HL Deb 14 January 2001 vol 630 cc854-70

4.14 p.m.

Lord Falconer of Thoroton

My Lords, with permission, I shall repeat a Statement made by my right honourable friend in another place. The Statement is as follows: "With permission, Mr Speaker, would like to make a Statement on the strategic plan for our railways which was published this morning by the Strategic Rail Authority.

"Its publication comes at a time when industrial action is being taken against a number of the train operating companies. It is not for the Government to intervene directly in disputes between private companies and their employees.

"However we do believe that in this day and age disputes of this nature should be settled by negotiation and not strike action which harms the travelling public and in the longer term has the potential to damage the railway industry itself.

"In these circumstances, the interests of rail passengers must come first and, as the Prime Minister said last Wednesday, arbitration and the end to strike action would be the best way forward.

"Mr Speaker, despite the efforts and commitment of many dedicated and motivated individuals who work in the industry, we do not have a railway system which is fit for the 21st century. This is due to two principal reasons. First, our railways have been subject to consistent under-investment for almost three decades. In the 1970s and 1980s, there was an environment of political disinterest as far as the railways were concerned. This led to limited funding and investment; a situation which continued during privatisation in the 1990s.

"The second reason for under-performance is the failed privatisation that was Railtrack. Five years after privatisation, Railtrack still does not have a register of its basic assets: track and signals.

"Costs of the West Coast Main Line escalated from £2 billion to perhaps some £7 billion and it is only now with a new management at the top that the total mismanagement and failure to deliver on this project is becoming clear.

"There has been a lack of investment in track maintenance, cruelly exposed at Hatfield, while at the same time £700 million was paid in dividends to Railtrack shareholders. Both of these—the lack of investment and the failed privatisation—have now been addressed by the Government. As the Director General of the CBI Digby Jones said this morning, nettles are at last being grasped.

"The total investment each year over the next 10 years will average £4.3 billion in today's money. This contrasts with £1.44 billion in the final five years of the last Tory government. The total subsidy from the Government to the industry will increase to an average of £2.94 billion a year at current prices, directly and indirectly supporting the increase in investment.

"We have said that we will provide £33.5 billion of public money to invest in our railways. The original provision in the 10-year plan for transport was £29 billion.

"The placing of Railtrack into administration on 7th October by the High Court means that we now have the opportunity of seeing a new licence operator for the network who will have one overriding priority: to put the interests of rail passengers first.

"So it is against this background that the strategic plan is being published. It is just a start but important because it is the first long-term plan for the expansion of the railway for nearly 50 years. It sets basic objectives, allocates funds, identifies priorities and sets a clear timetable for delivery. The plan forms part of this Government's agenda for modernisation of those essential services on which the public depend.

"Our approach is clear across all key public services, whether in health, education, the fight against crime or in transport. We invest in reform and insist on results.

"Between now and 2005, the priorities outlined in the plan reflect the need to tackle current problems of poor performance and lack of reliability; to develop a new structure for the industry; and to implement much needed improvements across the country.

"Specifically, 1,700 new coaches will be delivered by 2004 to replace 30 year-old slam-door rolling stock on the South Central, Connex South East and South West Trains routes.

"By the end of 2003, the train protection warning system will be completed preventing trains going through danger signals; £400 million will be provided for a rail performance fund to help secure short term improvements; and £430 million will be available for local schemes under the Rail Passenger Partnership programme.

"There will be major infrastructure and rolling stock investments in the West Coast Main Line and cross-country routes. This will lead to significant journey time reductions on the West Coast and frequencies on cross-country services will be doubled which will be of real benefit to major regional centres like Birmingham, Liverpool, Derby, Bristol and Plymouth.

"There will be improvements at 1,000 stations. A new approach to franchising will be adopted that reflects the priorities of passengers and achieves a balance between getting the basics right in the short term with the need to invest for the long term.

"The strategic plan contains a delivery commitment for each of the franchise areas showing in detail the improvements to be made and the time-scale for their implementation.

"In the medium term the plan shows how to achieve the three core targets for the industry of increasing passenger growth by 50 per cent, freight by 80 per cent and a reduction in London area overcrowding. It also sets out a broader range of objectives including improvements in safety, performance and quality.

"While the plan rightly focuses on the short and medium term, it is vital to plan for the long term. Major projects require detailed planning and analysis, robust contracting and strong and competent project management and delivery. The plan makes provision for development work now towards longer-term potential projects. These include major infrastructure improvements to the Great Western Main Line, new airport links, London CrossRail and a new north-south high speed line.

