House of Commons Hansard Debates for 1 Nov 1993

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23 per cent. in the current year, with all the resultant service cuts and fare increases, the Tories are preparing to increase the grant by 250 per cent. next year to put in place the structure for privatisation. That is not a transport policy. It is the politics of prejudice, which have characterised the whole shoddy operation. We see the same approach in the first amendment before us today. The Minister in the Lords suggested that it was merely a technical amendment. The Minister here says that it does not change anything. But the amendment would not have been proposed if it did not change anything and was not intended to do so. It was specifically the first attempt at circumventing the Peyton-Marsh amendment. That amendment placed a duty on the franchise director to give preference to management buy-outs. As my hon. Friends have adduced, management buy-outs are a form of privatisation.

The record of many management buy-outs is different from the one cited by the Minister. The Medway Ports were a management buy-out. City Link was a management buy-out. But, of course, management buy-outs quickly become full privatisations. The Government merely say that preference will be given to private bids to take over parts of the railways.

I object strongly on behalf of the great majority of railway managers to the way in which their name has shamelessly been taken in vain by Ministers. Ministers have paraded the country telling everyone who would listen--many preferred not to--that the Government were doing everything for the railway managers, who were champing at the bit to become involved in management buy-outs. Under the regulations that the Government insisted on enforcing, those same railway managers are not allowed to answer back for themselves on pain of losing their employment with the railways. If one of them had stood up and said that railway managers were not keen to become involved in management buy-outs, he would have risked not only his career prospects but his job.

While railway managers have been constrained, Ministers have felt able to travel around the country falsely representing the views of the railway managers. Ministers took it to the ultimate extreme in dealing with their Back Benchers. They told Back Benchers that they could not allow British Rail to compete because railway managers wanted to compete. Last week we saw the first evidence of the truth of the matter in a survey of railway managers.

Under the protection of anonymity--which surely should not be required in a democratic society--81 per cent. of railway managers said that they were opposed to privatisation as outlined in the Railways Bill. When asked whether they were in favour of British Railways Board having the ability to bid for franchises, 68 per cent. said yes and 18 per cent. said no. When asked whether they were in favour of management buy-outs in preference to BR bidding, 20 per cent. said yes and 64 per cent. said no. When asked whether there was a conflict between management buy-outs and BR bids, 77 per cent. said yes and 6 per cent. said no.

So when, for the first time, the managers are asked, we find a majority of between three and four to one against everything that the Government are doing. Yet Ministers have shamelessly maintained outside this place the hypocrisy and untruth that the purpose of the legislation is to support the ambitions of railway managers. Why do the Government always support minority vested interests? It would be astonishing if within the

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whole railway network there were not a few managers who could be paraded in The Daily Telegraph --three, to be precise --and I believe that the same three were paraded last week at St. Ermine's hotel to tell Tory Back Benchers about the enthusiasm for management buy- outs among their colleagues. If railway managers were so in favour of management buy-outs, I should have thought that two different sets of three could have been found--one for St. Ermine's hotel and one for The Daily Telegraph. But not a bit of it--it was the same three. I should be interested to know who paid those three railway managers while they sat in St. Ermine's hotel in a room booked by Coopers and Lybrand telling Tory Back Benchers what to do with their votes in the Division Lobby. Indeed, I am interested in the role of Coopers and Lybrand in rail privatisation as a whole. Why does Coopers and Lybrand book rooms at St. Ermine's hotel and fill them with railway managers, presumably in British Rail's time, in order to dragoon Tory Back Benchers into those rooms to be told what to do? Coopers and Lybrand has a big role in all this. It has a big financial role. One of its directors, Sir Christopher Foster, is the Secretary of State's adviser on privatisation. While Coopers and Lybrand may be able to do some of the Government's dirty work a few yards away from here and book hotel rooms, it does not seem to be getting on so well with the substantive matters of railway privatisation. I do not know whether the Minister will tell me what Coopers and Lybrand is paid for its consultants' reports. Coopers and Lybrand has come back twice to the Government to tell them that it cannot come up with access-charging regimes for the railways and that more work will have to be done. According to Modern Railways this month, Coopers and Lybrand has told the Government that the idea of railway leasing stock companies will not work. The Government can pay anyone to book a room in St. Ermine's hotel, but they are paying Coopers and Lybrand millions to tell them that the thing will not work and that the crucial solutions cannot be found. If the Minister can shed any light on the role of Coopers and Lybrand, Sir Christopher Foster and all the rest of the interlocking gang who are pushing privatisation through, the information will be received with interest and probably with surprise by the House. Conservative Back Benchers can do what they like. I am sure that they will vote for all this nonsense. They will think that they have got themselves off the hook. The legislation was another own goal even before the historic compromise was reached : it had been discredited and the Government were a laughing stock because they were offering nothing. The amendment is part of that. Priority, preference and promotion will be given to private bids against any bids from British Rail. That is the easy bit. Legislating for that is easy. But management buy-outs or private companies with a token insert of management involvement will still have to raise the money. We know--we do not need to have it explained in a little tutorial from the Minister--that companies will not take over the assets. We know that the Tory Government are setting up a raft of quangos to take over the assets. We know that the companies will take over management contracts for a limited period without any of the assets that provide security. We understand all that. But the companies will still have to raise the money in the markets to finance that operation.

