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Transport Bill

Volume 79: debated on Wednesday 22 May 1985

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As amended (in the Standing Committee), further considered.

Clause 45

Transfer Of Operations Of The Bus Company To The Private Sector

3.50 pm

I beg to move amendment No. 62, in page 39, line 38 after `undertaking', insert

`with not more than 49 per cent, thereof being transferred to any party'.
If one has a complaint about the Standing Committee procedure that we adopt in the House, it is that we tend to alternate between questions of the broadest principle and legal questions of the minutest detail without sometimes giving proper attention to the middle ground —those important aspects of the Bill where it may be made to work better or not to work at all. For reasons of the striking of political attitudes, questions of broad principle tend to be dwelt upon, and for reasons of delaying the progress of the Bill, questions of the minutest detail tend to be dwelt upon. Sometimes both sides of the Committee do not look at the Bill itself and how it might best be made to work.

The motivating force behind the Bill is competition policy. Central to that policy is the proposition that the Government should divest themselves of the National Bus Company. The form in which the NBC is privatised and the timing of that privatisation could be absolutely essential to whether competition policy is effectively stimulated or inhibited by the Bil.

My amendment, if taken literally—it is not intended to be—would oblige my right hon. Friend the Secretary of State to divest the state of the NBC in at least three separate companies. I have discussed the matter with the National Consumer Council, and the purpose of my amendment is to introduce a short debate on the form of privatisation. I invite the House to recommend my right hon. Friend, when deciding how many companies to break the NBC up into, to favour a large number of small companies rather than a small number of large companies.

My hon. Friend the Member for Hereford (Mr. Shepherd) knows better than I, but I know too, that it was the monopoly, the monolithic power, of the Midland Red West Company, that all but jeopardised the experiment undertaken in Hereford and Worcester, although in the end competition won through. Should we divest ourselves of the NBC as one large monopoly organisation, the competitive threat that that would present to other bus companies, existing and putative, throughout the country, would be so great that the conditions of free competition for the customer-passengers that we hope to establish through the introduction of the Bill might never be successfully set up.

In deciding how to privatise NBC, my right hon. Friend the Secretary of State will have taken and will take advice from many different sources. He will have spoken to representatives of the NBC itself. Naturally, they will have told him that the more closely that the form in which the company is privatised resembles its present form, the more that will suit them and the easier it will be. I imagine that the last thing the present management wants is that the company should be fragmented before sale into many small and unfamiliar companies.

My right hon. Friend the Secretary of State will also have spoken to the trade unions involved. I am sure that they too would prefer to deal with one large organisation or a small number of large organisations than with a large number of small organisations.

My right hon. Friend will also have spoken to the local authorities. No doubt they too would prefer to carry on working with companies of more or less the same size and type of management as those with which they are familiar, so I imagine that they would also not wish the NBC to be broken up into a large number of small, unfamiliar units.

Does my hon. Friend agree that breaking the NBC up into companies of similar size to the present main constituent companies — for instance, Trent Motor Traction in my area—would allow the possibility of management buy-out and employees having a stake in the company employing them, thus providing the same opportunities to advance as in the case of the National Freight Consortium? Does my hon. Friend agree that it might be better to proceed in that way rather than by having very large companies which could not possibly offer opportunities for managment buy-out?

Yes, I entirely agree with my hon. Friend. If my right hon. Friend the Secretary of State were minded to break up the NBC into something approximating to the current pattern of constituent sub-companies I believe that that would be the right decision. I am familiar with the operations of Trent Motor Traction and I believe that a company of that size and form could operate effectively and properly, but it is not for me to say that every one of the constituent companies now under the NBC umbrella is in the same position. Certainly, anything larger than that would be too large, although anything very much smaller might be too small provide the management structure, the number of buses or the facilities to stand alone in the market place. Nevertheless, in my view it stands to reason that the NBC should be broken up into a number of much smaller companies. That is the purpose of my amendment, and I commend it to the House.

Finally, my right hon. Friend the Secretary of State has no doubt also spoken to my right hon. Friend the Chancellor of the Exchequer, who, I imagine, will have concluded that, the larger the company to be sold, the better the immediate proceeds to the Treasury. In the short term, that is true. In the long term, however, I believe that the establishment of a proper competition policy will benefit future Chancellors, as it will be possible to reduce subsidy because the companies will be able to provide a good service without it. I am sure, too, that the draftsmen and accountants at the Department of Transport will have told my right hon. Friend the Secretary of State that it is much easier to sell one large company or a small number of large companies than to sell a large number of small companies.

All those considerations are important, concrete aspects which bear heavily in the immediate term. Competition policy is an abstract, long-term matter which does not bear heavily in the immediate term, but it is the motive behind the entire Bill and I hope that my right hon. Friend and the House will not lose sight of it in considering the form in which the NBC should be privatised.

As we are now reaching the stage when the Bill is likely to become law whether we like it or not, although its shape may be changed in another place, the amendment moved by the hon. Member for Derbyshire, West (Mr. Parris) is clearly worthy of consideration. I was somewhat concerned at the outset in case he was encouraging fragmentation down to totally anarchic proportions, and I was glad to hear that that was not his intention. If the companies are too small, that is clearly undesirable, but if privatisation is to take place as proposed it seems sensible that the operating companies should be the main constituent components. To the extent that the amendment seeks to achieve that, it has something to commend it.

There is considerable concern that, if the NBC is to be broken up, in view of the experience in Hereford it should not be broken up in such a way as to create a series of local monopolies instead of one national monopoly. The Minister, I know, would agree with that. However, we have to secure circumstances in which competition is fair and equal.

If I may make an oblique reference to circumstances north of the border, what causes me concern is that the Scottish Bus Group, which is to be retained as 100 per cent. Government-owned, will seek to gobble up the services of the passenger transport executive and create, effectively, a national monopoly in Scotland. I regret that the Government tend to regard Scotland as a region of the United Kingdom, whereas it is a distinct national entity. If a monopoly is created, there will be less competition in Scotland. If the consequence of what is likely to happen in England is a series of regional monopolies, real competition will not be improved. I should like the Minister to consider that point.

4 pm

There is genuine and serious concern that the National Bus Company may be broken up in such a way as to create a series of regional monpolies instead of the competition that the Secretary of State for Transport seeks. My hon. Friends and I have expressed reservations about the thrust of the Bill, but I intervene at this point in a spirit of realism, recognising that the Bill will be passed. I urge the Secretary of State for Transport to take account of the genuine concern about the implications of breaking up the National Bus Company. The amendment takes some account of the need to implement the Bill's provisions in a balanced and sensible manner.

Before the hon. Member sits down, will he explain what kind of size, if the National Bus Company is broken up, the Liberal party thinks it is reasonable for these companies to be, bearing in mind that the smallest of the NBC companies operates 134 vehicles and the largest 1,105? Will he also say a few words about. management buy-outs and employee participation?

I am surprised that the hon. Gentleman does not realise that the Liberal party believes that local authorities and local passenger transport authorities should be making the decisions. That is why we oppose the Bill. They would be able to determine what is the right balance. Given that the Secretary of State for Transport intends to implement the Bill, I am suggesting that he should ensure that local circumstances in each region should be taken properly into account. That is the point of the amendment, and that is why it deserves consideration.

Although this amendment appeals to hon. Members, one has to remember that clause 45(8) makes it abundantly clear that the Secretary of State has reserve powers. Therefore, if he discovers that defective proposals are put to him, or if he does not approve them, he will be empowered to draw up his own. In Committee, it became clear to me that. the attitude of the Government borders upon obduracy and that hon. Members have therefore formed the view that the only salvation, minor though it may be, will be found in the House of Lords. Therefore, the hon. Member for Derbyshire, West (Mr. Parris), whose amendment appeals to the House, should consider the attitude of the Secretary of State for Transport. Even if the House agrees to the amendment, the Secretary of State will quickly find a means by which to have his own way.

I wish to underline the point made by my hon. Friend the Member for Derbyshire, West (Mr. Parris). The National Bus Company has learned from the Herefordshire trial area that the effectiveness of Midland Red West as an operating company was immensely improved by direct communica-tion between management and garages and drivers. The management of Midland Red West would, I believe, endorse that point, because it has made it to me.

It leads me to believe that more and smaller operating companies, with no more than 200 buses at most, would be most responsive to the market. It would also meet the point made by my hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo). Management or worker buy-outs would become even more possible, which could only be to the good. When those who are employed in the great state monoliths have a direct interest in their companies, their attitude changes. I want the attitude of these workers to change. I want them to be responsive.

In particular, I wish the label "the friendly bus service" to be returned to Midland Red. It used to be a friendly bus service before it was nationalised in 1968. Since then, the friendly bus service has been lost sight of. Those of my constituents who have spoken to me believe that Midland Red has become a distinctly unfriendly bus service.

It must have been a very selective cross-section of the hon. Gentleman's constituents.

The hon. Lady, as ever, makes a derogatory remark. My constituents have volunteered this information when I have asked for comments. That view has been expressed too often to be ignored. I want the label "the friendly bus service" restored. It will be restored by means of short lines of communication and small units with the maximum direct employee participation.

The timetable for the disposal of the assets of the National Bus Company could create great difficulties for the passenger transport executives when they are broken up. If the PTEs were to be broken up before the NBC and if tendering were to commence after the PTEs were broken up but before the NBC was broken up, the NBC assets could be over-valued and the NBC would be in a very good position over tendering. What will the timetable be? Also, how do the Government intend to deal with the problem of the PTE agreements with the NBC?

I shall deal first with the point raised by the hon. Member for Sheffield, Central (Mr. Caborn), although it is somewhat outwith the rest of the debate. The National Bus Company will, by D-day, be broken up into operating companies. There is no such pressure upon the PTE. He need not, therefore, be concerned about the PTE. If there is any cause for concern, it is that the PTE is not to be broken up so quickly as the National Bus Company.

My hon. Friend the Member for Derbyshire, West (Mr. Parris) has done a service to the House in moving this amendment and I am glad to have the opportunity to reassure him. I can well understand his concern. He does not want the National Bus Company to be transferred to the private sector in a form which will enable it to dominate the competition and thereby undermine our policy. It is for that reason that clause 46(1) says that the main objective of the NBC in preparing its disposal programme and in running its business until the programme is completed shall be to promote sustained and fair competition. That will be competition between the NBC subsidiaries and former subsidiaries and other operators. The NBC will have to dispose of its operations into a number of units. The objective of promoting competition clearly could not be met if the NBC was privatised as a whole.

My hon. Friend the Member for Derbyshire, West referred to the central purpose of the Bill, which is to introduce competition. Many of our debates have, wrongly, been overshadowed by the failure to recognise that the key point of the Bill is competition, which brings with it the opportunity for efficiency of management, more businesslike organisation and a position in which the consumer comes first.

We are trying to obtain some notion of the Government's thinking, if there is any. The Minister referred to competition and said that if we privatised the NBC as a whole, we would not have competition. Yet only a week or so ago, the Government decided to privatise the gas industry as a whole to promote competition. Where is the logic in the Government's thinking?

The hon. Gentleman knows that one can relatively inexpensively promote a competitive bus service alongside another bus service, but cannot, for the same relatively low cost, provide a gas pipeline into each household alongside the established pipeline. The hon. Gentleman's point has no validity.

I am delighted that my hon. Friend the Member for Hereford (Mr. Shepherd) is present because the Hereford experiment was enlightening. We made it clear that it was a trial and that we had many lessons to learn from it. One lesson we learned was the way in which Midland Red used its clout in the form of predatory pricing that was anti-competitive—

Should we therefore conclude that the Minister believes that, if two or three companies compete in the same area for the same routes, there will be no attempt at predatory pricing? Has he not heard of one company seeking to use its economic muscle to drive out other companies? It does not need to be Midland Red; it will be typical practice throughout the country.