"Major investment must be directed to where it is most needed. Passenger demand is highly concentrated by market and route. Around 70 per cent of all passenger journeys made nationally use the network in the South East. This means that we must focus investment on the main routes, both inter-city and commuter, which serve London.

"With the scale of investment provided in the 10-year plan we can meet the needs of London and the South East without diverting funds from the regional network. In addition, the refranchising of regional franchises, almost all of which come to an end shortly, will provide the opportunity to improve services. The regional networks will also benefit significantly from the doubling of frequencies on cross-country services.

"A particularly key role in the forward planning of the railway is being played by the devolved administrations in Scotland, Wales and London.

"My colleagues in Scotland welcome this document and the vision it contains of a safer, better and bigger railway system for Scotland in the future. The SRA's plan is designed to meet the needs of Scottish passengers and freight customers and contributes to the delivery of the Scottish Executive's document Strategic Priorities Pr Scotland's Railways.

"Many of Scotland's priorities are addressed in partnership with the Scottish Executive and with Strathclyde Passenger Transport Executive. In particular, the plan includes reference to the development of Waverley station in Edinburgh to provide more capacity and better passenger facilities; and to work on rail capacity in the Central belt and on rail access to Glasgow and Edinburgh airports.

"The Welsh Assembly is making a significant contribution alongside that which is planned by the Strategic Rail Authority over the next five years in enhancing rail infrastructure especially on Valley lines and the Cambrian line.

"The Wales and Borders franchise is being taken forward as a priority in the strategic plan. This provides a real opportunity to increase the quality and frequency of services and I expect the new franchise to be operational early next year. A good start is being made with the reopening of the Vale of Glamorgan line from Barry to Bridgend.

"Wales will also benefit from the commitments made on strategic services into London including new rolling stock and track improvements. This is vitally important in improving communications for people in Wales as well as attracting business arid leisure travellers to Wales.

"The Mayor for London is about to issue directions and guidance to the Strategic Rail Authority which will place a priority on better integration of railways with Tube and bus services and with increased frequencies.

"We also need to do more to encourage freight onto the railways. I recognise that a key element of this is intra EU freight through the Channel Tunnel.

The House will be aware of attempts to enter our country illegally through the tunnel. We must ensure that this does not happen and we will continue to press the French authorities to provide the necessary security—both physical and through police presence—at the freight yards on the French side. We have made good progress on Eurostar and that needs to be matched on freight.

"Under the plan the freight facilities grant will be relaunched and there will also be a £300 million fund aimed at small scale freight schemes.

"Britain's railway is essential to the country's economic success, social development and environmental sustainability. Every day the network carries 2.5 million passengers and 400,000 tonnes of freight. Each day Liverpool Street station alone handles as many passengers as all the airlines carry through Heathrow.

"The railway industry is itself a key industrial sector employing 130,000 people. An efficient rail system would relieve road congestion and improve the competitive position of British industry. Travelling by rail is six times safer than travelling by car for each mile travelled. Rail is Britain's most extensive and co-ordinated national public transport system.

"For these reasons we need a railway that can deliver for our people and our country: no more vague aspirations or grand visions strong on rhetoric but weak on delivery. This plan is an agenda for action. It shows what will be achieved for the large-scale investment we intend to make over the next 10 years. The Strategic Plan for Railways draws a line in the sand and represents the point at which we say, 'Enough is enough'. Let us take the action necessary and get on with delivering a railway which is fit for the 21st century and for the country with the fourth largest economy in the world. This plan will make an important contribution towards achieving that objective, and I commend it to the House".

4.26 p.m.

Baroness Hanham

My Lords, first, I thank the Minister for bringing the Statement to the House today. It is good for all of us to know that the Secretary of State has returned, presumably well refreshed. from his sojourn in India in time to present it in another place.

The travelling public have not fared quite so well since in his absence many passengers have been standing waiting for non-existent trains on cold arid dismal platforms while the country's rail service is subjected once again to the sight of shop stewards bringing the rail service to a halt, with strike after impending strike. No doubt the Government will feel compelled soon to deliver the sandwiches and beer bromide at No. 10. The noble Lord rightly says that we need a transport service fit for the 21st century but whether or not we get it depends on more than the production of 10-year plans and strategic statements. It depends on the building of confidence both for the investment required and in the public's mind.

The Government's handling of the rail services over the months since October has been nothing short of shameful. As the Prime Minister rightly realised in his statement yesterday. the travelling public will be unforgiving about the rail service—a service which the Government now have, effectively, renationalised and for which they will be held accountable at the next election, as the Secretary of State said.