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I notice that the Secretary of State is sitting there dumb. I am reminded of something that I read yesterday when I was browsing through Lady Thatcher's memoirs--it is good for insomnia. I quote from page 835 under the heading, "Men in Lifeboats" :

"But I still wanted a new face at Education where John MacGregor's limitations as a public spokesman were costing us dear in an area of great importance."

If he was a failure at education, he is a disaster at transport. [Interruption.] I am sorry. Lady Thatcher has high opinions--

Mr. Stephen Day (Cheadle) : Will the hon. Gentleman give way?

Mr. Wilson : No. Obviously, the Secretary of State for Transport has a great track record on popular policies. I quote from page 848 of Lady Thatcher's memoirs :

"John MacGregor supported me : I could not now credibly promise a radical overhaul of the community charge, no matter how convenient it seemed."

He is back today and cannot promise an overhaul of rail privatisation, no matter how convenient or sensible it might seem, and no matter what a splendid precedent it might be.

Yesterday, he was confronted with questions. Suddenly, after so many months, we started to hear about 15-year franchises--such franchises entered the frame. It is policy on the hoof. The Government can provide 15- year, 30-year or 50-year franchises, and they can politically fix a subsidy to those franchises for a couple of years, but they will not be here to see them through. I make no idle boasts but there may or may not be a change of Government--that remains to be seen.

If anyone in the City puts money into the franchises on the assumption that this Government, for political reasons, can guarantee a level of subsidy and then guarantee the conditions of those franchises to those operations for more than 18 months or two years, much less three years, five years, 10 years or 15 years, they will be much mistaken. I would not put tuppence on it. I do not think that they will put much money on it because everyone realises that the Government will throw money at a small number of franchises to give them some political credibility this side of a general election. People will see through that because they will realise that, if it ever got beyond that stage, every bit of loading that went towards the few private franchisees would be at the expense of those operations that were still run by British Rail.

Labour Members speak for railway managers. We speak for the 80 per cent., not the 20 per cent. While 20 per cent. are being bribed into taking franchises with assurances that Ministers are in no position to give, 80 per cent. will still be running services in the public sector. We will not stand idly by and see them left with a rump railway stripped of investment and subsidy in order to skew financial support to those small elements that the Government have managed to get into the private sector.

"Preference" and "the promotion of management buy-outs" are double talk for saying that, in all the circumstances, British Rail will be discriminated against and anyone the Government can get to bid against British Rail will be preferred. That approach, which is inherent in this amendment, was confirmed by the deal done last week where it was formalised that if anyone bids, or anyone can be found to run a railway, British Rail will be disqualified from doing so.

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I need hardly say that that is not acceptable to the Labour party. I said last ys and the right of British Rail to bid, electors and anyone who knows anything about the industry will judge the consistency or the principle that underlies that decision. We will oppose amendments Nos. 1 and 2.

