minister that greater consideration be given to urban light rail systems in places like Birmingham and the Manchester extension. That has not been mentioned before.

In this country we have a different set of problems to those elsewhere in Europe characterised by the recent privatisation of the system, the very dense commuter traffic in the south-east and the comparatively short distances over which most freight is conveyed. All of this was made worse by the starvation of investment in infrastructure and rolling stock in the run up to privatisation. This shows up particularly in the state of the west coast main line. This was the subject of very substantial investment involving electrification and resignalling during the 1960s. I was one of the engineers involved in that. We now have to make a new and even more substantial investment to bring it up to date. This is particularly so for matters such as the structure gauge, which means altering bridges and tunnels in order to put piggyback trains through them.

This lack of investment demonstrates the dilemma that faces engineers. We have a new generation of tilting trains that are needed to cope with the Victorian engineering of the west coast main line with its sharp curves and steep gradients and the new concept of moving block signalling, already mentioned by a number of speakers, which will safely allow greater track occupancy and directly communicate with the driver in his cab, giving him information about the speed that he is permitted to go. The system has digital displays. These systems are beginning to come in. This signalling will conform to new European standards and will enable trains and locomotives to travel in due course anywhere on the European network. This system is in its infancy, and specifications are beginning to emerge from Brussels. The new trains and signalling will require considerable development work, and that means that the time to bring both into service approaches the contract duration for the train operating companies. I hope that the re-engineering of the west coast main line will also ensure that it is practical to run piggyback trains throughout its length, and that the line to Holyhead will not be ignored.

Noble Lords may be interested to learn that when we were installing the Victoria Line we ran no fewer than three prototype systems. First, we ran it on extra capacity up beyond Acton where there is a four-track main line. When the start button was pressed to set the first automatic train in operation it went backwards because the circuit diagrams were incorrect. We then tried it at Turnham Green in-service carrying passengers between two stations. Finally, we installed it on the Woodford-Hainault line as a full scale prototype. It was then installed on the Victoria Line proper when the Tubes were commissioned. We were remarkably successful in experiencing very few problems in getting the whole system to work.

My previous remarks referred to investment in existing lines. But surely we should be looking for investment in new lines such as Cross-Rail and the reinstatement of lines removed in the Dr. Beeching era. Only by making that investment will we persuade people not to use their cars for all journeys or manage to take heavy freight off the roads. That is the direction in which we should be moving; but, unfortunately, we have a scenario in which the British Rail Property Board is disposing of critical chords, trackbeds and other land where freight operations might in the future be reinstated. One particular line that might be reinstated is the Dumfries-Stranraer line which would avoid an enormous detour almost up to Glasgow and back again. I am pleased to hear that Derbyshire County Council is considering an investigation into the feasibility of restoring the line between Matlock and Buxton, referred to by the right reverend Prelate, in order to reduce the number of cars entering the Peak District. It might be possible to encourage some mineral traffic back onto that line. The problem is that many of the currently used quarries are a considerable distance from the track and most of the quarries that are on it have been abandoned. Surely, this is the kind of initiative that the Government should encourage in their integrated transport policy.

As a member of the Select Committee of this House on the Channel Tunnel Rail Link Bill, I particularly hope that the Minister can enlighten the House as to the state of negotiations on the future of this link following the demise of London and Continental Railways. It is essential that that link is built in toto in order to maximise the benefits particularly to the north of the country by the provision of links to both the west coast main line and east coast main line at St. Pancras to encourage regeneration of the east coast corridor and provide relief for the North Kent commuter lines. That in turn will release capacity for freight on the Kent lines. To cut the link short at Ebbsfleet or Stratford in order to save substantial investment costs will not solve these problems. The Channel Tunnel forms the UK's link into the European Community's rail freight freeway concept. It is essential that that has adequate links into the freight networks of this country.

Rail still has an enormous amount to offer its customers and the country from an environmental point of view. However, Railtrack and the train operating companies must get their act together to offer a reliable, quality service at the right price and with adequate investment for both passengers and freight.

7.6 p.m.

Lord Harding of Petherton

My Lords, I have listened to some very well researched and technically knowledgeable speeches this evening, not least that of the noble Lord, Lord Methuen, who has just spoken. I have no technical knowledge of railways but I should like to make some general remarks from my experience.

I travel regularly by train to London from the west country and have done so for the past six-and-a-half years. I noticed a marked improvement in punctuality and standards of service in the year or so running up to privatisation. This continued after the private companies were set up. However, in my experience in the past year standards have slipped, which is very disappointing. Recently punctuality has been uneven. For a period it is very good and then for a few days, or perhaps one day a week, the train on which I travel is late, sometimes by up to half an hour. The regulator has quite rightly pointed this out and warned the railway companies that their standards must improve.

However, to say, as some do, that performance in both punctuality and service is now worse than under British Rail is not my experience. Matters are definitely much better than they were under nationalisation on the Great Western line on which I travel and on South West Trains which my wife and I use occasionally. It will take time for the private railway companies to turn the railways in this country into an efficient, comfortable and agreeable way to travel. It is essential that that should happen. If we want people to use their cars less, as I am sure we all do—although by "people" we usually mean anyone but ourselves—the" railways must improve.

It has been said by some that the contracts for the railway companies' franchises are not long enough for significant investment in new rolling stock to be made. Can the Minister comment on that? It has also been said by critics of rail privatisation and the way it was designed and implemented by the previous Government that insufficient guarantees on improved performance were written into the contracts. The same critics say that some railway companies merely cram as many passengers onto their trains to make as much money as possible during the time of their franchise without making the significant investments that are clearly necessary. I also ask the noble Baroness to comment on that matter. I hope that the criticisms I have outlined are not true.

