Rail Industry

HL Deb 10 March 1999 vol 598 cc294-326

7.21 p.m.

Baroness Thomas of Walliswood rose to call attention to the case for greater investment in rail infrastructure to enable the rail industry to play its full part in an integrated transport policy while maintaining the highest safety standards; and to move for Papers.

The noble Baroness said: My Lords, in opening this debate I should say that I shall concentrate on railways as defined by BR in pre-privatisation days. We are currently seeing a rapid rise in the use of rail for both passenger and freight transport. Passenger kilometres have risen by 22 per cent. since 1994–95. Freight tonne kilometres increased by 12 per cent. last year compared with the previous year. That increase is welcome but it has also led to problems of overcrowding, breakdowns, delays and frustration, all of which are reflected in a higher rate of complaint.

New initiatives for better and more imaginative use of existing track can open up new routes, particularly what might be called cross-country routes. The recently announced initiative by Anglia Railways to connect Ipswich and other East Anglian towns with Watford and Basingstoke via north London is a welcome example. But most of the initiatives require either restoration of unused lines or chords, the building of new sections of rail or new signalling, or indeed a mixture of all of these. Future funding from the train operating companies may taper off as subsidies decline.

We recognise the investment already being made on the track, including, as a major example, the building of the Channel Tunnel rail link with government backing. But the fact is that we need more investment in rail infrastructure to overcome the lack of investment of the past and to provide for future growth in passenger and freight traffic. The problem in a privatised and fragmented industry is how to achieve this investment. In a word, do the Government accept responsibility for ensuring that a strategic approach is adopted to investment in rail infrastructure as governments used to do for road infrastructure? Or does the responsibility rest with Railtrack and whatever will be its equivalent in London? If so, are the regulatory and financial systems in place to facilitate the strategic exercise of this duty? These are some of the questions to which we hope to get answers tonight.

Quite soon now Railtrack's annual network statement will be published. Following last year's statement the rail regulator stepped in and negotiated an amendment to Railtrack's licence, requiring the development of the network. We welcome this determination on the part of the regulator to keep Railtrack up to scratch. We hope that this year's report will signal Railtrack's determination to satisfy the new requirement. After all, the value of Railtrack's shares has quadrupled since privatisation, reflecting a healthy profit situation and handsome dividends for shareholders, all based fundamentally on the transfer of public subsidy into Railtrack's trading accounts via its charges to the train operating companies. The public have a right to know that their money is being used to respond to their demand for better services. Our thesis is that strategic planning of network expansion requires long-term thinking, a recognition and implementation of public policy, as well as private opportunities for profit and the correct financial and regulatory context for decision-taking.

Let us look at some detailed proposals. My first example is Thameslink 2000. The increase in capacity of this essential north/south link through London has been postponed until 2006, due, it is said, to delays in the arrival at St. Pancras of the Channel Tunnel rail link. King's Cross/St. Pancras is due to become a major hub for international, national, suburban and London Transport routes. But it is difficult to see why moving the Thameslink 2000 station from east of King's Cross along the line to a position on the western side of St. Pancras should be delayed by the delays to the CTRL. Would it not be better to get on with it? After all, previous studies showed this scheme to have the highest return of all the London rail schemes. Is it not the case that at flotation some of Railtrack's inherited debt was written off in return for an undertaking to build Thameslink 2000? What is happening to that money meanwhile? What importance does the Minister give to this upgrade in terms of relieving congestion on London's roads? What action could be taken to hasten its implementation?

I now turn to the thorny subject of freight on the West Coast mainline. The UK's two major freight companies, Freightliner and EWS, are both heavily committed to investment in rolling stock—locomotives and wagons—as their contribution to a rapid increase in their business in line with government policy. They also require increased track capacity. I have already raised with the Minister in Questions for Written Answer and in the House the difficulties faced by EWS as it tries to increase its operation from 30 to 115 trains per day on the West Coast mainline over a 10-year period. Despite the regulator's instruction that Railtrack should demonstrate how sufficient capacity could be achieved, no conclusion has yet been reached by Railtrack. Moreover, Railtrack has already stated that it is not willing to upgrade the West Coast mainline to piggyback standard, partly because the Government are not willing to fund the upgrade. Yet this reluctance, wherever the fault lies, means that the chance of introducing new systems of rail freight, which could result in enormous gains in respect of easier transition between road and rail, will be lost. Do the Government have a view of the best solution and could the Government affect the outcome if they wished to do so?

An alternative strategic freight route from Glasgow to the Channel Tunnel has been announced and would be an acceptable conventional route from the point of view of the freight companies. But the question of capacity at key points, and of who pays, is becoming a major issue between Railtrack and the operators. Railtrack maintains that freight loses it money, despite access fees of £150 million per annum, and that its variable income from freight does not cover its variable costs. While the regulator investigates the balance between fixed and variable costs, no investment is taking place and the freight industry, like others, awaits the 1999 network management statement with some anxiety.

A commitment to investment in both routes and a retention of the present charging structure are regarded by the carriers as essential to maintaining the drive towards a bigger rail freight industry. Is the Minister satisfied that Railtrack has adequate incentives to make increased freight traffic financially attractive? In particular, can he explain to the House what combination of strategic rail authority, regulator and DETR powers and funding are, or will be, available to ensure that rail transport can play its part in the Government's own plans for an integrated transport system? After all, there may be a number of schemes which could deliver real social or environmental benefits but where the capital costs will exceed the available return in terms of paths sold.

I now turn to the matter of pinch points where the concerns of the Secretary of State to push ahead with action in the system has our full support, as does the availability of a government fund to assist with the action. This effort seems to be an excellent result of knocking heads together on the part of the Secretary of State. I hope that it has a successful future.

Next, there is the whole problem of maintenance, which is essential for the safety and comfort of passengers. Headlined in the last network management statement were 10-year programmes of £2 billion each for track renewal, for signal modernisation and for stations and structure—all good stuff and clearly funded. But it would be interesting to learn from the Minister what proportion of the £60 million which we are told is being spent on Paddington station is being spent, first, to benefit the passengers and train operating companies and, secondly, to raise Railtrack's revenue from retail premises. While we are on the matter of property, can the Minister assure us that sales of railway land really are under control and that profits from such sales are being ploughed back into the network? More importantly, is the Minister satisfied that the track and signalling renewal and maintenance programme is sufficient to guarantee levels of safety as use of the railway increases?

I fear that the Minister will be tempted to reply to my questions by referring me either to the strategic rail authority or to the rail regulator, but I cannot accept that either of those two institutions really has the task of considering where strategic new investment in rail infrastructure is required, over what timescale, and with what cost benefit analysis as a justification. As far as concerns investment in track, Britain sometimes seems stuck in the age of make do and mend. We have always been very good at that, but one has only to consider the efforts which went into the planning, justification and construction of the motorway system to feel that nowhere in the present rail set-up is there any person or group capable of taking a similar approach to track provision. We want to know, the industry needs to know, and rail users need to know that the regulatory and financial frameworks which will ensure that rail plays a full part in government policy are, or very shortly will be, firmly in place. I challenge the Minister to convince us that that is the case. My Lords, I beg to move for Papers.

7.31 p.m.

Lord Berkeley

My Lords, first, I declare an interest as an adviser to Adtranz and as chairman of the Rail Freight Group and the Piggyback Consortium.

I congratulate the noble Baroness, Lady Thomas, on initiating the debate and on her thoughtful and wide-ranging speech. She covered many of the infrastructure concerns that I certainly have. I should like to expand on one or two of them, but before doing so I wish to reflect on just how much has changed on the railways in the past five years. We spend some time in the House criticising the awful service, short trains and delays. Occasionally we praise the railways as well. We often forget that there was as much if not more that was awful with the old British Rail but then we could blame the government of the day directly. Perhaps that is what is missing today. It is more difficult to get information. I shall come back to that point later in my speech.

Railtrack, for better or worse, now owns our railway infrastructure and we must ask ourselves whether the company is fulfilling its licence obligations to maintain the network and enhance it to meet the reasonable demands of its customers. As the noble Baroness, Lady Thomas, said, maintenance is patchy. Some good work is being done, but there are two many stories of even worse bureaucracy now than in the days of BR.

Noble Lords may have seen today's publication by the Health and Safety Executive into the Bexley accident in February 1997. It gives me great cause for concern. Noble Lords may recall that a ballast train was derailed. The report blamed Railtrack, the South East Infrastructure Maintenance Company and the Southern Track Renewals Company for the accident. It was caused by the two rails moving apart because the sleepers were rotten. To me, that is plain bad maintenance, which was reflected in the fines on the companies totalling £150, 000.

In how many other places on the network is that happening? There could be a disaster. We do not know. We do not know whether Railtrack is maintaining the network efficiently, at the minimum rate for a safe railway or even to modem equivalent form. We need more information. We have a right to that information because the Government are providing more than £1 billion of subsidy to the railways. That information must be provided and verified independently. Whether that should be done by the rail regulator or the SRA is to be discussed but they must have sufficient resources in order to do that.