The whole question of Railtrack's charges becomes extremely interesting in the context of the document entitled "Commercial Returns for Passenger Train Operating Companies", which states : "Roundly the central Government grant requirement would total some £2 billion in 1994-95 assuming an 8 per cent. return for Railtrack." It is interesting to have confirmation that Ministers are working on a return of 8 per cent.

Mr. Freeman indicated dissent.

5.15 pm

Mr. Wilson : The Minister is welcome to intervene if he so wishes. The 8 per cent. return for Railtrack will come only through charges to the operating companies. That will be the source of income for Railtrack via the franchise director. As we all know, the subsidy to British Rail in the current year is about £830 million. Those are the two figures, like for like--£830 million and £2 billion. The hon. Member for Worcester (Mr. Luff) looks characteristically puzzled. I may be able to help him.

Mr. Peter Luff (Worcester) : My puzzlement relates to what the hon. Gentleman's speech has to do with the amendments under consideration. Mr. Wilson : The hon. Gentleman's puzzlement speaks volumes about his comprehension. If he does not understand--

Mr. Matthew Banks (Southport) rose--

Mr. Wilson : Tory Members should hang on a second--I will listen to one at a time. Public schoolboys are so impetuous.

If the hon. Member for Worcester cannot read the amendments and find that they relate to the charging regime of Railtrack and management buy-outs, perhaps he needs a course in literacy rather than rail privatisation.

Mr. Banks : If the hon. Gentleman spent more time doing his homework not simply on the railways but in every respect, he would know that neither my hon. Friend the Member for Worcester (Mr. Luff) nor I went to a public school. Throughout this debate, I hope that the hon. Gentleman will spend more time concentrating on the amendments and less time on the invective. I have always felt that he makes much better contributions, which are listened to with greater interest on both sides of the House, when he is less personal and concentrates on the matter in hand.

Mr. Wilson : I am so impersonal I have forgotten the hon. Gentleman's name.

We have come to the end of a long process. We had reasonable debates in Committee, and we won assurances there. However, we have seen those assurances overturned

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in the other place. We have come to the last lap in the parliamentary process and we are confronted with an additional 470 amendments. Railway pensioners have written to us to express their concerns, but those concerns have been ignored.

Frankly, I am much less concerned about abuse towards Government Members than I am about the abuse of Ministers towards the railway network, railway pensioners and so on. If Conservative Members expect a soft ride and a nice little game of cricket, they will not get it. This privatisation is not like other privatisations because the difficulties do not end here--they begin here. All around the country, we will continue to tell people what the Government have done to the railways. We will identify stage by stage the consequences of the legislation and we will hold to personal and electoral account those who voted for it in the full knowledge of precisely what they were doing to the railways.

Sir David Mitchell (Hampshire, North-West) rose

Mr. Wilson : Does the hon. Gentleman wish to intervene?

Sir David Mitchell : I simply join my colleagues in expressing the hope that the hon. Gentleman might turn his attention to the amendments.

Mr. Deputy Speaker : Order. The amendments relate to the general duties of the Secretary of State and the regulator. There has been nothing out of order to date.

Mr. Wilson : If I were in trouble, I do not think that I would like the hon. Members for Worcester, for Southport (Mr. Banks) and for Hampshire, North-West (Sir D. Mitchell) as my cavalry. Many of my hon. Friends wish to participate in this key debate.

What we have here is a set-up. I wonder whether any Conservative Members took the trouble to fight to get a copy of the report. It is not a two-bit report from a junior civil servant ; it is a report from a top working party--the good and the great of the Department of Transport putting their collective intellect into how this will work.

I can provide copies of this paper to any Conservative Member who wants to know what he is voting for. It roundly says that the Government grant requirement will total some £2 billion in 1994-95, assuming an 8 per cent. return for Railtrack. Everyone will pay everyone else 8 per cent., and so that the train operating companies can pay the leasing companies and Railtrack the economic costs plus 8 per cent., £2 billion will be needed next year to start the circle. That compares with £830 million this year.

