Rail Transport

HL Deb 21 January 2004 vol 657 cc1114-36

8.18 p.m.

Lord Lea of Crondall rose to ask Her Majesty's Government what their response is to the report prepared for the All-Party Parliamentary Rail Group by Professor Phil Goodwin on the Future for Rail.

The noble Lord said: My Lords, early last year the All-Party Parliamentary Rail Group, with the assistance of the Rail Forum, invited Professor Phil Goodwin of University College London to prepare the report that we are debating. In a nutshell, his remit was to review where things now stand on the rail component of the 10-year transport plan announced in 2000 and updated in 2002. Incidentally, the update showed huge increases in the forecast levels of road congestion. Professor Goodwin's central assessment is that, although a year ago the picture was one of doom and gloom for the railways, with calls for a new Beeching, the latest analysis suggests that we can now see light at the end of the proverbial tunnel. But I shall try not to do an injustice to what is a very careful and balanced assessment.

On the downside for rail the huge cost escalations on investment projects are still a major concern. But, on what one may paradoxically describe as the upside, the implications of growing road congestion and the logic of road pricing affecting both passenger and freight are beginning to transform the whole field of transport economics, with much more vigorous use of the price mechanism in prospect on the road side. The successful congestion charge in London, although there is much that can be said on the whole question, has helped tremendously to concentrate our minds.

Goodwin's conclusion is that very large investments in rail must continue and the rates of return on them will start to improve as the cost-benefit arithmetic and customer decision making responds to the new market signals, in particular producing a modal shift to rail in many market segments, notably InterCity and in the conurbations. Goodwin is very careful not to claim that rail is the alternative to road for every journey because clearly it is not, but in terms of rail economics there is a high degree of validity for his thesis, with a proper degree of empiricism in his approach.

The Goodwin report, with its impressive grasp of what I will term spatial economics linked to the growing desire of people and goods to move as a feature of a growing gross national product, will help to promote the intellectual underpinning of what I believe will prove to be the new policy mix for the next 20 years. The all-party group has warmly welcomed the report.

The 10-year plan, the principle of which we are all as determined as the Government to sustain, has already played a vital role. It has marked out the pitch on which the different transport modes are competing. It sets out some of the rules indicating where the referee may from time to time need to blow his whistle. We recall that it is some three years since the 10-year plan was published to a very wide cross-party welcome, and in particular the robust reasoning for the need for large and sustained sums for investment, the headline sum for rail being £67 billion—roughly half public and half private—and, incidentally, in the same ball park as overall investment on roads despite the much higher usage of the latter.

Incidentally, the Rail Regulator makes the point that it is he who authorises the actual payments through the access charging regime, but I believe it would be to throw out the baby with the bath water to deny the huge role played by the 10-year plan in setting out the ball park numbers. It is equally important to have a look at what we are getting for our money.

It was always recognised that the investment would take time to show results. Nevertheless, the 10-year plan envisaged a 50 per cent increase in passenger traffic and no less than an 80 per cent increase in freight, albeit the latter from a very low base. We also know that these targets—I use that word for want of a better— have to relate to normal questions of rates of return on capital. We cannot decide levels of investment by waving a magic wand.

This is the one time in my remarks that I will mention the relationship between the roles of the Rail Regulator, the Strategic Rail Authority, Network Rail, the train operators and, in the middle of it all, the Department of Transport. My one comment on this is that although on the face of it it seems odd that we have the regulator getting down to the detail of exactly when to extend line capacity between Rugby and Stafford, it is equally obvious, if there is a finite amount of capital which he can justify—and he has a role in putting pressure on contractors to perform—this institutional demarcation dispute, if I may use that trade union term, is not the central issue for the railways. There has already been a deluge of facile talk about it this week, with vertical versus horizontal integration, lengths of franchises, fat controllers and the rest of it.

To return to the main theme. Goodwin analyses the economics, the inter-action between supply and demand, first by considering the supply side, which is the cost and efficiency of supply capital and whether this is constrained, and the demand side, therefore the price, and hence the level of traffic having regard to the competition and changing consumer preferences.

Goodwin points out that when we ask who is to pay for investment there are only two choices: the fare payer or the taxpayer. He says that the so-called private finance is not a third way.

Perhaps there is one interesting caveat to that. One financing model—Crossrail—provides for institutions and businesses to play a part in stumping up the money through some kind of levy (for wider social and direct business benefits that they can see) and the enhanced land values and property values more generally that this new spatial economics can capture. Apropos the previous debate, although Crossrail will not be ready in time for the Olympic Games, the non-stop seven-minute journey on the Channel Tunnel Rail Link from St Pancras to Stratford will be.

Recent statements by the AA, the RAC, the Freight Transport Association and others have, for the first time, fully recognised that not only is an expanding rail sector vital for the country, but also that a congestion-charging regime on the roads will have to play a part. That is in addition to the effects of the 48-hour week limit for commercial drivers affecting road far more than rail, and, to take a different point, the implication for centralised production and "just-in-time" distribution. I am reminded of the thought that all the sandwiches in Britain are now made in Peterborough, as someone put it. For all that I know, perhaps they are—apart from the tomato sandwich that I made myself last night.

Perhaps I may raise a couple of points about road-charging regimes, showing the significant difference between the two possible scenarios. Scenario A does not have road charging on the relevant routes. Scenario B has road charging. Professor Goodwin demonstrates that the move from scenario A to scenario B is decisive in increasing the use of rail and, therefore, the rate of return on investment. It gives a decisive signal to the investment community. It is also side by side with getting a grip on costs—namely, the moment that the Treasury can start to believe seriously that there is a future other than pouring money down a big, black hole.

In a nutshell, the new paradigm sees rail continue to charge at full cost, but, for the first time, with road also charging full cost. In particular, that is a revolution from the current marginal cost perception of the road journey—in other words, the perception that, "This is only costing me the cost of the petrol"—which hugely distorts the intermodal share at present.

