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Lord Dixon-Smith: My Lords, I apologise for interrupting but I feel I must. We should be quite clear that the reason my party oppose what the Government propose in this Bill is because we do not consider it to be full and proper privatisation. My party's policy has not changed. We still favour that as the correct and best solution.

Lord Smith of Clifton: My Lords, I thank the noble Lord. I pointed out that while his party is still fully in favour of privatisation it is against this particular form of part-privatisation.

The only consistent party line is that of the Liberal Democrats, who have always opposed the privatisation of air traffic control whenever the issue has been raised. Why the Government have changed their tune so flagrantly and gone out of their way gratuitously to antagonise majority public opinion is inexplicable. After all, after three years in office they are having enough trouble convincing the electorate that they are delivering on their manifesto pledges for education, health and road and rail transport, without courting massive disfavour by totally reneging on their policy for air traffic control for which they have absolutely no popular mandate. Perhaps there is some deeply dark Freudian sado-masochistic explanation for this self-inflicted injury, but, if so, it escapes me. The privatisation of NATS will be seen to be as politically inept as the Chancellor's curmudgeonly decision to raise the state pension by a measly 75p this year. The public are utterly opposed to it.

Liberal Democrats oppose this privatisation measure for five fundamental reasons. First, as I said, the Government have no mandate--indeed, quite the reverse. Constitutional convention should not be flouted quite so cavalierly. Secondly, the proposals are finance driven, as the noble Lord, Lord Macdonald of Tradeston, frankly admitted, when they should be safety driven. That is the most serious objection to the proposals.

A commercially oriented public/private company, with shareholders seeking a maximum return on their investment, means but one course of action; cutting costs. As there is little possibility of market expansion, the only way of improving profit margins would be to

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reduce manning levels and to shorten the safety distances between airborne planes. That would be folly, particularly at the present time. Air traffic control over Britain is growing in volume at a rate of 6 per cent per annum. British airspace is already one of the most densely crowded in the world. And when Swanwick kicks in, 18 months hence, there will be a need for a further 100 air traffic controllers. Furthermore, I agree with the noble Lord, Lord Brabazon of Tara, that the Government's PPP project is hopelessly complex, although I reject his alternative of full privatisation.

Thirdly, the argument that NATS needs an injection of private-sector management discipline is far from obvious. NATS currently makes a surplus of some £55 million a year, which goes directly to the Exchequer. More importantly, it has a safety record second to none and it is expertly managed. What "added value", to use the current cant, will private sector techniques bring, apart from the absurd potentially dangerous cost cuttings to which I referred?

Your Lordships will doubtless recall that a captain of industry, a chairman of ICI no less, was called in by government to sort out a transport problem. Dr Beeching's savage surgery was applied to the railways with disastrous results. At enormous cost, attempts are now being made to reverse its worst excesses. Like Captain Boycott a century earlier, his surname became a reviled verb. Beeching was not a happy precedent and we should beware the blandishments of any would-be emulators.

Fourthly, NATS would become the only privatised air traffic control agency in the world. Not even President Reagan endeavoured to privatise American air traffic control, which remains in federal hands. This would make it much more difficult to harmonise with the state-owned systems of the member states of the European Union. Collaboration, not competition, is what is needed in the move towards a European "single sky", which most experts agree is the desired goal.

Fifthly, the smooth interface between civilian and military air traffic control may well be compromised by privatisation, no matter what government directives are issued. This would be very serious at times of increased military activity, thereby endangering national security.

It is for those reasons that we on these Benches are implacably opposed to privatisation. We go along with the need for more capital to keep NATS fully modernised to meet the growing demands it is facing, but we are not convinced that a PFI or a PPP scheme is either necessary or desirable. Quite frankly, the Treasury could afford to provide the necessary money to be repaid over time. That would be a much cheaper option and could be facilitated by the recent changes to resource accounting and capital charging that enable costs to be apportioned and recouped over the lifetime of the project. That is the conclusion of a recent study by the National Institute for Economic and Social Research.

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However, for reasons best known to themselves, the Government are very unlikely to provide Exchequer moneys for the future funding of NATS and it is only realistic, therefore, to consider other feasible options apart from privatisation. During the passage of the Bill in another place, my honourable friends supported the proposal put forward by the honourable Member for Edinburgh East and Musselburgh, Dr Gavin Strang--who at least has the great virtue of sticking to the principles which his own Government have so cynically abandoned--for a public, not-for-profit trust with bond issuing powers.