I hope that I have demonstrated that I am happy to take interventions and will be pleased to answer questions. The hon. Member for Lewes (Mr. Rathbone) was a great rebel in this matter, and by now I would have expected the hon. Gentleman and the ex-Transport Minister, the hon. Member for Hampshire, North-West, to be leaping to their feet to explain why it is a better deal for the taxpayer to pay £2 billion to restructure for privatisation than to pay £830 million to keep the BR network going. If any Conservative Member can explain that, I shall be pleased to allow him to intervene.

There is silence, because they do not know and do not care. They do not care how much it costs, or about the £2 billion for restructuring or the £25 million currently being

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paid to consultants such as Coopers and Lybrand and the usual suspects who are trying to tell the Government how to make the plan work.

They do not care that the extra £2 billion next year to British Rail will not provide an extra train. All that they care about is the ideology of breaking the system up and selling it. That is how it is seen in the country. No doubt we shall return to these arguments in the debate.

I ask my hon. Friends to oppose Lords amendments Nos. 1 and 2. I again express shock at the fact that we shall have to vote on 470 amendments. We are in for a long night.

Sir Michael Grylls (Surrey, North-West) : I have not spoken on the Bill before. That confession is not especially relevant but my deeper confession is that I am filled with admiration for the Opposition. For 13 years companies have been privatised or commercialised, one after the other. Great monolithic nationalised industries which were pinned down by the Government and the Treasury were allowed to fly free and prosper and provide a better service for the public. After 13 years the Opposition are still bitterly opposed to that. The hon. Member for Cunninghame, North (Mr. Wilson) gave me the impression that he was not greatly in favour of privatisation. I admire the fact that he can still say that because he has been proved wrong time and again. Today's issue of the Evening Standard has a front-page headline about British Telecom offering a better and better service to the public. I am using that as an analogy, and I hope that I am in order. British Telecom would never have offered such a service before it was privatised. It is offering it now because the monopoly has been broken, more competition has appeared, and BT has to offer a better service.

Many of my constituents daily use the railways, and it might be thought that I would have been nervous about privatisation because it might upset some of them. I have thought carefully about the Bill and about the railways, which I use. To put it mildly, the rail service is not that good, and almost anything would be an improvement. Our track record on freeing up monopolies and introducing competition over the past 13 years has been very successful.

I am prepared to stick out my neck and say that railway privatisation is good because it will introduce competition through franchises and because it will allow management buy-outs. The Opposition used to espouse a form of co-operative ownership, and that had some attractions. A management buy-out is at least half of that because it will free experienced people in the railways from the bureaucratic clutch of British Rail. They will be allowed to get money to run a railway and offer a franchise, and that must be good.

Mr. Keith Hill (Streatham) : The hon. Gentleman speaks about the breaking of monopolies and the development of competition. Is he aware that the Government's proposals will lead to the establishment of regional and local private monopolies for periods of six, seven and possibly 15 years? Some of us prefer public and publicly accountable monopolies to private monopolies of the sort proposed by the Government.

Sir Michael Grylls : I understand the hon. Gentleman's point and I accept that he is partly right. However, there will probably not be different franchises on all sets of

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railway lines, so it would seem that there will not be competition. There may be competition on the north-east route to Scotland. Let us assume that the hon. Gentleman is right, and that only one franchisee will operate on that line. There will be competition between that line and an operator on another line. People may say about my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell), "His constituents have a fantastic line with a wonderful operator and we should try to encourage that operator to another line." Therefore, there will be competition by example.

Sir David Mitchell : Surely because of the private car and the considerable expansion of coach operators, especially on commuter routes, it is no longer true to say that railways have a monopoly. On the longer routes there is competition from the airlines. The hon. Member for Streatham (Mr. Hill), who raised this hare, is wrong.

Sir Michael Grylls : I was giving the hon. Gentleman the benefit of the doubt and trying to be as kind as possible while not deviating from the amendment.

Sir Paul Beresford (Croydon, Central) : I shall be a little more vicious than my hon. Friend. Does he agree that the hon. Member for Streatham (Mr. Hill) is diametrically wrong? The whole point about franchising and contracting out is that they will give the client, British Rail, control of public accountability on behalf of the taxpayer. Currently there is no such accountability.