The hon. Lady knows that Midland Red, which has a large operating area, was faced with competition on a narrow front. It concentrated its resources on seeking to smash that competition. When the Bill is on the statute book and there is competition throughout the country, such companies will face competition on every flank and will not be able to concentrate their resources in that way. I hope that the Liberal party will now return to its traditional belief in opposition to monopoly and support what I am saying.

I am concerned that the Bill may inadvertently create local monopolies. Is the Minister aware that the former manager of Grampian Passenger Transport has recently transferred to become the general manager of Alexander's Northern and the Scottish Bus Group on the clear indication that he sees the expansion of the Scottish Bus Group to replace existing local authority services and, therefore, create a monopoly that will provide him with his career prospects?

4.15 pm

Is my hon. Friend aware of the significance of the local election results? For example, in Lancashire the local Labour group spent more than £130,000 to scare people with a misinterpretation of our bus policy, but lost control of the county, while there was a magnificent result in Hereford and Worcester—the Conservatives retained control—where the experiment took place that has been much maligned by the Opposition? Does my hon. Friend draw the obvious conclusion from that?

I am sure that the whole House will draw the obvious conclusion from that. If the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) fears that she will lose the company of my hon. Friend the Member for Mid-Worcestershire (Mr. Forth) in the next election, I assure her that, once the Bill is in operation and there are improved bus services in his area, he will be re-elected with an even larger majority.

My hon. Friend the Member for Derbyshire, West referred to competition as being more important than the maximum short-term yield to the Treasury, and I carefully noted his point. He also said that the units should not be so small that they were unviable or inadequate in management structure. An important point was made by my hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo) who said that the size was such that a management buy-out would be possible. We have good reason for studying some of the other places where management buy-outs are taking place. Huge advantages have flowed from that, especially in the change in worker attitude — for example, in the National Freight Corporation.

If companies are split into too small units, there is a danger that some of them will not be subject to management buy-outs. Why should anyone bid money for weaker companies? Why not wait until they go out of business and buy their buses at cheap, second-hand values and refuse to do anything about future pension requirements? Is there not a need to retain a balance to ensure that the scenario I have outlined—which in some areas is as likely to happen as the scenario outlined by my hon. Friend—does not happen? Should not the Government be aware of that danger when considering the amendment?

My hon. Friend is well known for his interest in this area, but he may not have been in the Chamber when I spoke about the purpose entrenched in the Bill—the promotion of sustained and fair competition. Sustained and fair competition will not be promoted, with units of the size that my hon. Friend says nobody will want —units which would therefore go bust. That is not the promotion of sustained competition. Therefore, my hon. Friend's point is fully met.

Will my hon. Friend bear in mind the danger that large municipal operators — for example, Manchester, with more than 3,000 vehicles—can make mincemeat of any private operator unless the Government are careful to ensure that they are scaled down at the same time?

I take my hon. Friend's point, which has some substance. However, in the bus industry there are diseconomies of scale above a certain level and there is no reason to believe that some of the PTEs will not want to break down into smaller units to make management more economic and efficient.

The hon. Member for Gordon (Mr. Bruce) said that he feared an inadvertent creation of monopolies. I am delighted to welcome him back to the traditional Liberal view that a monopoly is not desirable. I only hope that he will address his remarks to his hon. Friend the Member for Isle of Wight (Mr. Ross) and look at the way in which the Liberal party has approached this Bill throughout its passage. It has sustained the view that local authorities should have the right to decide, which—in the pattern of the knowledge of what many local authorities will do —is to create local monopolies. We believe that that is against the interests of the customer and of the industry as a whole.

It is too early, however, to say exactly what will follow in connection with the break-up of the National Bus Company. We have asked the board to draw up options for privatisation of the company. The company has appointed a merchant bank to advise it, and my Department last week appointed consultant accountants. Until we have seen later in the year the options for privatisation and discussed them in detail with the company, I cannot say in how many units the National Bus Company will be transferred to the private sector. However, I can give my hon. Friend an assurance that I would not agree to any programme for the disposal of the National Bus Company's operations unless I was clear that it would indeed promote the competition which is the cornerstone of our policy.

The Minister will accept that the formula that he has proposed is very complicated. He is saying that the units on the one hand must be large enough to be viable but on the other hand must be small enough for anybody considering a management buy-out to take them over. Will he give an undertaking that he will come back to Parliament when he finally reaches some decisions about the matter, which is fundamental to the future of the transport system, so that we may have the opportunity to discuss the decisions that he takes? If not, will he accept that we are having to take his word that he has no idea at present what he intends to do, but that at some time we can rely upon him to do the best possible thing for the best of all worlds? He will accept that that is a trifle vague, even for him.

The hon. Lady produces, as if it is some strange new idea which suddenly worries her, the fact that at this stage the negotiations between the representatives of the merchant bank on the side of the National Bus Company and the Department's representatives have not reached a stage at which any conclusion can be brought forward. That is correct. The hon. Lady knows that, and she has known it all along.

We have said that we are setting down the broad criterion upon which those decisions will be taken. That criterion is promoting sustained and fair competition. That does not mean that the patterns will be the same size in every part of the country. Indeed, as some of my hon. Friends have argued, in some areas, larger units may be appropriate because larger units will be opposing them. In other parts of the country there may be more demand for a management buy-out, and the resources available for the management buy-out and the amount that management and workers want to take over may themselves have a profound effect upon the decisions taken. It would be wrong for us to set down now, before advice has been taken on these matters, the precise pattern in the way that the hon. Lady has requested.

She now asks me—it is an unusual concept—that we should come back to Parliament and give it the opportunity to discuss the proposals when the negotiations between the two parties have been completed. There will be nothing hole-in-the-corner about this. The hon. Lady will have public knowledge of what is being done and, if she does not like it, the opportunity of a Supply day will of course be available to her.

The Minister is as much seized of the issue as any other hon. Member, but in fact he is asking the House to give him a blank cheque. After many weeks considering the Transport Bill, he cannot yet tell Parliament what the apportionment shall be. All he says is that he can assure Parliament that, whatever the apportionment and whatever the break-up, it will comply with the central point of Government policy, competition. The words sound very inviting, but in practical terms I ask the Minister to try to respond to my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) and say whether at some point he will let Parliament know what will arise from the blank cheque for which he now asks.

It is not a blank cheque. If the hon. Gentleman had been in business, he would know that a decision is often taken that an expenditure between X and Y will be permitted. We have set down parameters within which such decisions will be taken. The parameters are that we seek a break-up of the National Bus Company which will promote sustained and fair competition. The criterion is established, and we shall do our best to ensure that it is fairly and properly carried out. On that, the hon. Gentleman can have my assurance. It is impossible to go further at present, when we do not know which group of management and workers will come forward, what its resources are and how much it wants to take over. Nor do we know the advice of the National Bus Company and its merchant bankers or the advice of our own consultant accountants. I have given the hon. Gentleman a reasonable criterion against which he can judge the success or otherwise of our policies in this matter, and I hope that he will accept that.

I hope, therefore, that my hon. Friend the Member for Derbyshire, West, having drawn attention to a useful point and having had the advantage of a useful debate, will find it appropriate to withdraw the amendment.

I apologise to the hon. Member for Derbyshire, West (Mr. Parris) for not having heard the beginning of his opening remarks.

I wish to speak briefly against the amendment and to bring to the attention of the House the example of Mid-Wales. The company that operates in Mid-Wales is Crosville. Indeed, it operates in the whole of north and Mid-Wales with buses going down as far as Cardigan and Carmarthen in the south and covering the Aberystwyth, Newtown and Dolgellau area of Mid-Wales. I am told that only one bus service in that area makes a profit. If the Bill is enacted, severe problems will arise in the area. Nobody will wish to undertake a management buy-out or to compete because it is not possible to make a profit in the area. Any buses that are run in the area will be run only because the county councils are providing the necessary funds and subsidies. I do not believe that any company wants to run a service that will be wholly dependent upon subsidies.

The area of Mid-Wales has to be tied to a much larger company such as Crosville. It could be contrary to the intention of the Bill to require Crosville to produce plans for the break-up of the company. If a break-up of the company is to be produced, the units must be as large as possible. This means that it is unlikely that any management buy-out would be undertaken in the area. I think that the Minister needs to have as much freedom as possible in order to be able to provide for services in such an area.

With regard to selling off any part of the company, the provision
"with not more than 49 per cent. thereof being transferred to any party"
puts additional restrictions on the Minister. In my view, the Minister will have enough trouble trying to privatise the bus service in Mid-Wales. I do not wish him to be hampered further. For that reason, I am not happy with the amendment.

It is not for us to dictate what should or should not happen in Mid-Wales. The House is at its least effective when it attempts to dictate the detailed structure into which companies such as NBC should be broken up.

4.30 pm

Before my hon. Friend proceeds, may I draw his attention to the nonsense spoken by the hon. Member for Wrexham (Dr. Marek)? He claimed that nobody wanted to run a service that was dependent on subsidy. There are thousands of businesses in Britain which run on the basis of contracting, and a contractor is delighted to contract to a public body, such as a local authority because he knows that in the end he will get his money. It is, therefore, nonsense to suggest that what we propose is unattractive.

I am sure that many bus companies will have to depend to a greater or lesser extent on subsidy, and what happens with Crosville and in Mid-Wales will have to be for determination outside this Chamber. It is for us to lay down the broad guidelines according to which executive decisions will be taken. It was with that in mind that I initiated this short debate. The Minister, in responding, has gone further even than my amendment sought to go and, in the light of that, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment No. 176, in page 41, line 8, at end insert—

'(5A) The Company's disposal programme shall also—
  • (a) specify the parts of their undertaking the provision of which has been financed wholly or partly by any one or more Passenger Transport Executives or local authorities and in respect of which sums are repayable to the Executives or local authorities; and
  • (b) describe the manner in which such sums are to be assessed.'.
  • It will be convenient for the House to discuss at the same time amendment No. 175, in clause 47, page 43, line 2, at end insert

    'and on the disposal of any part of their undertaking shall make repayment of such sums as are repayable, as mentioned in section 45(5A) of this Act, in respect of that part of the undertaking.'.

    We are here attempting to achieve an orderly disposal of assets. Over the years, PTEs have been contributing not just to revenue costs but have put considerable sums — remember, we are talking about ratepayers' money — into the creation of assets for a number of companies. That expenditure has covered, for example, vehicles, garages, bus stations and interchanges.

    As the Minister admitted when replying to the last amendment, he is not certain how the companies will be broken up or even about the size of the units that will then be created. It seems wrong, therefore, that the ratepayers, who have contributed for years, should not be told clearly what will happen to those assets. We are, therefore, asking in the amendment that
    "The Company's disposal programme shall also—
    (a) specify the parts of their undertaking the provision of which has been financed wholly or partly by any one or more Passenger Transport Executives or local authorities and in respect of which sums are repayable".
    We debated this matter at length in Committee. It remains an important and outstanding issue because we are talking of large sums of money. The report on transport aspects of the 1984 public expenditure White Paper said:
    "the fact that the NBC was able … to reduce its capital liabilities to the Secretary of State by £17·7 million in 1983 indicates that the Company is generating substantial cash surpluses after taking account of both interest charges and capital investment requirements. The revenue support payments made by local authorities to the NBC are, therefore, in effect, being used to repay the Company's long-term loans rather than to improve service standards, a situation that we find rather surprising."
    The Minister will also be aware that the Grieveson Grant report pointed out that a further £23 million of NBC debt had been repaid and had not been replaced by further loans. We are considering extremely large sums. That money has been paid to NBC and we have no idea of what attempts will be made to repay it and what will happen about the disposal of the assets in relation to PTEs.