The strategic plan produced by the Strategic Rail Authority—only a summary of which we have been given so far—prepared presumably largely under the auspices of Sir Alastair Morton since the new chairman was appointed only as recently as October, indicates the growth in passenger numbers which has taken place since Railtrack was originally formed in 1995. There has been a systematic increase in numbers from 29 billion passenger miles travelled in 1995 to just under 40 billion in 2001. That is scarcely a disaster and has occurred largely under the much-derided arrangements put into place by the previous government which survived until the Secretary of State put Railtrack into administration and upset the entire apple cart.

The chairman set out a vision for Britain's railways of sufficient trains running with sufficient passenger capacity; trained and motivated staff; improvement of the whole journey experience; safe and welcoming stations; reliable and clean trains; and predictable and relaxing journeys. We would all sign up to that. But can the Minister explain what will bring about this vision? One of the main components of the piece, Railtrack, is currently in administration. Its successor was first expected to be in place within three to six months. That has now extended to about the end of 2003. Can the Minister give more information on the timescale expected before the successor company is in place?

Investment in the railways has been trumpeted at £34 billion, but it has been acknowledged by the Strategic Rail Authority that at least 80 per cent of that funding is money which is already tied up in current expenditure. Indeed, it is also apparent that the additional £4.5 billion of extra money which has been promised by the Government and to which the Minister referred is not new money, but incorporates spending commitments which the Government had previously promised to Railtrack; namely, freight upgradings and spending announcements made previously by the former Rail Regulator. Can the Minister give details of what extra money will be made available to support the rail system? It seems certain that there is no new cash in the system, but if there is, could he please point us to it?

Can the Minister tell the House how many of the initiatives which he has announced regarding new rolling stock and safety measures, as well as the other measures he mentioned, have already been announced? Can the Minister also give details of what is expected to be the make-up of the new company to run Railtrack? Does he believe that the actions of the Government so far, which have undermined confidence in the City, can be overcome sufficiently to ensure that private sector investment will be achieved? If not, what will be the future for the railways?

Does the Minister agree that the £34 billion which will be required from the private sector to achieve the 10-year plan is already in jeopardy as a result of the actions of the Secretary of State? Is not the situation that the short-term priority of the Strategic Rail Authority will depend on the new Railtrack company, and that the strategic vision will be worthless unless that is resolved? The Strategic Rail Authority itself has said that the plans can be implemented only if the new Railtrack is funded like the old. That statement is included in the summary.

The travelling public are seriously fed up with the railways. In London, travellers are as or even more fed up with the Tube, where no decision has yet been taken about the public/private partnership. Indeed, there seems to be some disagreement between the Prime Minister and the Secretary of State as to whether the PPP is even going to go ahead. One of the targets of the Strategic Rail Authority is to increase passenger numbers by a further 50 per cent in order to reduce the numbers travelling by car and thus relieve congestion, but if the capacity of trains coming into London is increased before the Tube is improved, what are people going to do? I do not believe that Ken Livingstone's dependence on increasing the number of buses is likely to provide a reasonable alternative solution.

The plan is long on expectation and short on reality. The chairman and the Minister have said the same thing; that it draws "a line in the sand". However, I think that many people, passengers in particular, believe that this will be shifting sand at best, a quagmire at worst.

In closing, I do not know whether the Minister has time for crossword puzzles, but if he has, he might like to ponder on an anagram of the words "Tony Blair"—"not by rail"—an epitaph which many of those who use the railways may savour.

4.34 p.m.

Lord Bradshaw

My Lords, I thank the Minister for repeating the Statement made in another place. Over the weekend, I read a book written by Sir Felix Pole, a former general manager of the Great Western Railway who was, I believe, the best general manager of any railway company. He commented that it was pride in doing a job properly that formed the most important element which had to permeate through an organisation. It is not about financial incentives for managers and it is not about payment, provided that it is adequate. It is about knowing ultimately that a good job has been done in serving the people one has set out to serve.

I shall return to that theme, but first I should like to say that I endorse the plan where it points out that a period of stability is needed. That is needed more than anything else. The railway industry is no place for cowboys and it is no place for people with short time-frames. That is because the returns which can be earned from railway investment are never available within one, two or three years. That point was underlined by Felix Pole in his book. One must invest for profits in 20 or 30 years' time, not for next week or the week after. For that reason, I take issue with the need to increase competition and contestability which is outlined on page 14 of the new strategic plan. That is not what we want; possibly at the outset we need to see competition between the serious contenders, but we do not require the kind of short-term competition that we saw as a result of privatisation, which delivered a large number of franchises to those more interested in getting rid of staff and implementing other short-term cost-cutting measures, inevitably leading both them and the railways into trouble.