I watched the recent Panorama programme on BBC1 about railway privatisation and how it was working. The negative comments on the current state and future prospects of the railways in Britain reinforced these critical views. Apart from some hype by Richard Branson about what he will be able to do—I hope it is true—as one would suspect of a Panorama programme a gloomy presentation was made which showed little hope for the future. I was very pleased to hear the right reverend Prelate the Bishop of Blackburn give hope to the railways. His contribution was very positive in that direction.

It will not help future investment in the railways to hear a large part of the media making such criticisms, encouraged by the Save Our Railways organisation. I do not know what that organisation's agenda is, but it does not seem to have any positive contribution to make.

Punctuality is absolutely essential if more people are to travel by rail. There is nothing more annoying than to arrive half an hour late for a meeting, an appointment, or for work in the morning. Next time the person affected will go by car so that he or she can ensure that they arrive on time. If they are late, they can blame themselves for not starting earlier.

Punctuality is not the only aspect which affects travel by rail. Overcrowding is also a great disincentive. I have not experienced it myself but I understand that many commuter trains into London are grossly overcrowded.

The politeness and helpfulness of staff is also important, as is the speedy relaying of information the travelling public. These services have definitely improved since the days of British Rail. However there is still some way to go. Perhaps because I am deaf, I find it very irritating that the loudspeaker systems are not correctly adjusted or are too old, and I find it impossible to hear the details of the announcements. It is not because the announcements are too soft but because they are indistinct. That is a sign of bad management. I wonder whether some of the managers spend too much time sitting in their offices and not enough finding out what is happening on the ground. That was impressed on me by my commanding officer when I was doing a certain job.

All enterprises and businesses should be run by private companies. Governments and public corporations do not run things well. Railways by their very nature are, to some extent, monopoly providers and must be regulated. There must be stringent safety rules which are strictly adhered to.

I hope that the Government will give the railway companies the encouragement to invest and improve rail services. It will take time to improve things. Railways all over the world are making a come-back and the new technology on fast trains, particularly in Japan, will make a big difference to the attractiveness of rail travel.

7.12 p.m.

Viscount Thurso

My Lords, I am clearly not alone in your Lordships' House when I confess that as a young boy I wanted to be a train driver. However, I was probably luckier than most—with the notable exception of the noble Lord, Lord Palmer—in that I had an opportunity to drive a train when the last steam train went down the line from Thurso to Inverness. This last locomotive stopped for water at Altnabreac and my father and I were given a ride up and down the line. Since then I have had a huge affection for the railways and use them as often as I can.

In common with many other people, I have been very sad to see the remorseless decline of the rail system. I am therefore particularly grateful to my noble friend for having introduced this debate, and at a particularly appropriate time.

It is appropriate for three reasons. First, the decline in real use has been reversed, and that is good news. Secondly, the concern for the future and for the future direction of transport policy in relation to railways has never been more acute, and that is bad news. Thirdly, it looks as though the Government will do something about it, and that is an opportunity.

Whilst the decline to which I refer has in part been caused by the increasing comfort and convenience of the motor car, coupled with the massive extension of the road network, and in part by an equally considerable increase in the variety and efficiency of regional air transport, there is a third and very important reason: that is the hostile political climate under which the railways have operated, stretching back decades, perhaps even beyond the infamous Dr. Beeching.

It is very telling that when governments in the past have referred to expenditure on roads it has been called "investment in infrastructure", but whenever they have referred to similar expenditure on the railway it is described as "a subsidy". Until such time as we are prepared to regard expenditure on rail infrastructure as an investment—and perhaps even to consider road expenditure as a subsidy—then we will not have the political will to do anything to improve its current dilapidated state.

As my noble friend pointed out, it is vital when considering the future of the railways that one makes a correct comparison—what one might term "an apples for apples comparison"—with other forms of transport. The cancellation of the motor rail service is an example. In common with other noble Lords, I was a regular user of the motor rail service, making two or three return journeys a year. The service was well used, as I often witnessed, and yet in the run-up to privatisation the service was closed. The reason given at the time was that it was simply too costly to run.

A few weeks ago I discovered from a friend, who is travelling to Scotland for the first time, that an enterprising road haulage contractor is now running a regular service transporting cars by road from the home counties to Inverness. Your car is picked up and transported overnight to Inverness whilst you make your way by air or rail as you see fit. From April, the cost of this service is £390 including VAT, which is considerably cheaper than the old motor rail used to be. That this service now exists not only demonstrates that the strong demand is still there but, more importantly, it underlines just how prejudicial policies have been against the rail network and in favour of road transport.

This example demonstrates how important it is that we develop in our future transport policy as a sine qua non a consistent approach to road and rail. Nowhere is this more required than in how we look at the cost of provision of these services.

For example, the only reason why de-regulated buses have proliferated and can offer a cheaper service is because they bear virtually no infrastructure costs. The same is true for road freight. It is difficult to get accurate figures and I am grateful to Mr. Simon Miller of Railtrack for providing me with some. Rail freight users pay 100 per cent. of the cost of service provision; rail passengers pay on average 60 per cent. of the full cost of service, which will rise to 80 per cent. on current franchise commitments. This compares with road users paying on average about 30 per cent. of the full internal cost of motoring at point of use. These are the hard costs and take no account of external collateral or social costs of these choices.

Again according to Railtrack, road activity is variously estimated to have external costs ranging from anything between £10.9 billion a year up to £52.9 billion a year. The comparable external costs of rail transport are negligible. The plain fact is that road users are not paying for the full cost of their transport decisions.

The same discrimination appears when it comes to investment. Something in the order of £9 billion was spent on roads last year, whereas Railtrack are rightly proud of the fact that their increased expenditure will only total £1.5 billion a year.