    I am not certain what the hon. Lady is after. She said that the NBC made a profit. Any successful, well-run business is likely to make a profit. In this case, out of its profit it has repaid part of its debt to the Government. That has been a proper course for it to take and many businesses do that to their bankers in the course of successful trading periods. She went on to refer to revenue support being given by local authorities to the NBC. That is support to provide services which would otherwise operate at a loss and it is likely to include an element of the cost of depreciation on NBC's vehicles. Over and above that, she may have in mind contributions from ratepayers towards major capital assets such as depots and bus stations. If the hon. Lady will spell out the precise area of her misgivings, I will explain the position.

    I am endeavouring not to delay the House unduly. I specified the items which I had in mind and mentioned garages, bus stations and interchanges—property of various kinds — on some of which large investments have been made. I pointed out to the Minister more than once in Committee the size of the sums involved.

    The Minister says that businesses are in business to make profit. That is not the point at issue in debating this amendment. Local authorities are contributing ratepayers' money to the NBC, not to enable the NBC to repay much larger sums but to enable good services to be provided in their areas.

    In its report on the privatisation of NBC, Grieveson Grant said:
    "Since the December 1983 year end, a further £23 million (of the NBC debt) has been repaid and not replaced by further loans."
    In other words, there is no question of money continuing to be spent on the replacement or building of assets of the type to which I referred. Indeed, the Minister pointed out that Midland Red used its older buses, in the Hereford trial area, to run the competition into the ground. The report continued:
    "The repayment of these liabilities in 1983, while maintaining a strong balance sheet, emphasises the company's ability to generate cash … a consistent feature."
    That cash has come largely from the considerable sums that have been contributed over the years by local authorities. It is not true to say that revenue support grant has recently been given in respect of those contributions. In many instances, the money has been used to create capital assets of the type I mentioned, and in Committee I gave the Minister the figures.

    Because it is important for us to deal with other aspects of the Bill today, I will not detain the House on this issue, even though it is important. But answers are required. Local authorities have contributed large sums of money, yet no attempt will be made to repay them for creating those assets when they are sold, and we have no idea who will take over those assets or what will be the profits that such companies make in the future.

    Why should local authorities, many of which will be rate-capped, be expected to find large sums of money to make up the difference, for example, on concessionary fares, from contributions from their ratepayers? They should be told in clear terms what will happen to NBC's assets that have been created by their money.

    The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) has made the position clearer, and it may be helpful if I divide the issues that she raised. There is, first, the issue of revenue support and the repayment of money to the Government. Secondly, there is the issue of the grants that have been made for capital expenditure on garages, bus stations and other property.

    As for the profits that have been made and the use to which the board has put those in repaying debt to the Government, that is a normal procedure for a successful business, and the NBC is successful. In other words, it is proper for a successful business to use the profits from its operations to repay debt. There is nothing strange about that.

    The hon. Lady went on to raise the different question of substantial grants — she was right to say that sometimes a great deal of money has been involved—in garages, bus stations, property and so on. Some of my hon. Friends will be interested if the hon. Lady is saying to the House that the representatives of the ratepayers, in the form of the metropolitan county councils, have parted with public money to the National Bus Company without any contractual arrangements about what is to happen—[Interruption.] The hon. Lady knows perfectly well that the National Bus Company has always had power to sell subsidiaries if it wished. Is she suggesting that ratepayers' money has been put into companies that could be sold without contractual arrangements to cover what was to happen to that money if the subsidiaries were sold?

    Is the Minister of State not aware that he is telling the company—not asking it—to sell its subsidiaries? Does he seriously think that local authorities would have entered into an agreement to put up money over many years if they had thought that at the end of the time all of the assets were to be disposed of with no consultation with the people who had put up the cash? He must think that local authorities are more stupid than anyone else.

    The astonishing thing that the hon. Lady is trying to reveal to the House is just that. She is trying to say that local authorities have parted with large sums of money to the subsidiaries of the National Bus Company, although she knows that the National Bus company has always had the right — not the compulsion of Government — to sell any subsidiaries it wanted. [Interruption.] No. It has always had that power under existing law. At any time the NBC could have put any one of its subsidiary companies on the market if it judged that to be a profitable and viable way of using its resources. Is the hon. Lady saying seriously to the House that ratepayers have been looked after so badly that their representatives have parted with large sums of public money without any contractual arrangements about what was to happen if the subsidiary company was sold?

    It would be a different matter if the National Bus Company was being made to dispose of assets. The hon. Lady and I are talking about money that has already been paid over under existing legislation. The National Bus Company has an absolute right to sell those subsidiaries. Is she saying to the House that the representatives of the ratepayers have been so incompetent and so unable to protect the interests of the ratepayers that no contractual arrangements were made about what was to happen in the case of the disposal of a National Bus Company subsidiary into which the local authority has put money? If there are contractual arrangements, they will be carried out. If there are no contractual arrangements, it is a disgrace.

    The Minister is not concerning himself seriously with the problem. He is so naive that he cannot see the difference between the National Bus Company coming to some kind of agreement with the people from whom it is to get its funding and being forced to flog off any saleable asset, including all of its buses and other assets, because the Government have insisted. If he cannot see the difference, he must be more naive than I believed. He and his Secretary of State are forcing the National Bus Company to sell off its assets and to divide itself into tiny units. He is not even sure what size the units should be. He should accept the amendment so that an attempt can be made to protect the investment of many ratepayers over many years.

    I do not think we need detain the House much longer on this amendment. The point I have made is clear and simple. Revenue support has been for the operating expenses of the National Bus Company, including depreciation; profits on its operations have enabled it to repay the debt to the Government. In regard to grants of large sums of money for garages, bus stations and the like, I doubt very much whether the representatives of the local ratepayers have been so remiss as to part with that money without contractual arrangements about what was to happen in the event of the National Bus Company deciding to sell the subsidiary company into which the money was put. If that were the case, as I said, it would be a disgrace. Therefore, I hope that the House will feel it right to reject the amendment.

    The issue has become unnecessarily heated. To come back to the amendment, what does it seek? It does not matter a tinker's cuss whether the Minister is right. Money has been put into the National Bus Company for certain capital projects. Whether the contractual arrangement did not foresee what the company would be forced to do as a result of the Bill or whether the possibility was foreseen is of no consequence. The amendment does not argue the point. It says that the disposal programme under clause 45 shall

    "specify the parts of their undertaking the provision of which has been financed wholly or partly by any one or more Passenger Transport Executives or local authorities".
    Why does the Minister not accept the amendment?

    4.45 pm

    In the cold light of tomorrow the hon. Member should consider the debate carefully against the background that the Audit Commission will be examining the accounts of local authorities to see whether they have disposed of money without making contractual arrange-ments as to its repayment. Either there is a contractual arrangement for what is to happen in the event of a subsidiary of the National Bus Company being wound up or being sold, or there should be. I have no doubt that the Audit Commission will consider with great interest what the hon. Gentleman has said.

    Order. I remind the hon. Gentleman that this is Report stage. He must not keep making speeches.

    I want just to tidy up one point, Mr. Deputy Speaker. I think the House would agree that it would be better to clear it up. I agree with the Minister thus far. I agree also with my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody). What we are asking for is an account in the disposal programme. That is what the amendment seeks. It does not argue the point.

    Two questions were raised time and time again in Committee. We brought clearly to the Minister's attention the agreement in the Transport Act 1968 on the financial arrangements between passenger transport executives and the National Bus Company. What the Under-Secretary has said in the House this afternoon is misleading. He knows that there is a clear relationship between PTEs and the NBC and that there are financial agreements between them.

    No one in the United Kingdom would think that we could have such a stupid Secretary of State for Transport who would bring in such a stupid Bill to take us back 50 years. It is like asking people to make financial agreements to put men on the moon. That is how the Secretary of State is seen in the transport industry.

    May we have an answer to the question about the relationship between the NBC and the PTEs under the 1968 Act? Can we be told what the Secretary of State will do about the £40 to £45 million of ratepayers' money that has gone to the NBC? If he is shedding crocodile tears about ratepayers' money, will he return that £45 million to the ratepayers, where it rightly belongs?

    I refer the hon. Member for Sheffield, Central (Mr. Caborn) to clause 57(3) under which termination arrangements for section 24 agreements can be made by order.

    In regard to the point made by the hon. Member for Hartlepool (Mr. Leadbitter), it is not for the Government or for the House to interfere in the contractual arrangements that have been entered into between the National Bus Company and local authorities. The parties to the agreements should have drawn them up properly to provide for what is to happen.

    I did not say that it was for the Government to interfere. We have had too much of that already. I am saying as a matter of record that the amounts are known. We are asking in the amendment for them to be included in the disposal programme for information —not to interfere.

    The National Bus Company will have entered into hundreds of contracts and agreements in varying forms in the course of running its business. Included in those arrangements will be the financial memoranda and financial terms of agreements under which money has been put into NBC subsidiaries. Even before the company had power to dispose of its subsidiaries, which was long before the Bill was introduced, it has had the power to sell assets that were not required for the purposes of its business. Having acquired money from a local authority, there could well come a time when the company would dispose of the asset that had been bought with the money so provided. Unless the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) is right, local authorities will have made proper contractual arrangements for the money arising from such a disposal and I see no reason why we should seek to interfere. If the hon. Lady is right in the rumour that she has started this afternoon and there are no contractual arrangements, the Audit Commission should take a close interest.

    The Minister has treated the House with his normal contempt. He knows what is behind the amendment and he understands its importance. He has chosen not to answer any of our questions and the appropriate responsibility will be his. Amendment negatived.

    Clause 46

    General Duties Of The Bus Company

    I beg to move amendment No. 63, in page 42, line 26, after 'shall' insert—

  • ' (a) take such steps as may be necessary fully to secure the payment of the benefits that, but for the operation of this Part, would have been payable under any pension scheme or in accordance with customary practice in respect of the employment, before the coming into operation of this section, of persons employed or formerly employed by the Bus Company or in any undertaking or part of an undertaking which is to be the subject of a disposal under the programme, and to secure the due performance of the employer's obligations in respect of those benefits; and
  • (b).'.
  • With this it will be convenient to discuss the following amendments: No. 64, in page 42, line 27, leave out from 'any' to 'are' in line 29 and insert `such undertaking or part'.

    No. 65, in line 37, after '(4)', insert ' (a) or (b) '.

    No. 66, clause 48, in page 43, line 38, at end insert
    'and where the scheme contains provision for the transfer of anything which constitutes an undertaking within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 1981, as having effect on the day on which the scheme comes into force, the said regulations shall have effect as if regulation 7 (exclusive of occupational pension schemes) were omitted'.
    No. 67, clause 52, in page 47, line 10, at end insert
    ', including the payment of such sums as he may, with the approval of the Treasury, determine to the trustees of the Bus Employees Superannuation Trust and the trustees of the National Bus Pension Fund or either of them for the purpose of meeting the whole or part of any shortfall in the assets of the funds referable to the benefits and gratuities payable in respect of persons employed or formerly employed by the Bus Company or in any undertaking or part of an undertaking which is subject to a disposal under this Part.'.

    In a long working life, one of the most important investments that anyone can make is in his or her pension entitlement. Those who have been working for the NBC or passenger transport authorities have not been among the highest paid and they have not been the best protected members of our society. They have not enjoyed the brilliantly framed contracts of the company director with the sharp lawyer who insists that, no matter why his services are dispensed with, he will leave with a large golden handshake. They have not received any overpayment for working long hours in a dirty and increasingly dangerous job. They have worked for authorities in the belief that their time as busmen and women would be rewarded at the end of their service with a proper retirement pension.