As the noble Baroness said, the challenge now is to cope with growth. Rail freight showed a 16 per cent. increase last year and passenger traffic grew by 7 per cent. If one projects that forward, there will be a doubling of traffic in 10 years. Yes, we can make the trains longer, we can make them heavier and put more coaches on the passenger trains, but we will still need double the number of trains in 10 years. The train builders can build plenty of trains and one can probably improve stations and other facilities. But can the infrastructure cope and how will it be done? Yes, more trains could be run at night, but not all passengers want to travel at night. To a large extent freight is moved at night but some freight must be moved when the customer wants it to be moved, which is often in the daytime.

We can run trains seven days a week, which does not always happen at the moment. Many passengers would be pleased not to be put on a bus when they want to travel on Sunday morning. We can also build more flyovers and junctions and we can lengthen platforms, but we still have to double the number of trains.

I have two solutions which I hope will be considered worthy of consideration. The first is to make the network a real seven-day-a-week, 24-hour-a-day railway. The main routes would be signalled for bi-directional working with regular crossovers to allow work to be done on one track while trains operate on the other. There is nothing new about that—it has been done on the Continent for years—but it needs to be done here. One of the freight customers who sells milk wants to use rail but will not do so until that kind of service is provided. Cows produce milk all the time and the customer wants to have trains run all the time. Bi-directional signalling and more crossovers would certainly enable that to happen. However, it means someone—probably Railtrack—investing in the equipment so that it can be done safely.

The other solution is signalling. Two years ago Railtrack told us and the world that there was such a shortage of signalling engineers that it was having to sub-contract some of the work to Australia and that this problem was constraining its growth and investment. Two years on, the signalling industry is complaining of few if any orders and is warning of major redundancies. On the ground very little new work on signalling is going on apart from at Euston. The reports on the development of the transmission-based signalling for the West Coast Main Line, as the noble Baroness, said, seemed to indicate that development work is continuing but is not going very well or very fast. I certainly have my doubts whether that signalling system will, in the near future, be able to provide Virgin with the contractual commitment to which Railtrack has agreed. That has a severe impact on the capacity for other passenger and freight trains.

The other way of increasing capacity is to build more lines. We have seen the Channel Tunnel rail link and Central Railways. But that is expensive. What is needed to increase the number of trains is major resignalling in many places in order to reduce the headway or distance between the trains. If we are not investing in signalling and if signalling engineers are going on the dole, it seems to me that not much strategic thought is going into the problem at the moment.

Where does Railtrack come in? At the rail summit a couple of weeks ago, which the Deputy Prime Minister chaired, Railtrack showed £45 billion of investment over 11 years from the year 2000, of which £6 billion was in rolling stock, £19 billion in maintenance and £19 billion in infrastructure enhancement. But investment by whom? Railtrack states that it has invested £1.4 billion in the past year, and that the amount will rise.

But let us examine some of those claims. I have the document in front of me. One problem relates to bottlenecks. The noble Baroness gave some examples. There is one in Leeds. Railtrack has taken a year to start work on that and has now begun to improve capacity. However, capacity for freight is not being improved, only passenger capacity, because EWS refuses to pay any more money. EWS says that it has a contract with Railtrack, and that Railtrack must provide the capacity. Railtrack is effectively saying, "Tough". So that is the position. The work is much cheaper now with a passenger enhancement, but that is not being done. Railtrack says that it has identified 90 new freight depots, indicating that it has paid for the work. I know that it has not paid a penny.

The noble Baroness mentioned Thameslink. As she said, there is no reason why work cannot be started now. What annoys me is that the document which was sent to 300 or 400 people states that West Coast upgrade, Thameslink, and Channel Tunnel rail links were all committed to from 1996 to 1999, and that before 2002 delivery will be well under way. The last announcement I saw indicated 2006 for Thameslink. That is not giving the whole picture to those who fund the work.

My question to Railtrack and the Government is: how much of Railtrack's investment relates to new work, or is it enhancement of capacity or capability; and how much is maintenance? We need the figures broken down separately. We also need to know how much is Railtrack's money and how much comes from grants. Unless we receive that information, we shall not receive a final answer as to whether Railtrack is capable of investing and whether it will invest at all.

The rail regulator is studying all these issues before further developing his decision on Railtrack's access charges and the regulator asset based regime. However, I understand that the regulator has three people working for him and Railtrack has 40. Will the regulator again be pushed into a situation where there is a lack of information?

My message is that I hope the SRA and the regulator will get a grip on the information, so that these issues can be debated. We are continually told that documents are confidential. Even the study that Railtrack did under the trans-European network fund in relation to the south-west of Cornwall was confidential until my noble friend the Minister kindly placed a copy in the Library. There are many other people who also wish to see it.

The railways have always been secretive. Now is the time for them to open up the information for debate, consultation and then action. I welcome Sir Alastair Morton's appointment as chairman of the SRA. I hope that there will be an equally strong and fair rail regulator when that appointment is announced. In the end, if Railtrack will not fulfil its licence obligations, the SRA must have the power to take action to ensure that someone else does. That is the only solution to achieving forecasts of double the number of passenger and freight trains on our network in 10 years.

7.43 p.m.

Viscount Weir

My Lords, I begin by declaring an interest. First, I am chairman of BICC, a company which not only has, through its Balfour Beatty subsidiary, extensive involvement in railway maintenance and renewal, but has also won the first two major contracts for the West Coast mainline. Secondly, I am also a director of the Canadian Pacific, one of the world's most famous railroads.

There are many aspects to the subject that we are discussing. However, I wish mainly to touch on the financing of rail investment. Perhaps I may begin with a little story. When I was a small boy, we had in our house the skin of an enormous grizzly bear. The poor bear was shot by my Canadian great grandfather with his trusty Colt revolver. My forbear (if I may use that word) was the leading civil engineer in Canada and he plugged the beast, which was being unfriendly, while surveying the route of the Canadian Pacific.

Driving that railroad through the formidable barrier of the Selkirks and the Rocky Mountains remains to this day an outstanding triumph of willpower and engineering. But if that was a challenge of astonishing difficulty, raising the finance required was in its own way scarcely easier. Then, and now, the financing of railway infrastructure—and indeed much infrastructure generally—has always met with the same problems.

The first difficulty is that the return on the investment is so often long term. Modern capital markets are fundamentally very competitive, so infrastructure financing, if by way of equity, has to compete with the equity returns available from other alternatives, and the total returns that shareholders expect today are high and often pretty quick.

Equally, the financing of infrastructure projects by debt often carries a higher risk element than, in simplistic comparison, fixed interest lending to a stable government.

The problem is made more acute for many infrastructure projects by the cost of dead money; that is, the cost of servicing capital during prolonged construction periods before the investment starts to produce cashflow. In that context, I am open to correction, but for the Channel Tunnel I believe that the dead money cost was pretty close to the actual cost of driving the tunnel.

An even more important consideration in infrastructure financing is the real destination of the return on the investment. If any of us builds a factory, the profit—that is, the benefit of the activity—goes into our profit and loss account. But for many infrastructure investments, that is not the case at all. To return to the Canadian Pacific, it eventually made, and still makes, good profits. Those profits, however, are microscopic compared to the general economic gain (it may be called profit, if we wish) that Canada gained from the construction of the railroad.

I would add two comments. First, the general national economic gain may be very real, but it is also very difficult to quantify. Secondly, there can still be an important economic gain of that kind even if an infrastructure project may not itself appear to show a profit at all in conventional accounting terms. Those factors hardly make conventional financing easier.

Again, if noble Lords will forgive my delving into history, the Canadian Pacific could never have been built at all if it had had to raise its finance in simple financial market terms on a stand-alone basis. What happened in Canada was that the splendid ancestor of the noble Lord, Lord Strathcona and Mount Royal, in the face of great political opposition, prevailed upon the government to guarantee some of the debt. Moreover, as an additional and very valuable incentive the railroad was given huge federal land concessions.

I say all this, not to recount ancient history, but simply to demonstrate that there have always been the same basic problems in financing railways. They therefore often need to be addressed by government not only with imagination, but with the recognition that capital markets have developed primarily to meet the needs of conventional business, rather than those of peculiar beasts like railroads and that there may often be an unquantifiable, and sometimes large, public benefit.

I do not know whether Mr. Prescott has a motto or slogan above his desk. But if he does not, he should have one that reads simply: "He who wills the end must will the means". And he should send that motto in triplicate to the Treasury.

Finally, I believe that for the best end result the system under which our railways operate should correspond closely and in a complementary way to the timescale and manner in which its infrastructure is financed. I am not sure that that is entirely the case today.

To illustrate what I mean, it is not helpful, where a long-term view is needed, to give concessions to train operators for periods which are too short. If you do so, those operators will simply act in a short-term way. It is stupid to expect them to do otherwise. They will not make enough long-term investments in rolling stock or, more important, in modern operating systems.

Equally, if operators' returns are subject to the changing whims of the regulator, we will have just the same result. Similar considerations apply to those involved in railroad maintenance, where every party's interest is always better served by long-term alliance agreements rather than short-term contractual confrontation.

Above all, Railtrack must be treated in a sensible way. It is absolutely unhelpful to talk, as some outside this House have done, about obscene profits. That blows off populist steam and does nothing constructive whatever. Railtrack needs to make good profits simply because it has such large ongoing investment requirements. To put it rudely, it needs money to pay for decades of shameful neglect by governments of all persuasions.