The report is packed full of powerful insights, of which I shall cite two. On page 11, there is the rather striking observation that the majority of investment for public transport—that is, rail—could in future be private, but that the majority of investment in private transport—that is, road building and road traffic—is public. It is pointed out on page 14 that the higher safety requirements for rail, in effect, raise the price of capital.

On pages 23 and 24 of the report, Goodwin notes—in concluding what he dubs his "digression into roads"—that capacity constraints on roads, in many cases, are also paralleled by capacity constraints on rail. If we are searching for a satisfactory policy mix, the one thing that we cannot do, in effect, is to choke off road and to choke off rail traffic at the same time through lack of capacity on rail or through pushing up fares too fast. We must put the rail capacity in before we can do the switch—bringing to mind shades of the debate about London Transport and charging in London.

From page 26, Goodwin addresses the strategic implications for rail of constrained demand for road movements. In my view, that is where we see the opening up of the most innovative and arresting part of his analysis. He demonstrates that whereas there is a rather slight impact on modal share through rail investment per se, there is a huge shift in its share, and, hence, benefit to the economics of' rail, via the introduction of a charging regime on road for the relevant journeys.

On page 26 there is the hypothesis that a reduction in car traffic of 5 per cent through a charging regime could increase demand for public transport by 50 per cent—he gives his reasons for stating that—thus transforming the profitability of investment. That will improve the economics of public transport and although it is only a hypothesis, it is a plausible one in some segments.

The argument that I have summarised is, of course, much more complex and sophisticated than that and much traffic could disappear or go elsewhere. To what extent—this is not a good example but it is a possible contrary hypothesis—would road traffic simply shift outside the most congested period and, for example, move to the middle of the night? The spectre of us all driving through the middle of the night is more than a little far fetched, although many people in the south of England already seem to get up in the middle of the night to go to work. Surely there are limits on how far that will go.

I also believe that at some point it would he useful to see an assessment of the income distribution consequences of charging regimes. Some de facto hypothecation has to take place so that the caricature figure of the man in the Bentley with the big cigar, scattering £50 pound notes left and right so that other people get out of his way, has to be combined with the principle of all the revenue going into public transport and with other measures to avoid problems for vital services, rural residents and so on. That is not an easy area about which to generalise.

In conclusion, the report is pregnant with ideas across a broad sweep. In thanking Professor Goodwin for his work, my colleagues and I are very pleased to be associated with it. I very much look forward to this short debate and the response from the Minister.

8.31 p.m.

Lord Sawyer

My Lords, I thank my noble friend Lord Lea of Crondall for introducing the debate. It gives me an opportunity to sneak in under the wire and make a little stab at one or two points that interest me. I do not mean the Goodwin report, in particular, 10-year plans, logistics or many difficult, technical and complicated matters that my noble friend excels at explaining. I want to follow on from a contribution that I made to the October debate on the railways when I spoke about people, Investors in People, customers and staff. I make no apologies for taking every opportunity to speak on this issue, given that yesterday was a big debating day on the railways for our nation and yet very little was said about people—so there is probably a need to redress the balance now and again.

My approach is that essentially business success, in whatever terms one sees it—whether in plans, investment or strategy—comes through, and with, people. The industry employs 40,000 to 50,000 people. How they are valued, managed, paid and most of all how they are respected. has a tremendous effect on the kind of railways that the public receive and how good the service is for customers.

Following the debate that we had last October, the Minister of State was kind enough to write to me emphasising the importance of people. I very much appreciate that. He also explained in some detail the Centre for Rail Skills, a new body set up in the industry, and the work that it is doing. I agree that that is important, but I want to emphasise that skills training complements investing in people; it is not a substitute. The benefits for rail companies of achieving the national standard for Investors in People may, but may not, embrace skills training. Skills training cannot achieve cultural change as Investors in People can. Cultural change is much needed if we are to deliver the kind of service that people expect.

In October I had a useful meeting with Mr Richard Bowker and his team, along with the chairman and the chief executive of Investors in People. I hope that that meeting bears fruit. Progress has been slow, not least of all because there has been much turnover in senior staff in the Strategic Rail Authority, particularly in the human resources and training positions. That always impedes progress. I am hopeful that in 2004 we shall see steady and meaningful co-operation between the Strategic Rail Authority, the rail companies and Investors in People UK. That will lead to more companies achieving the Investors in People standard and consequently there will be great change in the culture of the companies, the way in which the staff are valued and treated and, of course, in benefits to the customers. I just wanted to add that observation.

On the question of customers, I said in October that I should like each of the rail companies to publish customer survey information, but that has not yet happened. Such information should be on the websites of all those companies. I hope that the powers that be will follow that up, as it is a pretty basic request. The SRA could request it and perhaps publish a compendium on league tables of customer service, which would allow customers like me to make comparisons. It would also enable us to have an even more extensive debate about what happens to the customer, which would be better than a debate that is based on anecdotes, moans and groans, and personal experiences, all of which are no doubt as valid as mine. I hope that my noble friend can look at some of those issues to see whether progress can he made.

Finally, I want to have a brief word about something that is not often talked about, which I shall call the "passenger experience". Passengers want regular trains at the right price, but they also want a pleasant travelling experience, which is not always available. If the train is not comfortable and clean, we should discuss why that is so. I make no apologies for slipping into anecdote when I say that travelling from Charing Cross, Cannon Street, Victoria or Blackfriars stations are not pleasant experiences for customers. Trains are often dirty and ill-used. Food, litter and feet seem to take up more space on the seats than passengers more often than not. It is not unusual to find vomit and, even, urine in the passenger areas.

Perhaps we do not like to talk about that, or we find it slightly embarrassing because it is not the rail companies' fault. In essence, it must be a kind of community problem that displays ignorance and lack of respect for one's fellow passengers. Sadly, at the end of the day, that seems to be where it lies. However, the rail companies and public representatives have a role to play in finding a solution, perhaps by improving manning levels at stations and on trains. Perhaps campaigning for cleanliness and high standards of respect for one another is all that is needed, as has happened in the past. Generally, it is a matter of showing concern. I wonder whether my noble friend feels that there should be more of a public debate about the passenger experience in addition to punctuality and price.