The model for that is NavCanada, which was created in 1995 with a board representative of airlines, staff and government. After an extensive analysis, the Canadian innovation was the option favoured by the Commons Environment, Transport and Regional Affairs Select Committee when it reported last February. Accordingly, Liberal Democrats will be tabling amendments to the Bill to enable an independent public trust to assume responsibility for NATS in place of the Government's policy of privatising a vital asset whose sole concern should be safety in the air rather than the price of a commercial share.

5.26 p.m.

The Lord Bishop of Hereford: My Lords, the Second Reading debate on the Transport Bill might not be seen to call for the use of apocalyptic language or imagery, but the fact is that the human race is threatened by two enormous and terrifying problems. The first is the relentless growth in population in the developing world and the second is the very serious damage which we in the developed world in particular are inflicting on our fragile environment.

It is not the business of the Transport Bill to inhibit the processes of procreation, but it is its business, among other things, to tackle some of our most pressing environmental problems. I warmly welcome the steps which the Bill takes in that direction, although I fear that they are more faltering steps than some of us would have wished to see.

I welcome the move towards something which at least begins to resemble an integrated transport policy. I welcome the emphasis on local transport plans. I welcome the creation of a definitive strategic rail authority. I welcome the provision for congestion charging and the workplace parking levy. All those developments offer significant environmental benefits, at least potentially. I hope very much that the Government will not be deflected from their originally declared objective of significantly reducing car use, promoting better public transport and moving large volumes of freight from road to rail.

I therefore want to speak entirely about the provisions of the Bill which have environmental implications, so my few words may be seen in that context perhaps as a trailer for what the noble Lord, Lord Beaumont, will be saying later in the debate. The Bill would have provided the ideal vehicle for such a

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development, but local transport plans can and should be as much concerned with making it safer and more attractive to walk or cycle as with the management of motorised traffic and the introduction of better public transport.

I was pleased to see the support of the Minister in another place, Mr Keith Hill, for the "walking bus" method of getting children safely to school as part of the "Don't Choke Britain" campaign. The enthusiastic introduction of that method right across the country could make a significant difference to car use and road congestion.

In all our attention to environmental concerns, we have to pay proper attention to the competitiveness of UK industry. Increased charges of any kind must be watched very carefully from that point of view. But it is in a sense fortunate that congestion, for example, has an enormous financial price tag as well as an environmental one. Congestion currently costs us a huge amount, variously estimated at between £19 billion and £23 billion each year. Compared with that, the necessary expenditure which we foresee on the enhancement of rail freight infrastructure of £5 billion over 10 years begins to look more like peanuts.

The Strategic Rail Authority has a very important role to play in achieving the development of rail freight infrastructure and the transfer of more traffic from road to rail. The past five years have seen a very encouraging growth in rail freight traffic under the completely transformed management of English, Welsh and Scottish Railways, Freightliner and, now, GB Railfreight. From an all-time low of 5.7 per cent of market share in 1995, the figure this year has risen to something like 8 per cent of the market share for rail traffic. However, when one reflects that rail's market share was 42 per cent in 1950, it becomes clear that we still have a long way to go to recapture that lost ground.

I believe that congratulations are very much in order on the achievements of the rail freight companies and on the efforts of the Rail Freight Group, so ably led by the noble Lord, Lord Berkeley. However, the real constraints now are on capacity. Significant infrastructure improvements are extremely costly. The return on capital investment of this kind is a long-term business and Railtrack has made it clear that it is not prepared to make that kind of investment.

That is one of the worst dilemmas to result from the bizarre processes of privatisation. Clearly it calls for the development of new and imaginative ways of funding major infrastructure improvements, such as the proposed special purpose vehicles which have been mentioned by Sir Alastair Morton. I hope that the Minister will be able to confirm that such measures will have enthusiastic government support.

I was grateful for what the noble Lord, Lord Freeman, said about the financing of the enormous gap in the infrastructure costs for rail freight because the environmental advantages of rail freight are very great. CO2 emissions for an electric freight train are 23 grammes per tonne/mile; for a diesel train they are

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70 grammes per tonne/mile; and for a heavy goods vehicle on roads, as much as 450 grammes per tonne/mile. The differences are colossal and it is extremely important that we achieve the transfer from road to rail.