I happen to believe that the railway industry has a great future. I do not say that because I am a railway fan or enthusiast or even because I am somewhat involved in the industry. I say it because only by developing our railways have we the slightest hope of relieving the ghastly congestion of our roads and cities. In conclusion, I wish to thank the noble Baroness most sincerely for making the debate possible.

7.51 p.m.

The Lord Bishop of Hereford

My Lords, I, too, am glad that the noble Baroness, Lady Thomas of Walliswood, has introduced this timely debate. Her opening speech was excellent; she threw so many shrewd and searching questions at the Minister that he will need all his 20 minutes to answer them. We have also had two excellent speeches from the noble Lord, Lord Berkeley and the noble Viscount, Lord Weir.

This is an opportunity for us to raise the essential question of the urgent importance of ensuring a process of continuing, coherent and consistent investment in our railway system. I believe that we are only just beginning to understand both how urgent it is on environmental grounds to transfer traffic from road to rail—that must be both passenger and freight traffic in large quantities—and the huge potential that still exists for such a change.

There have been some encouraging signs. Speakers have already referred to the significant upturn in passenger traffic. Figures have been given for the increase in freight traffic. I was told by English, Welsh and Scottish railways recently that it was 60 per cent. in the first three years of its existence. That is one of the few but really beneficial fruits of the privatisation process: the infinitely more efficient and enthusiastic management of the rail freight business by EWS and by Freightliner.

But we are starting from an unhappy position. It is common knowledge that the last government were unenthusiastic about public transport in general and railways in particular. That led to a long period of disastrous under-investment and a collapse of confidence in the industry. I believe the roots of our problems in fact go much further back in history. When most European countries were rebuilding and electrifying their war-damaged railway systems from the late 1940s onward, we had a so-called "modernisation plan" in 1955 which was essentially backward-looking and unimaginative: simple, rugged steam locomotives; small, unbraked freight wagons; enormous marshalling yards where freight was stuck for days or weeks. It was, in retrospect, a recipe for absolute disaster, the recreation of a 1930s railway, not the birth of a system for the end of the 20th century.

Our present problems have been exacerbated by the absurd fragmentation of the privatised railway industry. We urgently need a properly integrated national transport system, but we have not even retained a properly integrated railway system. That creates enormous difficulties in terms of investment. Those have already been touched on, but I believe that there are two fundamental problems: first, the conflict between short-term and long-term interests and objectives, to which the noble Viscount referred; secondly, the inherent difficulty which he also spoke about, of persuading a private company which needs to please its shareholders to make the long-term investments whose benefits may take 20 years or more to emerge and which inevitably entail some element of risk.

A railway is a long-term business. Most of our railway lines have existed for 150 years or more. New railways involve immensely expensive civil engineering work, which is particularly difficult in our small and crowded country. But those new railways need similarly to be built to last. It may be a generation at least before a return on the capital investment is seen. Locomotives and carriages have a life expectancy of 30 years or more, yet franchises to train operating companies are let for short terms like seven years. That makes it impossible for train operating companies to justify buying new stock, so a system of leasing is developed instead. But the leasing companies need maximum flexibility so that their locomotives or rolling stock can be leased to a different train operating company if need be. That means that they need to be flexibly deployable; it means carriages which will fit within the maximum number of loading gauges, and the most restrictive. So we have the ludicrous production at the moment of the Class 170 Turbostar trains for ScotRail, Anglia Railways and Midland mainline which are the most cramped carriages to be built for many years. It also means diesel, not electric traction.

We face the ludicrous and appalling prospect of railway engineers speaking of decommissioning electrified railways—perhaps even the Great North Eastern Railway—because of the dilemma created by the conflict of long-term and short-term interests and because of the extreme difficulty in financial and business terms of justifying new electric locomotives, with a limited number of lines on which they can be deployed. There are no plans at all for any further significant electrification of main lines, like the Great Western and Midland main lines, both of which use the ageing and now rough-riding 125 high-speed trains.

I am sure we all welcome the Government's intention to establish a strategic rail authority. We wish it well and hope that it acquires great skill quickly in wielding the limited range of sticks and carrots which I can see will be at its disposal. But it will need to think radically about how private companies can be persuaded and/or enabled to deliver an integrated railway system in the public interest and especially how the crucial aim of adequate long-term investment can be achieved.

Some of the players are in it for the long term, notably Railtrack—and speakers have mentioned how eagerly we await the network management statement. Will it promise a vigorous programme to address the critical pinch points or the notoriously rundown track: Euston-Rugby-Birmingham and Reading West; the Settle and Carlisle and the Glasgow and South Western? What about Thameslink 2006, or whatever it has become? What about gauge enhancement, if we are really serious about freight traffic?

There are some hopeful signs, not least that the problem seems to be beginning to be understood by Railtrack management. Perhaps I am naive and optimistic, but their chief executive, Mr. Gerald Corbett, said on 15th January, apropos the commitment to spend £165 million on Leeds station—though I recognise the partial character of that work: The Regulator questioned our willingness to take risks and commit to projects without a guaranteed return. We believe that this initiative takes us out of the model of a boring utility, and puts us on track to becoming the key to integrated transport". I wish it were true. I welcome that statement but it is only the very beginning and there are good reasons for doubting how seriously Railtrack takes that commitment.

Public money will certainly be needed for rail investment. I hope that the Minister will be able to assure us that the strategic rail authority will address ways of making that kind of investment possible. I hope also that he may give us assurances that electric traction, so clean, efficient and environmentally desirable, will be extended and certainly not curtailed.

Perhaps I may say a word about safety, since the Motion includes a reference to the maintenance of "the highest safety standards". I echo the recommendation last autumn of the Transport Committee of the other place that the work presently carried out by Railtrack's Safety and Standards Directorate should be transferred to an independent rail safety authority along the lines of the Civil Aviation Authority, and that Railtrack itself should be required to obtain a safety case from that independent authority. That might give one some confidence about the kinds of accident that we have heard described. This authority must be publicly funded and entirely separate from any of the private organisations involved in the rail industry. That new safety authority would also ensure fair and accurate attribution of responsibility for delay and the award of compensation. If Railtrack and all the train operating companies had to relate to an independent safety authority there would be no room for confusion, less scope for delay in the award of safety cases and much greater public confidence in rail safety.

Finally, I should like to relate a brief story about the high-tech, modernised railway. Yesterday I went to the booking office at Hereford to buy my ticket. I asked for a saver first ticket, with a senior rail card, to London. The booking clerk scratched his head and said, "Hm! We've got 17 different fares to London. I don't think we have that one in the machine". Since I knew the fare I said, "What about £55.20?" His response was, "Done!". I must be a trustworthy-looking chap.

8.1 p.m.

Lord Steel of Aikwood

My Lords, I too join very warmly in congratulating my noble friend Lady Thomas of Walliswood for initiating this excellent debate. We have enjoyed listening to some knowledgeable speeches including that by the right reverend Prelate. I am tempted to suggest that he should be appointed honorary chaplain to the railway network. His was a most authoritative and optimistic speech.

I begin with an apology to the Minister who is to reply to the debate. I do not expect from him any reply to the points that I raise in my speech for two reasons: first, everything that I intend to say relates to the responsibilities of the Scottish Office, not his department; secondly, I hope to escape from the debate before the end, a practice of which I thoroughly disapprove.

I intervene briefly in this general debate to raise a specific example of the problem of investment in railway infrastructure; namely, the position of the railways in and around the city of Edinburgh. When I was elected a Member of Parliament in the Borders in 1965 I inherited a situation in which the Border railway line was under threat of closure following the Beeching Report. I refer to the attractive 95-mile-long line between Edinburgh and Carlisle through the Borders. That line was in the event closed in the late 1960s. The other day my wife came across my ticket for the last train to leave Galashiels to head for London on the night sleeper. I do not believe that the decision to close that line would be made today by any government for two reasons. First, attitudes have changed completely over the past 30 years. We are well aware that we have been putting far too much traffic into our cities from surrounding areas. We are also very concerned about pollution and the effect on the environment. Secondly, referring specifically to Edinburgh, there has been an enormous expansion in housing over the past 30 years to the south of the city on the very route that was closed.

The hopeful sign is that Border Transport Futures Ltd has produced plans over the past few years to reopen at least parts of the line, beginning with the southern section. That is to be a freight-only service. Plans are well advanced to extract wood from the great forest of Kielder and, rather than clog up the roads in that locality, transport it when mature via the railway line through Longtown to Carlisle. As to that, the tender process is about to begin, and I am sure that we all wish the new freight service well.

My main concern is for the future passenger service at the north end of the line. A pre-feasibility study has already been conducted by Border Transport Futures of a branch line from Edinburgh to Galashiels. The Government have themselves commissioned a study concerned with the same route that is now under way. It involves Railtrack, Richard Branson's company and the Scottish Office.

I become very suspicious when I consider the number of studies and consultancies involved. Possibly it is a means of putting off decisions. I recall that at the time of the closure—which we campaigned against—the local authorities in the region, with my full encouragement and support, commissioned a feasibility study from Professor Hibbs. That could be dusted down and looked at again. It recommended a single track branch line from Galashiels to Edinburgh. Perhaps we are re-inventing the wheel two or three times in paper studies. However, I do not in any way disparage the study which is now under way. The economic situation in the Borders is so grave that we look forward to a positive outcome to the study and the restoration of that route in the interests of the whole of the Border counties.