8.37 p.m.

Lord Berkeley

My Lords, I declare an interest as chairman of the Rail Freight Group. I congratulate my noble friend Lord Lea, on securing this short debate, and on taking the lead in getting the all-party group to commission Professor Goodwin to carry out the work and then publish the report. I am sure that all noble Lords will agree that it should be a major contribution to the thinking that will surround the review of the 10-year plan. It should be essential reading for anyone who will be working on it, both within and without government. I am sure that everyone in the Chamber tonight has read it.

I shall speak on two subjects: road congestion and rail. I shall start with a quotation on Goodwin's report from the Secretary of State, Alistair Darling, who said: We will not be able to build our way out of all the pressures we will face. Road user charging has to be considered as part of sensible management of our roads". He wants to start a debate, which I welcome.

I think that that will lead quite quickly to gridlock in certain areas, and that certain areas are quite important. Trafficmaster has done some work showing that congestion on the M1 has gone up by between 75 and 143 per cent in the past five years. On the M62—the trans-Pennine motorway—congestion has risen by between 164 and 247 per cent in five years. And that is not starting from an empty road.

The quarterly survey of transport activity produced by the Freight Transport Association shows that the percentage of respondents who believe that congestion is getting worse has risen from 35 per cent to 60 per cent over the same period. The freight industry believes that congestion is worsening and I am astonished at the speed at which this deterioration is taking place.

I agree with Professor Goodwin that some form of road user charging scheme will be essential. However, I recall that the Government took a slightly different view in the Ten Year Plan for transport: they said that traffic would grow but congestion would not. At the time some of us wondered about that. My noble friend Lord Lea commented that perhaps people will do all their travelling at night. While that might be one solution, the critical problem is the location of congestion spots around the country, and it needs to be addressed.

We should accept that Professor Goodwin has identified a problem and that we need to look at the consequences. My noble friend quoted from page 27 of the report, where it notes that a 5 per cent reduction in road congestion could lead to a 50 per cent increase in public transport use—assuming that people still want to move around. I was struck by a comment made by a person at Transport for London whom I met last week. He said that the congestion charging scheme has been a success—I agree with him—and that road traffic has reduced. However, the scheme has caused people to transfer to the Underground and buses. He also remarked, "It may be that in 10 years' time the demand for buses will be so great that the bus lanes will not be able to cope". What shall we do at that stage? His solution was to build Crossrail. I shall not debate that proposal tonight, except to say that it would cover only one route. However, we have to think about future provision if the bus lanes no longer work. The Underground, as we know, is quite expensive.

I hope that we do not find ourselves debating the figures in the Ten Year Plan, pondering whether congestion will increase by X or Y per cent. The key point Ministers should accept is that the main motorways in certain parts of the country, along with London and the other main conurbations, will face a serious problem with congestion, if they are not facing it now. It has to be dealt with. If we opt for nationwide road user charging, one compensation may be that people living in the countryside will suffer from less congestion. Those with no access to public transport should see a reduction in the cost of moving around. I am sure that that would be much more acceptable.

On page 29 of Professor Goodwin's report is a comment by Sir Christopher Foster, former chairman of the RAC. He is credited with establishing the structure of the privatised railway. I am not sure whether that is a real credit, but we can leave it to one side. However, he challenges the Strategic Rail Authority to engage in a debate on the costs and charges for the use of road and rail—both direct and indirect. I think that he is right to ask for those figures. For over a year I sought information from the SRA on the costs and values of different types of rail transport—intercity, commuter and so forth—but I was told that that information is confidential because someone owns it. If we are to have a proper transport policy, one that means something, we have to be able to debate these matters on the basis of proper information.

We do not want to see another failure along the lines of the Birmingham Northern Relief Road. A previous government signed up to it and allowed the owners to charge exactly what they like for time immemorial. I am sure everyone now regrets that, so let us make sure that it does not happen again.

I turn to the railways. Clearly demand for rail transport will grow—on the assumption that people will continue to want to move around—and so we have to ask the question: can rail do it, and will the Government allow it to do so? While I welcomed the Statement made on Monday, I have a few concerns which I have already mentioned. While it is right that we review the railway, we must ensure that we do not seize upon a cure that is worse than the disease. Let us remember that the ink is not yet dry on the last round of changes.

Network Rail has been in place for around a year and is taking its contracts in-house. I shall come back to that point. The periodic review is a very important statement, made after detailed work by an independent regulator, about how much money Network Rail needs to run the network and the services specified by government for which it is contractually liable, in particular to the freight companies.

My noble friend Lord Sawyer mentioned people. He was absolutely right to do so. Those people in the railways have been subjected to unprecedented change in the past 10 years: changes of employer; changes of job; changes of management structure; changes of rules and regulations—that will not be my major theme tonight. Those changes are clearly unsettling and sometimes unnerving. We should ask whether further massive change will help them to do their job better or secure a better railway. I am grateful for the interest that my noble friend, who has enormous experience, is showing in the issue.

Since the Statement was repeated on Monday, we have heard predicable reactions. Many people have demanded that magic wands be waved instantaneously. I was pleased to see that the Health and Safety Commission bravely welcomed the review. However, it recommends that, safety should be truly independent". I agree with that. It also recommends that safety should be, free from … economic pressures". What is it trying to get at? Does it want a gold-plated railway that it will not fund? Nothing can be free from economic pressures, as has been said many times.

As for being "able to hold the industry to account", it does so in a confrontational and unhelpful way. Half the reason for our current problems is everybody's fear of being taken to court for something or other. I agree that the rail safety watchdog should be independent, but I shall submit information and evidence to the Government that show that a change is necessary.

Let us consider for a moment whether structural change is essential to deliver what we want, or whether a change in management, responsibilities and obligations is more important. I could speak further about safety. It needs to be independent, whether it be overseen by the Department for Transport or by a new regulator. We can debate that at length.