I shall give an example of such a perverse incentive. Under privatisation, the cost of repairing or replacing a bridge has doubled because half of the costs must be given to the train operators while half the costs go to the bridge. As a result, the cost is doubled and the same amount of work costs twice as much money to complete under privatisation as it used to cost under the nationalised British Rail. There are many such perverse incentives with regard to the railways which need to be taken out of the system if we are to provide rail services that will work.

The plan mentions that the SRA and the Rail Regulator have begun the process of working together. While I certainly should like to endorse the need for them to work together. I ask the following question: can we not use the CAA model in the railways, where economic regulation and safety regulation are both contained under the same heading—that is, under the SRA—so that we do not have a diversity of regulators interfering in the industry? Rather we should have one chairman who will answer for the industry as a whole rather than for part of the industry, or whose wishes could be contradicted by another regulator who is responsible for only part of the system. The plan refers to the fact that next year the HSE is to publish a health and safety strategy for the railways. However, that kind of document should be published by railwaymen, not by a body outside the railway industry. That is because things slip by and it is not possible to substitute proper, forward-thinking regulation for "after-the-event" regulation.

We need to look hard at the performance regimes for the railway. To that end, I am pleased to see that, at last, the passenger service requirements—PSRs—attaching to train franchises are to be re-examined. If they are interpreted too rigidly, then all flexibility is taken out of the timetable, making it impossible to path extra trains into it. In fact, that is exactly what has happened on the West Coast Main Line and—referring to a comment made by Richard Bowker in a conversation between us with which I agree wholeheartedly—there is no problem of capacity on the railways that an operator and engineer could not solve. However, if such problems are given over to lawyers and accountants, who are proliferating in the industry, then they will certainly not be able to provide

solutions because they will impose all kinds of' rigid rules that cannot be bent and flexed so that the original problem can be dealt with.

The paper dismisses vertical integration too easily. I know that a number of people do not like the idea, but it is an essential component if we are to get the grain operators and engineers co-operating together in modernising the railway. I spent my life working on the railway and I know that that is a fact. It will get rid of the many interfaces which exist on the railway and, as long as there is a method of resolving disputes—in which I was involved four or five times in my career as a general manager and as an operating manager—it will work.

I hope that this is not taken as a plan for London alone. Specific reference has been made to Scotland, but I have shown my noble friend Lady Scott that Railtrack, or its executors, has abandoned four schemes in Scotland, one of which has been mentioned, owing to a shortage of signal engineers. I endorse the idea of recruiting into the industry and training operators and engineers. There are nowhere near enough people who know about railways. There are plenty of people who can tell you what not to do legally or what not to do accounting-wise, but there are too few people who can tell you what to do railway-wise.

I welcome the idea of a new north/south route. However, I am afraid that we will get into a planning morass unless something is done quickly to repeal the Transport and Works Act because at the moment it takes ages to get anything done. With all due deference to the profession of the Minister, it is a meal ticket for lawyers but it does not get things done.

I hope that in the future we will have "rolling" franchises—that is, franchises which are awarded on the basis that there will be no end to them provided that they are carried out satisfactorily—because it is very difficult when you come to the end of any franchise, not only a railway franchise, to hand it on to a new person.

I note the sections in regard to airports, South West Trains and connections to the west of London airport. We should look again at landing charges at airports as a means of funding these projects.

I am pleased that there is much mention of freight, but I want to see progress on Fréthun. As to vehicle acceptance, a lot of rolling stock is not being used and we need to upgrade the power supplies on Southern Region.

Many consumers have been very inconvenienced lately by strikes. Industrial relations legislation tends to assume that there are only two people involved in disputes—the employee and the employer. But there is someone in the middle—the consumer—who is often forgotten in everything we do. People should go to arbitration—and, if necessary, they should be compelled to go.

4.43 p.m.

Lord Falconer of Thoroton

My Lords, I am grateful to both noble Lords for their responses. In particular, I am grateful to the noble Lord, Lord Bradshaw, for his constructive response to the strategy. I was not sure whether the noble Baroness, Lady Hanham, supports the strategic plan.