    The Secretary of State has decided in the most arbitrary and insensitive way that the transport system shall be thrown into chaos and disaster. Those who have been least considered during the Bill's passage are those who are employed in the transport industry. Since the Bill was presented to us, we have been talking about the disposal of state assets and the destruction of a transport system that has operated since the early 1930s. At best it will be replaced by a number of smaller companies. It is probable that transport systems in many areas will decline—with, undoubtedly, the loss of many jobs.

    Against that background, one would have expected to find somewhere in the Bill a pension entitlement guarantee. That would have reflected the recognition of a moral duty towards those who have worked for many years in the transport industry. Clause 50 refers to the NBC's staff pensions. Unlike other privatisation measures, the Bill ends the "no worsening" principle for staff pensions. Up to 65,000 employees could be affected, and it is clear that the Treasury is demanding that money should be raised in every possible way so that it can be given in tax concessions to those at the top end of the income scale. It is more interested in doing that than in making suitable provisions for those who are employed in the transport system.

    Clause 50 sets out the transfer of pensions after the break-up of the NBC. It mentions briefly the involvement of its employees but it does not mention what will happen to the employees of the passenger transport executives. Their future has not been referred to by the Under-Secretary of State or by the Secretary of State. There is no reference to the pension rights of those who are most at risk.

    There are a number of ways in which the Bill could have provided for transferred employees to retain their present entitlement to benefits, and we endeavoured to discuss them in Committee. We asked for simple guarantees to be written into the Bill. We observed that state assets had never been disposed of without a guarantee being written into the relevant Bill to cover the pension entitlement of those who had worked in the industry. We were told that employees' interests would be protected at the point of transfer and that we need not worry about the future as it would be in the interests of the companies taking over the assets to look after the employees that they took on. If that is genuinely the opinion of the Secretary of State and his ministerial colleagues, it is indescribably naive. If they have taken a cynical approach and do not believe that there is any guarantee for employees after the dissolution of the NBC, that is outrageous.

    Whenever we endeavoured to extract answers from Ministers in Committee, we were told that they did not consider it necessary to insert a guarantee covering the NBC's pension funds. It is clear that there must be a proper arrangement. Surely Ministers understand that smaller companies will not be able to meet current pension commitments and may find themselves unable even to cover existing payments to pensioners.

    We have been told that the NBC pension scheme is well funded and can meet all its liabilities. Ministers sought to stress that there will be no risks, but under this Government no one can foretell what will happen. It is relevant to observe that we have a higher rate of bankruptcy under the Government than we have had for many a long year. If there is no risk, a guarantee would cost the Government nothing and would be at least a demonstration of their good will.

    We were told in Committee that we were raising unnecessary scares and that the problems we were outlining would not occur. I can assure the Secretary of State that many employees are deeply concerned about their future pensions. The very least that Ministers can do is treat those fears seriously. Subsection (3) contains a guarantee that individual companies will not be put in a worse position by Government order. That implies that, if there is a cash shortfall, pensioners will suffer. The only protection against that is to be found in section 74 of the Transport Act 1962, which provides a "no worsening" guarantee. However, if the money is not there to meet the pension entitlement, pensioners will suffer.

    The two approaches which could have been taken to pension funds following privatisation would both have maintained some version of the "no worsening" undertaking. When British Telecom was taken over, the entire pension fund was transferred in one block. When Sealink was sold off—a section of a state organisation —the staff remained in the British Rail pension scheme. When the NBC is privatised, we shall not be left with a large company. The company is to be broken into small companies, in line with the Government's competition theory. There will be no large company with the resources to underwrite pension funds.

    What was the Government's answer when we raised the issue time and again? It was that, as long as the Government predictions of inflation and investment are exactly correct for the next 40 years, the Government are convinced that there will not be a problem. However, if there is any shortfall, pensions will have to be topped up from some other source. One would be new NBC staff paying into the fund. However, that will end when the NBC is dissolved, which will make closed funds of both the National Bus pension fund and the Bus Employees Superannuation Trust.

    5 pm

    The other guarantee would be a straight payment from the NBC. We have been told today that companies must be small enough to ensure that there is no unfair competition. The Secretary of State appeared to be saying that there might be instances of some municipal companies with 3,000 buses, which he presumably thinks is fair competition. If there are only small companies and there is a shortfall, who will find the money to pay these people who, in good faith, entered into superannuation payments that will now not come to fruition? Is it seriously suggested that what is in effect a contract with the people working in the bus industry, a contract that they have honoured through their working lives, is to be discontinued without any undertakings or any attempt to give them a guarantee that the Government will underwrite any future problems?

    If that is the case, I have to point out one or two things to the Secretary of State. The people who are to have their pension funds put at risk, and the existing pensioners who are wholly reliant on the arrangements into which they have entered, are not suddenly seeking to dissolve the arrangements in their superannuation fund. They are being told that the arrangements into which they have entered over the years are at risk and they have not been consulted. This has happened because the Secretary of State, in a great blaze of light, wants to throw us all back to the Victorian ages and recreate the horse bus system.

    What kind of responsible Government is that? What kind of commitment to ordinary working men and women does that show? Where are the Government who care so much for the individual? If an individual earns more than £40,000 a year, the Government care for him, but if he is working in the bus industry and has made the grave mistake of trusting those with whom he has been in a contract for all his working life, the Government's answer is, "Hard luck." That is the answer of a Government who are uninterested in carrying out their responsibilities to the people working in the bus industry.

    In the Committee on the Transport Act 1982, the hon. Member for Wallasey (Mrs. Chalker), the Minister of State, Department of Transport, claimed that staff pensions would not be worsened by that Act, and that it would be wrong if they were. True, pensions were not worsened by that Act — it took the Government two more years to come up with a brilliant bit of planning to destroy the base on which pension schemes had been worked out.

    The Minister's pledge that it would be wrong to worsen the conditions of anybody in the staff pension funds is being broken with utter cynicism. Saving money is the basis of this Bill and saving money at the expense of the pensioners and people working in the bus industry is about the lowest way of taking advantage of those least able to fight for themselves.

    There is no evidence that the Government intend to carry out their responsibilities. Are we to assume that the argument between the Treasury and the Secretary of State is so important that he regards the sale of the NBC's assets as taking precedence over everything else? It does not matter if, in so doing, he damages the interests of the people working in the industry or the interests of the passengers, or if he destroys the transport industry that has grown up over many years. All that matters to him is flogging off anything that is not actually nailed down to anybody who wants to take whatever assets he wants that used to belong to the state through the NBC.

    Let us be clear what is happening to pensioners. They will be told that at the moment of transfer they need have no worries and their pension rights will be the same with the incoming company. That is nonsense, because the companies that will come into being will be much smaller and less viable and will have far fewer assets, by definition. The only people who will benefit from these changes are those who will be able to ignore all the commitments that were entered into by the NBC and the PTEs with their employees. It is a disgrace. It is one of the nastiest, most unacceptable and most rotten parts of the Bill.

    I hope that the Secretary of State can sleep at night, because what he is doing both to the pensioners of, and those working in, the bus industry is disgraceful. [Laughter.] I am glad that the Secretary of State finds this amusing. Many of those who are now employed will ask one question of him and one question alone: how can he sit there calmly, knowing that his future is protected, while he cheats the bus industry and those who work in it out of their just entitlement? At the very least, the Secretary of State can accept the amendment. If he does not, we shall know clearly how much commitment he has to the interests of people who are now working in the bus industry.

    I have added my name to the Opposition's amendment both in sorrow and in anger. I wrote to my right hon. Friend the Secretary of State some months ago expressing concern about the future of pensioners. Following a meeting with my hon. Friend the Under-Secretary of State, who invited me to write to him expressing my concern about the Bill, I wrote to him about my concern about the pension settlements. I am still awaiting a reply from both my right hon. Friend and my hon. Friend. It is a pity that my hon. Friend the Under-Secretary is not here.

    I make it clear that I am speaking on behalf of the people who work in the bus industry, in my constituency or any other constituency, and who are worried about their pensions. I speak particularly on behalf of the Association of Management and Professional Staffs, which I know has written and is concerned about this matter.

    As we consider these amendments, we might at least try to understand what the Government are up to and what they have done in similar circumstances. Accordingly, I put down for answer last week a question to my right hon. Friend the Chancellor of the Exchequer about certain other pension funds. The first related to the National Freight Consortium, and the figures will come as a shock to many Conservative Members and many in the Conservative party. Although the Government raised £53·5 million in gross proceeds from the sale of the consortium, they had to make up £48·7 million in the deficit under its pension funds. Therefore, the taxpayer did not make an enormous profit out of privatising the National Freight Consortium. We still have to make an annual payment of million to the fund. That is not a good deal for the taxpayer and those figures throw a lot of light on the Treasury's attitude to pension funds in the Bill.

    It is clear in agreements that the Government have made with the industrial training boards that the Government set out to give those employees the type of guarantee that is requested in the amendment. The memorandum of agreement of 21 March 1983 between the Secretary of State for Employment, the Minister of Agriculture, Fisheries and Food and others refers to
    "the arrangements agreed to be made to fund the whole or part of any deficiency in the 'closed' part of The ITB Combined Pension Fund".
    That was a clear commitment by the Government to do exactly what is requested in the amendment.

    I mention those two items because they show the danger as it appeared to the Treasury and show that those who want the guarantee are not asking for something that the Government were not prepared to give in another respect.

    It is unfortunate that my hon. Friend the Parliamentary Under-Secretary of State — the hon. Member for Hampshire, North-West (Mr. Mitchell) — is not in his place. When this matter was dealt with in the Standing Committee, of which I was not a member, several of my colleagues raised with the Under-Secretary of State a number of questions about pensions. It is interesting to read the details of that debate and note some of my hon. Friend's statements. He reassured my colleagues and, no doubt, persuaded them not to press their amendments. Having been approached about guaranteeing pensions, he said:
    "other employees and former employees are already covered by section 74 of the 1962 Act."
    That is not so. Other employees and former British Electric Traction employees will not be covered by section 74, since that provides only that appropriate orders may be made. The orders which have been made so far—2,011 in 1958 and 1,824 in 1969—will lapse when the NBC is dissolved because they impose obligations on a company that will have ceased to exist. So much for that first statement.

    My hon. Friend the Under-Secretary of State made a further reassuring gesture when referring to what would happen after the NBC had been disposed of. He said:
    "Once the Secretary of State had approved the disposal programme the NBC would have a duty to implement it."
    How can the NBC implement protection against a future deterioration in funds after it has gone out of existence? That, too, was a misleading comment. My hon. Friend went on to say:
    "The National Bus Company itself does not formally guarantee"
    the pension funds. I believe that most people would agree that it is accepted that the NBC's covenant to make up contributions to the amounts required to maintain those funds is effectively a guarantee of a continuing employer. My hon. Friend the Under-Secretary of State said:
    "a statutory guarantee would provide NBC pensioners and employees with more security than comparable groups."
    I have already referred to the pensions given to employees of the industrial training boards. It is clear that the guarantee to which my hon. Friend referred is on all fours with the guarantee given to employees of industrial training boards.