There is a problem with the role of the SRA and Network Rail. There is overlap and confusion, which should be resolved. We can debate that issue later as well. Network Rail has taken maintenance in-house, which has more than doubled its staff in six months in a safety-critical area. I understand that some of the staff and managers from the contractors do not want to move. I worry about the continued safe maintenance of the railway while that is happening. Taking work in-house is a brave decision and I am sure that it will save money in the long term. I worry about the process, but I hope it works.

Nevertheless, 10,000 or so rules and standards will need to be removed or amended if they do not meet the criteria that we and Ministers have mentioned. There are many examples, but I shall not go into them at this late hour. However, there are 10,000 of them. It requires a task force drawn from Network Rail, the Rail Safety and Standards Board and others proactively to challenge them. It should challenge not just the HSE, which does need to be challenged, but its own people as well. It also needs strong support from Ministers and the SRA.

There have been calls for vertical integration and for TOCs to run the infrastructure of the railway. What makes them think that they can do it better than Network Rail does now? I read in the press this week that the TOCs have suddenly discovered that they are short of drivers, but I shall not go into that. The TOCs appear not to have quite understood that Network Rail is under severe financial regulatory pressures. I suggest that they are not always under the same pressures. If there is to be vertical integration, let EWS run the Midland Mainline; let Freightliners run the Southampton to Birmingham route; let GB Railfreight run the Great Eastern; and Direct Rail Services the West Coast Main Line, northern branch. That is no more stupid than the suggestion that the passenger people do it. That would mean massive change.

I suggest that, rather than massive change and years of uncertainty and cost, it would be useful first to improve communications, to change attitudes and to define responsibilities clearly. That suggestion applies also to the SRA.

The railways are consumed with bureaucracy—much of it self-inflicted, I accept. Some in the industry are fearful, as I have mentioned. Nobody seems to know who is doing what and few are prepared to speak out, for good reasons. However, improvements are taking place. Network Rail has existed only for a year.

I suggest that the problems faced by the rail industry are to do with management and communication. I hope that it will be given the chance, under a great deal of pressure from Ministers, to solve those problems before the Government press the nuclear button and plunge the railways into another five years of uncertainty.

8.50 p.m.

Lord Faulkner of Worcester

My Lords, it is unusual for an Unstarred Question to be so extraordinarily topical as that of my noble friend Lord Lea of Crondall today. I congratulate him on his timing and on his speech. Like my noble friend Lord Berkeley, I pay tribute to him for his persistence in persuading the other members of the All-Party Rail Group to commission the report produced so ably by Professor Phil Goodwin. I declare an interest as the group's treasurer and as someone who has had an association with the railway industry for more than a quarter of a century. I also add my appreciation to the Railway Forum, which paid for the report but had no influence over its content and its conclusions, which are Professor Goodwin's alone.

I suggest that our task today—rather in the way that my noble friend Lord Berkeley has done—is to put the report into the context of the announcement made by the Government on Monday and to draw particular attention to the findings and recommendations that will best inform the review that is now taking place.

I should also like to draw the attention of the House to some lessons that we learnt at the British Railways Board during the 20-odd years that I worked there from 1977 onwards. It is a pity that, once again, we shall not have the benefit of hearing in the debate from the dozen or so former Conservative transport Ministers who are Members of the House, particularly those who were responsible for the privatisation of the industry in the 1990s. But it will be nice to hear from the noble Lord, Lord Luke, none the less.

It is perhaps significant that the only one of the former Ministers who intervened during the discussion on Monday's Statement was the noble Lord, Lord Peyton of Yeovil, whose period as transport Minister I was happy to describe as the golden age of post-war railway history.

There is not time today to delve into the extraordinarily complex psychological relationship between the British people and the railways. To call it "love-hate" is far too simple. We do not have the huge sense of pride that the French have, for example, in their wonderful TGV network—although, as a frequent user of their provincial services, I do not detect in France a greatly superior system to our cross-country services, the frequency and convenience of which I believe are better than theirs.

But where SNCF is fortunate is that it does not have an hysterical, unfair, biased, inaccurate and often mendacious national newspaper industry constantly on its back in the way that our railways do. The snide comment, the cheap joke, the ludicrous anecdote, the invented so-called "facts", and the denigration of the best efforts of hard-working public servants are all preferred—particularly in the tabloid newspapers, but sometimes also on radio and television—to an honest appraisal of the facts, or to giving credit where it is due.

Let me take just one recent example—the suggestion by Network Rail that timetables should show slightly increased journey times to reflect engineering and other conditions on the line so that passengers can have more confidence in published arrival times. Our railways have included what is called "recovery time" in their schedules since timetables first started to be published in the middle of the 19th century. There is nothing underhand or dishonest in their doing so; our domestic airlines have done it for years. Indeed, it is not very long ago that flight times from Heathrow to Glasgow and Edinburgh were increased overnight from one hour to one hour and 20 minutes—an increase of 33.3 per cent—and yet there was no media outcry over that.

When I travelled to Hull and back for a day trip last Saturday, the timetable had a few minutes added to it to take account of a diversion for engineering reasons via Hertford. In the event, Hull Trains did not need them and the two trains I caught were eight and 15 minutes early. Everyone on board felt good about it and many congratulated the train crews.

The strange relationship between the British people and their railways is brilliantly described by Professor Goodwin in the chapter headed "The Paradox of Growing Demand for a Service in Crisis", which starts on page 32 on my copy. He quotes from a range of really damaging newspaper reports, which contain nothing but gloom and despair for the travelling public. He then states: The question arises of explaining the buoyant, and for much of the period actually increasing, national demand for rail travel. This is not a debating point—one cannot dismiss the importance of the problems of service delivery—but the resulting picture of a crumbling system only barely managing to cater for customers who were deserting it in droves just does not seem to be demonstrated in figures for actual usage". The professor then quotes a series of statistics to prove that point including the SRA's own assertion that, passenger kilometres travelled on the network have grown by 38 per cent since 1995 and now exceed the levels of 50 years ago, carried on a rail network half the size. Rail moves 20 per cent more people into central London than ten years ago". What we have, therefore, is an extraordinarily popular railway, used by more people than at any time since the mid-1950s, who refuse to be put off from travelling by train despite the denigration and abuse from the media.