There is one area where the Government can have an impact without increasing public expenditure or amending the terms of the franchises, and that is the area of fiscal policy. We are one of the very few countries in the world which has taken the cult of the company car to the extreme. Like many others I benefit from a company car, but under the present system there is no incentive for me or my company to change. If the benefit of a company car were to be fully taxed, and particularly if scale charges for petrol were to be fully abolished and replaced by genuine business mileage to be claimed from the company, I foresee two effects. The first is a reduction in the number of cars given as perks. The second is companies paying people in cash which would then be taxed in the normal way.

On the other side of the equation, I should like to see, at least for a limited period, some or all of the cost of rail season tickets being tax allowable. That would encourage more use of the railways by creating greater revenue streams and better cashflow.

Finally, I cannot take part in a debate in your Lordships' House without mentioning tourism. Recently at a lunch, I spoke to the chief executive of the BHA. We were talking generally about tourism and I asked him what, if he had one wish, he would wish for to improve tourism in this country. He thought for a moment and said, "Transport, and particularly the railways". We must not underestimate the value to all businesses, particularly tourism, of having an integrated and efficient transport system, in particular an efficient rail system.

The key to achieving the shift in emphasis which we all desire and to achieving the levels of investment necessary to make railways the first choice for passengers and freight alike is a change in the political language and climate in relation to the railway system. In that regard, I am glad that the Government are committed and I am sure that their heart is in the right place. But we need to see some real commitment if these good wishes are to be turned into reality.

7.20 p.m.

Lord Milverton

My Lords, I am pleased to be able to join in the debate because my family and I are rail users and we enjoy it. As regards late trains, often it is not the fault of Great Western Trains, Thames Trains, Connex South Eastern or Virgin—the lines on which my family and I often travel—but as a result of signalling and points failure. The noble Lord, Lord Berkeley, was right in saying that there must be more research and more money invested so that signals and points do not so often fail, causing late running trains. Furthermore, as often happens on the Great Western Trains, for example, a truck manages to damage a bridge, which also results in late running trains. We must not automatically blame the company. Perhaps the Government will give the House encouragement by stating that Railtrack will be helped to make such improvements. I also suggest greater liaison between companies and the consumers. The various companies should provide more reliable and understandable information about connections.

It can be seen that the rolling stock of Great Western Trains is good and is improving. Perhaps it is not as good as it could be, but on the whole it is very good. Its staff are helpful, pleasant and courteous.

Overcrowding has been mentioned. Sometimes trains are so overcrowded that one cannot walk down the corridors. Would not there be an uproar if such a train were involved in a crash? Would not the question he asked, "Why was that allowed?"? The issue of overcrowding on trains must be investigated. It is not allowed in buses and cars and it should not be allowed on trains.

Connex South Eastern and Thames Trains are the poorest companies. They are not impressive and are dirty. I travel from Great Bedwyn, where the line begins, and often an inspector has not appeared by the time the train reaches London. There is no ticket office at Great Bedwyn station so one purchases a ticket from the inspector when he comes through the train. That has happened to my family and I on several occasions.

I think Virgin Trains need a great deal of improvement. They are poor and untidy and often the staff are unhelpful. With all due respect to Richard Branson, perhaps he needs to stop floating about around the world. Perhaps he needs to take a little more time taking note of his Virgin railways in order to see what they are doing. Someone told me that he used to travel on his trains and take note, but perhaps he is tired of that. Perhaps the Government could suggest to Mr. Branson that he takes more note of what is happening on his railways.

My family and I have sometimes travelled on the north east line. I am sure that people are right in saying it is the best. Great Western Trains is slowly catching up, but during all our journeys on the north east line its coaches and service have been superb and excellent.

How nice it would be to see the continuation of the improvement of the freight service. How nice it would be to see the busy freight yards which one used to see. How sad it is to see freight yards disappearing leaving untidy tracks. We can all remember the busy freight yards and it would be lovely to see them again. One now sees monster lorries and it is good that they are being put on rails.

It would also be nice to see the re-opening of old lines, as has been mentioned. In Marlborough, where I live, there used to be two stations and one could travel to Swindon or to Cardiff. What terrible journeys they were. Perhaps at the time, closing so many lines was considered the right thing to do economically, but many people took pleasure in travelling on those minor lines. If Her Majesty's Government want more people to use their cars less, public transport must be improved. There must be more co-ordination between the railway and bus companies. I am sure that it could be improved.

I hope that the Government can encourage us by stating that the railways will continue to improve, the north east line being the example to follow. I hope that they will encourage bus companies to work with the railways. That should be possible because National Express has bought some railways. My family and I have never used its lines, so I can speak only of Great Western Trains, the north east line, Thames Trains, Connex South Eastern and Virgin Trains. Of those, Great Western Trains certainly is the best. I believe that today the railways are better than in the days of the London, north east, southern, midland and Scottish lines. Indeed, I heard that by comparison those companies were not financially better off.

7.28 p.m.

Lord Razzall

My Lords, it falls to me to wind up the debate on behalf of the Liberal Democrats. I suspect that my noble friend Lord Rodgers of Quarry Bank is somewhat surprised to discover that I do so as the member of the new "gang of only four"; that is, the four non-hereditary Peers participating in today's debate. Perhaps when the Government saw the Motion tabled by my noble friend Lady Thomas they wondered why we had not waited because a White Paper is promised in the Spring. It may well be that a number of points made in today's debate could have been made in response to that White Paper. However, the speeches of so many noble Lords this evening have indicated why the state of the railways is an important issue for us to debate today.

I have listened to the speeches of noble Lords and two fundamental reasons have emerged. First, it is quite apparent that in the aftermath of the Kyoto summit the environmental significance of the railways cannot be over-estimated. We are facing forecasts that indicate that car use will increase by one-third to one-half by 2016, and that at a time when our roads and many of our motorways are already at full capacity. Quite clearly, if we are to meet any of the targets that we set ourselves at Kyoto the railway system is at the heart of the solution.

