HC Deb 25 July 1984 vol 64 cc683-5W
Mr. Hayes

asked the Secretary of State for Transport what steps have been taken by his Department to increase competition and efficiency, and reduce the role of the public sector, in the provision of transport.

Mr. Ridley

The Transport Act 1980 deregulated the long distance express coach market and the Civil Aviation Act 1980 required the Civil Aviation Authority to give greater emphasis to competition between British airlines and to give the interests of users equal ranking with those of airlines. Both measures have benefited travellers.

I have recently put forward major proposals to increase competition in local bus services which will end 50 years of protection. I intend to introduce legislation at the earliest opportunity to remove restrictions on competition in local bus services by abolishing road service licensing throughout Great Britain except for the time being in London where new arrangements have just been introduced. I have also made it clear that the structure of the bus industry must be changed to remove the dominance of very large public sector operators and to allow competitors an opportunity to enter the market. Passenger transport executives will be required to break down their operations into smaller units as separate companies. The National Bus Company will he reorganised into small freestanding parts which will then be transferred to the private sector. Municipal bus operations will be incorporated into companies still owned by their district councils. Local authorities will be required to seek competitive tenders for contracts to run bus services which are not commercially viable but which they consider essential and wish to subsidise.

In international discussions we have carried forward our commitment to the liberalisation of transport. The European Community has agreed in principle to work towards the elimination of quota restrictions on the road haulage industry. In the field of aviation we have secured routes from London to several major European destinations for a second United Kingdom carrier and opened up the London to Hong Kong route to British Caledonian and Cathay Pacific in addition to the existing British Airways service. The European Community has set up a high-level working group urgently to consider further liberalisation of air transport and to report to Ministers. At the same time I am seeking to negotiate more liberal air service agreements with other European countries. The agreement which I have already reached with the Dutch Government has introduced by far the most liberal bilateral agreement on air services in Europe and will benefit travellers greatly. The Government are continuing to ensure that world shipping markets are kept open to competition.

The Government have increased substantially the opportunities for the private sector within transport by a substantial programme of privatisation. The National Freight Corporation was sold in 1982 to a consortium of its own managers and employees and is now operating more profitably. Associated British Ports has also made a good start in the private sector and we have recently raised £50 million from the sale of the Government's residual holding. We have sold 37 of the 38 English motorway service area leases, earning £50 million and leading to better, more competitive services for motorists. British Rail's hotel and hovercraft businesses have been privatised, and more than £200 million of British Rail nonoperational property has been sold. In 1981 the design and supervision work on motorway and trunk road schemes worth over £2,000 million was transferred to private firms of consulting engineers and since then work on another £710 million of road schemes has since been placed with the private sector.

I have recently announced the sale of Sealink UK Limited for £66 million to Sea Containers Limited which plans major investment in the company. I have already referred to my proposals to privatise the National Bus Company. I am also considering the future of the British Airports Authority. We have taken powers to privatise British Airways and are preparing for this to happen in 1985. I am considering urgently the report by the Civil Aviation Authority on the implications of this for competition and the British airline industry.

The Government have encouraged a more competitive approach and greater efficiency within the public transport industries. In October 1983 we gave the chairman of the British Railways Board clear and realistic objectives for his business. These included achieving a substantial reduction in the requirement for PSO grant by 1986 while providing attractive and reliable services to customers; we also made clear that we did not wish British Rail to embark on a programme of major route closures. Within the context of that policy I have put forward proposals reflecting the views of the Transport Select Committee which would allow the introduction of guaranteed and, if necessary, subsidised substitute bus services where they would be appropriate on local transport and value for money grounds. These services would be protected by a closure procedure similar to that for railways. The London Regional Transport Act is the first step in establishing a better organisation for public transport in London.

I have recently given the chairman of LRT objectives for his business, including making London's bus and underground services more attractive to the public; the involvement of other operators, public and private; and improving value for money for passengers, ratepayers and taxpayers. I have set a tough but realistic financial target to reduce revenue subsidy to £95 million — half the present level — by 1987–88 which will require large reductions in costs. With these efficiency gains I expect LRT to maintain a broadly stable relationship between fares and prices generally, after any inital increase to redress the balance.

I have also written to the chairman of LRT and BR setting out ways in which I expect them to work to improve the co-ordination of services and achieve better value for money.