Sir Michael Grylls : My hon. Friend puts the point rather more firmly than I would have done. I rest on the truth of the interventions by both my hon. Friends who spoke with great clarity. No hon. Member can escape the fact that competition, however it is done and however imperfect- -and it is difficult to get perfect competition--is beneficial. We should aim for maximum competition, and I thank the Government for breaking the monopoly because it has always been illegal for anyone other than British Rail to operate a railway system. That is a big step. [Interruption.]

The Opposition should listen. Hon. Members are here for only one reason--to try to serve the public. We are not here for our own gratification. At the moment, the railway is a public service and we should try to ensure that it provides a better service.

I end where I started. The Opposition have experienced successful privatisation and commercialisation over the past 13 years, and they are still saying, "Oh no, it does not work." They are either blind or determined not to work for the good of their constituents or the wider public. We should encourage the Government to press ahead with franchising as quickly as possible in the interests of our constituents. Management buy -outs should be encouraged, and I am glad to see that referred to in the amendment.

Mr. Wilson : The hon. Gentleman is obviously a great expert on privatisation. Can he tell us of any other privatisation in which the industry concerned continues to depend for its profitability on the level of taxpayers' subsidy?

Sir Michael Grylls : The hon. Gentleman has asked a perfectly fair question and I shall answer it. We are aware that many of the railway routes will require continuing subsidies. The Government have not been doctrinaire and said that the subsidies will be wiped out overnight. It is in

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the interests of the public that they continue. If the hon. Gentleman is saying that the rail network is a more difficult commercialisation--perhaps a better term than privatisation when applied to the railways--I agree with him. However, that does not mean that we should run away from it and that we should not be more flexible in the way that we handle it.

5.30 pm

The hon. Gentleman cannot deny that the railways will be better served by competition, by the breaking of the monopoly and by the provision of a service with a private enterprise ethos. The industry needs to get away from the dread hand of a huge, bureaucratic business, which can never ben changed from within. The culture is too deep to change it from within ; it can only be changed from without. I remember Sir Ian MacGregor saying when he was at British Coal, that every decision made either by him or by those at levels below him was immediately reported to the then Department of Energy. A business cannot be run properly with continual interference from Government. British Rail needs to be freed from the dread hand of Government and commercialisation and management buy-outs must be encouraged. The Government are to be congratulated and I wish them well with the amendments.

Mr. Nick Harvey (North Devon) : It is small wonder that, at this last stage in the progress of the Bill, we are considering measures to featherbed management and employee buy-outs. It is not that many months since the Secretary of State told us that he was holding back the floodgates of private sector interest until 1994. Now, with just two months until it is 1994, the floodgates are in danger of collapsing inwards for the lack of any water on the other side. The truth is that virtually no one is showing any interest in bidding. The whole madcap plan for privatisation is now dependent upon management and employee buy-outs. As the hon. Member for Cunninghame, North (Mr. Wilson) said, a recent survey shows that, even among those groups, there is precious little interest in bidding.

The Government are flogging a dead horse and this is their last chance to salvage anything from the project. Is it any surprise that management and employees are showing such a lack of interest? What is in it for them? They are being offered only short franchises and there are no assets against which to raise funds. There is no opportunity to build up any assets that they can sell on at the end of the franchise period. For them, it will just be a daily struggle to run the services.

Why should managers and employees want to carry the can when disasters, such as that at Clapham, happen? Why should they take on that burden of responsibility without any proper corporation behind them? They know the horrible truth about the running of the nation's railway services and trying to encourage them to take responsibility for that is, as has been said, like trying to sell ice to an eskimo. It is no wonder that they need the incentive of extra funds and a clear path in the bidding process, with British Rail being kept out of it.

In Committee, we discussed in some detail the principle that the teams running the shadow franchises should not then bid to take over those franchises. At that point in the saga, the Minister agreed with that. If the teams running the

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shadow franchises then bid for them, in effect they will be determining the price that they will have to pay for those franchises, or the subsidy that they will receive to run them. I recall that there was bad feeling during the bus privatisation because teams of managers valued the bus services that they then proceeded to buy. In considering the special measures proposed to help management and employee buy-outs, we must question what impact competition law will have. I cannot help but remember the whole sorry debacle of the British Aerospace takeover of Rover, when the European Commission found that there had been unacceptable sweeteners. There is a risk that the Commission will reach the same conclusion about these measures.