The second reason that the debate is so germane today is that this House can no longer ignore the fact that for many members of the public privatisation has so far proved to be a failure. Many noble Lords this evening have given anecdotal evidence of their own experiences as to why it is a failure. As the noble Lord, Lord Milverton, indicated, any process that has resulted in the reputation for sanctity to which Richard Branson has become accustomed being ruined as a result of the performance of Virgin Trains is anecdotal evidence enough.

However, we also have statistical evidence from the Office of Passenger Rail Franchising. From the 1997 figures we learn that punctuality deteriorated during 1997 on nearly half the reported route groups. The reliability indicators deteriorated on nearly half the reported route groups. Eighteen service groups failed to reach their passenger targets. Train cancellations were significantly worse.

As the noble Lord, Lord Hunt of Kings Heath, said, a major cause of that has been the exacerbation of the problem by a lack of national co-ordination. Many noble Lords have indicated what that lack of co-ordination means in practice. We have a hit and miss record on any national timetable inquiry. Indeed, many people have said that they always phone twice to check that the second result is the same as the first.

Lord Harding of Petherton

My Lords, I should be grateful if the noble Lord would let me intervene. I have telephoned the national number on several occasions. I got straight through and received very courteous answers. I received accurate and up-to-date information on how late the train was.

Lord Razzall

My Lords, that may be the noble Lord's experience but it is not the experience of everybody.

There is the issue of missed connections, to which reference has been made. The idea of holding up a train to meet a connection has long gone out of the window. There are different ticketing policies on a number of routes. There are different policies as to whether you should buy a ticket before you get on the train. That struck me when I travelled on two consecutive days. In one case I travelled on the Gatwick Express where I was encouraged to buy my ticket on the train. On another occasion I travelled to Newbury, which is about the same distance as to Gatwick, and had I not bought my ticket before I boarded the train I should have suffered a serious penalty. There seems to be no logic as to why those two positions should apply.

Dare I say that privatisation has not even been a financial success. We are now well into it—in the third or fourth year—but the doubling of the state subsidy in 1997 to £2 billion per annum is double the subsidy that was being paid prior to privatisation.

In addition, with some exceptions, we have not seen a dramatic improvement in the replacement of old rolling stock. Investment in rolling stock and the infrastructure of the railways has, over the past few years, suffered what Mr. Patten used to refer to as a "double whammy". Prior to privatisation there was a significant starvation of investment by the government. Indeed, in 1993–94, which was the year pre-privatisation, investment in the railway system was down to only £817 million. I should say as an aside that that had a significant impact on BREL, the then recently privatised rolling stock manufacturing company, which had more than 100 years experience in the manufacture of rolling stock in its three plants in Crewe, Derby and York. Indeed, as a result of that starvation of orders, significant and permanent damage was done to the capability and capacity of BREL which was, by then, owned by the Swedish company ABB.

The other part of the "double whammy" is that since privatisation, with some notable exceptions, there has still been under-investment in rolling stock. We know why that is and various noble Lords have indicated that it is because of the inter-relationship between the length of the franchise and the need to invest significant sums in rolling stock which has tempted many operating companies to opt for short-term profits at the expense of longer-term investment. Moreover, there is the scandalous case of under-investment by Railtrack, which has already been criticised by the regulator.

Noble Lords may well ask what we should do about that. Although in the run-up to the last election both the Liberal Democrats and the Labour Party were, I suspect, briefly tempted to suggest renationalisation, that particularly horse has now bolted and there is no practical possibility of choosing that option.

However, we certainly want the Government to honour their manifesto commitment to establish a national rail authority. That was in the manifesto. We are now nearly a year after the election and that national rail authority needs to be established very quickly.

We need to remove the confusion between the franchising director and the rail regulator. There is clearly confusion between the powers and the duties of the two. We need to end the regulatory confusion caused by the current failure to regulate the rolling stock leasing companies.

More particularly, and more vitally, we need immediate action to ensure investment in the infrastructure of the railway system and rolling stock. I believe it is the case that as regards stations, which throughout the country require significant investment, both the train operating companies and Railtrack are prepared to invest in station improvements, but there must be a mechanism to ensure that the facility is paid for by subsequent franchisees. Otherwise, they will not make that investment.

Similarly with regard to rolling stock, we must empower Opraf to underwrite residual use of rolling stock and recompense franchisees for that residual value so that when new franchisees come in there is a mechanism in place to ensure that the existing franchisees which have invested can have the residual value and he recompensed. It may well be, as has already been done with Midland Main Line, that the way to do that is by extending franchise lengths under the existing franchise agreement. In Midland Main Line's case, that has been done for a period from seven to 10 years against its commitment to invest in new trains.

It is quite clear that railways are at the heart of the integrated transport strategy that we all require. That requires urgent implementation if we are to meet the environmental challenges of the 21st century. I hope that the Government will rise to that challenge.

7.38 p.m.

Lord Brabazon of Tara

My Lords, I join noble Lords in thanking the noble Baroness, Lady Thomas, with whom I share a birthday, for introducing the debate this evening. There has been a good deal in the debate about the merits and demerits of privatisation. But as the noble Lord, Lord Razzall, said, I do not believe that either the Government or the Liberal Democrats believe that renationalisation is any longer a serious proposition. Therefore, it is up to all of us to help the privatised railways to work, even if the Government, in their heart of hearts, do not really approve of them.

After all, the railways are one of Britain's great national assets. I shall certainly not say that everything is perfect but I shall attempt to demonstrate—and I believe that it has been demonstrated in today's debate—that there are good prospects for the railways.