My particular plea—this is all I say tonight—is that, without considering the long-term possibility of reopening the whole line, work should proceed immediately on the extension of the Edinburgh suburban rail network at the northern end of that line. It is rumoured that there will be an announcement by the Scottish Office, possibly tomorrow, of agreement to fund the crossrail project put forward by Edinburgh City Council to extend the existing suburban network, which has been so successful, from the west to the east of the city. I very much welcome that. When my honourable friend Mr. Donald Gorrie, the Member for Edinburgh West, was councillor for that area he was very successful in the campaign to reopen Gyle station. That has proved an enormous success. It brings people from the outer housing estates to the west into the city centre. A week or two ago I went to look at the even older example of the reopening of the branch line to Bathgate. There I observed the number of commuters who arrived in the late afternoon. To reopen stations and lines in the Edinburgh area has proved successful. I wish the crossrail scheme all success.

The plan is to extend the suburban line through Waverley to Kinnaird Park with a station at Brunstane. I believe that a mistake has been made in not reopening the station at Portobello. A large population in that area would prefer to use rail rather than take their cars into the city centre. Since this scheme is supposed to be up and running by 2002 I am bound to question why there is not to be a station at Holyrood where the new Scottish Parliament is to be established. I am informed that the cost is very substantial. I cannot understand how a station on an existing line can cost £5 million All that is needed is a platform and a shelter. I believe that the future Scottish Members of Parliament should set an example by providing access by train to the new Parliament. I hope that the matter will be reconsidered.

I give a warm welcome to the project, which, if I am right, is to be announced tomorrow. It will enable the northern part of the old Waverley line to be reopened. I urge the Government—it will be the responsibility of the Scottish Office and the Scottish Parliament, together with the rail authorities—to press on beyond Kinnaird Park to Millerhill and the new housing areas of Newtongrange and Gorebridge. If that is done it will be relatively simple to extend the line south to the Borders, as I hope will happen.

One of the main blockages to the restoration of that suburban link is the new Edinburgh road bypass. The Scottish Office is faced with a repeat problem. The traffic on the bypass is greater than was forecast. Just as at the western end of the bypass, at the Gogar junction, there was first a roundabout, then traffic lights, and eventually an underpass—which should have been constructed at the very beginning—so the same story is being repeated at the eastern end at the Danderhall roundabout. At that end we are now at the traffic light stage. The new Edinburgh Royal Infirmary is under construction just north of the roundabout. We should now be beginning to construct an underpass or overpass. That should be wide enough to accommodate the rail link to avoid a long argument about future expenditure and disruption to the Edinburgh bypass. My plea is that we have some real forward thinking to integrate the road and rail networks and that a decision about the necessary capital expenditure is taken in time.

8.9 p.m.

Lord Cadman

My Lords, we are grateful to the noble Baroness for raising the subject today. We seem to be having a good crack of the whip lately, given the debate of the noble Lord, Lord Berkeley, in January, and the more recent discussion on the Severn Tunnel last month. The Severn Tunnel debate highlighted the importance of keeping our rail infrastructure in good order, and any lack in that direction could have drastic economic consequences. Shutting part of a system even at weekends for repairs tends to put many people to vast inconvenience. Perhaps more lines should be dual signalled—the noble Lord, Lord Berkeley, mentioned this—so that one line can remain in use while the other is worked on, a practice which is widespread in Europe.

Investment is the key to unlock the future potential of the rail industry to meet the greater demands that will be made on it in an integrated transport policy. Railtrack is responsible for the biggest part of that investment. It has to justify the many improvements and upgrades, to say nothing of eliminating pinch points in the system to provide the train operating companies with a suitable railway for their needs. Passenger growth over the past five years has been around 20 per cent. and rising, which presents quite a challenge. Freight is similarly growing. Railtrack has a difficulty in that in the private sector strict commercialism seems to reign supreme whereas the railways provide a public service. Many recent studies have revealed that many schemes are somewhat difficult to justify without considerable subsidy. That has led Railtrack to concentrate initially on station regeneration schemes which provide a greater return through increased business development of the premises. Railtrack has been inclined to ask users to-help with the finance of upgrades and new route development. That really is the role of Government who respond by providing the infrastructure investment fund and freight facilities grants. It is likely that in the not too distant future, the demands made on those funds will be considerable, and their augmentation will be essential.

Railtrack has been unwilling in the past to take risks, a lamentable policy indeed, but unfortunately somewhat necessary in commerce. Therefore it is to be congratulated on making a start on modernising Leeds Station where £160 million is to be spent on increasing the train paths available from 24 to 40 per hour, and shouldering much of the commercial risk itself, despite a certain lack of commitment to freight.

In the main, the train operating companies are investing heavily. Some 1, 800 new carriages of various descriptions are currently being built or on order. That will release many older vehicles for scrapping and less old stock for refurbishment and re-use. Anglia Railways' plans to start a new service from East Anglia to Watford and Basingstoke via the Feltham gateway to Heathrow involve the use of new trains. Its more controversial and competitive plans to connect Waterloo with hitherto untapped areas in Southampton and Romsey will use refurbished stock cascaded from the Gatwick Express which is to receive new rolling stock this year.

Virgin Trains is committed to massive investment in its West Coast mainline and cross-country fleets for which it has contracted Railtrack to produce a suitable railway to enable those new, in the main tilting, trains to operate properly. This investment by Virgin, along with Railtrack, now brings the total committed private sector investment in those projects to above £4 billion over the next six years.

Other companies also operate on that railway, especially freight; and Railtrack seems to be having some trouble accommodating them. Providing for piggyback and high cube traffic within the upgrade does not, it seems, appear commercially viable. I have to say that since the completion of the Channel Tunnel, this country needs somehow to provide a route properly to connect our system with that on the Continent where such traffic is widely carried without a problem. If Railtrack is unwilling to get to grips with this, one's mind is directed towards another scheme which continues to lurk in the background. I refer to Central Railways whose highly controversial and ambitious scheme involves a high cube route from Liverpool and Manchester, crossing the Pennines using the redundant Woodhead Tunnel, thence to the London area using the old Great Central Formation via Nottingham, Leicester and Rugby, eventually connecting with the Channel Tunnel at Folkestone and then on to Lille in France.

It may be of interest to your Lordships to learn that that scheme is actually 100 years old and was conceived back in the 1890s by the late Sir Edward Watkin who, as a railway baron, planned to use the Metropolitan Railway and Brunel's tunnel under the Thames to connect his Great Central London Extension with the South Eastern Railway to the nascent Channel Tunnel at Dover. It is interesting to speculate that had Sir Edward's plans come to fruition, we would have had a bern gauge route east-west across London, making Crossrail unnecessary and providing much improved communication around the capital. Having built his London extension from Nottinghamshire to Marylebone, unfortunately takeovers and mergers thwarted his plans and, sadly, he died before anything else could happen.

Central Railways have had considerable presentation problems, but I feel that the scheme is worthy of some consideration, if only to goad Railtrack into accepting that if it does not get to grips with this piggyback traffic, others perhaps will. That will surely be to Railtrack's loss.

Continuing with the freight theme, there will be a need for terminals, both intermodal and more basic ones to load and unload rail vehicles. The planning regime associated with those facilities is very obstructive and time-consuming and needs to be reviewed. Perhaps that is an issue that the strategic rail authority can address. While the Transport and Works Act can be used to facilitate the provision of rail services to those terminals, their inevitable need for buildings is not covered by that Act and local planners become involved. Many of those authorities are quite co-operative, but some still seem to be living in the dark ages and need to realise that the renaissance of the railways will need their blessing. Planning for those projects must be speeded up if a real part is to be played by the rail freight industry in removing some of the traffic from our roads.

I should like to cite a project at Colnbrook near the junction of the M. 4 and M. 25, which is rail connected and will provide a much-needed facility in that perhaps sensitive area but close to London. There is also a useful project at Avonmouth where a large area of wasteland is being redeveloped to provide an intermodal terminal and other industrial premises.

Thus we see that privatising the railways has been somewhat successful with both an increase in passenger numbers and the number of freight tonne/miles up and rising. The system is struggling to cope now and will continue to do so in the future unless investment keeps pace. The railway industry welcomes the setting up of the strategic rail authority and looks forward to the legislation which will enable that body to provide the appropriate strategic direction. Unfortunately the Government seem to have got their priorities wrong in that constitutional matters are to take precedence over important matters such as transport, food standards, health and welfare, and now even access to the countryside. I am sure that the voters will not thank the Government who, in their zeal to emasculate this House, neglect to address those more important matters that they were elected to get on with.

The rail industry needs strategic support now; otherwise we would not be having all these complaints about poor service. Let us hope that this debate can go some way to help achieve the renaissance that the rail industry needs and is willing to provide.

8.17 p.m.

Lord Hooson

My Lords, I, too, congratulate my noble friend Lady Thomas of Walliswood. I have learned a great deal in the debate. We have heard some good and informative speeches. I am in the same class as my noble friend Lord Steel. I have no expertise except as a passenger. It was while I was seething as a passenger that I allowed my name to be put down for the debate. I express the communal feelings of my noble friend Lord Geraint and myself. He has decided that I shall let off steam on behalf of the both of us because we were involved in the same incident.

