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Mr. Brian Wilson (Cunninghame, North): What about the west coast?

Sir George Young: I am coming to that.

I can give no better illustration of the healthy pattern of investment in our railways than to mention three projects that I have launched in the past 10 days. On the morning of 4 November, I opened a new high-speed rail freight facility for Buxton Lime Industries. The Government had contributed £2.6 million to the project, which will potentially relieve the village of Buxton of up to 125 lorry trips each day. On the afternoon of the same day, I had the pleasure of inaugurating stage 2 of the Robin Hood line--a £20 million scheme that included the restoration of rail passenger services through the town of Mansfield. On 13 November, in the presence of the hon. Member for West Bromwich, East, I cut the first turf in the construction of the £145 million Midland metro light rail scheme, which promises to bring major benefits to travellers in the west midlands and to play a key role in the regeneration of the black country.

The long list of essential investments undertaken at public expense since 1979 records only a part of the Government's success in the transport sector. Massive private investment has also been possible in transport industries, especially in those that have been privatised in

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the past 16 years. Hon. Members with long memories may recall that British Airways used to be a nationalised industry, dependent for its investment plans on the availability of Government funds. [Interruption.] The successes achieved by British Airways in recent years show vividly how businesses can flourish in the private sector, meeting their passengers' needs and investing to attract new custom. [Interruption.]

Madam Deputy Speaker: Order. There seems to be an increasing tendency for both Front and Back Benchers to make seated interventions.

Sir George Young: We can also point to similar patterns in other industries that have been freed from the straitjacket of public-sector controls. The National Freight Corporation, National Express, most of the bus industry-- now including London Buses--the BAA, Associated British Ports and the trust ports Clyde, Forth, Medway, Tilbury and Tees and Hartlepool are now all private-sector operations, free to invest as their customers demand and without constant reference to Whitehall.

We are making good progress both with the competition to select the private sector promoter of the high-speed channel tunnel rail link and with the hybrid Bill. The European Community has designated the project one of the 14 top-priority trans-European network projects, and I welcome the Commission's decision to give it £13.6 million worth of support in 1995.

The scope for attracting private-sector investment to transport projects is not limited to industries that are already in the private sector. We have sought new ways of developing partnerships between public and private sector, and have already made great progress. Some £100 million of private-sector money was invested in the railways last year; on the road network, the Queen Elizabeth II bridge between Dartford and Thurrock was built entirely by the private sector at a cost of £150 million.

The success that we have achieved through greater involvement of the private sector in transport encourages and inspires us to further progress in that direction. In 1996-97, the radical transformation of the railway resulting from the Government's privatisation plans means that responsibility for the bulk of investment will lie within the private sector: Railtrack, the rolling stock leasing companies and projects such as the channel tunnel rail link will all be in private hands. Railway businesses will be freed from direct public-sector expenditure controls and will be able to focus on providing services that are more in line with customers' needs.

Our arrangements for franchising passenger services are consistent with our aim of delivering a high-investment railway for the future. Franchisees will have a clear interest in new investment that will bring them the opportunity to improve services, attract more passengers on to the railway and increase revenue. They will be able to work with the rolling stock leasing companies and Railtrack to develop proposals for new investment. Early signs are already promising. I am particularly encouraged that the bids that the franchising director has received for the first three franchises include some constructive and imaginative proposals for investment and service improvements.

Mr. Wilson: The Secretary of State knows as well as we do that he is whistling in the dark. Virtually the only bids that he has had for the first three franchises are from

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management buy-outs in which people have been compelled to compete for their own jobs. Would the Secretary of State care to comment on the views of James Sherwood, president of Sea Containers, who has consistently said that a seven-year franchise period would not allow for investment, and that--as the Government insist on that period--he wants nothing to do with a deteriorating railway? It is difficult to portray James Sherwood as a mad-eyed Trot.

Sir George Young: It is the hon. Gentleman who is whistling in the wind. Sea Containers was not successful because there were better bids. That is good news for the passenger and the taxpayer but it is bad news for the hon. Gentleman.

Mr. Dafis: Will the Minister give way?

Sir George Young: No, because I should like to make some progress.

Last week I announced the sale of the former British Rail passenger train fleet, the rolling stock leasing companies--ROSCOs. That was Britain's largest ever privatisation by direct sale. The new owners are demonstrating a strong commitment to the development of a competitive market for passenger rolling stock. In addition to taking over the existing train fleet and the networker express fleet that is currently on order, the new owners bring access to additional funds to finance new trains and refurbish existing rolling stock. Their position in the industry, each company having a nationwide customer base and a spread of newer and older trains, should stand them in good stead to invest in renewal and to seek new growth opportunities. I am delighted, and I hope that the hon. Member for Cunninghame, North (Mr. Wilson) is also delighted, that ROSCOs have already begun discussions with potential franchisees on the need for future co-operation.

We set up Railtrack to own most of the track, signalling and associated infrastructure, including the stations and to operate 14 of the major stations. Railtrack will be floated on the stock market next spring. The company will no longer be competing with, for example, hospitals and schools for limited public sector funds. It will receive regular income through access charges and will be able to tap new sources of private funding to carry out its investment plans. Railtrack has been established with a level of funding and a regulatory regime sufficient to allow it to fund its investment programme, which includes necessary maintenance and renewal of the infrastructure.

I shall now deal with the matter raised by the hon. Member for Glasgow, Rutherglen (Mr. McAvoy). I was surprised to read in this morning's press suggestions that Railtrack may be holding back £1 billion that might otherwise be used for investment in the current year. That article was based on a profound misunderstanding of the difference between real cash flow and the accounting treatment of Railtrack's investment budget.

Railtrack is spending more than £1 billion this year on infrastructure renewal and maintenance. As a result of surveying its assets, Railtrack has drawn up long-term plans for developing that infrastructure over five years for stations and over 10 years for tracks and signalling. That longer-term approach to investment planning is a key advantage of privatisation and represents the liberation of industry from the straitjacket of public expenditure controls. Yet again, the truth about rail privatisation is

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being obscured by unfounded reports that attracted comment in the morning before disappearing into oblivion by lunchtime.

We have restructured the industry in such a way that the financial regime that is in place will allow Railtrack to fund the necessary maintenance and renewal of the network. The regime of the rolling stock leasing companies has clear incentives for them or others to invest in new rolling stock. I am confident that, as a result of these new financial and regulatory regimes, investment will increase, as with all other privatisations. Overall funding in future years will, I am sure, enable the industry to meet its objectives of developing and improving the network and improving services to users.

In addition to the benefits of privatisation, we can expect further benefits to the railways from the private finance initiative. One beneficiary will be the west coast main line, the strategic arterial railway route connecting London, Birmingham, Manchester, Liverpool and Glasgow. The last comprehensive re-equipping of the line was in the 1960s and 1970s, and that investment is coming to the end of its economic life. At the end of 1993, we announced that private finance would be used to modernise the line. A feasibility study analysing performance standards and investment options for the line was completed at the end of last year. It recommended an investment programme of modernisation works involving complete resignalling and comprehensive renewal of the track and the electric power supply and other infrastructure work.

In March, we approved the development of a new state-of-the-art signalling system for the line. Development work for that signalling system will take place while Railtrack is in the public sector and will form part of the private finance initiative. The project has generated considerable interest, and Railtrack received a good response to its tender invitation. It expects to award the contract early next year.

It is hard to overestimate the economic importance of the channel tunnel rail link and the west coast main line--[Interruption.]


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