What is more, if Professor Goodwin's assessment of what will happen to congestion is correct, and the Government decide to adopt sensible demand management policies for our roads—as I fervently hope that they do—rather than disappear into the black hole of a massive motorway building programme, the need for more capacity on our railway will grow enormously.

Some noble Lords may recall that during the debate on buses initiated in December by the noble Lord, Lord Bradshaw, I supported Mr Livingstone's return to the Labour Party for the reason that the success of London's congestion charging scheme should set the agenda for transport policy considerations across the country. I warmly welcomed, therefore, the press statement last July by the Secretary of State on the Government's road strategy, quoted by my noble friend Lord Berkeley: We will not be able to build our way out of all the pressures we face. Road user charging has to be considered as part of sensible management of our roads". That statement is quoted approvingly by Professor Goodwin who says: A sensible pricing system on roads would radically transform the economics of railways". He includes the startling statistic that, a reduction in traffic of only five per cent could lead to an increase of up to 50 per cent in the actual or potential demand for public transport use". That is incredibly important because it puts directly into context all that the Government are attempting to do to improve the railways. It also destroys completely, of course, as Professor Goodwin points out, the ludicrous suggestion which has appeared in the Sunday Times and elsewhere in recent months that what the railways need is a new Beeching "to take the axe again to the railways".

The reality is, of course, that many of the capacity problems that the railway is having to cope with now stem directly from the Beeching closures of the 1960s and 1970s and the short-sighted cost cutting that followed, such as the singling of the Southern Region's west of England main line and the Cotswold line from Oxford to Worcester.

What a tragedy it is that the one north-south main line built to continental loading gauge and able, therefore, to take all the Channel Tunnel trains and freight—it would be interchangeable with the Continent—the Great Central, was closed in the 1970s. What a relief it is that Beeching's plan to close the north London line, now the most congested commuter railway on the system, was prevented after a public outcry.

That brings me to the Government's Statement on Monday. I agree with much of what David Begg wrote in the Financial Times yesterday, in particular his assertion that it would have been better if this review had been announced in 1997 immediately after the Government came to power. I do not criticise them for that. They believed that they could make work the privatisation structure they took over. Few imagined that Railtrack would be so utterly incompetent, insensitive, profligate and arrogant. Few foresaw that the layer upon layer of legal and contractual agreements would inflate costs by a factor of between two and three, and that the fragmentation of the industry would create such a risk-averse and blame-avoidance culture.

How interesting it is that the architects of this system, the spokesmen for the Conservative Party, now admit what a ghastly mistake it all was. Let us take Mr David Willetts who said in the Daily Telegraph of 13th December of last year: It was the wrong model … I freely accept that this structure is not right. I would not defend the way in which we carried out railway privatisation". It is a bit late to admit that. But we have to move on and, naturally, I wish the Government's review well. I particularly welcome the fact that the Secretary of State has asked Richard Bowker and the SRA to play such an important part in the process. Mr Darling's Statement also said that they had, worked extremely hard with the industry, bringing greater leadership and strategic direction to the railways, and they do so with our full support".—[Official Report, Commons, 19/1/04; col. 1077.] I agree and hope that it has put paid to the negative and damaging rubbish that appeared in the Independent last week, following the planting of some unpleasant and malicious rumours.

The new structure of the industry must feature an accountable, single point of contact for industry and government. I hope the review produces such a recommendation and puts at the head of that organisation an individual with proven qualities of leadership and an ability to change an industry for the benefit of its customers. The outcome that must be avoided is what Anthony Hilton described in an amusing, but accurate, piece in the Evening Standard on Monday. Speaking of the Government, he said: Perhaps it yearns for the days of rail nationalisation when, according to an old Treasury hand who actually administered the policy, the civil servants pursued an active strategy of making sure the railways never became popular. There was method in their madness. They realised that if the rail system was used too intensively and more and faster trains were run, the track would begin to crumble and maintenance costs would soar. Whenever it looked as if rail passenger numbers were increasing too fast, the Treasury would cut the funding so that the old British Rail would have to whack up fares, and passenger numbers would plummet. Trains would then be cut, reducing the wear and tear on the track, and reducing the likely cost of maintenance and easing the strain on public finances". Mr Hilton adds: I am not making this up, honest". I can assure him that he is not, because, as the noble Lord, Lord Bradshaw, would probably agree, that is exactly how it was at the BRB. It is so important that we do not go back to those days and go down the crazy cul-de-sacs like the Serpell report, and the other efforts to reduce the size of the railway, particularly at a time when we should be planning to increase capacity for all the reasons that Professor Goodwin puts forward in his report.

9.02 p.m.

Lord Bradshaw

My Lords, we welcome Professor Goodwin's report and I join those who have already thanked the noble Lord, Lord Lea of Crondall, for giving us the opportunity to debate the issues raised. I particularly commend the fact that the report is brief—much briefer than is usual for such reports.

Early on, Professor Goodwin refers to the establishment of: a national Strategic Rail Authority for Great Britain, to provide a clear, coherent and strategic programme for the development of our railways". I will argue that the SRA has not yet carried out those functions. To some extent, the reason is that it has been a prisoner of decisions taken before it was functional—namely the fact that the West Coast Main Line upgrade had been agreed and the Southern Region power upgrade was made inevitable by the decision that had already been made to replace most of the rolling stock on that network. So the majority of funds available for the SRA never existed. The SRA has been cursed by fighting between the bodies that surround it, to which the Secretary of State drew attention on Monday—namely the Rail Regulator, Railtrack, the Health and Safety Executive, the Department of Transport and, of course, the trade unions, who have not always smoothed the way of passengers. The SRA has also been the victim of thinking on a grandiose, rather than an incremental, scale. It has become part of the problem, rather than its solution.

