British Railways Board (Property) (Hansard, 9 December 1985)

§ Mr. David Mitchell

The British Railways Board (the board) has considered the report and prepared a response, copies of which I am placing in the Library of the House. The response shows that the board is ready to accept the great majority of the commission's recommendations, and describes the action that the board will be taking for implementation. I welcome the board's initial response to the report. My Department is monitoring progress on this and I will make a further statement next year on the board's implementation of the commission's recommendations.

It is the Government's general policy that all land surplus to the requirements of public authorities should be offered for sale as soon as practicable. While the commission saw no reason to criticise the board's decision to sell surplus property, it did suggest that the implementation of this decision was deficient in some respects. I am pleased to note from the board's response that it is confident that no sales have taken place in ill-considered ways or with unnecessary loss.

The main business of the board is running the railway and the Government wish to see the board continue with its very successful programme of property disposals as vigorously as possible. Accordingly, we have restated to the chairman of the board the objectives which the Government wish the board to pursue towards its property. In particular these call for the board to continue to manage its operational property in accordance with best commercial practice, and to identify and divest itself of all its underused or surplus land and property as rapidly as possible, avoiding distress sales. Judgments on timing and relative priorities are to be based on discounted cash flow appraisal using a rate of discount not less than the required rate of return.

The commission drew attention to the need for improvements in the organisation and management structure within the board in order to secure the best return from the estate. I welcome the action which the board is proposing to improve its handling of property matters, including strengthening the role of the managing director 428W of the British Rail Property Board and setting up a BR property review group. The board believes that this will achieve the aims identified by the commission in a manner more compatible with the overall management structure of the board.

The commission was critical of the board's procedures for releasing land no longer needed for operational use, which it saw as "cumbersome and expensive". I welcome the study which the board has set in hand to identify improvements that can be made in this important area.

The commission acknowledged the board's success in developing and exploiting its operational estate, but made a number of recommendations for improvements. I look forward to effective implementation of the steps that the board is taking, including those to improve the procedures for reviewing development opportunities and for appraising property investments. I am encouraged by the progress being made in improving the marketing of railway arches and station trading facilities, and I look to the board to exploit to the full the opportunities for extending competition and involving the private sector in these areas.

The commission also recommended that my Department should undertake a thorough review to determine how far current liabilities in respect of property no longer needed for the railway should be removed from the board or separately funded. My Department immediately sought from the board the factual information necessary to conduct this review, and is giving it careful consideration.

We are grateful to the Monopolies and Mergers Commission for this wide-ranging report which I am confident will provide the stimulus for a variety of significant improvements in the manner and efficiency with which the board conducts its property activities.