    That was not the end of what I can only describe as a most misleading speech. Answering a suggestion by my hon. Friend the Member for Hertfordshire, West (Mr. Jones) about a common pension fund for the bus industry, my hon. Friend the Under-Secretary of State said:
    "if the NBC wished to pursue it the Government would be happy to explore the possibility."
    In relation to the alternative suggestion that the 1:wo existing schemes should be closed to new entrants and that there should be a negotiation with a major insurance company to take over the funds, my hon. Friend said:
    "The NBC has not yet put that proposal to us"—[Official Report, Standing Committee A, 18 April 1985; c. 1287$90.
    It is puzzling that my hon. Friend implied that the idea of a common fund and using an insurance company had not been considered. Both possibilities were discussed by the NBC with the Department of Transport well before that speech. In fact, the particular point about creating a separate fund with a new insurance company was discussed in the December 1984 paper which was submitted to the Department of Transport. In the light of that speech, three or four of my colleagues decided to withdraw their objections. They were right to be concerned. If I had listened to that speech, I might have been encouraged to withdraw my objection.

    5.15 pm

    If I had discovered that I had been misled—I use that word advisedly—by the Minister, either intentionally or unintentionally, I would have been very angry. I do not accuse him of making an intentionally misleading speech. I would have said, "I believe that the pensioners are entitled to some type of guarantee."

    The real issue is whether the Government will follow up the type of obligation that any right-thinking Government should and would undertake—obligations towards employees when a concern is nationalised or denationalised. We are talking about people who were in a private fund, were brought into the public sector and will now be taken out of the public sector again. It is clear from earlier debates this afternoon that there can be no guarantee whatsoever for the future for many people. Even if there is a management buy-out, many of these companies will not be able to retain the same number of staff. They are asking only that the work which they have done and their pension entitlements should be given some form of guarantee.

    I shall not join in the personal strictures of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), but I believe that the credibility of my hon. Friend the Under-Secretary of State and of the Government depends upon the answer my hon. Friend gives to these amendments. This is a Government who, whatever their failings, try to stick to their word and obligations. I sincerely hope that my hon. Friend the Under-Secretary of State will reconsider the decision which has already been made. I make this point on purely practical grounds: if my hon. Friend the Under-Secretary of State was correct and a guarantee is not needed because the fund will be adequate, what on earth are we arguing about? By giving that guarantee my hon. Friend will be showing an earnest of faith with the many thousands of workers who have given loyal service in the private and public sectors. I could never vote for the Third Reading of this Bill if my hon. Friend cannot give a satisfactory reply to the points made in the amendment.

    The hon. Member for Wellingborough (Mr. Fry) has made a powerful case to which the Under-Secretary of State must seriously address himself. The risk to which the Minister referred has been created, or not created, as a direct result of Government action. As the hon. Member for Wellingborough correctly pointed out, it seems reasonable that the people who have been in and out of the public sector should be given an assurance—first, that those who already benefit from the pension funds may securely expect that benefit to continue and, secondly, that all accrued benefits at the point of privatisation will be met by the funds.

    I am fascinated by the somewhat distracting private conversation between the Parliamentary Under-Secretary of State and the hon. Member for Wellingborough, but if it produces the right result, it will have been worth while. Employees of NBC had every reason to expect that they would be treated similarly to others who have been subjected to developments such as this as a result of Government action. It is clear from correspondence that hon. Members have received that employees are shocked that the Government could proceed with a Bill with such a strong ideological thrust in which they are the pawns and not be prepared to guarantee them a fundamental right.

    Perhaps the hon. Gentleman would like to stress that, whereas the Government are over-anxious to provide future employers with fundamental rights to set up new companies, they are reticent about affording employees equally fundamental rights.

    The hon. Member for Wellingborough mentioned the cost that might be involved, which would wipe out a substantial part of the benefit. If there is no potential cost, we may as well have a guarantee and demonstrate good faith.

    There are three categories of employee—those who are in receipt of pension and who must be protected, those who have accumulated pension rights up to the point of privatisation whose contributions and benefits should be guaranteed, and those who are employed after privatisa-tion and who will find that the companies for which they work might not be able to sustain previous levels of pension funding. The Government have an absolute obligation to the first two categories and some obligation to the third. It is a disgrace that the Government have got this far with the Bill without giving the first two categories such a guarantee.

    Does the hon. Gentleman agree that, irrespective of what might have been said in Committee or off the record, there is much dismay and uncertainty among employees, their widows and people who depend on such pensions about the future? To end that uncertainty, clear provision must be made in the Bill. More than anything else, that has been the burden of the letters that we have received in the past few weeks.

    The hon. Gentleman is absolutely right. The Bill creates uncertainty in the transport system. Nobody denies that — the Secretary of State merely claims that it will be beneficial. If he wants to ensure that employees in the industry will make a go of the Bill, but he is not prepared to guarantee their fundamental rights, he is creating anarchy and will find that there are many disgruntled employees. He must also address himself to the fact that, as a result of the Bill, there are likely to be many redundancies because the new companies will take on new people to avoid the obligations that the Bill puts on them.

    The Government's conduct on the Bill has been nothing less than disgraceful. If a guarantee about pensions is not given here, it must be included in another place. The right hon. Gentleman has an opportunity today to show that he recognises the obligations that he must accept if he is to give any credence to the commitment behind the Bill. If he does not do that, he will show himself to be no man of honour. I leave it to him to decide whether he wants that stigma.

    Order. Many hon. Members wish to speak, but there is little time.

    If this group of amendments is accepted, much anxiety among employees of the NBC in my constituency will be relieved. They are worried by what they regard as inadequate provisions in the Bill for their pension rights. I speak on their behalf. They do not feel that the assurance given by my hon. Friend the Minister on 15 April, that their pensions would be protected, is enough. If there is nothing for them to worry about, there was no need to reject in Committee the amendments that afforded such protection.

    My constituents want the Government to know that their proper concern is for their future. It is a simple, natural and fundamental worry of all who pay into a pension fund to know that it is protected. The anxieties go deeper than that, however. These people were obliged by the terms of their employment to pay into the National Bus pension fund or the Bus Employees Superannuation Trust, and many of them have made large contributions. They are now asking my right hon. Friend for the full protection of the law for their investment.

    The Government Actuary has estimated that the assets of the post-privatisation fund will be quite sufficient to cover the outstanding liability for pensions and accrued rights. But just suppose he is incorrect. What guarantee will the pensioners have then? They will have been wronged and will have no concrete assurance that the wrong will be rectified. Correcting injustice is a slow business. It is all very well for my hon. Friend the Member for Wallasey (Mrs. Chalker), the Minister of State, to say in Committee that it is not the Government's policy to affect any existing pension rights, but the pensioners want their rights to be protected, not just not affected.

    We should establish a scheme to replace the obligations to pay the balance of the cost of accrued pension rights. That was dealt with in previous legislation, in 1962, 1968 and 1969, when pensions were protected fully for past and future service. Why cannot the same be done now? The Bill has few enough frieds. A lot is taken on trust about bus services improving, but employees should not be asked to take their pension entitlement on trust too. Concern has been expressed by people in NBC, by members of the pension fund's management trustees and by their beneficiaries. Their worry is real and will be alleviated by the Government accepting the safeguards in the amendments or by greater reassurance than we have had so far.

    I am one of those unfortunates who was not a member of the Standing Committee, so I have not had an opportunity to say as much as I should like, on behalf of my Scottish rural constituents, about this ill-considered Bill.

    I should like to express the strong support of the Transport Salaried Staffs Association, which sponsors me, for this group of amendments. The TSSA has members and retired members with pension rights in NBC pension schemes. I am not sure how many of its members are involved, but I understand that the total is about 65,000. They have every right to be anxious about the fact that the abolition of the NBC will leave their pension fund in limbo.

    It is by no means impossible that in future the NBC pension fund will run into a temporary deficit. There will be no NBC to help it overcome such temporary difficulties, and problems could arise. Inflation will always be a factor, and no one will contribute to the scheme when the NBC has been scrapped. For that reason, such problems could continue for some time into the future. The beneficiaries are likely to be left with a lame duck residual pension organisation, with no NBC to guarantee it in times of need.

    5.30 pm

    I have read the report of the debate in Committee and am less than impressed by the Government's insensitive attitude towards the anxieties of NBC pension beneficiaries. I read the bland assurances that the NBC pension schemes will be able to meet their commitments. As the hon. Member for Wellingborough (Mr. Fry) said, if there is no risk, why are the Government so reluctant to give a reasonable guarantee? I read the Government's suggestion that there is technically no guarantee at present, but there is. The NBC covenants through the trustees to make up the total contributions required, and it would continue to do so if it were not to be scrapped. There is therefore an effective guarantee at present.

    The Minister suggested that the successor companies could pick up the liability, but many of them will be small and will change hands, and there is no provision to compel them to make up any shortfall. Even the old chestnut that the. Government do not want to set a precedent has been dragged up, but there are precedents. The Government guaranteed the finances of the National Freight Corporation pension funds to the extent of ensuring that a payment for historic liabilities was made to the trustees of the fund. When subsidiaries of British Rail were privatised, such as British Transport Hotels and Sealink, specific commitments on maintaining no less favourable pension arrangements in future were written into the contracts of sale. There is no fear of a precedent being set, because a precedent already exists.

    The other technicalities that have been mentioned are irrelevant. The case is overwhelming for a reasonable guarantee for pensioners who could be put at risk by the consequences of this aspect of the ill-considered legislation. I can only repeat that, if the Minister believes his own assurances about the risk of problems arising., he must agree that it will cost him nothing to give the House that guarantee this evening. We must have a positive response to the amendments. The House and people with pension rights under the schemes have a right to demand such assurances now.

    I have not taken part in previous debates because I class myself as a friend of the Bill. I have been able to defend its political implications from the beginning. However, more recently, since the Bill's implications for both the National Bus Company pension fund and the Bus Employees Superannuation Trust became more apparent, it has been extremely difficult to respond to my constituents' letters. I am referring not only to letters directly inspired by the NBC, which invited pensioners to write to me, but to direct approaches from people whose personal, immediate and direct anxiety is that they are pensioners and who see the future as uncertain and possibly bleak. I have also received letters from people who are nearing the end of their service with the NBC and do not see a place for themselves in a new, thrusting and possibly successful company. They want to know exactly what they can expect.

    Whatever the past legal position of the NBC's covenant to support the pension scheme, I understand from the Minister's comments in Committee that there is no legal obligation on the NBC at present to make up any potential deficit. If that is so, it would be helpful if my right hon. Friend would reiterate that this evening so that the Opposition cannot suggest that the Government are creating conditions legally less favourable to pensioners.

    I do not wish to make the semantic point about whether pensioners are or are not in a narrow sense better off, but I ask the Secretary of State please to give the House a clear assurance that it is his intention and understanding that the conditions of existing pensioners and those who will retire when the NBC ceases to be an entity will not worsen. If he can give us that assurance, I and other hon. Members will be able to respond to our pensioners and potential pensioners more adequately than we have been able to do during the past few weeks.

    Will my hon. Friend also ask the Secretary of State to explain what is meant by "the ex gratia payments"? The dictionary definition of ex gratia is

    "in the absence of a legal right",
    yet we are being told we must honour ex gratia payments.

    I thank my hon. Friend, but I will not take up the time of the House by repeating the question, which I am sure my right hon. Friend heard.

    I shall make a brief contribution because other hon. Members wish to participate. I wish to say a word or two about the impact of the Bill on the bus depot in my constituency, that of the East Yorkshire Motor Services, which is part of the National Bus Company, and about the Bill's indirect effect on my constituents and everyone who lives in the Humberside region.

    I feel particularly strongly because many people who worked in the company for many years are worried about the effect of its break-up on their pensions. My hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) said that about 65,000 people would be affected, but if the dependants are included the figure is probably double that. Therefore, a large number of people will be directly affected by these provisions.

    We are making only a small request of the Government. We ask that people who have worked in the company for many years and those who at present draw pensions should have a guarantee for the future. It is trivial and would cost peanuts. If the Government do not respond, they will be seen as penny-pinching and mean.