First, as regards investment, it should come as no surprise that John Welsby, Chairman of the British Railways Board, said a few weeks ago in the Sir Robert Reid lecture: The privatisation regime has swept aside the debilitating uncertainty of the annual public expenditure round; investment programmes can be planned over several years forward with much greater confidence; and there is greater freedom for the participants to make use of financing mechanisms such as leasing which arc standard practice in the private sector but which were denied to the public sector corporations". He continued, If, as a public corporation, BR had been granted the scale of Government funding which is now committed, the promises of continuity that have been made, and the flexibility that now exists to make use of the array of commercial financing mechanisms, we would have thought that the millennium had not only arrived early but had also brought with it the sort of glorious benefaction that is the stuff of dreams". John Welsby is, I believe, also the Deputy Prime Minister's special adviser on the railways. Let us look at the facts. Under the franchising agreements the train operating companies are to spend some £1.8 billion on new trains and rolling stock refurbishment. There are orders for some 2,175 new coaches in process, and more are planned. Hardly a week goes by without some new announcement, such as that on the much criticised west coast main line. I was glad to hear that the right reverend Prelate had some words of praise for that line, although the noble Lord, Lord Hunt of Kings Heath, did not have very many. I say only that I believe the west coast main line is technically much more difficult than the east coast line. If one were starting from scratch, I think one would build it straighter. New tilting trains are being ordered, which together with improvements to the line by Railtrack, will dramatically cut journey times from London to Glasgow from the present five hours 20 minutes, first to four hours 20 minutes and eventually to three hours 50 minutes. All this should help the Government in their laudable aim to get more traffic on to the railways and off the roads. Growth in passenger numbers is already happening, up 7.5 per cent. last year; with some companies the figure is as high as 15 per cent.

I am told that the current timetable contains a total of 29.000 more trains than the winter 1996/97 one. For example, the Midland Main Line will double the frequency between London, Leicester and Nottingham. Great Western Trains is committed to a half-hourly service to Bristol and Cardiff, and Anglia to a similar frequency on the Norwich line.

Much has been made of the level of subsidy the train operating companies receive, but that is falling rapidly: from £2.1 billion last year to £1.9 billion this year, to £926 million in 2002–2003, when six of the 25 operators will actually pay money to the franchising director rather than draw subsidy. So, taken with the privatisation proceeds of some £4.7 billion, it really cannot be argued that the taxpayer has received bad value for money. One can contrast this with an article that I read in the Economist this week about what is happening in some other European countries. The French Government have just had to write off 20.5 billion dollars' worth of railway debts. The Italian railway is currently losing 4 trillion lira a year, which apparently equates to 2.2 billion dollars. In the years from 1990 to 1994 Europe's railways swallowed 31 billion dollars of subsidy a year. Therefore I do not think the situation in this country can be described as bad.

I said earlier that all was not perfect. The noble Baroness, Lady Thomas of Walliswood, referred in particular to the situation in the south east of England. But even where justifiable criticisms have been made action is in hand to alleviate the situation. For example, South West Trains has increased passenger journeys by nearly 15 per cent., increased passenger miles by 16.5 per cent. and increased the number of peak time seats available by more than 7,000 extra a day. It has also ordered some £90 million worth of new trains.

Reference has been made in the debate to through ticketing and bus links. The noble Lord, Lord Alderdice, mentioned the situation in Northern Ireland. Here, too, I believe, welcome progress is being made. In Oxford some bus routes have been diverted to serve the station, and through fares introduced by Thames Trains. A ticket, sold on the bus, covers the trip to the station, the rail journey to London and the Underground when you get there. As far as I am aware such innovation was not happening pre-privatisation, and again I believe will help the Government with their ambitions for an integrated transport system. Let us hope that these examples are replicated across the country. Park-and-ride is also being promoted, with major schemes being planned for an East Midlands Parkway station to link buses, coaches, cars, the Midland Main Line and the East Midlands Airport. In addition, there are many local schemes being introduced. I hope that the noble Lord, Lord Palmer, gets his station at Edinburgh Airport as part of that process.

For some companies success and growth in traffic is proving a problem, as a number of noble Lords have mentioned. I refer in particular to GNER where passenger numbers have increased three times faster than predicted. By all accounts the company is offering a much improved service. The noble Earl, Lord Leicester, in his excellent maiden speech gave a flavour of that. The company holds the franchise for the shortest period, seven years, of all the former inter-city routes. Because of this faster than expected growth, which the Government must surely welcome, passengers face severe overcrowding in the near future, if not already, on some services, with capacity being reached sooner rather than later. The company wishes to invest in new trains, but such investment is not practicable unless the franchise can be extended, as new trains ordered now would not be delivered until late 2000, with less than three years of the franchise to run. I know that GNER has discussed this with the Secretary of State and hopes for an early decision from him. If he gives the go-ahead, the company will be in a position to order a substantial number of trains to give an increase in capacity. That is not to say that GNER has not already invested £12 million more than was committed in its franchise agreement. I hope that the noble Baroness will be able to give us some indication about that matter, although of course I do not expect her to make an announcement on the subject in this evening's debate.

It has been suggested to me, and I think there is something in this—I think the noble Lord, Lord Berkeley, touched on this—that one of the problems of the franchising regime is that it was based, perhaps for historical reasons, on the possibility of failure, either financial or otherwise, of the franchisee and what would happen in the event of such a failure. Not enough, if any, attention was paid to the possibility of success, or rather being too successful. I turn briefly to freight. Many noble Lords have referred to the carriage of freight and the investment proposals of EWS which has ordered 280 new locomotives and some 3,000 new wagons. As an aside to this, as has been mentioned, it has had to reopen the factory at York which is, of course, good news for employment in that area.