Apart from funding the massive losses of rail, why should we all care? Because Phil Goodwin argues that railways can be a significant part of the future for passengers and freight for the benefit of us all. Setting aside the usual suspects—who he identifies and, by the way, were mostly keen advocates of privatisation—a cost-efficient railway with investment targeted where it would do most good could make a significant contribution in accessing cities, major inter-urban journeys, and reaching our ports and airports. The main beneficiaries will probably be car users either as passengers or as drivers on less congested highways.

Goodwin argues that we should make allowance for the disruptive effect of change in rail and road schemes. I believe that that makes a strong argument for allowing the planning of engineering possessions to be one of the tasks that should be considered for transfer to the major franchisees. Safety management, Goodwin argues, has become a millstone around the neck of the industry. I fervently support the review of all safety arrangements mentioned by the noble Lord, Lord Berkeley, and others, with responsibility being vested almost entirely in the new chief inspector of railway accidents in the Department for Transport.

Goodwin goes on to raise the issue of the multi-modal studies. These, he says, were "very expensive". They represented a largely coherent package, with road and rail elements being interdependent. It was a pity that the SRA was somewhat lukewarm in its participation. They need revisiting after rail costs have been brought down, because they need to be implemented on a co-ordinated basis, as Goodwin argues, with the effects likely to be cumulative as road and rail schemes move together. I seek some assurance from the Minister that that will happen. Otherwise the very large sums already spent will have been wasted.

A feature of the multi-modal studies was that some of the recommendations depended on traffic restraint through congestion charging. The technology to make that work has now been proven. The extension of congestion charging, however, depends upon local authorities being actively encouraged by central government to implement and develop such schemes. Can the Minister promise such encouragement? It also demands that public transport as an alternative to the car should be reasonably priced—which is largely not the case when one compares this country with many countries in Europe.

However, I pay tribute to the Government—they deserve one or two brownie points particularly when they have done the right things—for their recent announcement on funding of the guided bus schemes in Luton and Cambridge, two extremely congested cities. We need such schemes to make traffic restraint and congestion charging acceptable. We need operators of buses, guided buses, trams and trains to bring forward reasonably priced proposals, bearing in mind that cities that are less congested present far better operating conditions, which in turn lead to lower costs.

In talking about congestion charging I shall pause for a moment to say that the letter in yesterday's edition of the Times stating that 75 per cent of retail businesses in the London charging zone experienced a drop in trade makes no mention of the loss of American tourists, worries about terrorist outbreaks or the closure of the Central line. It was written more out of fear, or to stir up trouble, than as the result of any sound research. I think that we have to wait for that research to be published.

We are led to two conclusions. First, the growth of road traffic will inevitably lead to demand management, especially in urban areas. People in the country have nothing to fear from that. In urban areas there are very limited opportunities to build road capacity or parking capacity. Secondly, better public transport will be needed. The choice of mode, whether bus, guided bus, tram or rail, will depend on the costs that attach to each mode. As things stand the bus will inevitably win, as it has in London. Rail can win only if it exploits capacity to the maximum and reduces the costs of enhancing services well below the present level. That is why the review announced on Monday by the Secretary of State for Transport is so important, indeed crucial, to the industry. There can be no increased role for rail in the future unless costs are quickly and dramatically controlled.

I was shocked to learn yesterday that the chairman of the Strategic Rail Authority has written to stakeholders asking them to let him have their views in a coherent and organised way, so that he can provide the Secretary of State with advice that represents the views of the whole industry. I would not wish the views of stakeholders to be limited or moderated by such a channel of communication. The SRA controls the franchising process—that is its main function. Those seeking to win or to participate in that process may not wish to express views through that means. If they think that their views are contrary to those of Richard Bowker, they will not express them, because they will feel that they will be disadvantaged in some way in the franchising procedure. Nor may they wish to come to the eye of the foul-mouthed executive director of communications employed by that organisation, who is unfit to hold public office.

The SRA is part of the problem, in common with other organisations who are no doubt—one has been mentioned already by the noble Lord, Lord Berkeley—hurrying to protest the fact that they should all remain independent. The role of the SRA should not be above question. It contains people of definite views and priorities. Those views are not universally shared. I hope that the Minister will assure us that the review is open to all who have a point of view, and that access to the review will be plain and simple. In that review, I hope that simplicity and devolution will have their part.

Above all, I commend to the Minister the good sense written in today's edition of the Times by Simon Jenkins. There have been many articles on this subject, but this one is written by someone who knows something about the railway. I reiterate my offer made from these Benches on Monday that we are willing and indeed anxious to help and to support a radical review. We are not willing to stand by and watch a review that does not stop the turf war of various organisations and which does not legislate quickly and decisively to stop these if necessary; a review that fails to dramatically stop waste and bureaucracy. A review, which I hope we can support, should lead to an improvement in services and a reduction in costs.

Professor Goodwin's report is welcome, as it shows what may happen. I stress the word "may". We, and I hope that I speak collectively between these Benches and the Government, must reach out to get the future that he suggests may be there.

9.13 p.m.

Lord Luke

My Lords, we on these Benches also welcome Professor Goodwin's report. We are grateful to the noble Lord, Lord Lea of Crondall, for asking this Question. The Statement made on Monday by the Secretary of State, Mr Darling, clearly showed that this is an important topic which comes high up not only on the political agenda, but also strikes a chord with a large majority of the public and the media.

As noble Lords have shown in their excellent contributions to this debate, this subject is not only an important one, but one which covers a broad area. I hope therefore that noble Lords will forgive me if I do not confine my comments strictly to the report per se, but speak to the subject of the report in general.

In order for us to consider what the future holds for rail, we must learn the lessons from the past. In 2000, the Labour Party, three years into its first parliamentary term, made huge promises on the issue of rail, and launched an ambitious, and much talked of, 10-year plan. Mr Prescott argued in the foreword of the document presenting that plan that it, will deliver the scale of resources required to put integrated transport into practice". The Government listed great improvements, which were to all be in place by 2010, including improvements to service quality, more punctual and reliable trains, less overcrowding, and modern and increased capacity on the West Coast and East Coast Main Lines.