However, even in an ideal world with 50 per cent of freight carried by rail, a great deal will still have to go by road. I believe that it is very encouraging that the CBI and the Freight Transport Association have joined with the rail freight companies in a combined campaign to improve rail freight so that it can properly serve the national interest and complement road freight services. Those services suffer appallingly from congestion costs, and I believe that targeted congestion charging makes economic as well as environmental sense. If we could reduce significantly the number of private cars on the road, the necessary road freight would travel more quickly, more efficiently and more economically.

The workplace parking levy, with all the proceeds hypothecated for public transport improvements (I hope not simply for 10 years but indefinitely) would reduce considerably car use and hence atmospheric pollution. As a member of the All-Party Motorcycling Group, I must declare an interest and plead for an exception to be made for motorcycles, which are so much more environmentally friendly than cars as well, of course, as much more fun. There are already examples of large companies which have introduced excellent green transport policies for their employees, such as Boots in Nottingham and Pfizer, the pharmaceutical firm, in Kent. Those examples could and should be followed.

However, I believe that there is a serious flaw in the provisions for the parking levy. The Bill specifically excludes retail and leisure locations and I believe that that is a mistake. It is significant that the Local Government Association, among other bodies, wants to see the parking levy introduced also at out-of-town supermarkets and retail and leisure facilities, where free parking at present seriously disadvantages town centres and their shops and businesses. The huge proliferation of out-of-town shopping centres has been an important contributory factor in the growth of car use, not to mention the aesthetic impact of their hideous buildings and sprawling car parks.

A flat-rate compulsory car park charge of, say, £3 for every visit to such a place may be a useful deterrent. However, as other noble Lords have said, I recognise that car use is not as price-sensitive as one would like to believe. But I believe that it may achieve something and it may also do something to help our declining market towns. If the supermarkets complain, too bad. They have already inflicted far too much damage on our landscape, our environment, our town centres and our farming industry.

In general, I welcome the Bill. It promises some important environmental benefits. In introducing the Bill, the noble Lord, Lord Macdonald, said that the Government plan further amendments. Perhaps he will think of others in response to some of the points that I make. If the Government really wanted it to, the Bill could deliver even more environmental benefits.

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I fear that I must end on a slightly sour note with regard to another important omission. The Bill has much to say about air traffic control and many noble Lords have spoken wisely and knowledgeably about that. However, it has nothing to say about the volume or levels of air traffic and their catastrophic environmental impact. Friends of the Earth has calculated--I recognise that this is perhaps an impressionistic rather than a precisely verifiable statistic--that one return flight from London to Miami generates more CO2 pollution than does the average private car in this country in a whole year.

I believe that there is a dawning awareness of the danger of the pollution caused by road traffic. That is one of the reasons for congestion charging and the parking levy. So far there appears to be little or no awareness of the appallingly damaging effect of air traffic. What do the Government think about CO2 pollution? Do they care or not? Do they realise that soon we shall have to meet much more demanding targets for CO2 reduction than those set at Kyoto? If they do care, why have they allowed the extraordinary expansion of so-called low-cost airlines with more and more flights to what Mr Chamberlain, were he living at this hour, would no doubt have called "little-known airports in faraway countries"?

Of course, this is an international problem and it needs an international solution. However, I believe that we could at least give a lead.

5.37 p.m.

Lord Morris of Manchester: My Lords, together with other noble Lords all across the House, I pay tribute to the three maiden speakers and look forward to hearing all of them again on many future occasions.

I have two reasons for speaking in this debate. First, I want to acknowledge the Government's major new investment in the Greater Manchester Metrolink. As a Member of Parliament for Manchester for 33 years, I was much involved in securing the funding to get this project, which today is so hugely important to the conurbation, off the ground.

The Government have now allocated no less than £250 million to the expansion of our Metrolink and it will benefit not only my former constituency, Wythenshawe, which includes Manchester Airport, but also Oldham and Rochdale, Ashton and Trafford Park. It will be a major influence on the regeneration of Greater Manchester and reflects high credit on the passenger transport authority and executive. Thousands of new jobs will be created and, once finished, Metrolink will carry around 50 million passengers, some 10 million of them--as the right reverend Prelate the Bishop of Hereford will be glad to hear--attracted from the private car.