Only this weekend we heard how much more privatisation will cost than was originally suggested. The late Robert Adley, the predecessor to my hon. Friend the Member for Christchurch (Mrs. Maddock), coined the expression "poll tax on wheels" to describe the Bill. At the time, he was referring to its unpopularity, but it might have been a more apt comparison had he been referring to the horrible expense that the taxpayer will have to bear. Privatisation will end up costing at least what was suggested at the weekend and probably a great deal more.

The preparations within British Rail for the shadow franchises and the management buy-outs are already having a desperate effect on morale as people within the industry wonder whether they are part of the in crowd-- part of any bid. The air of intrigue and suspicion is having a profound effect on the morale of railway workers and that will become worse as time goes on.

Sir Michael Grylls : If the hon. Gentleman is so opposed to the Bill, why has the Liberal Democrat-controlled county council on the Isle of Wight welcomed the opportunity for the private sector to bid for the Isle of Wight railway? Why does the hon. Gentleman take a different line?

Mr. Harvey : I have said nothing today, or previously, to suggest that there should not be any private sector bid for any railway service. The amendments that we are discussing relate to management and employee buy -outs, which the Government want to featherbed. They want to distort competition and to short-change the taxpayer. Taxpayers have been investing heavily in our railway network for many decades. When someone wants to take over the service--whether a management buy-out or a private sector business --the least that the taxpayers are entitled to is the satisfaction and certainty of knowing that the service will be better run and at a better price than under British Rail, the existing carrier. There is no reason why there should not be management and employee buy-outs ; I am not suggesting that they should be prohibited. However, such bids should be able to stand on their own feet in their attempt to beat British Rail.

The truth is that, in the dying hours of the passage of this Bill, the Government have been driven to make policy off the cuff. That is behind the Secretary of State's reluctant admission at the weekend that franchises might be allowed to run for as long as 15 years. For many months, anyone considering taking on a franchise has told him that, because any investment in the railways takes so long to be repaid, potential bidders would be interested only if the

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franchises ran for longer than originally proposed. Now, in their desperation to make some sense of the privatisation, the Government have had to agree to that.

The Government are absolutely determined to wipe British Rail off the map. The amendments are an attempt to load the dice in favour of any bidder trying to take services away from British Rail. By all means management and employee buy-outs should be allowed to bid, but they should stand on their own feet, win on price and win on service provision.

Mr. Keith Hill : Lords amendment No. 2, according to the Minister, will enable Railtrack to manage its affairs sensibly. It also modifies the powers of the regulator in his application of access agreements.

Splitting the railway network between operating companies and an infrastructure authority--Railtrack--is a fundamental aspect of the Government's proposals. The scheme was greeted with bewilderment by the international experts who appeared before the Transport Select Committee, and the Committee expressed great scepticism about it on operational grounds. It remains a matter of deep confusion, however, why the Government have resolutely refused to name Railtrack on the face of the Bill, or to describe its functions therein.

Why have the Government refused to include any reference to Railtrack? Why have they broken with all precedent in privatisation legislation and refused to name a successor organisation of such fundamental significance ? Why did they take their resistance to naming Railtrack to the extent of voting down an amendment so to do in the House of Lords? Does not that confirm that enormous powers for the future organisation of the railway will be concentrated in the hands of the Secretary of State. In the words of the Select Committee report, it is

"an indication of the sweeping powers contained in part II which enables the Secretary of State to restructure British Rail in the way he sees fit."

Will the Minister confirm, because Parliament, the public and potential operators have the right to know, that the absence of Railtrack from the Bill means that it will be possible for the regulator to approve franchises which combine control of both operations and infrastructure? Is that not the very definition of a network licence, which appears in amendment No. 2?

In other words, will the Minister confirm that it will be perfectly possible for, for example, Mr. Richard Branson, of a potential Virgin Rail, to enjoy sole ownership of the east coast main line--if he so wills and if he can afford it--for a period of several years in the not-too-distant future ? Was not that the effect of amendment No. 163, passed in Standing Committee B in the House of Commons on 23 February 1993 ?

