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Viscount Goschen: My Lords, the Government's position is very clear. We support the detailed arrangements as made in the Railways Act, which are again extremely clear. British Rail is permitted to bid, except when the Franchising Director decides that that should not be the case--at his discretion--if it would be in the interests of promoting competition for franchisers; of promoting the award of franchises to companies in which qualifying rail employees have a substantial interest; and of encouraging new entry into the passenger railway industry. Those are the circumstances that are laid down in the Act. We support that.
Lord Taylor of Gryfe: My Lords, is the Minister aware that running the railways is a very complex and important part of our infrastructure? Is he also aware that the people who might bid for such franchises on behalf of British Rail are experienced operators of the railways? Therefore, is it wise to exclude those operators acting as bidders for the new franchise?
Viscount Goschen: My Lords, the Franchising Director must weigh up the very points that the noble Lord has made. However, the House should bear in mind that, as I mentioned, the Franchising Director also has a duty to promote the award of franchises to companies in which qualifying railway employees have a substantial interest--that is, the management buy-out type of situation. With that type of situation, it is very clear that existing management is able to put a substantial investment of its knowledge into the railway
Lord Peyton of Yeovil: My Lords, I would like to be clear that the Franchising Director is acting on his own discretion and without any guidance from the Government. In that case does it not appear that he is being a little wooden in the exercise of his discretion?
Viscount Goschen: My Lords, the Government and the Secretary of State are specifically prevented from giving the Franchising Director objectives, instructions and guidance on the exercise of his powers under Section 25 of the Act, which is the relevant section to do with allowing BR to bid. We are specifically prevented from giving the Franchising Director such directives, so it is up to him to make his own decision.
Lord Dean of Beswick: My Lords, is not the Minister aware that British Rail is on record as saying that it will bid for franchises and that it will win? Does not the Minister accept from me that as British Rail is to be excluded from the present clutch of franchises, whoever obtains those franchises may do so at a knock-down price which is against the interests of the public purse?
Viscount Goschen: My Lords, I do not agree with the noble Lord. There has been healthy competition for these franchises. However, the Franchising Director must assess each franchise on an individual basis. He must assess the circumstances and consider whether preventing the BR Board from bidding in accordance with the discretionary powers given to him under the Act coincides with the duties that he has been given by the Act.
Viscount Caldecote: My Lords, does not my noble friend agree that British Rail managers know as much about managing British railways as anyone and that when they are freed from the shackles of Treasury control they are most likely to make a success of running British Rail franchises? Will he not therefore do a little arm twisting and perhaps give a nod and a wink behind the scenes to the Franchising Director to persuade him to allow British Rail managers to bid for all franchises?
Viscount Goschen: My Lords, the answer is no to both questions. I have said that we are specifically prohibited from doing exactly what my noble friend asks. We will not and cannot do that. As regards the other point, I agree that those who manage the railways at the moment have a substantial body of knowledge about the railways and they of course will be considering whether to submit management buy-outs. If franchises are won by the British Railways Board, the members of the board will not be freed from the constraints of the public sector borrowing rules because they will still be part of the public sector.
Viscount Goschen: My Lords, it is not just a matter of specific directives but also of objectives, instructions and guidance. That is the wording contained within the Act and we are therefore prevented from giving those objectives, instructions and guidance. The matter cannot be clearer than that.
Lord Clinton-Davis: My Lords, is not the truth of the matter that when the Government introduced the Railways Bill they did not want to allow British Rail to bid? It was only as a result of the activities of this House and of the noble Lords, Lord Peyton and Lord Marsh, in particular--
Lord Clinton-Davis: --as well as the Opposition of course, that some common sense prevailed. The clear will of Parliament was that British Rail should be permitted to bid. The net result of the situation is the following, is it not? British Rail has not been permitted to bid and therefore the original will of the Government is being respected by the Franchising Director. Is that not an utter disgrace?
Viscount Goschen: My Lords, I believe that the noble Lord has misinterpreted the situation. The will of Parliament was indeed that British Rail should be allowed to bid; the will of Parliament was also that British Rail should be allowed to bid subject to the discretion of the Franchising Director. That point was also inserted into the Act at the will of Parliament. Parliament has agreed to the Bill, which is now an Act, as a whole, and we must follow it.
Lord Mackie of Benshie: My Lords, will not the Minister tell us who selected this wholly objective Franchising Director who has turned down seven bids? Surely it was the Government who selected him, and their criteria used in the selection must have been useful to them.
Baroness Castle of Blackburn: If British Rail was allowed to tender for the franchise for the busy Chiltern line would passengers at High Wycombe station not have to stand--as I did this morning in a biting wind--outside what used to be, under British Rail administration, their waiting-room, which has now, in preparation for privatisation, become the area retail manager's office?
Viscount Goschen: My Lords, I am slightly at a loss. The noble Baroness is complaining about the service provided by British Rail yet at the same time she wants British Rail to continue to run the service. The process
Viscount Goschen: My Lords, in seafaring, as with any industry, recruitment is primarily a matter for employers. Nevertheless we have introduced positive measures to assist recruitment such as the Government Assistance for Training (GAFT) scheme, which has helped over 2,500 officer cadets train for their first certificate of competency. We are reviewing the effectiveness of this and other merchant navy support schemes.
Lord Clinton-Davis: My Lords, does not the Minister agree that the tremendous shortage of skilled seafarers in the British merchant marine is likely to prejudice opportunities as regards the UK fleet in securing advantages from the increased world trade in cargo shipping that is projected? Does not the Minister also agree that a recruitment figure of 420 cadets per year is about one-third of the number of cadets that is required if we are to be able to make that sort of contribution? What are the Government proposing to do about that?
Viscount Goschen: My Lords, I agree with the noble Lord that there are, and will be, considerable opportunities within the merchant shipping sector. I also agree that there is a problem as regards the number of recruits entering merchant shipping. That is why we have put into place some good and effective training schemes whereby the Government assist cadets who are entering merchant shipping. The Government Assistance for Training scheme, for example, has never refused an applicant to the scheme on the basis of capacity. I agree with the noble Lord, Lord Clinton-Davis, that it is important to have a good flow of people coming into the industry, but his figure for those cadets coming in this year should be compared with that of 1987/88, when it was less than half that figure.
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