The biggest single investment in a public transport scheme outside London made by any government in 30 years, it gives the lie to those who complain that Ministers have not fully committed themselves to investment in the transport infrastructure. For this I extend warm appreciation to my noble friend the Minister, whose personal links with Greater

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Manchester are close and of long standing. In my view, my noble friend was already well entitled to call himself an honorary Mancunian: now no one anywhere can question that entitlement.

My second reason for speaking today is to congratulate the Government on this Bill. For 18 years in another place I was forced to witness the progressive disintegration of public transport wrought by bus deregulation and rail privatisation. Passenger numbers fell by over 30 per cent in metropolitan areas and fares increased in similar proportion. Socially, environmentally and economically the effects were disastrous. The Bill heralds change for the better with its emphasis on integrated transport, land-use policies that favour public transport as a viable choice for the car owner and the injection of some order into the chaos that followed rail privatisation.

But there is no Bill that cannot be improved--I speak as a former Minister who took many wide-ranging new measures to the statute book--and I have some suggestions for my noble friend to consider.

At the heart of the Bill is the obligation that Local Transport Plans will place on local transport authorities to produce a strategy for a bus quality partnership between the public and private sectors. In advance of the Bill's enactment, many authorities, including Greater Manchester-- which the Deputy Prime Minister has designated a "centre of excellence"--have already been hard at work forging such partnerships. In general, the local authorities will invest in bus priority and improved bus facilities and ensure that information and ticketing schemes are developed. Those efforts will be developed in partnership with bus operators, who are investing heavily in new, cleaner and accessible vehicles. As drafted, however, the Bill forbids any prescription of timing or frequencies.

To many of us that seems odd. If local transport authorities have gone to the trouble of providing improved facilities, it is not unreasonable for bus operators to be asked to guarantee a minimum level of service. In another place the Government expressed fear that such powers might be used by over-zealous authorities to place a burden of service upon operators beyond what is commercially tolerable, resulting in wholly prescriptive bus franchising. Yet such powers are available in the Bill if quality partnerships fail. I understand that Ministers have suggested that similar arrangements might be entered into voluntarily; but the trouble here is that they would not enjoy the partial protection offered by the Bill's competition test applicable to statutory quality partnerships.

Operators have the genuine anxiety that if they enter into such arrangements they will be exposed to the full rigours of the Competition Act 1998, with no protection from the Bill's competition provisions. To meet the legitimate concerns of all parties, my suggestion--to which I hope my noble friend will accede--is that voluntary arrangements, once made, should have the same protection as that afforded to statutory partnerships. That would allow authorities

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and operators to negotiate minimum frequencies which, while not statutorily prescriptive, would be judged by the same competition criteria as those set out in the Bill. My contacts with people of differing interests suggest that this compromise could meet the concerns of all parties. I know that my noble friend will want to respond to me about it as helpfully as he can.

I turn now to integrated through-ticketing, the ultimate test for any scheme of integrated public transport. As the Bill stands, there is an obligation on local transport authorities and bus operators to formulate a scheme of through-ticketing for buses. There is also an obligation on the Strategic Rail Authority to collaborate with such schemes. I see two weaknesses in this approach. First, there is no obligation whatever on bus operators to collaborate with the SRA; and, secondly, there are public transport modes other than bus and rail. I spoke earlier of my delight at the expansion of the Greater Manchester Metrolink. Elsewhere in the country there are other light rail systems, ferries, metro systems and so on. None of these other forms of public transport is addressed by the Bill and I feel this should be reconsidered. The Secretary of State might, for example, take power to require local transport authorities and operators of all modes to collaborate on multi-modal through-ticketing. Without that power, a splendid opportunity to guarantee fully-integrated public transport might be lost.

As your Lordships know, the problems and needs of frail elderly and severely disabled people have been my special parliamentary interest over many years, including my five-and-a-half years as the first Minister for Disabled People. Thus I welcome the introduction of minimum fares for elderly people and the new help for disabled travellers that my noble friend the Minister announced in opening the debate.