5.45 pm

The Minister owes it to the House to be frank about the matter, because it bears profoundly on the kind of railway service that the public are likely to experience in the future. It also bears profoundly on the future viability of Railtrack itself.

Are there not several other major question marks over the financial arrangements of Railtrack ? One major question is about access charges. Will the Minister confirm that, with only five months to go before Railtrack assumes its responsibilities, there is still no agreement on a financial regime--in other words, that there is still no agreement about the rate of return that Railtrack is required to make

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on its assets and that, as a consequence, there is still no agreement on the charges that it will want to impose on British Rail or on possible private operators ?

Is it not an extraordinary state of affairs, when literally half the railway, less than half a year before it comes into operation, still does not know what its revenue costs or revenue charges will be ? Does not that uncertainty compound the uncertainty about the investment that is likely to be available to Railtrack following the current Public Expenditure Survey Committee round ?

The Minister was right when, in Committee, he deplored the tendency of Governments to treat railway infrastructure as an economic regulator. He said :

"It is sometimes seen as the regulator. When public sector revenues are under pressure, investment projects are often postponed."--[ Official Report , 11 February 1993 ; c. 52.]

Quite right too.

In contrast to that deplorable record, the Minister drew, at that time, a rosy picture of a long-term rolling programme of investment for railway infrastructure under the new Railtrack arrangements. It would help the House if the Minister could give us a guarantee that, following the Budget, there will be no cuts in investment for Railtrack. At the end of the day, it is not phoney deals or fancy franchises, but cash entering the system, upon which the future of the railway system depends.

Mr. McAllion : The hon. Member for Surrey, North-West (Sir M. Grylls) referred to Opposition Members repeatedly getting things wrong. The hon. Member for Christchurch (Mrs. Maddock) reminded him of the words of her predecessor, Mr. Robert Adley, that the proposals contained in the Bill were

"the poll tax on wheels."

If ever a Government got anything wrong, it was the Conservative Government when they brought in the poll tax ; and if ever a Government are going to get it wrong again, it is the Government when they force this measure through the House tonight and bring upon themselves the hatred and rejection of the British people, who do not support the measures in the Bill and especially do not support the break-up of the public service railway.

I listened to the Minister of Transport in Committee, and I was not over- impressed by his contribution. I thought that perhaps he would have improved, having been given the summer recess during which to recover, but he made a brief speech tonight in introducing the amendments which even he should be embarrassed about.

The Minister began by saying that amendments Nos. 1 and 2 were relatively uncontroversial, and then he ran right into a wall of controversy when he suggested that he should not make the arguments for them, because we could read them in the Hansard report of the House of Lords. As my hon. Friend the Member for West Bromwich, East (Mr. Snape) pointed out, that is no way for a Minister of the Crown to operate in the House of Commons. If he can argue the case for those amendments, as he does here, he should not refer hon. Members elsewhere.

The Minister went on to say that the amendments were to make things clearer, but he could not say clearly what "a substantial interest" meant. He could only say that it is not 5 per cent. We are all agreed about that. "A substantial interest" does not mean 5 per cent., but what does it mean? The Minister could not define it more specifically.

An annexe in a letter that the Minister circulated to my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) describes the different groups of amendments.

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When describing amendments Nos. 1 and 2 the Minister says that employees providing the railway services to be franchised must have "a significant interest". Which is the correct phrase? Is it the "substantial interest" that is in the annexe which the Minister sent to my hon. Friend? Will the Minister tell us which phrase will appear on the statute book when the Bill finally becomes a statute? There is a difference between "substantial" and "significant". "Substantial" suggests that perhaps we are describing a majority interest. The Minister was careful not to define it in those terms, but that is what I would take to be the meaning of "a substantial interest". What do other hon. Members believe the phrase "a substantial interest" means? One may receive 650 different interpretations of what "a substantial interest" might mean. Let us remember that we are dealing with law that will go on to the statute book. We could not get a definition of a key term in an important amendment that will go into a Bill and, by my standards, that is no way for a Minister to try to get any legislation through the House. In fact, he went on to say that he could not define "a substantial interest" because it depends on the capitalisation ; it depends on the debt burden ; it depends on the possibility that the company that is set up will suffer a loss of revenue at some time in the future.