We travelled together about a fortnight ago. It was not an unusual incident, but the worst of our experiences. We left here at 4 p.m. to catch a train from Euston at 4.45 p.m. We should have reached our local station at about 8.25 p.m. We reached there at about 11 o'clock that night. We were delivered by a minibus. The noble Lord, Lord Geraint, had to drive me home which is on the way to his home. I do not know what time we got home. It was our worst, but not an unusual, experience.

We were travelling on Virgin trains and should have changed at Wolverhampton. We were told at Birmingham that there had been trouble on the track on the other side of Coventry. We had not noticed it. When we reached Wolverhampton we expected to change to Central Trains. Its train had left 10 minutes before we reached the station. There was no other train for another two to three hours. I have travelled on this line for the best part of half a century from Aberystwyth to Paddington. I have never experienced as bad and unreliable a service as I have done in the past few years. It might be more comfortable in some sections, but the service is nothing like as reliable as it was.

What happened was because of trouble on the line. It has happened repeatedly. The noble Lord and myself travel on average once a week during parliamentary sittings. It is amazing the number of occasions something has gone wrong. We hear anecdotal evidence from other passengers.

When I say that I have no experience of railways, I had a transitory one some years ago. I had to object to some of the Beeching proposals as a Member of Parliament concerning my own constituency. I was also briefed many times by local authorities and pressure groups and had to attend public inquiries in order to object. I learnt a few things about the railways then which I had forgotten until today.

The contribution of the noble Viscount, Lord Weir, was interesting. He spoke about the capital cost of railways and the long-term investment they represent. I am a great admirer of French railways. I believe that France has got it right. It has taken a long-term view In this country we have been inclined to take short-term decisions on most issues over the past 20 years. We have failed to take the long-term view.

I objected to privatisation of the railways. I thought it was a mistake at the time. I believed that we should have more freight on the railways. It is very much easier for people to travel on the railways. Many of my friends in mid-Wales travel to London by car because the trains are so unreliable. Most of them would much prefer to travel by train if the service was reliable.

A major problem faces the Government. I am very glad to hear about the setting up of a strategic rail authority. Is it going to be provided with additional money? I suppose it has no money at all at the moment. Is it going to be properly funded and carry out a proper investigation of the kind of investment that is required in this country over the next few years? Trains are held back because of difficulties on the track or with the overhead lines. Sometimes one has to change from one line to another. Is the strategic rail authority to be allowed to hold back a train operated, for example, by Central Trains, and so on? All these things need to be considered.

The noble Lord, Lord Cadman, mentioned the Severn Tunnel. I have an interest to declare, as I did on a previous occasion. I am chairman of the Severn River Crossing plc, which provides the road links. It is very important to have a reliable service through to South Wales. We depend so much on the engineering works of the Victorians as regards the rail track. They performed marvellous feats of engineering. I do not know how many tunnels I go through between mid-Wales to Euston but there are many. The tunnel under the River Severn is a masterpiece of engineering. We could not hope to rival it today because it would cost an enormous amount of money. I suspect that the tunnel, and many like it, need careful investigation to see whether more work should be done now to give them additional support.

In our debate on the Severn Tunnel about a fortnight ago it transpired that work on the rail track through the tunnel required the tunnel to be closed for about six weekends, if my memory serves me right. It transpired that all that was being done was changing the rail track, which has to be changed in any event from time to time, whether the track goes through a tunnel or not. No work was being done on the tunnel as such.

The strategic rail authority needs to look at the whole rail network to see what is required to bring it up to modern standards. It will have to start with the main lines. I am sure that my noble friend has performed a great service by raising this point at this time. It is obvious to anyone that major investment is needed. It will be virtually impossible to raise that money on the market and therefore one can only look to the Government to provide the funds.

8.26 p.m.

The Earl of Leicester

My Lords, I remember that at about this time last year the noble Baroness, Lady Thomas, led a debate on more or less the same subject. I suspect that the catalyst for that debate and what prompted her to bring it forward was her intense frustration, which I remember very well, at the appalling lateness and overcrowding of the trains on her particular sector.

Regrettably, the trains are still late, overcrowded and dirty. This continuing unpleasantness, if one can so call it, really prompts us to believe that privatisation was, and is, a disaster and that perhaps the only way that we can remedy the defects of that process is by throwing more money at Railtrack.

We have heard very little about what Railtrack does well. It would be a great shame to ignore the progress in growth. By that I mean the growth in passenger traffic, freight and investment. Perhaps I may give your Lordships a few facts. Ten years ago at the height of the boom there were 21.3 billion passenger miles travelled. In 1995 it had dropped to a low of 17.8 billion passenger miles, but now it is back at 21.3 billion passenger miles again. That is an enormous increase in passenger numbers. As we have also heard, freight levels have risen accordingly.

Every day 20, 000 trains run on the network. There are 1, 000 more passenger trains now running each weekday than there were three years ago at the start of privatisation. At peak times the railways run at capacity. I can never quite understand why the railways should be immune from peak time delays when the roads are not expected to be immune from such delays and indeed not only at peak times. In the 20 years prior to privatisation the average investment by BR at 1998 prices was £850 million a year. We have heard that this year Railtrack is investing £1.4 billion. It has a programme of some £17 billion for the 10 years from 1997 to 2007.

In 1996, at the start of privatisation, Railtrack had a staff of 400 planning, designing and monitoring investment. Such is the volume of work today that it has increased the number to 1, 200. The range and amount of work that has been undertaken is astonishing. Approximately half of Railtrack's 2, 500 stations have been improved, modernised and generally refurbished. One-third of those stations now have CCTV security monitoring and 90 freight depots have been opened. In addition, there are the major capital projects about which we have heard.

Is it doing enough? The short answer is no. The politicians and pundits are right in pointing to the 20 years of under investment with which Railtrack must catch up, never mind the past three years' growth which it must sustain.

Can it do more? I bow to the technical expertise of the noble Lord, Lord Berkeley, who outlined ways in which during the next 10 years a great deal more can be done and the number of trains can be doubled. However, as a layman, I believe that certain practicalities dictate how much Railtrack can do. There are logistic difficulties of undertaking track maintenance and improvements, especially bearing in mind that most of the work can be done only at night and at weekends when it can work flat out.

We heard from the noble Viscount, Lord Weir, about the other big constraint; finance. The £17 billion investment over 10 years is the largest investment project ever undertaken by any British company in this country. By 2004, Railtrack will have a debt of £4 billion. It will be one of the largest borrowers in the City. Any company which has to service a debt of such magnitude must eventually face a reduction in profits and therefore potentially lower dividends and fewer investors. If Railtrack does not retain the confidence of its investors and the financial markets, no money will be forthcoming. The noble Viscount told us that most eloquently.

There have been calls for a massive increase in investment. Railtrack states that it needs to spend £37 billion, but I suspect that that will cause enormous strains on the company. Apart from the physical constraints, I am not sure how it can raise the money unless it is allowed to earn more. I suspect that that means that the rules will have to be changed; for example, charging for each train on the line rather than the fixed charge which it generally receives.

I have said nothing about integration, which is part of the Motion, but I understand that there is a great deal of integrated bus and train ticketing all over the country, especially in Scotland. Safety has hardly been mentioned, but I am told that taking into consideration the number of train miles, the number of serious accidents has halved since 1994.

We all want greater investment, but realities must be faced. In the meantime, I believe that the facts, which have not been mentioned tonight, support Railtrack's claim that it is doing a good job under difficult circumstances.

8.34 p.m.

Lord Mountevans

My Lords, I, too, am grateful to the noble Baroness, Lady Thomas, for giving us the opportunity to debate railways, investment, integrated transport and safety. I congratulate her on attracting several speakers beyond the list of what might be called "the usual railways suspects" and I hope that we shall hear more from all of them.

I wish to concentrate on investment and safety. Not only is rail investment a good thing, but it has been a necessity for decades. That necessity is only now being addressed seriously as an anticipated result of privatisation. The private sector has abilities to raise money which the old nationalised industry, under Treasury constraint, lacked.

The noble Baroness gave us the traffic growth figures and several noble Lords repeated them. The industry, reacting to those figures, is investing at unprecedented levels, as the noble Earl reminded us. In infrastructure terms, we must welcome all the routes which are open; shared risk projects such as the long awaited refurbishment of the West Coast main line. We must also welcome Railtrack's commitment to spending £165 million—that figure has risen by £5 million between the two briefs I received last week—by 2001 on more track, new signalling, improved passenger environment and, not least, a bus station. That is all at Leeds station, which won the station of the year contest in the days when I presided over that venture.

I congratulate Railtrack on committing itself to a major project addressing the needs of its immediate clients, the train operators, and its remoter clients, the PTAs and the passengers. I look forward to seeing the results, but I have one reservation. It is that the project has been under consideration for quite a while. Under a former legislative regime I took the enabling legislation through this House, in 1992 or 1993. Even then the legislation had cleared another place, before which there must have been a certain amount of planning. Therefore, we are rapidly reaching the stage where the project has existed for about 15 years. If privatisation enables it to proceed, who am I, and who is anybody else, to condemn it?