    During my surgery on Saturday morning, Mr. Fairless of Priory road, Hull, who is a bus operator, explained to me the great worries experienced by many families. It must be remembered that those people live on an extremely low income. Most of them are almost at benefit level, and they cannot get alternative occupational pension arrangements. To do that, one must earn a higher income than many of them earn, even with overtime rates.

    If the Bill is enacted, many of the small companies that will be created after the break-up of the NBC will not provide the contributions that the NBC currently makes to its pension fund. We know that contributions come from the employer and employees. We cannot say what future employers will contribute, because many of them will be small companies running on tight margins. A cut in pensions is bound to ensue. That idea is appalling. It is another example of the Government moving wealth from the less well off to the very rich, as they have done for the past six years. They have failed to support those who worked in the industry and who contributed greatly to it.

    The Bill shows the sort of Government we have. It is shameful and disappointing and it causes much worry to bus operators not only in my constituency and in the county of Humberside, but throughout the country.

    I am sorry that I must speak in the debate now, but since it is a fairly complex matter, I should take some time to reply to the points that have been made. First, I shall deal briefly with what I may call the peripheral points that have been raised, but I shall deal with the main matter soon.

    I apologise to my hon. Friend the Member for Wellingborough (Mr. Fry) and to my colleagues who have not received answers to letters that they sent recently. We have received more than 600 letters, and it will take a little time to reply to them. However, my hon. Friend received a full letter from me on 22 February—I have a copy of it here —on this subject, so I hope that he will not accuse me of discourtesy. He asked about British Electric Traction in relation to the speech in Committee by my hon. Friend the Under-Secretary of State. If he discusses that with my hon. Friend the Under-Secretary of State, I am sure that his mind will be set at rest.

    The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) asked about the future of the pensions of PTE employees. The matter was set down for debate yesterday, but we did not reach it because the guillotine fell. It is only right that I should say a few words about it now. There are several options for the pensions of PTE employees when they go to the new companies. The Government's preferred option is that they should stay in their local authority schemes. There is no reason why they should not do so, but we are discussing the matter with the local authorities to see whether they are content with that solution or whether they would prefer another opinion.

    It would be wise to discuss the amendments later and to come to the point of principle now. The Government and the Opposition believe that the existing pension entitlements of the employees of the National Bus Company, and existing pensioners, are extremely important. They should be in no worse position and, for that matter, in no better position than members of any well managed pension fund. I accept entirely the obligation which my hon. Friend the Member for Wellingborough suggested lies upon the Government to achieve that aim when the NBC's subsidiaries pass into the private sector.

    The hon. Member for Gordon (Mr. Bruce) said that we must consider three categories: service until now; service between now and the break-up; and service in the future. Of course, service after privatisation should be the responsibility of the new employers, who will set up a special scheme or will operate other arrangements to comply with their legal obligations in relation to pensions. However, I accept that the obligation about which my hon. Friend talked relates to the first two categories —existing pensioners, and rights earned up to the dissolution of the NBC.

    5.45 pm

    The difficulty is not whether we should achieve that objective—I agree that it is vitally important—but how we achieve it. A company standing behind its pension fund may be thought to provide extra security, but it does not guarantee the fund. It certainly does not do so legally. The company may meet financial difficulties; it may even go bankrupt. The best that any company can do is to ensure that the money invested in the fund, as a free-standing entity with its own assets and liabilities, is adequate to provide benefits earned to date. I remind the House that NBC employees and the NBC have already made proper provision for pensions on the appropriate actuarial basis. Therefore, substantial assets are already in the funds.

    Secondly, it is wrong in principle for the Government to give an open-ended guarantee to a private sector fund. Indeed, there is no such legal guarantee at present. I should tell my hon. Friend the Member for Portsmouth, North (Mr. Griffiths) that the NBC does not legally guarantee its pension fund. Neither the Government nor the NBC guarantee for all time the present NBC pension fund.

    If I complete what I have to say, the hon. Lady may be satisfied and may not need to intervene.

    If we are transferring activities to the private sector, we must not perpetuate a link with the Government, let alone a guarantee. My hon. Friend the Member for Wellingborough and several hon. Members cited some instances where they believed that there was a Government guarantee. In relation to the British Rail fund and some parts of the National Freight Consortium fund, a guarantee was given many years ago by a different Government in different circumstances. The present Government accep-ted that they could not break that guarantee. However, it is not our policy to give any guarantees on privatisation.

    My hon. Friend the Member for Wellingborough and other hon. Members mentioned the industrial training boards. They were not nationalised industries and were not privatised; they were dissolved. Therefore, there were no successor companies to them in the private sector. The Government remain the employer of those industrial training boards, although they were dissolved. It is simple for the Government to decide whether to guarantee the funds in its employees' closed pension funds or to make those funds actuarially sound so that they will be adequate. They chose the former. But that is not a parallel, because the boards were not active industrial concerns which passed into the private sector.

    The reason for the great worry about this point—

    If the hon. Gentleman allows me to proceed, he will get his answer. I understand that anxiety is heightened on this occasion because there will be no one successor company to the NBC. Instead there will be several different-sized companies. We do not know how many there will be. As hon. Members said, they might merge, reduce in size or change to other activities. Clearly, that raises worries that they might not stand behind the funds. I recognise that concern, and no doubt the NBC will also take account of it when putting forward proposals for future pension funds arrangements—for example, whether the present funds should stay open, be divided or be closed. However, even if the NBC were privatised as one company, it would not be guaranteeing the funds any more than it does at present. No company can guarantee its future trading environment.

    Even if the NBC were privatised as an entity, in future it could get into financial difficulties and find itself unable to support the funds of its own pension company. Therefore, the problem does not arise because of privatisation; it arises because of the many small companies — or whatever they will be — that will continue.

    The right answer must be to look at the funds themselves, apart from the parent company, recognising that they have their own assets and their own liabilities. We must make sure—absolutely sure—that the assets are adequate to discharge the funds' responsibilities. That is what we have done on all previous privatisations. That is what we have undertaken to do in—[Interruption.] If Opposition Members want the answer, they should keep their mouths shut. I am coming to it.

    That is what we have undertaken to do in this instance. It is doubly important in this case since, as I have said, the funds may be closed at the time of the dissolution of the NBC. They must be left with assets that are adequate to discharge their responsibilities in relation to all employees' service with the NBC up to that time.

    I say this to the hon. Members for Crewe and Nantwich and for Gordon. The funds must be adequate, which is to deny totally that in some way there is a dispute between the Treasury and the Department of Transport because ultimately, if NBC itself were to put more money into the funds, it would be the Treasury that would have to make the funds more adequate through getting less from the sale of the NBC.

    That brings me to amendment No. 63. It would be difficult to implement. For example, I can imagine lawyers arguing for weeks, to nobody's benefit but their own, about what would have been paid
    "but for the operation of this Part".
    In so far as the wording of the amendment is meant to imply a formal guarantee for pension benefits either by the new employers or by the Government, I must remind hon. Members that the NBC itself does not guarantee the funds in that indefinite way. It would not be right to pledge taxpayers' money to put the funds in a specially favourable position.

    The intention of the amendments is admirable, but their effect would be to make the present position too rigid and restrict the scope for negotiation. For example, if the trustees of the pension funds, my hon. Friend the Member for Wellingborough or other hon. Members, seek more certainty about the adequacy of their funding—perhaps because the funds are closed—they may want to seek wider backing from somewhere else in the private sector, such as the insurance industry. Indeed, I hope that the trustees will explore that option fully. That would require negotiation with insurance companies, and I repeat that the House should not seek to fetter that negotiation in advance. All that I ask is that we do not close options in the negotiations that must precede the trustees' acceptance that the funds are adequate. The trustees have to accept that the funds are adequate, so it would be wrong to put restrictions upon any discussions that they might wish to have to satisfy themselves.

    Amendment No. 66 would amend the Transfer of Undertakings (Protection of Employment) Regulations 1981 to require the new employers taking over the NBC to take over the pension scheme rules as well. I think that the amendment can scarcely be meant seriously. Those regulations are of national application, and it would be quite inappropriate to make a special exemption from such legislation for one single case.

    I also recommend the House not to accept amendment No. 67. It would provide for direct payments from the Exchequer to NBC pension funds. There may be payments into the funds. I have already made it clear that we are very ready to countenance that, to give the funds the proper security, but I envisage the payments coming from the NBC's own resources, which I am sure will be adequate for the purpose.

    Therefore, I suspect that all hon. Members share the same objectives, although I do not think that any of the amendments would help to achieve them. That must be true, unless hon. Members want to put the NBC pension funds into a privileged position so that other taxpayers carry the risks in those funds while the pension funds of those same taxpayers are not so guaranteed. That would be intolerably unfair. I ask the House to reject the amendments and to trust the Government's assurance that they will see the funds at an adequate level at the time of dissolution of the NBC.

    The Secretary of State has given a passable impersonation of Pontius Pilate. In effect, he says that the matter is nothing to do with him. He has refused to answer any of the questions. Indeed, he has positively distorted some of the truth.

    Let us be clear. NBC employees, the pensioners and the deferred pensioners presently enjoy security because they have a covenant that the NBC will make up contributions to the amounts required to maintain the funds. On the dissolution of the NBC, that protection is lost. As it stands, clause 50 does not provide any substitute. The Secretary of State knows that. He knows that what he is trying to suggest is not tenable. There is a moral responsibility on the Government to fulfil the undertakings that were given to the pensioners working in the NBC. The very least that the right hon. Gentleman could do would be to say to his hon. Friends, "We shall take away the clauses, redraft them and bring them back in another place." The right hon. Gentleman is not prepared to do that. He has never been prepared to take up the responsibility that is inherent in his legislation.

    Let me remind the Secretary of State of a few things. Why are those pensioners now at risk? How can he say that some of the companies might go bankrupt, and, when they are bankrupt, they might not be able to maintain pension rights? It is because of his legislation. Who is changing the structure of the NBC? The Secretary of State for Transport. Who is putting the pension rights of 65,000 people at risk? The Secretary of State for Transport. Who refuses to write in the guarantee or undertake the responsibility? The Secretary of State for Transport. Why is he not prepared to give the same undertakings to people in the bus industry that were given to people concerned in previous denationalisations? It is not good enough to say that in the case of the National Freight Corporation the Government had to honour certain responsibilities, but they were undertaken under another Government. I suppose that we should agree with the right hon. Gentleman about that.

    This Conservative Government, unlike probably any previous Conservative Government, have no interest in either their responsibilities or a moral undertaking to protect the interests of the pensioners. This Conservative Government are interested only in asset-stripping. They are not prepared to carry out the undertaking to find the money to make sure that the pensioners of today or of tomorrow will be protected. As far as the Secretary of State is concerned, if they lose their jobs and their pension rights, so be it.

    I offer just one challenge to Conservative Members. We have heard a great deal both in Committee and in the Chamber today about the fact that the Labour party has no monopoly of commitment or care.

    If that is right, let all Conservative Members join me in the Lobby. If that is so, let the Conservative party—even the old Conservative party—come forward and show the pensioners and workpeople in the bus industry that Conservatives are not just mouthing empty words. They have their rights and they have their challenge. We shall put this to the vote. How many of them will join us?

    Question put, That the amendment be made:—

    The House divided: Ayes 178, Noes 241.