The previous government allowed the use of 44 tonne trucks for journeys to and from the railhead. Can the Minister say how this has worked? Has it been a success and how many operators have taken advantage of this arrangement? I believe that EWS is pressing at an open door as regards wishing to see an increase in the carriage of freight. As the current president of the British International Freight Association I know that our members are keen to give rail a try, particularly if a freight service can be operated to Heathrow, which I believe is being discussed. However, there are problems, including problems of access. I have heard that even on the new west coast line EWS may only get half the train paths it forecast it would need. No doubt the Minister will tell us something of the role of the proposed strategic rail authority. I wonder whether she can say if this is the sort of issue that will concern the authority, and indeed, the issue of British Rail land and keeping it available for railway purposes. That issue has been mentioned by many speakers.

I am rapidly running out of time. I conclude by saying that I believe the industry is keen to play its part in meeting the Government's objective of reducing road traffic and is actively working to encourage new business. What it needs now is the support of the Government in meeting these aims and not the continued sniping that is so often evident in the media, but which, I am glad to say, has been largely absent from today's debate.

7.50 p.m.

Baroness Hayman

My Lords, I should like to add my congratulations to the noble Baroness, Lady Thomas, on initiating the debate and on her contribution to it. I have to say that participating in it reminds me of the perils of being a Minister in your Lordships' House. I always say to colleagues in another place that one never comes to this House without there being someone who knows more about the subject than one does oneself when replying to a Question or a debate. That was very well illustrated today, not only by those noble Lords who contributed from strong personal experience—technical, engineering or other—but also those who have had experience of actually driving the trains. I had not realised that was going to happen. I must add that I feel slightly exposed, replying to this particular debate as Minister for Roads. The road lobby has been, if I may put it this way, very much not in the ascendency. The benefits of improved rail services have been the key theme.

I also wish to add my congratulations to the noble Earl, Lord Leicester, on his very impressive maiden speech. He said at the start that he was nervous. It was not apparent in either the content or his delivery. I am afraid he will find that he is encouraged to participate a great deal in this House in the future.

As the noble Lord, Lord Razzall, pointed out, we have heard from many Members of their experiences of the privatised railway network. I think anyone would agree that those experiences are, to say the least, mixed. Listening to the right reverend Prelate, I nearly said that the performance that we heard about was a "curate's egg". We saw from the exchanges between the noble Lords, Lord Harding and Lord Razzall, that there are different views and different experiences post-privatisation.

But one thing has been clearly demonstrated. Privatisation has not of itself produced the cure-all that was promised, and a great deal now needs to be done. The railway now has a mish-mash of regulatory responsibilities, and there is no one body responsible for balancing the needs of both passengers and freight and the overall development of the network. Most importantly, passengers are not getting the service that they have a legitimate right to expect, nor the service that will make the railways a more attractive alternative to the private car, to make it the normal means of transport to which the right reverend Prelate alluded. These are fundamental problems that we have to address if we are to meet the concern expressed throughout the House today that we should take advantage of the benefits, not only to travellers but to the wider public, and industries such as tourism—to which reference was made by the noble Viscount, Lord Thurso—of improving rail services and attracting more passengers and more freight onto the railways.

That is why the Government are committed to creating a new rail authority which will act firmly in the public interest. As part of the wider development of an integrated transport policy—as the noble Lord, Lord Alderdice, rightly reminded us it should be—we have been conducting a fundamental review of railway regulation in order to identify areas where action needs to be taken. Our review has revealed a number of shortcomings in the present arrangements, some of which were also identified during the course of our debate. The Government have inherited a system which has no focus for long-term strategic planning or investment; no clear split of responsibilities between the rail regulator and the franchising director, and no one body accountable to passengers when things go wrong. It is a system where key players such as Railtrack are only lightly regulated, and where some organisations—the rolling stock leasing companies, for example—are not regulated at all. It is a system which apparently tolerates months of delays for passengers, while leaving the franchising director with insufficient powers to penalise the offending train operator.

These are serious problems. We acknowledge that the reforms needed to remedy these failings are not ones that can be made overnight. We will need to establish a new rail authority to implement the proposals that in the spring we plan to set out in our White Paper on integrated transport.

But we have already taken action within the constraints imposed by the current complex regulatory structures. On 6th November my right honourable friend the Minister for Transport announced three new measures to boost investment, protect passengers' rights and make sure private operators provide high-quality services.

We have issued the franchising director with new objectives which deal with the real issues that matter most to passengers—investment in decent rolling stock and stations, high standards of punctuality and reliability and the protection of passengers' rights.

We also approved a set of planning criteria which will provide an effective framework for developing and implementing worthwhile rail investment—investment of the type called for in tonight's debate—which will improve the range and quality of the services available to rail users.

The third element in our interim package is a voluntary concordat between Ministers and the rail regulator. Firm, fair and accountable regulation is essential for passengers and for the industry on which they depend. We inherited a regulatory structure which did not give the regulator any formal indication of what the Government wanted for the railways. The concordat bridges that gap.

As one would predict, tonight's debate has given us insights into concerns about poor performance by train operators. The noble Baroness, Lady Thomas, raised the issue at the beginning of the debate. We are not willing to accept poor performance by train operators. Passengers have the right to expect high levels of punctuality and reliability. We expect those who perform badly to take immediate steps to improve their services to satisfactory levels. But also, the good performers should not think that they can simply sit back and rest on their laurels. That performance needs to be sustained throughout the year—the point was made about the differences that can occur at different periods.