The noble Baroness asked what will deliver the strategic plan in the short term, the medium term and the long term. The answer is that, first, leadership—which Mr Bowker is more than happy to undertake—will deliver it. Secondly, there will be investment of the money announced in the 10-year plan, coupled with the £4.5 billion extra that has been announced since then and private sector investment. Thirdly, there will be an identification of strategic priorities.

As everyone recognises—including Mr Bowker and the Secretary of State—this is only a beginning. We need a beginning such as this, where there is leadership and commitment. As Mr Bowker points out, commitment was profoundly lacking in the 1970s, 1980s and the early 1990s in relation to an expanded rail network. That is what we have now. So, in answer to the question of what will deliver the strategic plan, it is leadership, investment, strategic planning, the setting of priorities and then delivering them.

The noble Baroness then asked about the spending position and whether any new money is identified in the plan. The answer is that no new money is identified in the plan. The position is as follows. The 10-year plan identified public sector investment of £29 billion in relation to rail. That increased by £2.3 billion in an announcement made in October 2000. It went up by a further £1.5 billion in an announcement made in April 2001. At the same time as that £1.5 billion announcement was made, a further £462 million was allocated to freight. In October 2001, an additional £154 million was allocated to CrossRail, and in November 2001 a further £290 million was allocated to the SRA. This has increased the public sector money allocated to rail in the 10-year plan from £29 billion to about £33.6 billion.

The noble Baroness asked about new initiatives in relation to the strategic plan—in particular, about new rolling stock and so on. The new cash has been announced already along the lines I have indicated. The rail performance fund is new and the rail passenger partnership has been expanded. She asked what will encourage the private sector to make an investment of something in excess of the £30 billion referred to in the plan. The view expressed by the Strategic Rail Authority, chaired by Mr Richard Bowker—who is a man with profound experience of the railway industry—is that it will invest. Long-term commitment by the Government, investment, strategic planning and leadership is the kind of landscape which will encourage private sector investment.

Baroness Hanham

My Lords, the Minister has not quite answered my question. Investment by private companies has been put in jeopardy by the mess surrounding Railtrack at the moment. My question is whether, in the light of what has happened since

October, the Minister is still satisfied that private sector investment will be forthcoming. Indeed, is Mr Bowker able to vouch that the money will be there?

Lord Falconer of Thoroton

My Lords, Mr Bowker, who is much more expert than myself and, with respect, the noble Baroness, has said that he believes that it is there. This is a strategic plan produced three months after 7th October 2001. So the answer is, yes, we believe that the money can come from the private sector. The money will come where there is a landscape of leadership, investment, long-term commitment and the ability to identify priorities for the system.

The noble Baroness ended by making reference to the Tube. In relation to the Tube—just as in relation to the rail network—nettles have to be grasped. As Digby Jones, the director-general of the CBI said this morning in relation to the railways, nettles are finally being grasped after the 1970s and 1980s when, to quote Mr Bowker in his report, there was "disinterest" in the railways. So the answer is that just as we are grasping nettles in relation to the railways, so we are grasping nettles in relation to the Tube with our proposals in regard to the PPP.

The noble Lord, Lord Bradshaw, in his constructive contribution, made two points which very much echo what Mr Bowker has said in the strategic plan. First, he referred to the need for an ethos of accountable delivery and high-quality service delivery in the rail industry. That comes right up front in the strategic plan and we thoroughly endorse that view. He also referred to endorsing a period of stability. Again that is reflected in what Mr Bowker has said.

The noble Lord referred to the disadvantages of short-term gain, which, again, was mentioned by Mr Bowker. He referred to the importance of training operators and engineers, as well as increasing the standard of engineering—a point that was also thoroughly endorsed by the strategic plan. He welcomed the new North-South proposal, but, rightly, referred to various planning problems, whether parliamentary or otherwise, that can lead to huge delays in relation to infrastructure projects where, although there must be proper consultation, there must not be such long delays as would put this country, people in business, and leisure travellers at a disadvantage because of the time taken. We agree with that view.

The noble Lord raised a number of issues, such as landing charges at airports. However, these are matters that can be discussed in the future. I should point out that the critical aim on which the strategic plan focuses is delivering certain specific targets—for example, a 50 per cent increase in the number of passenger kilometres, and so on—that are vital to ensure a rail system fit for the 21st century.

4.50 p.m.

Lord Berkeley

My Lords, I very much welcome the Statement and the launch of this strategic plan, which I believe to be comprehensive, forward looking and good for freight. I declare an interest as chairman of the Rail Freight Group. When repeating the Statement. my noble and learned friend noted that the new network licensee—Railtrack's successor, which will replace the late-lamented "cash cow", as I call it—has one objective; namely, to put first the interests of rail passengers. I hope that my noble and learned friend has not forgotten the interest of rail freight customers. Perhaps he could clarify that point.