I am sure that I do not need to remind your Lordships that the plan hit troubled water almost immediately. The tragic rail crash at Hatfield, which left many dead and injured, exposed the problem of gauge corner cracking on tracks. That meant that the Government had to address the problem and, as a result, there was a considerable lowering of speed limits, which inevitably caused a "sharp fall in performance", in the Government's own words.

The bureaucracy that the plan implemented has also been a failure, I am sad to say. The Strategic Rail Authority, which has come in for some fairly hard words during the debate, was created to, provide a focus for strategic planning of the passenger and freight railways". Sadly, it has merely added to the bureaucracy on railways, which also consists of the Health and Safety Executive and the Rail Regulator. That bureaucracy has brought uncertainty over regulation and has been a huge cost to the taxpayer. The current regulatory regime costs more than £110 million a year, an increase of at least £5 million on last year, in direct operational costs alone. It absorbs a similar sum again in terms of industry resources.

Staying with money, I should say that this month the SRA's annual report was leaked to the Independent. That is what the noble Lord, Lord Faulkner, was referring to. It stated that the current £54 billion earmarked under the 10-year plan was being used up simply to maintain the present railway network, with nothing left for the improvements which the rail users had been promised. The report was considered unfit for publication. The Department for Transport has now said that a new report will not be published until the summer. I do not know whether that is true; perhaps the Minister will confirm or deny it. If the publication of the report has been put off until the summer, there must be some reason for that.

So what has the turning sour of all those great ideas meant for the people who really matter, the travelling public? The statistics speak for themselves. The SRA measures rail performance using a public performance measure (PPM) which combines figures for punctuality and reliability into a single measure. The PPM of all operators has fallen since 1998. Only 84 per cent of trains ran "on time" in 2003–04, and the number of complaints per 100,000 journeys increased by 6 per cent between 2002 and 2003. Yet during that period of late trains and increasing dissatisfaction among those using the trains, fares increased markedly. In fact, they have increased above inflation for all the years that Labour has been in power. In short, rail travel in this country is unreliable, overpriced and underfunded.

All that we know, and it is well documented. Now we have the helpful report from Professor Goodwin. He suggests among a great many other things that the, role that public transport is called on to perform within transport strategy as a whole is greater than was assumed to be the case at the time of the launching of the Ten Year Plan, not less". It is clear that the railways are in a mess, although a great number of journeys are still most successful. I am always very successful whenever I go on a journey. Even when I was told last week that a crane had fallen on the track and that I would be a very long time getting from Waterloo to Winchester and back again, I am glad to say that I had no problem either way.

Now is the time for the Government, and in particular the Transport Minister, to say that the Government were wrong and are sorry. Mr Kim Howells admitted on the "Today" programme that that was the case. I would very much welcome that. During the short debate after the Statement earlier this week, my noble friend Lord Astor said that the Conservatives admit that we did not get the interface right between the railway companies and Railtrack during privatisation. The Government and Mr Darling in his Statement also said that some good things came out of privatisation and welcomed the innovation of the various railway companies. They have carried many more passengers than before.

The Government have rather wasted three years trying to implement that ambitious plan, which has now been discredited. However, we should now be concerned with the future. The railways need less bureaucracy and more long-term investment from longer franchises. The Government must consider reducing the regulatory burden on rail, so that the supply of services can respond to individual demand, rather than to dictation from the centre.

With congestion charging on the roads, new taxes planned for the motorways and concern about the environment at an all-time high, people are looking for a safe, value-for-money alternative to travelling by car. The railway currently only partially provides such a service. I, for one, will be keeping a close watch on the Government to see whether they carry out the review promised in Monday's Statement and, more importantly, act to cut bureaucracy.

9.21 p.m.

Lord Davies of Oldham

My Lords, I join all the other noble Lords who have spoken in thanking my noble friend Lord Lea for introducing the debate on the report. He stuck closely to his last by reviewing; the main issues contained in the report—a report that has arrived at an opportune time and which we regard as thoughtful and full of well-informed analysis that will help us while we are engaged in a significant review of the railway.

I do not say that the Government subscribe to all the report's conclusions, but it is a welcome contribution to the debate. I congratulate the All-Party Group on Rail on having commissioned the report and my noble friend on introducing and producing an extremely well-informed debate that leaves me with a range of issues to which I must respond.

One point that I had not anticipated, which does not arise directly from the report, but which stands on its own merits, is that made by my noble friend Lord Sawyer. He is right. Of course we preoccupy ourselves with the two great criteria of the railway service: punctuality and reliability. He is quite right: we also need to pay attention to the question of the acceptability of the service once one is on the train. He suggested that that required some wider societal measures.

We have a range of strategies to improve behaviour on trains. Many of us can bear testimony to rail journeys where the train has been reliable and punctual when it deposited us, but we have endured many unhappy minutes, or even hours, on the train because of the conduct of a small number of people. We must address that issue.

The report emphasises the interaction between rail and road policy, which is of great importance. The Government recognised that, which is why both the 10-year plan and the White Paper sought to address those relationships in an integrated manner. I welcome the report's acknowledgement of the innovative concept at the heart of our 10-year plan.

When the plan was published, it was widely welcomed for delivering a much-needed step change in transport investment. It provided an unprecedented long-term commitment from the Government and put an end to decades of stop/start funding and short-termism. It envisaged total spending, including private investment, of £181 billion over 10 years. That included public expenditure of £22 billion for strategic roads; £33 billion for the railways; and £52 billion for local transport. Significant progress has already been made towards delivering that increased investment under the plan.

Let me mention another point raised in the debate. My noble friend Lord Sawyer mentioned the morale of those who serve on the railways. Investment is an important part of morale, because it suggests that the Government, acting on behalf of the wider public, have faith in the service that the railways can provide, if they are given the tools to do the job. I shall talk more about the Strategic Rail Authority later, but let me emphasise to my noble friend that the authority takes the skills issue seriously. It has set up a rail skills exercise. It is concerned that we train people effectively. That point is well made by the noble Lord, and accepted by us.