    Division No. 218]

    [6 pm


    Archer, Rt Hon PeterGarrett, W. E.
    Ashdown, PaddyGeorge, Bruce
    Ashley, Rt Hon JackGilbert, Rt Hon Dr John
    Ashton, JoeGodman, Dr Norman
    Atkinson, N. (Tottenham)Gould, Bryan
    Bagier, Gordon A. T.Gourlay, Harry
    Banks, Tony (Newham NW)Hamilton, W. W. (Central Fife)
    Beckett, Mrs MargaretHancock, Mr. Michael
    Beith, A. J.Harman, Ms Harriet
    Bell, StuartHarrison, Rt Hon Walter
    Benn, TonyHattersley, Rt Hon Roy
    Bennett, A. (Dent'n & Red'sh)Healey, Rt Hon Denis
    Bermingham, GeraldHeffer, Eric S.
    Bidwell, SydneyHogg, N. (C'nauld & Kilsyth)
    Blair, AnthonyHome Robertson, John
    Boyes, RolandHowell, Rt Hon D. (S'heath)
    Bray, Dr JeremyHowells, Geraint
    Brown, Gordon (D'f'mline E)Hoyle, Douglas
    Brown, Hugh D. (Provan)Hughes, Dr. Mark (Durham)
    Brown, N. (N'c'tle-u-Tyne E)Hughes, Robert (Aberdeen N)
    Brown, Ron (E'burgh, Leith)Hughes, Roy (Newport East)
    Bruce, MalcolmHughes, Sean (Knowsley S)
    Buchan, NormanJanner, Hon Greville
    Caborn, RichardJohn, Brynmor
    Callaghan, Rt Hon J.Jones, Barry (Alyn & Deeside)
    Callaghan, Jim (Heyw'd & M)Kaufman, Rt Hon Gerald
    Campbell, IanKinnock, Rt Hon Neil
    Campbell-Savours, DaleKirkwood, Archy
    Canavan, DennisLamond, James
    Carter-Jones, LewisLeadbitter, Ted
    Cartwright, JohnLeighton, Ronald
    Clark, Dr David (S Shields)Lewis, Ron (Carlisle)
    Clarke, ThomasLewis, Terence (Worsley)
    Clay, RobertLitherland, Robert
    Clwyd, Mrs AnnLloyd, Tony (Stretford)
    Cocks, Rt Hon M. (Bristol S.)Loyden, Edward
    Cohen, HarryMcCartney, Hugh
    Cook, Frank (Stockton North)McCrea, Rev William
    Cook, Robin F. (Livingston)McDonald, Dr Oonagh
    Corbett, RobinMcKay, Allen (Penistone)
    Cowans, HarryMcKelvey, William
    Craigen, J, M.McNamara, Kevin
    Crowther, StanMcTaggart, Robert
    Cunningham, Dr JohnMcWilliam, John
    Dalyell, TamMadden, Max
    Davies, Rt Hon Denzil (L'lli)Marek, Dr John
    Davis, Terry (B'ham, H'ge H'l)Marshall, David (Shettleston)
    Deakins, EricMartin, Michael
    Dixon, DonaldMaynard, Miss Joan
    Dobson, FrankMeacher, Michael
    Dormand, JackMeadowcroft, Michael
    Dubs, AlfredMichie, William
    Duffy, A. E. P.Mikardo, Ian
    Dunwoody, Hon Mrs G.Mitchell, Austin (G't Grimsby)
    Eadie, AlexMorris, Rt Hon A. (W'shawe)
    Eastham, KenMorris, Rt Hon J. (Aberavon)
    Ellis, RaymondNellist, David
    Evans, John (St. Helens N)O'Brien, William
    Fatchett, DerekO'Neill, Martin
    Faulds, AndrewOrme, Rt Hon Stanley
    Field, Frank (Birkenhead)Owen, Rt Hon Dr David
    Fisher, MarkPark, George
    Flannery, MartinParris, Matthew
    Foot, Rt Hon MichaelPatchett, Terry
    Forrester, JohnPavitt, Laurie
    Foster, DerekPenhaligon, David
    Foulkes, GeorgePike, Peter
    Fraser, J. (Norwood)Prescott, John
    Freeson, Rt Hon ReginaldRadice, Giles
    Freud, ClementRandall, Stuart
    Fry, PeterRedmond, M.

    Rees, Rt Hon M. (Leeds S)Strang, Gavin
    Richardson, Ms JoThorne, Stan (Preston)
    Roberts, Ernest (Hackney N)Tinn, James
    Robertson, GeorgeTorney, Tom
    Ross, Stephen (Isle of Wight)Wainwright, R.
    Rowlands, TedWallace, James
    Ryman, JohnWareing, Robert
    Sedgemore, BrianWeetch, Ken
    Sheerman, BarryWelsh, Michael
    Sheldon, Rt Hon R.White, James
    Shore, Rt Hon PeterWig ley, Dafydd
    Short, Mrs R.(Whampfn NE)Williams, Rt Hon A.
    Silkin, Rt Hon J.Wilson, Gordon
    Skinner, DennisWinnick, David
    Smith, C.lsl'ton S & F'bury)Winterton, Nicholas
    Smith, Rt Hon J. (M'kl'ds E)Wrigglesworth, Ian
    Soley, Clive
    Steel, Rt Hon David Tellers for the Ayes:
    Stewart, Rt Hon D. (W Isles)Mr. Frank Haynes and
    Stott, RogerDr. Roger Thomas.


    Aitken, JonathanFreeman, Roger
    Alexander, RichardGale, Roger
    Amess, DavidGlyn, Dr Alan
    Ancram, MichaelGoodhart, Sir Philip
    Atkins, Robert (South Ftibble)Goodlad, Alastair
    Baker, Rt Hon K. (Mole Vall'y)Gorst, John
    Baker, Nicholas (N Dorset)Gow, Ian
    Banks, Robert (Harrogate)Gower, Sir Raymond
    Beaumont-Dark, AnthonyGreen way, Harry
    Beggs, RoyGregory, Conal
    Bellingham, HenryGriffiths, E. (By St Edm'ds)
    Biggs-Davison, Sir JohnGriffiths, Peter (Portsm'th N)
    Boscawen, Hon RobertGrist, Ian
    Bowden, A. (Brighton K'to'n)Hamilton, Hon A. (Epsom)
    Bowden, Gerald (Dulwich)Hamilton, Neil (Tatton)
    Brandon-Bravo, MartinHannam, John
    Brinton, TimHarris, David
    Brooke, Hon PeterHarvey, Robert
    Brown, M. (Brigg & Cl'thpes)Haselhurst, Alan
    Bryan, Sir PaulHavers, Rt Hon Sir Michael
    Buchanan-Smith, Rt Hon A.Hawksley, Warren
    Buck, Sir AntonyHayes, J.
    Budgen, NickHayhoe, Barney
    Burt, AlistairHayward, Robert
    Butcher, JohnHeathcoat-Amory, David
    Carlisle, John (N Luton)Henderson, Barry
    Carlisle, Kenneth (Lincoln)Hickmet, Richard
    Carlisle, Rt Hon M. (Wton S)Hicks, Robert
    Carttiss, MichaelHind, Kenneth
    Cash, WilliamHirst, Michael
    Chapman, SydneyHogg, Hon Douglas (Gr'th'm)
    Clark, Hon A. (Plym'th S'n)Holland, Sir Philip (Gedling)
    Clark, Sir W. (Croydon S)Hordern, Peter
    Clarke, Rt Hon K. (Rushcliffe)Howarth, Gerald (Cannock)
    Clegg, Sir WalterHowell, Ralph (N Norfolk)
    Cockeram, EricHubbard-Miles, Peter
    Coombs, SimonHunt, David (Wirral)
    Cope, JohnIrving, Charles
    Crouch, DavidJackson, Robert
    Currie, Mrs EdwinaJohnson Smith, Sir Geoffrey
    Dorrell, StephenJones, Gwilym (Cardiff N)
    Douglas-Hamilton, Lord J.Jones, Robert (W Herts)
    Dunn, RobertJoseph, Rt Hon Sir Keith
    Durant, TonyKellett-Bowman, Mrs Elaine
    Dykes, HughKershaw, Sir Anthony
    Evennett, DavidKey, Robert
    Eyre, Sir ReginaldKing, Roger (B'ham N'field)
    Fairbairn, NicholasKing, Rt Hon Tom
    Fallon, MichaelKnight, Gregory (Derby N)
    Farr, Sir JohnKnowles, Michael
    Favell, AnthonyKnox, David
    Fenner, Mrs PeggyLamont, Norman
    Fletcher, AlexanderLang, Ian
    Fookes, Miss JanetLatham, Michael
    Forsyth, Michael (Stirling)Lawler, Geoffrey
    Forth, EricLawrence, Ivan
    Fox, MarcusLee, John (Pendle)
    Franks, CecilLeigh, Edward (Gainsbor'gh)

    Lennox-Boyd, Hon MarkRowe, Andrew
    Lester, JimRumbold, Mrs Angela
    Lightbown, DavidRyder, Richard
    Lilley, PeterSackville, Hon Thomas
    Lloyd, Peter, (Fareham)Sayeed, Jonathan
    Lord, MichaelShaw, Sir Michael (Scaro')
    Luce, RichardShelton, William (Streatham)
    Lyell, NicholasShepherd, Colin (Hereford)
    McCurley, Mrs AnnaShepherd, Richard (Aldndge)
    MacGregor, JohnSilvester, Fred
    MacKay, John (Argyll & Bute)Sims, Roger
    Maclean, David JohnSmith, Tim (Beaconsfield)
    Madel, DavidSoames, Hon Nicholas
    Major, JohnSpeed, Keith
    Malins, HumfreySpencer, Derek
    Malone, GeraldSpicer, Jim (W Dorset)
    Marland, PaulSpicer, Michael (S Worcs)
    Mates, MichaelSquire, Robin
    Mather, CarolStanbrook, Ivor
    Maude, Hon FrancisStanley, John
    Mawhinney, Dr BrianSteen, Anthony
    Maxwell-Hyslop, RobinStevens, Lewis (Nuneaton)
    Mayhew, Sir PatrickStevens, Martin (Fulham)
    Mellor, DavidStewart, Allan (Eastwood)
    Merchant, PiersStradling Thomas, J.
    Meyer, Sir AnthonySumberg, David
    Miller, Hal (B'grove)Taylor, John (Solihull)
    Mills, lain (Meriden)Taylor, Teddy (S'end E)
    Mills, Sir Peter (West Devon)Temple-Morris, Peter
    Mitchell, David (NW Hants)Thomas, Rt Hon Peter
    Monro, Sir HectorThompson, Donald (Calder V)
    Montgomery, Sir FergusThompson, Patrick (N'ich N)
    Moore, JohnThornton, Malcolm
    Morrison, Hon P. (Chester)Thurnham, Peter
    Moynihan, Hon C.Townend, John (Bridlington)
    Murphy, ChristopherTownsend, Cyril D. (B'heath)
    Neale, GerrardTracey, Richard
    Needham, RichardTwinn, Dr Ian
    Nelson, Anthonyvan Straubenzee, Sir W.
    Nicholls, PatrickVaughan, Sir Gerard
    Norris, StevenViggers, Peter
    Oppenheim, PhillipWaddington, David
    Oppenheim, Rt Hon Mrs S.Wakeham, Rt Hon John
    Osborn, Sir JohnWalker, Bill (T'side N)
    Pattie, GeoffreyWall, Sir Patrick
    Pawsey, JamesWaller, Gary
    Peacock, Mrs ElizabethWard, John
    Pollock, AlexanderWardle, C. (Bexhill)
    Porter, BarryWatts, John
    Portillo, MichaelWells, Bowen (Hertford)
    Powell, Rt Hon J. E. (S Down)Wheeler, John
    Powell, William (Corby)Whitfield, John
    Powley, JohnWhitney, Raymond
    Prentice, Rt Hon RegWiggin, Jerry
    Price, Sir DavidWinterton, Mrs Ann
    Proctor, K. HarveyWolfson, Mark
    Rathbone, TimWood, Timothy
    Renton, TimYeo, Tim
    Rhodes James, RobertYoung, Sir George (Acton)
    Rhys Williams, Sir BrandonYounger, Rt Hon George
    Ridley, Rt Hon Nicholas
    Ridsdale, Sir JulianTellers for the Noes:
    Robinson, Mark (N'port W)Mr. Tristan Garel-Jones and
    Roe, Mrs MarionMr. Michael Neubert.
    Rossi, Sir Hugh

    Question accordingly negatived.