I have often had the pleasure of welcoming innovative new facilities in Greater Manchester for blind and other disabled people. They have ranged from free or flat fare concessions, grants toward accessible buses, door-to-door transport across the whole county and taxi vouchers for people whose disabilities are such as to require the use of taxis. I am glad to say that concessionary facilities in all metropolitan counties exceed the statutory minimum. While some use flat fares and in others fares are free, they are all uniformly generous. But a statutory scheme is made essential by some local authority schemes that vary, in terms of practical help, from the pathetic to the non-existent.

I must, however, enter the plea that where a concessionary scheme for the elderly is demonstrably more generous in the round than the minimum, some discretion should be afforded to the Secretary of State to exempt it from the minimum. I say that not merely on account of administrative difficulties or expense, both of which will occur, but because of the confusion and anxiety that two schemes, or a hybrid of two schemes, will cause both to drivers and the elderly people whom the minimum is designed to help. And here, in parenthesis, I make one more plea of special importance to many frail elderly and other disabled

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people: namely, that steps will be taken to ensure that rail substitution services are by wheelchair-accessible vehicles; and that licensed taxis, all of which will be required under the Disability Discrimination Act 1995 to become wheelchair accessible, are guaranteed access to railway forecourts.

Finally, I want briefly to comment on the proposed Strategic Rail Authority, whose purpose of introducing some order into chaos I wholly applaud. I trust that we can now look forward to stability and investment in the rail network on a scale not hitherto seen. There is concern, however, that a London-based SRA will not be able, by the very nature of its strategic and national responsibilities, to take into account local and regional priorities. I am pleased that the Government have, to a considerable extent, protected the powers of passenger transport authorities and executives in metropolitan areas to fix service levels and standards, a power they have exercised since 1968 with enormous benefits to local people and with higher levels of investment than can be found elsewhere in this country.

The Bill sets out matters that the SRA should have regard to in discharging its functions. But there is one curious omission: the Local Transport Plans of local transport authorities. This Bill stands or falls on its ability to deliver fully integrated public transport and the Government's chosen mechanism is the Local Transport Plan. Whether in metropolitan or shire areas, rail services will be an essential constituent of these plans; yet the body charged with responsibility for rail services is not given, on the face of the Bill, a duty to take Local Transport Plans into account.

I gather it is felt that to list every matter to which the SRA should have regard would be impossible and that this should be left to guidance from the Secretary of State. I accept that that may be the case for a wide range of matters, but Local Transport Plans are so central to the Government's whole strategy that their omission from the SRA's stated duties seems frankly illogical. I urge my noble friend to reconsider this constructive criticism of the Bill and I know he appreciates that it comes from people who both welcome the Bill and wish him all possible speed in achieving its enactment.

5.49 p.m.

Lord Faulkner of Worcester: My Lords, I suppose it was inevitable that this debate would be wide ranging, as the Bill contains complicated provisions relating to so many aspects of our transport industries. I shall resist the temptation to go down all the routes that the Bill opens up and which other speakers have covered and concentrate mainly on the aspect I know best and talk about Part IV, which formally establishes the Strategic Rail Authority.

Before I do so, I must comment on the Government's proposals for the National Air Traffic Services. Some years ago, I was employed as an adviser by the Civil Aviation Authority. The CAA was then--and remains today--an effective and efficient

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regulator. It is vital that nothing is done which diminishes that role or in any way compromises the CAA's absolute commitment to air safety.

In my view, the Bill passes that test. It also addresses the issue of investment funding in air traffic control. With air traffic levels throughout Europe growing by 6 to 7 per cent a year, long-term investment in NATS is not only desirable but essential. I am aware that there are differing views here and outside about the model the Government have chosen to resolve this.

I am puzzled by the tactics which the two Opposition parties apparently plan to adopt in your Lordships' House when we reach later stages of this Bill. The Conservatives are in favour of total privatisation of NATS. The Liberal Democrats are totally against. This point of view was helpfully clarified and confirmed by the noble Lords, Lord Dixon-Smith and Lord Smith of Clifton, just a few minutes ago. Yet I read in the press that they are apparently planning to vote together in the hope that they will embarrass the Government. If they do decide to go down that route, do they not think that this would be regarded as cynical and as a blatant piece of opportunism?

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