It also depends on the unforeseen rise in costs. One foreseen rise in costs that may be able to be taken into account are the track charges that will be levied by Railtrack, but, as my hon. Friend the Member for West Bromwich, East pointed out, neither the Government nor the Minister are prepared to tell anyone what those track charges may be, so we do not know what foreseen or unforeseen costs may arise.

That is an insane way for the House to behave when we are dealing with legislation. What happens when one of the franchises is awarded to a bid that comes from a management buy-out and someone contests that award on grounds of interpretation? Should one go to the regulator and ask him to define "a substantial interest", or should one go to the courts?

Let us suppose that the parties ask the courts to decide what Parliament meant by "a substantial interest". The courts would look at the Hansard record of the debate and would find out that no one in Parliament could define "a substantial interest". The Minister was not prepared to do so. He virtually told hon. Members that it is up to us to make up our own minds about what that phrase means before we vote on the amendment. What will the courts think of the House if that is the sad result of our debate, because the Minister and the Government do not know what they are doing in these amendments? The phrase "a substantial interest" is not the only problem. We went on to ask the Minister what he meant by "promoting". We are placing a duty on the regulator and the Secretary of State to "promote" management buy-outs. The Minister says that that does not mean price preference, so we are clear about that. Funds will be made available to help in the preparation of management bids. I think that the Minister said that--he referred to the fact that £100,000 of taxpayers' money would be made available for potential management buy-outs.

If I w the Minister's definition that is all that will be necessary to qualify for a £100,000 handout to prepare the franchise bid. That percentage interest will also place a duty on the Secretary of State and the regulator to promote the bid when compared with one with which no former British Rail employees are involved.

The whole thing is absolute nonsense. What will happen if there are two bids which in all other respects are equal, but one is a management buy- out? Will the Secretary of State and the regulator be obliged to give the management buy-out preference? What if a private sector bid is only marginally better than a management buy-out? Does "promoting" mean that the Secretary of State must still give preference to the management buy-out in those circumstances? It is an insult for the Minister to come to the House in 1993 with those arguments and to expect the amendment to be carried with a majority. It is also an insult to those Conservative Members who have been getting kudos from their constituents throughout the summer by arguing that they will stand up to the privatisation of the railways. When the time has come, they are not taking part in the debate or complaining when the Minister tables such shoddy and slipshod amendments.

As a Scottish Member, I have a special interest in the debate, because ScotRail and the east coast main line will be two of the first franchises put out to tender. I am especially concerned because, at a time when the Scottish rail network is crying out for investment, the Government seem to have got their priorities completely wrong.

A recent report on transport links with Europe prepared for the Select Committee on Scottish Affairs identified an urgent need for a £750 million investment in track and rolling stock in Scotland. At such a time, it is wrong for the Government to proceed with a Bill that will promote management buy-outs and privatisation, change the structure of the railways, and put at risk safety and all the other things that are important to people in Scotland.

Time and again, hon. Members have referred to the stories at the weekend about the measure costing about £2 billion. We know that the original estimate for the public sector obligation grant for next year was £851 million, based on the assumption that the rail network would remain in the public sector. However, an influential interdepartmental Committee set up by the Minister and the Secretary of State is suggesting that, if privatisation goes ahead, the cost will be £2 billion.

Every hon. Member knows that there is an unprecedented squeeze on public expenditure. The Chancellor of the Exchequer has made it clear that his proposed limits for public spending next year will not, under any circumstances, be breached. We must believe the Chancellor of the Exchequer when he says that £851 million will be spent on the public sector obligation grant next year. We must believe that that figure will not be breached, but if so, where will the other £1 billion-plus come from? I suggest that it will not come from Government grants to any franchise holder next year. The people who win the franchises will be expected to make savings by cutting services, jobs and working conditions for railway staff. That is not merely my view but that of the people who work in the industry. Only last week, representatives of the "Save Our Railways" campaign came here. A train started in Glasgow, went to Edinburgh and then down the east coast

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