I also very much welcome the announcement on the cross-Channel situation. Do I detect that the Government are at last recognising that this is an international problem that needs an international solution by governments? I hope that the Government are putting increased pressure on the French Government to take the matter seriously. My final question relates to leadership, which was mentioned by my noble and learned friend. I was most impressed by the introduction to this plan from Richard Bowker, who says in the foreword to the summary of the strategic plan: I will make the case for rail and for the necessary investment. I will transform the SRA into the strong leadership team that was envisaged". That is fantastic. Mr Bowker goes on to say that the industry needs to deliver—and he is absolutely right there. However, a third element is involved. In return for all this, can my noble and learned friend say whether the Government's support is there to encourage growth and value for money? That applies especially to Railtrack to enable it to get out of administration as quickly as possible and thereby ensure the necessary investment that I, too, am convinced is still there.

Lord Falconer of Thoroton

My Lords, the service provided by Railtrack, or its successor, should be for all rail users—that means not just passengers but also freight. The importance of freight is reflected in the 10-year plan and in the subsequent announcements. It is also reflected in the strategic plan published today. In relation to the Channel Tunnel issue, I confirm that it is an international problem and one that can be solved effectively only by international co-operation. That is the position that the Government have always adopted on the issue.

My noble friend asked whether it would be right for us to get Railtrack into its new phase as quickly as possible. Of course we should do so as quickly as possible. However, we must ensure that what emerges from this period is a firm, sustainable structure for the future of the rail industry.

Lord Marlesford

My Lords, perhaps I may focus the Minister's attention on the crucial figures in the Statement and the additional figure that he has just given to the House. The Minister said that total investment over the next 10 years will amount to £43 billion. He also said: We will provide £33.5 billion of public money", for investment, which I believe creates a gap of £9.5 billion. In answer to an earlier question, the noble and learned Lord stated that there will be £33 billion of private sector investment. First, can the Minister reconcile those figures?

Secondly, as regards the money that is to come from the private sector, can the Minister say how much of it will be from retained earnings from the operators and/or the new Railtrack, and how much will be new investment from the City, or wherever? Further, of the new investment, can the noble and learned Lord say how much the Government plan to be loan capital and how much will be equity capital? If it is loan capital, will it, or will it not, be underwritten by the Government? If the required capital is not available from the private sector, are the Government saying that they will provide sufficient capital to meet the full investment programme over the 10 years?

Lord Falconer of Thoroton

My Lords. as far as concerns the breakdown between public and private sector funding, the basic figures are around £33.5 billion of public sector funding and an estimated £30 billion to £35 billion of private sector funding over a period of 10 years. Obviously, that will involve an increase in the rate of private sector investment over and above the current level. Therefore, we expect the level of private sector investment to increase both proportionately in real terms and from the level it is now. I am not in a position to go through the basic breakdown of how much will be loan and how will be designated otherwise. However, I can tell the House that Mr Bowker, who, as I said earlier, has worked for a considerable time in the rail industry, and the Strategic Rail Authority believe that those assumptions are realistic. Part of the vital landscape of those assumptions is a planned level of commitment by the Government over the long-term that people who make decisions about investment in the private sector will find attractive.

The Lord Bishop of Hereford

My Lords, I have three specific questions for the Minister regarding certain matters that seem to be absent from the medium-term priorities set out on page 37 of the summary of the strategic plan. Incidentally, the noble and learned Lord may like to know that I enjoyed two impeccably punctual journeys today. One was my first journey on a Virgin Voyager and the other was by SouthWest trains to Waterloo. On the latter train, the conductor variously identified himself as Sean Connery, Roger Moore and then, as the train curved round into Waterloo station and I could see that we had been signalled into Platform 10, he said, "My name is Tony Blair and, appropriately, we are coming into Number 10". He was obviously enjoying his job.

However, as far as I can see, three matters seem to be missing from the Statement. The first is any reference to future electrification, which, on environmental grounds, is highly desirable. not least on the Great Western and Midland main lines. We are in danger of having a new generation of diesel trains, instead of a new generation of electric trains. There appears to be no mention of that development.