Taking the strictures of the right reverend Prelate to heart, I should acknowledge that, despite those mixed levels of performance, some private train companies have made improvements in their areas. They have been mentioned during the debate. It is right to give credit where credit is due. The Government welcome, for example, the initiatives introduced by a number of train operating companies in respect of joint ticketing for bus and rail services. That is precisely the sort of innovation that we are keen to encourage and which will contribute to obtaining a truly integrated transport system—a theme that recurred throughout the debate. But the picture across the country is decidedly patchy. We cannot expect individual operators to act in isolation without the clear, effective and coherent regulatory framework which the new rail authority will provide.

The noble Lord, Lord Brabazon of Tara, asked about the functions of that new authority. No firm decisions have yet been made. We said in our manifesto that the authority would combine the functions of the Office of Passenger Rail Franchising and some functions of the department. We do not necessarily regard those functions as the limitation of the new rail authority's remit. The likely areas of responsibility for the new authority will include: managing and enforcing existing franchise contracts; developing a strategic vision for investment in the network; promoting integration between rail and other modes of transport; promoting voluntary action by train operators to win passengers; protecting the needs of disabled passengers; and balancing the needs of passengers and freight users.

My noble friend Lord Berkeley suggested that the new rail authority might have a role to play in making money available for investment in the network. We have as yet reached no final conclusions in this area, but if, as we propose, the new authority assumes OPRAF's current responsibilities and some of the department's, then OPRAF's budget would transfer to the new authority, as would the relevant parts of the DETR's budget. We shall be considering what other funding might be available, subject of course to the normal public expenditure constraints.

The issue of freight recurred throughout the debate. It was mentioned by many noble Lords, including the noble Earl, Lord Leicester, my noble friend Lord Berkeley, and the noble Lord, Lord Cadman. On taking office we found no national strategy for giving rail freight a sufficient priority on the network. We have made it clear that we want more freight to go by rail. We are glad to see that new freight companies are attracting new traffic to rail in an effort to reverse rail freight's long-term decline. They have adopted a positive attitude and ambitious targets. EWS aims to triple traffic in 10 years. Freightliner aims to increase the volume of containers carried by 50 per cent. in five years. We were urged, during the course of the debate, to facilitate increased use of the railway for freight traffic. We have already taken steps to help railfreight operators win more freight to rail.

We have taken positive action to publicise and streamline the grants scheme. We have set targets for the department's freight grants unit and have published new user-friendly guidance for applicants.

Under the previous administration, the freight grants budget was badly underspent. This financial year, the £30 million budget will be substantially taken up. My right honourable friend the Minister for Transport will very shortly be announcing the award of seven new freight grants worth a total of almost £5 million. These grants will spare residents of many areas of England over half a million lorry journeys through their localities. That is precisely the kind of issue that many noble Lords raised today. To reinforce the success of the freight grant scheme, next year's budget has been increased to £40 million, of which £20 million is already committed.

As well as revitalising the freight grants scheme, we have also secured commitments from the French Government and Eurotunnel designed to get a better deal for railfreight through the Channel Tunnel and beyond, not only by EWS but also by new entrants to the market.

In the last nine months, three new railfreight terminals have been developed to serve the international railfreight market: Tilbury, Hams Hall and Daventry. As regards the 44 tonne lorries going to the freight terminals, perhaps I may write to the noble Lord, Lord Brabazon of Tara, with the exact figure.

The Highways Agency, through its "Toolkit" initiative, is seeking to identify pilot projects which encourage both travellers and freight to switch from road to rail. That is the kind of joined up thinking, if I may put it that way, that different bits of the transport infrastructure can bring to an integrated system.

In the context of the development of an integrated transport policy, we are considering what other measures might be introduced to encourage rail freight. We are examining whether planning guidance might be strengthened to protect land for future rail use, and we are considering whether further improvements can be made to the grants regime.

As was predictable, several noble Lords commented today on the need for upgrading of the West Coast Main Line. I am also aware of the concerns expressed by my noble friend Lord Berkeley that the proposed upgrade will not cater sufficiently for freight traffic. The Government have repeatedly made it clear that we want to see Railtrack and Virgin trains move this project forward as quickly as possible. We are keeping a very close eye on it; and I note the remarks from the noble Lord, Lord Milverton, that perhaps Mr. Branson could keep a close eye on it as well. We have asked Railtrack for regular progress reports.

It is my understanding that one of the prime objectives of the proposed upgrade is to provide much needed additional capacity in order to meet the needs and aspirations of train operators. This is one of the issues the rail regulator will wish to consider in examining the proposed arrangements between Railtrack and Virgin which are with him for approval.

I note the comments made by my noble friend Lord Hunt about concern in the Birmingham area over the possible adverse effects that additional fast services on west coast main line may have on local Birmingham rail services. I am aware from reports in the press that his concern is shared by Birmingham business, council and train operators running local services. I can well understand the anxiety to safeguard local services. In the first instance, the allocation of capacity on a line is a matter that Railtrack should discuss with train operators and any differences should be referred to the rail regulator as part of his consideration of the proposed access arrangements between Railtrack and the Virgin Rail Group. In reaching his decision, the regulator will take account of the interests of all those affected by the proposals.

My noble friend Lord Berkeley and the noble Earl, Lord Mar and Kellie, drew attention to the technical problems involved in the upgrading of the signalling systems on the west coast main line. I am conscious that the line has not been improved since the 1970s and the train operators who use it and their customers want to have more services, reduced journey times and better reliability—the issue of journey times compared with the comparable eastern line were mentioned today. We shall look to Railtrack and its contractors to address the technical issues which are associated with the upgrade—and I accept that they are very real issues—that have been raised today.