If we wish to see the investment which such a project requires and which the Motion seeks, we must make sure that the regulatory environment is as good as the financial one and that neither is allowed to kick major projects into touch. I hope that the Minister will have something to say on regulation, not only as it affects the railways directly but as it affects the wider environment, be that planning or other matters, not least the wider social benefits which accrue from integrated transport.

Railtrack, too, has a further role to play. I look forward to the next addition of the Network Management Statement which is due later this month. It seems to me that previous editions have been more statements of intent, laudable but without timescales or financial commitment, than serious commitments. I hope that that situation is changed. But that is not simply a matter for Railtrack; it is also a matter for the Government, the financial sector and many other interests. One cannot assess risks nor make commitments unless there is some measure of predictability. It cannot, as the media pundits would often like to believe, on this scale be viewed like instant coffee—you just add water and go.

My second topic is safety. I address it secure in the knowledge that between 1986 and 1995 rail travel was the second safest mode of transport in terms of casualties per billion passenger kilometres after aviation. In a bus or a coach, I am five times more likely to be a casualty than I am on a train. In a van, the multiplier becomes nine times, and it is 15 times in a car. We are all obsessed with road safety, and both the previous government and this one have done a great deal to reduce the number of road casualties. At the same time, the number of railway casualties has been fairly low, and yet if there is an accident, it is a major incident. It has to be a very serious car crash to rate the same status as a train crash. As the noble Lord said, there is a double standard. If we are delayed on the motorway we say, "Oh dear, oh dear", but if we are delayed on a Virgin train we say, "Damn Virgin". The most risky means of travel is as a pedestrian, when the multiplier becomes 200.

Your Lordships will understand that I feel safe on a train; safe, but not complacent, for as long as there are humans there will be scope for human error. One error is one too many and as today's HSE report into the Bexley derailment, which has already been referred to, shows, errors can be compounded. In the case of Bexley, four bystanders—not passengers or even railway employees—were injured because of a combination of Railtrack error, the errors of two contracting companies, poor driver training and inadequate locomotive maintenance. As we have already been reminded, Railtrack and the two contractors were subsequently convicted and penalised.

I have mentioned only the highlights of the HSE press release, but that in itself raises concerns. The first is divided responsibility—no single and united accountability. I wonder whether we need an enhanced HSE, funded and staffed to set and enforce the standards rather than a whole number of parties none of which, in this instance, was either setting or sticking to its own safety objectives.

Going further, should the providers of services—and at Bexley, all five parties were providers of services—also act as regulators at the lowest level, which is a legacy of the old British Rail regime or should regulation be more arm's length? The right reverend Prelate the Bishop of Hereford is not in his place, but I echo what he said about the Civil Aviation Authority. For decades, ever since I can remember, it has, for example, employed checking captains to inspect and ratify the flight-deck performance of the pilots in the commercial sector. More recently, it has recognised that structural change has followed privatisation—there is a paradox to be drawn there—and the CAA is taking steps to ensure that its regulation is not only arm's length but is also tough and accountable and seeks to eliminate absolutely the multiplication of opportunities for buck-passing, which, for example, Bexley showed us in the first instance.

My second concern, again arising out of Bexley, is timescale. In the high summer of 1940, when we were at war and there were other complications, driver error led to a sleeping car train colliding with a freight train just west of Taunton at Norton Fitzwarren. The Railways Inspectorate issued its report and its recommendation in time for the Christmas Eve newspapers. That was four or five months, a timescale so brief as to be admirable when in the case of Bexley the accident was in February two years ago, so we are talking of 25 months.

More recently, and more modestly, my wife—and perhaps I should declare an interest on her behalf because she carries out PTS medicals nowadays, which obviously have a safety element—was injured on a train. The process then was internal inquiry, possible external inquiry by the Railways Inspectorate, conclusions, recommendations and, if necessary, litigation. In our case, all that was concluded and the damages claim settled within months.

Nowadays, things drag on and on and bucks are passed, as Bexley illustrates. That hardly seems satisfactory for consumers, injured parties, operators, regulators or, indeed, anybody else. We all need to draw the conclusions from every accident as quickly as possible in order to act upon them. In overhauling our railways, I hope that the Government will not overlook the fact that safety is paramount and that perhaps the safety regime, too, needs overhaul.

8.43 p.m.

Lord Methuen

My Lords, I too thank my noble friend Lady Thomas of Walliswood for introducing this debate. The debate has been about investment in rail infrastructure, integrated transport and rail safety. It is a coincidence that the report on the Bexley accident on 4th February 1997 was published today, as has been mentioned by other noble Lords.

Reading the summary of that report shows dramatically the pitfalls in the fragmentation of the railway industry into its present disconnected portions. None of the participants at Bexley comes out with any credit; neither Railtrack nor its sub-contractors nor the train-operating company concerned. It is lucky that there were no fatalities in that instance. The situation of the Railways Inspectorate and the length of time it took to report on the accident are significant and, compared with the recent accident in Germany, our showing is very poor.

The railway industry grew, grudgingly, a culture of safety during the last century. The companies of those days had to have legislation passed before they would install such matters as continuous braking systems which we take for granted now. Boilers blew up, bridges collapsed and there were horrendous accidents when hundreds of people were killed due to wooden coaches and gas lighting. The institution of the Railways Inspectorate in the last century was predominant in achieving the levels of safety we now have. I should like to see its independence preserved.

Most, but not all, accidents now are due to some form of human failing, and that was certainly so at Bexley. Railway signalling—and I speak as a sometime railway signal engineer—has led the way to safer railways, minimising the effect of human errors and permitting greater traffic density and higher speeds.

We are about to see a new generation of railway signalling which should give greater traffic densities and better regulation of the mixed traffic; that is, the high speed and suburban passenger trains and the freight trains. The modernisation of the West Coast main line and London Transport lines is highly dependent on that new transmission-based signalling system to deliver the benefits mentioned above without compromising safety.

Improved signalling, however, is but a minor factor in the story. I am told that the new signalling will offer only some 25 per cent. improvement in track capacity on the West Coast main line, reducing the headway from five minutes to four minutes between trains. Further improvement is constrained by the track and by traffic considerations—the need to load and unload trains and things of that nature and speed restrictions which exist, particularly in the Shap area.

The huge improvements we need to handle the projected increases in both passenger and freight traffic must come from major changes to the physical infrastructure, the reinstatement of lost track formations—for example, the redoubling of the Glasgow and South Western Railway, the restoration of the Matlock-Buxton link and the provision of flyovers in places like Reading, or new chords, as at Ipswich and similar at the identified 15 major pinch points.

I suspect that many of us have received a briefing document from EWS. It talks about a new strategic north-south route using the old Glasgow and South Western, Settle and Carlisle and Midland mainline and thus to London. I do not believe that those proposals directly help the piggyback consortium, due to the restricted loading gauge on the Settle to Carlisle railway. But I wonder whether that might not be countered by singling the tracks at those portions of the lines with heavily tunnelled routes and slewing the track to the centre of the tunnels to achieve adequate clearance. With modern centralised traffic control and a double track where it is practical, that might provide adequate capacity for EWS and piggyback.

But what about elsewhere on the West Coast main line? I am told that the main congestion is south of Rugby. Would it not make sense, therefore, to reinstate that part of the old Great Central route between Rugby and Banbury? The Great Central route crossed the West Coast main line at Rugby over a large bridge. I do not know whether or not it is still there. From Banbury, access to London already exists and that section of the line was redoubled between Princes Risborough and Banbury quite recently.

That is part of the central rail scheme but I cannot help feeling that that is probably financially more beneficial than the rest of what is proposed.

The danger is that the West Coast main line proposals will be pared away down to something quite insignificant during the current debates. However, we are already seeing improvement in investment in some pails of the system—£9 million has been spent on the Felixstowe branch so that Freightliner trains can now pass. However, I cannot help feeling that, whenever that line was built, the Victorians built it with the earthworks for a double track. Why did they not put the double track in on those bits where it was practical and thus virtually do away with the passing loops but have a double track railway? The cost of doing that would have been fairly minimal. The Princes Risborough to Banbury line was already installed as a double track, as I have said, but this is nothing like enough. As the right reverend Prelate the Lord Bishop of Hereford said, surely we should be examining the cost-effectiveness of electrifying between Paddington, Swansea and Plymouth, for instance.

The high speed trains are now 30 years old. By all means let us replace those on the Great Western line with East Coast main line-style electric stock. There is the added benefit that regional Eurostar services could then use an electrified line to Bristol and Cardiff and beyond. But to get this done the train operating companies would need longer-term contracts to encourage them to make the necessary investment in such stock.

The right reverend Prelate also mentioned that certain lines had been de-electrified or may be de-electrified. I would remind him that has already happened with the Manchester-Shepperton-Wath line, which is the Woodhead tunnel line, which has already been mentioned in connection with the central rail service. We shall have a better idea of Railtrack's proposals when their management statement is published. In the words of last night's airline debate, I hope they will put the customer first, and I look forward to the establishment of the strategic rail authority.

8.51 p.m.

Lord Dixon-Smith

My Lords, the noble Baroness, Lady Thomas of Walliswood, deserves all the thanks that she has received tonight for initiating this debate. I am happy to add my thanks to those of so many other noble Lords. As the noble Baroness said in her introduction, and as so many other speakers have also mentioned, the railway business has expanded enormously over the last four or five years. On both the passenger and freight side we now see plans for major expansion across the country.