Our priority now is to focus on delivering the improvements needed to modernise our transport networks, and to make the most cost-effective use possible of the huge increases in investment that the plan provides. We are now spending £250 million each week to improve transport in this country, in order to make up for what has been recognised by noble Lords on all sides of this House as decades of under investment. That is an increase in investment of 65 per cent over the past three years.

We are also investing in major improvements to our road and rail transport infrastructure, and the increased investment is making a difference. For example, in the past year, we have seen major infrastructure projects open, such as the M6 toll road and the first phase of the Channel Tunnel rail link, which was completed on time and to budget. Credit is deserved for that. Noble Lords will also be aware of many other major infrastructure projects where work is currently under way, such as the widening of key sections of the most congested parts of the motorway network, and the huge investment in upgrading the West Coast Main Line. The increased investment underpinning these projects is benefiting individuals and businesses alike.

Strategy must be able to adapt and accommodate developments, changing circumstances and new opportunities. That is why a review of the 10-year plan is now under way. We need to ensure that our long-term strategy remains fit for the challenges of the next decade. Events such as Hatfield have implications. The noble Lord, Lord Bradshaw, made reference to this matter. We need to accommodate features of such significance properly in our planning. That work is in progress, and it will culminate in the publication of a rolled forward transport phased strategy later this year after the spending review has been announced.

The noble Lord, Lord Luke, chided us on the Strategic Rail Authority's annual report. Does it not make great sense that the report should relate to the Government's spending review that is taking place over the next few months? That therefore fits in to a strategy that makes sense: resources allied to objectives.

The noble Lord, Lord Bradshaw, introduced the matter of whether the structure of the review means that the Strategic Rail Authority will have a monopoly on this. The Strategic Rail Authority will certainly play a very important role in co-ordinating a great number of the representations from the industry. Ministers have made clear that contributions made directly to the department will be welcome. We are open-minded about the situation. We recognise that the developing expertise of the Strategic Rail Authority puts it in a position where it can co-ordinate responses and provide coherence to the representations that come in.

On the issue of roads, the Secretary of State published a discussion paper Managing Our Roads, to which a number of my noble friends paid considerable credit, because the concept of managing the road might also mean managing demand. which is an important part of Professor Goodwin's report. We have to look at the question of managing demand, and along with that we need to look at the question of congestion and road pricing. The Secretary of State adopted a forthright, far-seeing and courageous position when he said that we do need to look at the feasibility of road pricing. The London congestion charge is an important aspect of that. It has been broadly successful. Noble Lords say that we may eventually run into congestion of buses in bus lanes. By Heavens, my Lords, I look forward to that day. We still have the problem of cars and lorries being inconveniently parked in bus lanes. I speak with some fervour because, 20-odd years ago, in a different guise, I introduced a Bill to produce bus lanes in London. I am therefore very pleased by suggestions that they will develop an even more crucial role in the future.

On road pricing generally, we recognise the value of the relationship between road and rail. I wish that I could be as optimistic about propositions made in the report and by my noble friends, in particular, that road pricing will have automatically beneficial effects for rail through a modulated shift from road to rail. Would that it were so easy, predictable and effective. At present, our studies indicate that road pricing probably shifts the times of journeys rather than the mode of travel. We should not make that automatic assumption—I do not suggest that Professor Goodwin did, but he placed great emphasis on it. We need to evaluate and look carefully at the issue, but there is always the possibility that the operation of a road pricing system at certain hours merely squeezes traffic on to the road at other hours rather than resulting in a move to rail.

I appreciate the contribution of the noble Lord, Lord Berkeley, on the necessity of road management and his warm support for it. My noble friend Lord Lea also emphasised that it was a crucial part of the report. I do not decry it—very far from it—it is an important contribution to the debate, and the matter requires further analysis and work. However, I have adopted the stance of not being overly optimistic that the proposition translates easily into government policy that would solve the situation as readily as one might think.

As a result of the history of underinvestment, it has been necessary to put in place substantial increased investment. That is why the Government announced public investment of £33 billion over 10 years, doubling railway investment over a five-year period. Total investment in the four years to 2006 will be almost three times that at the time of privatisation. Those are very significant figures, which will make possible the effective use of the railway against a background in which we will have the capacity to do so. That has been warmly welcomed on all sides of the House.

The recent regulatory review, published last December, confirms that the cost of upkeep of British railways is £1.5 billion a year more than was thought necessary just three years ago. The review implied that Network Rail inherited a business from Railtrack with unit costs substantially higher than they should be. Network Rail is now tackling those inefficiencies and working to bring down costs. But taxpayers and fare-paying passengers need to know that their money is being well spent and that increased spending will improve performance. In short, cost control is essential, and the review that we are carrying out will address those issues. The statement on Monday pointed out that we cannot expect to use the investment successfully unless we concentrate on ensuring that there are clear points of decision.

Many illustrations have been made in the debate today. My noble friends Lord Faulkner and Lord Berkeley referred to safety. The fact that there arc so many regulations and so many fingers in the pie means that the essential priority of safety—who would deny that?—has been translated into a range of inhibitions regarding the railway. That has not guaranteed safety so much as inhibited the railway's capacity to perform. That is why we need the review—there are a number of areas in which it is necessary.

The Strategic Rail Authority will have a role in the review. Its co-ordinating role will be enormously important, and the Government are confident that it will address the issues within a very short timescale. We need those submissions and the position before us in the next few months so that we can, coterminous with the development of the public spending review, have in place a strategy and resources.

We want to build on the review to create a railway which is responsive and operates in the public interest, while at the same time recognises the value of the private sector and respects the legitimate interests of investors. The report by Professor Goodwin highlights some of the key issues involved in all this. They will form part of the Government's review. I am very grateful that the All-Party Parliamentary Rail Group got to work on this at a very early stage and therefore has helped to prompt this debate, which my noble friend Lord Lea introduced so ably this evening, getting the general debate, following Monday's Statement, off to a very sharp, prompt and effective start.

House adjourned at twenty-four minutes before ten o'clock.