Secondly, in freight terms, there is no mention of the track bill that is needed to accommodate freight trains on the pinchpoints, especially through the West Midlands. Thirdly, there is a mention of gauge enhancement due for 2005 from Southampton to the West Midlands and from Felixstowe to Nuneaton, but there is no time offered at all for onward gauge enhancement to the North West, to Merseyside, to Manchester, or to Scotland. Is there no hope of any of these developments in the plan?

Lord Falconer of Thoroton

My Lords, the right reverend Prelate has asked three specific questions. Perhaps I may write to him on all three of them.

Baroness Scott of Needham Market

My Lords, I should like to refer to the issue of the single franchise into mainline stations in London. In doing so, perhaps I may declare an informal interest as a very regular user of Liverpool Street station. I should also declare a formal interest as a member of the Commission for Integrated Transport.

I very much agree with the sentiments expressed by my noble friend Lord Bradshaw; namely, that there are clear benefits to be enjoyed from single franchises into Liverpool Street station, in terms of rationalising services and dealing with some of the capacity problems involved. However, there has also been some benefit from the competition that has existed until now in terms of frequencies and keeping down the level of fares, as well as in station upgrades.

I should like an assurance from the Minister that future franchising arrangements will not throw out the baby with the bath water, and that we shall be able to hold on to some of the very real benefits that have accrued. East Anglian passengers will regard with concern lines such as London to Manchester where, since 1995, there has been an increase in fares of 80 per cent. They will also be looking at other lines where the availability of off-peak fares has been squeezed to very narrow and often almost unusable windows of opportunity; and, indeed, where plethoras of special offers have been developed very much at the expense of reasonable and affordable walk-on fares.

Lord Falconer of Thoroton

My Lords, I am not sure whether I detect a slight difference in the Liberal Democrat Front Bench in relation to the issue of competition and franchising. As is well known, the view that the number of franchisees should decrease is quite widely held through the industry. I do not detect that the noble Baroness is effectively disputing that fact. However, in so far as she is saying that there are benefits associated with the franchising system, I can say, yes; that is clear. In adopting the smaller number of franchises, one has to be clear that one is not losing the kinds of benefits referred to by the noble Baroness.

Lord Lea of Crondall

My Lords, perhaps I may return to the point raised by the noble Lord, Lord Marlesford, as it is possible to reach a somewhat different inference. It is true that there is a difference between the degree of commitment which, by its nature, can be indicated in a document such as that put out today by the Government on the one hand and by the private sector—the City—on the other. But should we not draw the inference that some kind of forum is necessary to examine how a commitment of £35 billion or £40 billion will come forward from the private sector; and that we should not merely rely on project finance, case by case, to produce that sum? Is it not the case that in France, Holland, Belgium and many other European countries there are national infrastructure banks or financial intermediaries which can bring together a public/private relationship? Is it possible to keep the door open at this stage for further consideration to be given, if any studies come forward, on the new financial intermediaries that may be needed to square the circle?

Lord Falconer of Thoroton

My Lords, it is an interesting idea and one to which my noble friend has referred previously. There is, as it were, separately from the railways merit in looking at that. The fundamental question raised by the noble Lord, Lord Marlesford, and others is: ultimately, will the providers of the finance be prepared to come forward and make it available? The view of Sir Richard Bowker and the Strategic Rail Authority is that they will.

Lord Burnham

My Lords, the Statement says that previous activities as regards the railways have been strong on rhetoric and weak on action. The noble and learned Lord has certainly been strong on rhetoric. I hope that his words do not come back to haunt him. The Statement does not refer to the most recent troubles of the railways; namely, with regard to the activities of the unions. This is remarkably familiar to those of us who were involved in the newspaper industry in the 1970s and 1980s. Then, the problem was solved—largely with the assistance of the union leader, now the noble Baroness, Lady Dean of Thornton-le-Fylde—by making the unions redundant so that they no longer had a place in the newspaper industry. There is nothing in the railway industry which makes the rail unions a vital part. What steps are the Government taking to ensure that there is no interference by the unions with the operation and activities of the railways? In asking that, perhaps I may say what an excellent service, in terms both of time and of dealing with the unions, is provided by Chiltern Railways.

Lord Falconer of Thoroton

My Lords, the third paragraph of the Statement referred to the issue of the unions. As my right honourable friend said in another place, we believe that, in this day and age, disputes of this nature should be settled by negotiation and not by strike action, which harms the travelling public and in the longer term has the potential to damage the railway industry itself. My right honourable friend reminded the other place that rail passengers must come first, as the Prime Minister had said on Wednesday. He urged that disputes should be sent to arbitration with an immediate end to the strike action. The issue of the present industrial relations problems was specifically addressed by my right honourable friend in his Statement and his remarks seem to offer the right way forward.