That fact does not indicate that the system is in imminent danger of collapse. Indeed it would seem to indicate that perhaps privatisation has had some merit in that the benefits have still to work fully through the system. The problems, if problems there are now, are largely those of success. Indeed some areas, as again has been mentioned, particularly the London commuter area, have reached the physical limits of their capacity for the first time ever. We have seen reports that capacity can only increase as a result of track signalling and station improvements to permit more and longer trains to run on the same lines: a common theme in tonight's debate.

The question is not whether there should be greater investment in railways, but how best to achieve it. The history of British Rail, while it was under the control of the Treasury, was one of consistent long-term under-investment, under governments of all political persuasions—I am sorry, "all" is too many in a House which has three political parties. In the situation in which we now find ourselves, we know that funds can be made available and the question is whether the Government and the regulators between them can or will create conditions for that money to come forward.

The previous government invested large sums in the national railway network and the Channel Tunnel was funded entirely with private funds. That of course has created enormous opportunities for enhancing both passenger and freight operations. Since privatisation Railtrack, which raised less money as a result of its sell-off than should have been the case because of the activities of the Labour Party when in Opposition, has seen that access to private sources of funding through the markets has produced investment programmes in the upgrading of the existing network and indeed in existing rollingstock on a scale that the Treasury could not have made possible.

Many noble Lords tonight have rehearsed details of those programmes, so it would be superfluous to go into them again, but one success has not been referred to and so I will mention it. The British Airports Authority invested £300 million in the Heathrow Express: a good example of integrated transport. However, we need to recognise that continuing success in this field will depend on confidence in the stability of the railways' political and financial support.

Much of the current debate takes place about train performance or, in other words, unreliability. Railtrack is criticised for causing delays to train services, but I sympathise. How do you upgrade track and signalling services which really are major engineering works when you have to keep the system running at the same time? It cannot be done without some disruption, and short-term disruption has to be the price that we are prepared to pay to bring in long-term improvement. The option of closing lines does not exist, although it can be done in the case of roads. Indeed we saw, with the closure of the Mall here in London, the ensuing traffic problems that such closures cause.

Of course disruption must be managed and minimised. Perhaps this will be the real job for Sir Alastair Morton and the Strategic Rail Authority, since the comprehensive spending review projections do not suggest that they will come forward with a dowry of additional money to invest from the public purse.

While on this theme of public financial support, reliable industry sources are suggesting that the Government are planning to pay track access charges direct to Railtrack rather than through the operators as at present. Will the Minister, in his reply, confirm that this does not contravene any European directives, since the change results in rail infrastructure being directly funded by the Treasury? In any event, such a change may well put aspects of improvement, such as Thameslink 2000 and the modernisation of the West Coast mainline at risk, since those improvements depend on the willing participation of the train operators who will lose funding as a result of the change.

As so often in the past, there is a danger that "hands on" by the Government may lead to "hands off by the commercial world. Will the Minister assure the House that there will be no disruption to present programmes of improvement as a result of these rumoured changes, if they are introduced?

It is not possible to have a debate such as this, despite the self-denying ordinance of the noble Baroness, Lady Thomas, without having some mention of London Underground, which is in every real sense a part of rail infrastructure. Present proposals suggest that as a result of the formation of public-private partnership the Treasury's funding support will cease as from 1st April 2000. To break even and maintain the network in its present state, the Underground has to achieve a gross operating profit of around £400 million. In 1997–98 that margin was only £265 million, leaving a funding gap of £135 million to be bridged next year.

Are we to assume that the large rail fare increase we saw this year will have to be repeated next year in order to cover that deficit? Perhaps the noble Lord, the Minister, could confirm what is to happen when he replies. In any event, the Government have been relying on their formation of a public-private partnership to raise £7 billion of private funds for Tube infrastructure improvements over the next 15 years. Are we to assume now that these improvements must be further delayed? I read in yesterday's Evening Standard that the new Tube ownership arrangements will now be postponed until after the next general election because of the impracticality of the present proposals. It appears that the potential bidders for participation are falling by the wayside. Can the Minister tell us what is to happen? London is desperate for practical solutions, not theoretical paper exercises. Can we be assured that there will be no delay in the maintenance and modernisation of the network? How is that to be achieved?

The truth is that the Government face an intractable dilemma. By history, tradition and philosophy, they would prefer to deal with a nationalised industry even though history shows quite clearly that that system has led to permanent, chronic under-investment and has therefore clearly failed. By history, tradition and philosophy, they find the implications of the privatised, free market solution difficult to accept—and so they search for a third way. In this area, it seems that the third way is becoming less and less clear.

9 p.m.

Lord Whitty

My Lords, I join other noble Lords in thanking the noble Baroness, Lady Thomas of Walliswood, for initiating this debate. From the Government's point of view, its timing is particularly apposite, coming as it does fast on the heels of the National Rail Summit, which was held on 25th February. The summit brought together the operators, infrastructure companies and others involved in the railways. It crystallised the Government's determination, together with the industry, to develop a new strategy, replacing the present unsatisfactory position which in part we inherited and which in part has been due to the inadequacies of the operators and infrastructure developers.

I must get this point off my chest before I go any further. The noble Lord, Lord Dixon-Smith, tried to blame the inadequacies of the privatisation on what the Labour Party did in opposition. I am quite prepared to stand here and defend the Labour Party's decisions in government. But our decisions in opposition reflected what was clearly a rushed and botched privatisation—whether or not one believes in the principle—and we are still living with the consequences.

It is true, as the noble Lord, Lord Dixon-Smith, said, that the history of the railway network under nationalised control was not one of great or appropriate investment. However, the noble Lord neglected to say that for the last 17 years of that nationalised operation the government he supported were responsible. Nevertheless, the fact of the matter is that under neither rigid centralisation nor the present privatised system are we getting the investment we need.

The debate is also apposite in its timing because, as the noble Lords, Lord Berkeley and Lord Mountevans, pointed out, the report of the Health and Safety Executive into the Bexley freight train accident was published today. In one sense, we welcome publication of the report. We endorse its findings and recommendations, which were spelled out by the noble Lord, Lord Methuen. We view with serious concern the fact that an underlying cause of the accident was Railtrack's poor management of its contractors. We note that revised procedures have been put in place. However, the report demonstrates that Railtrack needs to invest in maintenance and that its procedures must not put profit before safety.

Although Railtrack, as the operator of the network, has the prime responsibility for ensuring the safe operation of the railways, we continue to look to the HSE and to the Railway Inspectorate, by continuing their independent monitoring and investigation of rail safety, to ensure that Railtrack and the train operators meet their commitments and that safety standards are maintained and, where possible, improved. That point was raised by the noble Lords, Lord Methuen and Lord Mountevans. In the case of Bexley, the HSE and the Railway Inspectorate will ensure that all the report's recommendations are implemented and acted upon. Ministers are determined to ensure that, as part of improving the railways, safety is not compromised.

The noble Lords, Lord Mountevans and Lord Hooson, and the right reverend Prelate the Bishop of Hereford referred to the safety structure. We have instigated a review of transport safety arrangements, as announced by my colleague, Dr. John Reid, on 8th December. The Health and Safety Commission has also brought forward its planned review of the arrangements for setting and regulating railway safety standards. We need to consider also the extent to which Railtrack's role in enforcing as well as setting its own standards might be transferred. The initial response of the HSE is expected in the spring. The first of those broader assessments is also looking at the system of inquiries, to which the noble Lord, Lord Mountevans, referred, and which may need some degree of improvement. We can never become complacent when considering safety issues. Railtrack and the railway system as a whole have a much better safety record than do many other modes of transport. Nevertheless, when accidents occur they are serious. We are committed to ensuring that the safety regime is appropriate and the best possible.

I return to the subject of the National Rail Summit and investment, which has been a central concern of the debate. At the summit the Prime Minister made clear in his opening speech that the Government believe that the railway industry needs to start doing better and that it needs to start doing so now. He said that there had to be an improvement in two key areas, in service and—the subject of this debate—in investment. My right honourable friend the Deputy Prime Minister then went about, to quote the noble Baroness, "knocking heads together"—he is quite good at that—which led to the summit resulting in a co-ordinated approach. That also indicates that at the highest level in this Government there is some understanding of the kind of frustration about the present system which the noble Lords, Lord Hooson and Lord Geraint, have experienced, along with many hundreds of thousands of other rail travellers.

The summit resulted in a commitment from the rail industry which has stated that investment is already increasing and that some 1, 800 vehicles, trains and carriages have already been ordered and will be operative in the next two years. Railtrack states that its current investment programme, to which the noble Earl, Lord Leicester, referred, is to spend £17 billion by 2007, which is the biggest-ever investment programme undertaken by a UK company in this country.

Nevertheless, despite that level of commitment, the Prime Minister's message was that there must be more investment, not just to replace existing capacity but to expand in a way which addresses the issues of capacity raised by the noble Lord, Lord Dixon-Smith, and perhaps even the specific issues raised by the noble Lord, Lord Methuen, though I doubt all of them. Without that investment, in the face of growth in passenger numbers and rail freight, which has been impressive over the past few years, we run the risk that the railway network will lack the capacity to sustain the Government's integrated transport policy to relieve roads, congestion and air pollution.