Several contributors to the debate, such as the noble Baroness, Lady Thomas, the right reverend Prelate the Bishop of Blackburn, the noble Lord, Lord Cadman, and others referred to sales of railway land and we are aware of the concerns expressed on the subject. But we do not think it would be useful to stop all sales of former railway land. The British Railways Board no longer owns any operational railway land. Our policy is for British Rail to continue selling surplus land at market value. The sales are part of the expenditure programme of the previous administration to which the present Government have committed themselves. Railway businesses are routinely kept informed and it is open to them to bid for BR sites which are being sold.

As for operational land, when Railtrack was formed it took all those closed lines and closed freight sites which it thought would have potential for future rail use. Railtrack may dispose of certain areas of land that it no longer requires, in the same way as many other private companies do. If land has not been used for over five years and is not required for the future enhancement of the network, its disposal is a commercial judgment for Railtrack to consider. If land has been operational in that period, it would be subject to the normal closure procedures. I can say to the House that in addition to the safeguards I have just described, we are examining, in the context of an integrated transport policy, whether the planning guidance might be strengthened to protect suitable land for future railway use.

The noble Lords, Lord Razzall and Lord Cadman, with others, spoke of the need for long-term sustained investment in the rail industry. As your Lordships know, substantial sums of public money are going into the industry. The need is to ensure that the best value is obtained for that investment. An important responsibility of the new rail authority will be to give strategic direction to the industry. The noble Lords, Lord Brabazon of Tara, Lord Harding, and others raised the specific issue of requests for franchise extensions such as that received from GNER. These will be considered on their merits but I have to say to the House, as I have said before, that there will need to be very convincing arguments of public interest and value for money to justify renegotiation of contracts which were freely entered into following the competitive process.

I noted the territorial comments, if I may put it that way, made by the noble Earl, Lord Mar and Kellie, about services in Northern Ireland and the Republic of Ireland. I welcomed his remarks about the improving cross-border service and about integration of public transport. I know that my right honourable friend the Secretary of State for Northern Ireland is committed to producing a transport policy statement later this year, to be read alongside our own White Paper on integrated transport policy. I thought his remarks about services within and to Scotland vividly illustrated the point about the patchy performance of train operating companies. Like other noble Lords, he also mentioned the freight operator EWS. I know that a key part of EWS's strategy for increasing rail freight is to get more long-distance freight onto rail, including traffic between the south of England and Scotland. Perhaps they may consider the possibility of carrying cars as freight, as Motorail did in the past. I am busking on that point, I am not sure about it.

While we are on issues Scottish, the noble Lord, Lord Palmer, commented on the need for a station at Edinburgh airport. He made wider points about proposals for devolution. We have made it clear that the new rail authority will be a body with overall responsibility for long-term strategic development of the rail network across Great Britain. That is why the new authority will be ultimately responsible to this Parliament. But we want to ensure that the devolved institutions in Scotland and Wales play their part in this.

The noble Lord also drew attention to ticketing arrangements under the privatised rail system and urged train operators to extend the validity of some period returns.

My noble friend Lord Hunt of Kings Heath referred to the availability of cheap walk-on fares. We have inherited a system where operators have discretion to price some tickets according to market demand, but without any other controls by the franchising director. I urge train operators to take full account of the needs of their passengers in settling the terms and conditions of fares.

I am conscious of the time, but the noble Lord, Lord Methuen, asked a specific question relating to the Channel Tunnel rail link. As I said in response to a Question last week, London and Continental Railways said that it will require a further £2 billion of taxpayers money over the next two years to complete its contract. The Deputy Prime Minister said that that is not acceptable and under the contract LCR has 30 days to come forward with revised proposals. That 30-day period ends on Friday of this week. We will inform Parliament as soon as possible of the outcome of the discussions over the past month. But, given the sensitivity of those discussions, I hope that the House will understand that there is not a great deal that I can add this evening.

The noble Viscount, Lord Thurso, took us down the interesting avenue of the comparisons between rail and road cost—not a road down which I can follow him this evening. However, it was a well drawn point to make; we must look at the attractiveness of rail both in terms of the quality of the service and the cost.

This debate has served very well to draw attention to the state of the railways. When we came to power we found the system broken into literally one hundred pieces, with no strategic vision for the development of the network. We found a regulatory structure which even the industry regulators acknowledge can be confusing. We found a privatised railway that had made fortunes for the few, but in many cases had left passengers short-changed. And we found a railway crying out for some leadership and direction.

We are determined to address those issues—to do some of the untangling mentioned tonight—and deliver the coherent, clear and effective regulation which is needed to put the railways at the heart of our integrated transport strategy. We have demonstrated our intentions by taking action within the existing regulatory constraints and by conducting a fundamental review of rail regulation. We have taken action to encourage more freight on to the railway. And we have made clear our commitment to a new rail authority which will provide a much-needed strategic overview. We believe that we can—and must—get more out of our railway, and that we must do that not only in the context of an integrated transport policy, but also in the context of our commitment on climate change post-Kyoto.

8.12 p.m.

Baroness Thomas of Walliswood

My Lords, at this time of the evening I shall resist the temptation to re-enter the argument, for which I am sure everyone will be grateful. However, before bringing the debate to a close it is appropriate for me to say "thank you", particularly to the Minister for as usual coping with a vast mass of different queries and bits of data with her usual charm and efficiency.

I also thank those who introduced a note of humour into the debate. The idea of balloonists above our heads as we speak was delightful and those of us who have had the opportunity to drive a steam engine are greatly to be envied. I lived over the Euston goods yard as a child and the remarks of two noble Lords brought to my mind vividly the noises, the sights and the smells of that situation.

Finally, I congratulate the noble Earl. Lord Leicester, on his wonderful reminiscence about all that was peculiar and not entirely efficient in British Rail. I thank also my team of supporters on these Benches and all noble Lords who, as I expected, made excellent and illuminating personal contributions to the debate. We are to receive papers soon—one day, in the Spring. They are eagerly awaited and until then, I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.