Lord Clinton-Davis

My Lords, if my noble and learned friend and Mr. Richard Bowker are right—namely, that there will be investment from the private sector— there is nothing wrong with that. But what happens if they are both wrong, or partly wrong? What happens if the private sector is not willing to "pay up", partly or wholly? My submission—I hope that my noble and learned friend will support it, although I doubt it—is that the Government ought to make it clear now that, in the case that it does not, the Government will have no hesitation in ensuring that the necessary investment will come from them, rather than have a hiatus where nothing happens at all.

Lord Falconer of Thoroton

My Lords, the Statement relates to the Strategic Rail Authority's plan for the future in relation to the railways. That plan posits an expanded rail service. It can be a bigger and better rail service the more money can be levered in from the private sector. Sir Richard Bowker and the other members of the authority have put forward in the plan what they believe to be the right priorities. based on reasonable assumptions. If their assumptions are wrong—and they are the people who have the expertise in this area—then it is a sensible plan. One of the vital elements that will make it work is government support. The Government have made it absolutely clear that they support the vision and the plan.

The Earl of Caithness

My Lords, the noble and learned Lord was quick to condemn Railtrack again, and in particular the rising costs of the West Coast Main Line. I am sure that I do not need to remind the noble and learned Lord that any government capital project has equal costs in over-runs. I could draw attention to the Scottish Parliament and, closer to home, the Dome as areas where government should not have got involved.

As regards private finance, will the noble and learned Lord confirm that in their figures the Government make no provision for a risk insurance premium, which might be charged by the private sector for its co-operation given the fact that Railtrack has been renationalised without compensation? Any future private sector involvement will have a risk premium attached to it. Even if that is as small as half a per cent, the Government will have to add in excess of £1 billion to their figures. Will the noble and learned Lord confirm that those costs are not presently included in the government figures? Will he also answer the specific question of my noble friend Lord Marlesford? If the private sector does not perform, will the Government fill the breach?

Lord Falconer of Thoroton

My Lords, as to a risk assurance premium, I am not sure whether the noble Earl is suggesting that the premium itself would be £1 billion. With the greatest respect, that seems totally over the top. As to the precise provision made, I shall have to reply in writing.

In regard to the question by the noble Lord, Lord Marlesford, we are talking about a plan which, if one manages to lever in private money, means that one will be able to have more funding for the railways. The plan sets out what the Strategic Rail Authority believes is the way to lever in the kinds of money to which I have referred and what should be done once that money is obtained, coupled with public sector financing. What one has, therefore, is a plan for the future, with government support. That is what the Strategic Rail Authority was charged with producing. It is not right to say, "What happens if this does not work? What will the new plan be?". This is the view of the Strategic Rail Authority about how the railways can be developed over the next 10 years, making reasonable assumptions about what the financing would be. It is a plan which has the support of the Government. The Strategic Rail Authority and the Government together believe that it will produce a better railway system.

Lord Faulkner of Worcester

My Lords. does my noble and learned friend accept that there are two aspects of the strategic plan which are particularly welcome to those of us who care about the future of the railways? The first is the recognition that transport now deserves a much higher priority on the national political stage and that the problems of the railways in particular will have a great deal of attention devoted to them over the coming three or four years. Secondly, this is the first attempt that has been made for many years to plan a railway for growth arid expansion. The motive underlying privatisation, and indeed many of the Treasury policies pursued by governments of both parties in the 1970s, 1980s and 1990s, was to plan for contraction and reducing the level of public subsidy. I particularly welcome the acceptance in the strategic plan and the Statement that the railways will have a larger part to play in the carriage of people and freight in the future.

In congratulating Richard Bowker on his impressive start, I hope that my noble and learned friend will endorse the comment in the foreword: I want to see fewer accountants, fewer lawyers and fewer consultants. Instead I want to see more engineers, more operators, more project managers and especially more young graduates, apprentices and school leavers joining an industry with a future".

Lord Falconer of Thoroton

Yes, my Lords, I thoroughly support the first part of that question. It shows the priority that is being attached to the importance of railways. I also support the second part of the question. It indicates a Strategic Rail Authority envisaging a railway system that will grow and expand. I am sure that we all want that. I also thoroughly endorse the statement that we need fewer accountants and lawyers and more young people involved in railways. We need more people committed to a big railway system. This is a plan for the future. As Mr Bowker says, it is only a beginning, but surely we respect him enough to give his plan a chance.