At the summit the Deputy Prime Minister launched a "spring clean" package for the railways aimed at providing a new railway architecture, putting passengers first and creating a better integrated public railway service. He announced that the Government were prepared to renegotiate existing franchises and specified criteria against which applications would be judged. One of those would be the extra or accelerated investment which renegotiation would generate, which would give the franchisees a longer period—a point raised by the noble Viscount, Lord Weir—and the extent to which that investment could meet passenger needs.

The Deputy Prime Minister also introduced Sir Alastair Morton as the new chairman of the British Railways Board and head of a shadow strategic rail authority. The appointment of a new franchising director and rail regulator will follow. He also launched the consultation exercise which will lead later in the year to the shadow SRA's plan for the railway. He also announced the start of work on a national passengers survey and on ways of measuring more accurately train operators' performance. He promised legislation to establish the SRA on a statutory basis—an SRA which would also regulate the rolling stock leasing companies if they do not voluntarily restrict their market power.

For its part the railway industry gave a commitment that punctuality and reliability—the biggest current problems as the noble Lord, Lord Hooson, pointed out—would be better next year than they are now. Other commitments from the industry were that there would be investment in 2, 300 new vehicles so that by 2002 half the current rolling stock fleet would have been replaced or refurbished; by April next year all stations in Great Britain will have passenger information systems; and, on the safety side, an extra £39 million will be spent on measures to improve the security of passengers.

Those commitments build on the action plan agreed in November. The summit shows that the industry can come together to discuss how to provide a better rail service and increased investment in partnership with the Government. It demonstrates how, despite the fact that there have been failings on all sides in the past and currently, we ought to move away from the blame culture and pull together to achieve our common objectives, being frank with each other but also making commitments to each other which are real.

It is also important that the summit was seen as part of the railway's contribution to an integrated transport policy. Last July's White Paper was an important document. At its heart was the policy of integration. Rail transport's role, as noble Lords have said, is not only to shift cars off the roads and provide a real alternative to motor transport; it is also to improve the efficiency of our freight system, to improve the economies of distribution as a whole and to contribute substantially to environmental improvements, and to provide an interface with other modes of transport, be they bus, road or pedestrian. Therefore investment is not just in railways but in the interface between railways and other modes.

My noble friend Lord Berkeley expressed a degree of scepticism about Railtrack's commitment and the noble Earl, Lord Leicester, expressed the belief that Railtrack was moving in the right direction. Either way it is clear that Railtrack is responsible for the stewardship of and investment in the railway infrastructure and the system we have. Under the conditions of its network licence, it is required to produce an annual statement—its network management statement—covering a 10-year period with greater detail given for the first three years. The Government look to the rail regulator to monitor Railtrack's investment, the form of the NMS and the period it covers, all of which have to be approved.

Over the past two years the regulator imposed certain conditions on Railtrack to improve the company's accountability and to place it under explicit obligations. In September 1997 Railtrack's network licence was modified to require it to maintain, renew and develop the network in a way which meets the "reasonable requirements" of train operators—both passenger and freight—and of funders. The condition in its network licence makes Railtrack explicitly accountable to the rail regulator and in effect to the train operators and the funders of the railway network for its stewardship.

Nevertheless, it is fair to say, as the noble Lord, Lord Mountevans, said, that the 1998 NMS in practice contained few firm commitments on investment for future years. As a result, further conditions were imposed by the regulator last July. Railtrack was then required to improve its network performance—reducing delays it caused—in 1998 by 7.5 per cent.; to eliminate poor track quality by April 2001; to produce plans aimed at addressing key capacity bottlenecks; and to improve the consultation process with train operators.

Railtrack's new NMS is due to be published towards the end of this month. Many of the issues raised by noble Lords will be addressed in that new plan. The ball is very much in Railtrack's court. We hope and believe that it will have learnt from last year and that the 1999 NMS will meet the needs of the industry, and the broader points raised in this debate and, indeed, by Ministers at the rail summit.

My right honourable friend the Minister of Transport made it clear that the Government will be looking closely at the 1999 NMS to see whether Railtrack's proposed investment is sufficient. The rail regulator will also be looking at the NMS carefully and will be looking for the shadow SRA's view on it and on the outputs it wants Railtrack to provide. We expect the rail regulator to take appropriate action to ensure that the network is maintained, renewed and developed in a way which meets the reasonable requirements of the industry and of its ultimate passengers. In doing so, it will need to provide more information than has been the case in the past. However, I believe that Railtrack is apprised of that fact.

In the immediate terms of the NMS and in the longer term, one of the major problems addressed in this debate is the fact that, although investment is desirable, there are constraints because of the long timescale of return and other market constraints on the funding of that investment. One of the messages of the summit was that we are all—that is to say, Government and those in the industry—prepared to talk about how, together, we can provide better funding arrangements, such as the infrastructure investment fund, and so on.

However, investment in infrastructure is still primarily Railtrack's responsibility. It is Railtrack's job and a requirement of its licence. Indeed, Railtrack understood the situation when it took on that licence. Of course, it does have to operate in the market. I do not wish to enter into a debate about whether Railtrack needs a strong share price or a stronger one than it has at present. The regulator has a view on that and has said that the profits of Railtrack are in excess of what could reasonably be expected. That suggests that there is at least some money which perhaps went to shareholders rather than being spent on investment in rail. That is one source of investment, but we also need to establish confidence in the railway system as a whole so that capital markets can see a return, albeit a long-term one, and that that return is reasonably assured.

I shall now address the question of access charges. The rail regulator's periodic review of access charges will shortly be released. The NMS will be a key input to that review. The regulator has made it clear that he wants to use the review to promote investment in growth in rail services and to improve the performance of the network. The Government have obviously endorsed those objectives. We expect the regulator to put in place a charging structure which imposes incentives on Railtrack to invest properly in the future of Britain's rail network.

The rail regulator's work is continuing. Last December, he published a key document on the financial structure for Railtrack, leading to decisions on access charges from the year 2001. He concluded that the current returns earned by Railtrack are excessive and said that where new investment is underpinned by government subsidy and assurances, returns should be lower. If Railtrack is exposed to genuine risk, higher terms and higher returns would be justified.

So the rail regulator has made it absolutely plain that the profits of Railtrack are in excess of what can reasonably be expected. That is already in the pipeline, but let us now look briefly to the future. We shall have a shadow strategic rail authority from 1st April. We are committed to bringing forward legislation in due course. I noted the views of the noble Lord, Lord Cadman, on our priorities, but we are where we are. As of now, the timing of that legislation, whether it be this Session or the next, is at least in part in the hands of your Lordships.

Among other things, the strategic rail authority will promote railway use, plan the strategic development of the network for both passengers and freight and promote integration between transport modes. The legislation will also give the authority and the regulator new enforcement powers so that they can impose penalties or conditions upon train operators and Railtrack more swiftly, and penalise past breaches of franchises and licences.

Several noble Lords indicated a feeling that rail freight should not be seen as the poor relation on the railway. There has been an impressive improvement in the level of rail freight in this country. Both the operating companies and those who use them are to be congratulated on a more effective way of shifting freight which is more appropriate to an integrated transport policy. We need to develop those provisions for rail freight. We believe that Railtrack needs to take into consideration the needs of the freight industry and that the new regime we are proposing will allow it to do so.

A number of other detailed points have been made, notably on the West Coast mainline which usually features fairly large in these debates. Railtrack is currently taking forward the first phase of its passenger upgrade programme and Virgin Trains has submitted an action programme to the franchising director indicating how it intends to improve its performance. There are capacity problems on that line which Railtrack needs to attend to.

The noble Lord, Lord Dixon-Smith, mentioned issues relating to the London Underground which I was quite relieved the noble Baroness did not mention at the beginning of the debate. All I will say at this point is that negotiations on the PPP are complex and detailed. It is a case of "watch this space. "For the moment I shall not go further than that. I shall certainly not comment on newspaper reports on these matters which in my experience leave a little to be desired.

This has been a good and informed debate. Without engaging too much in a blame culture—as I mentioned earlier—I should say that Railtrack now understands that certain responsibilities exist and it is now taking those on board. We must move into a new era under a new regime where the operators, Railtrack and the Government all accept their responsibilities and all look for the resources which will be necessary for investment, identify the priorities and move together to ensure that we have a railway system which is appropriate for the integrated transport needs of the 21st century.

9.21 p.m.

Baroness Thomas of Walliswood

My Lords, I wish to thank all those who have taken part in the debate. I, like others, was particularly glad to hear from those who are not normally counted among the usual suspects in these debates. I refer to my noble friends Lord Steel and Lord Hooson and in particular to the contribution of the noble Viscount, Lord Weir, who added a fresh and distinctive historical and financial perspective to our debate.

We were reminded once again what an extraordinary expert in these matters the right reverend Prelate is. How he fits rail and the countryside in with all his other responsibilities I am not quite sure. We did not touch on the Underground. That was partly because—the Minister will perhaps be relieved to hear—my noble friend Lady Ludford was not able to be present tonight. Otherwise I can assure the Minister he might have been challenged on that subject, and no doubt on another occasion he will be. For the moment at this late hour I thank the Minister and everyone else who has taken part in the debate. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.