    Clause 55

    Passenger Transport Areas, Authorities And Executives

    I beg to move amendment No. 190, in page 48, line 22 at end insert—

    `(aa) such provision to require that the appointment, or any suspension, dismissal or requirement to resign, of any member of the Executive shall be subject to the approval of the Secretary of State; and'.
    Although it may at first seem obscure, the purpose of the amendment is to provide a semblance of protection for the directors of the passenger transport executives. My intention is to draw to the attention of the Secretary of State for Transport and his ministerial team the problems that may be faced by the directors of the PTEs.

    The passenger transport authority, which in the metropolitan areas will be a board consisting of elected representatives, will form the policy for buses in its area. Both the executive and elected directors of the PTE who are appointed by the local authorities which make up the passenger transport authority will carry out the directive of the authority.

    The purpose of the amendment is to highlight the problems that may be caused if there is a direct clash between the passenger transport authority and the passenger transport executive. The hybrid companies in the area of the passenger transport executive will be wholly owned by the passenger transport authority. In other words, they will be public companies that are wholly owned by the municipal authorities and they will be partially subject to the Companies Acts of 1948 and 1967 and to other legislation passed by Parliament. Unfortunately, however, those local authorities which are dominated by the opposition parties are prone to interfere with the democratic running of public organisations and deliberately flout the law of this country.

    A typical example of the kind of behaviour to which I refer is reported on the front page of today's edition of The London Standard under the headline "Invasion by 'Rent a mob'". At a meeting of Hackney council last night council representatives were effectively prevented by this invasion from carrying out their lawful duty to set a rate. Mr. Hatton and his followers in Liverpool are deliberately flouting the law of England on rate capping. We have seen this in Southwark and we are seeing it in Lambeth. Labour authorities are deliberately breaking the law, and the hooligans whose actions are described in The London Standard are unfortunately encouraging this kind of behaviour.

    6.15 pm

    No, not at this stage.

    If such an authority decided to break the law and form a policy that was contrary to the law and ordered the directors of the passenger transport executive to pursue that course of action but the directors decided to carry out their duties as prescribed by the law, which totally contravened the policy that had been dictated to them, and in consequence the Labour-controlled passenger transport authority said to them, "Because you have not obeyed us you are sacked", it would bring to an end their participation in the passenger transport executive. These people, many of whom are executive directors, would have no recourse to anybody, apart from the courts. The amendment provides a safeguard for the directors. If they have been lawfully carrying out their duties but nevertheless have been dismissed, they will be able to turn to the Secretary of State for Transport who can act as a court of appeal and reinstate them. It is unfortunate that I am obliged to move the amendment. It is a product of the change in atmosphere in local government.

    There is a second reason that must be considered. I cannot disclose my sources because to do so would mean that those who have given me this information would be in danger of losing their jobs. There are Labour-controlled passenger transport authorities which are deliberately telling their employees not to implement the provisions of the Bill when it becomes an Act so as to try to break the timetable, disrupt the plans for bus passenger transport and ensure that the consequent disruption discredits the Conservative party at the next general election. There may, of course, be a general election shortly after the enactment of the Bill. If directors say that they are not prepared to accept a political directive by a passenger transport authority, they can be fired by it for disobeying that political directive, although it has nothing to do with the duty to provide a proper system of bus transport in the area of the passenger transport executive. Those are factors about which the public should be aware, which is why I have tabled the amendment.

    I hope that my hon. Friend the Under-Secretary will give an assurance that that will not be allowed, that the PTE directors will have security of tenure and that they will be allowed to carry out their proper duties in running a bus service so that the public will benefit and be assured of a proper bus transport service.

    A rather worrying trend in the Government is becoming clearer by the day — their deep-rooted fear of properly elected representatives. With the Secretary of State for the Environment it takes the form of removing from metropolitan counties the right to exist. With some Conservative Members it takes the form of seriously suggesting that those who do not pay rates—presumably they mean those in receipt of rate rebates—should not have the right to vote in local elections.

    However, today is probably the first time that a Back-Bench Conservative Member has seriously suggested that we should not trust the locally elected representatives who were elected on a platform that included certain transport policies, but instead should ensure that they are bypassed in any arrangement with their own staff and that the Secretary of State — that well known giver of the judgment of Solomon—should make decisions in such matters as important as the dismissal, suspension or requirement to resign of any member of the executive.

    The hon. Member for Lancashire, West (Mr. Hind) is probably not a bad man. He is probably worried because, on the results of the county elections, there is no doubt that he will find himself looking for another job after the next general election. Perhaps his feeling that elected representatives are not to be trusted stems from that. We must understand exactly what he has in mind—not for him the usual guarantees for any employee in his contract of employment. Of course, we know that the Government are carefully trying to lower the terms of employment—for example, they have changed the conditions for unfair dismissal. It is important to the hon. Gentleman that, in future, the PTAs should not be in control of their staff — that there should be not only a distancing of the PTAs from the PTEs, but a positive intervention from the Secretary of State.

    I do not seriously challenge the hon. Lady's comment that those democratically elected to deal with transport should have the right to do that. But is she seriously suggesting that there is not a large element of the Labour party in local administrations that denies the right of this place to make the law of the land, that openly flouts it and believes that because it was elected locally it can ignore the law?

    Those people were elected on a specific policy, and have the right to carry it out. The Government are denying them that right. The hon. Member for Lancashire, West used the word hooligans. We should look at what happens when Conservative students have what they call a quiet weekend. They have to be dealt with severely by the chairman of the Conservative party who, when he had finished squeaking, tried to remove their funding.

    Let us not be mealy-mouthed and hypocritical; it is quite clear what the amendment is about. The hon. Member for Lancashire, West believes that those who are properly elected are not to be trusted to carry out their responsibilities—they should not be allowed to maintain the usual relationship between employer and employee; we must rely on the Secretary of State. After all, when the right hon. Gentleman has finished destroying the bus industry, had a go at the rail industry, mucked up the airports and changed one or two other minor matters, he will not have anything to do, so he will have time to adjudicate between each PTE and its employees.

    It is extraordinary audacity for a Conservative Member to move an amendment implying that elected Labour-controlled PTAs will cause disruption in the bus industry. The metropolitan counties are facing abolition, the formation of joint boards, the abolition of transport supplementary grant, the vying between various heads of expenditure for the financing of public transport, all the measures in this Bill and the break-up of section 24 agreements in the NBC —which is of great importance to PTE areas—and yet are being accused by a Conservative Back Bencher of being likely to cause disruption in the transport industry.

    The hon. Member for Lancashire, West (Mr. Hind) should be attacking the Secretary of State. Under legislation passed by this Government, passenger transport authorities should be submitting plans for the next three years to the Secretary of State by 31 July. He should have provided them with advice in February or March, so that they could submit the plans on time. His Department has given them no advice. Yet a Conservative Member has the audacity to move an amendment implying that even more democratic accountability should be taken away from those authorities because they cannot be trusted. He should be moving amendments to stop the Government interfering in public transport.

    Reaction from Opposition Members shows that my hon. Friend the Member for Lancashire, West (Mr. Hind) has struck a sensitive spot. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) spoke about my hon. Friend's prospects after the next election. She has only a 290 majority, so it would take only a 0–25 per cent. swing for her to have to find something else to do—but I shall not fall into the same trap as the hon. Lady by pressing that point any further.

    I share my hon. Friend's concern about the dangers that could arise. Obviously there is a possibility of some PTAs adopting an appointments policy for PTEs that puts more weight on political inclinations than on ability. That would be undesirable. I hope that Opposition Members, when they leave off their swords and shields of political campaigning and consider the best interests of the travelling public, would also feel that that was undesirable.

    My hon. Friend mentioned some of the policies that the PTA might try to pursue. I know there are some Labour Members who take a view contrary to that of the hon. Lady. They believe that local councils should obey the law and that those in this House who try to encourage them not to do that should not be supported because they are undermining democracy and the constitutional position of the House. I was surprised to hear the hon. Member for Crewe and Nantwich say it was her view—I take it that this is not the official Labour party position—that, if a council is elected on a policy, it is entitled to carry it out, regardless of whether that policy happens to be in accordance with the law made by Parliament. If the hon. Lady wishes to qualify her remark, I am delighted to give her the opportunity to do so.

    6.30 pm

    The hon. Lady says that she did not say that, but that was the remark that I heard her make and that I noted. I am sure that certain of her hon. Friends, not least the shadow Secretary of State for the Environment, would not agree with her in the view that she expressed today.

    I think that it would be unwise to try to counter these dangers by giving the Secretary of State a final say on these matters. The appointing and dismissing will be done by the PTA which—apart from in Scotland—after the abolition of the metropolitan councils will be composed of district councillors nominated by constituent district councils. They will have to account for all their actions, including those of appointment and dismissal, as PTA members both to their nominating councils and to the local electors.

    Indeed, in matters such as this where any decisions could have a serious effect—this may well be the view that some Labour councils take in doing things against the interests of the ratepayers—on a majority of electors, I think that that accountability is likely to be more real.

    Appointments to the passenger transport executive, as with other passenger transport authority decisions, will be local matters, and I think it is right that the PTA should be accountable for them locally. We would not want to impose central Government upon that framework. Indeed, I think that such a move in itself would dilute local accountability and perhaps even discourage passenger transport authorities from taking a responsible approach. In particular, if things went wrong, under the provisions suggested by my hon. Friend they would undoubtedly say that it was not their fault but the fault of the Secretary of State because he had endorsed the appointments or the dismissals.

    In answer to one of the very real fears that my hon. Friend the Member for Lancashire, West expressed, I must say that passenger transport executive members cannot be directed to act contrary to the law. The duties of the PTE are quite clear. They are to secure services to meet the area's requirements and in a financial sense to break even.

    While I appreciate the concern of my hon. Friend and welcome the fact that he has raised the matter today, I think that there are safeguards against some of the dangers that he has outlined. Equally, in the other areas it is proper that the local passenger transport authorities should be locally accountable and able to take decisions for themselves.

    In the light of what I have said, I hope that my hon. Friend, after his valuable contribution to the debate, will withdraw the amendment.

    I am obliged to my hon. Friend for the clear and precise view that he has expressed. I join him in hoping that the local representatives will make sensible and proper decisions on a local basis. It was not my intention to denigrate local representatives in any way. Indeed, I am a strong supporter of local government.

    It must be borne in mind that local authorities are subject to Parliament. Parliament makes the law, and all powers that are passed to local authorities are devolved from Parliament. Accordingly, each local authority must obey the law. I fully accept, as I am sure most of my hon. Friends do, that the majority of elected representatives are conscientious and obey the law in carrying out their functions properly. The rule of law is the most important factor in this matter and I emphasise it today to lay down a marker for the future.

    I fully agree that there are those—a minority element — who unfortunately support the view of the Opposition, as they showed when they arrived in their busloads last night at Hackney town hall. They could influence the situation. As a consequence of what has been said by my hon. Friend, I am sure that they will realise that that is not a course of action that they should follow, and accordingly there will be safeguards in the courts to deal with that matter.

    I beg to ask leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    I beg to move amendment No 168, in page 49, line 23, after 'area', insert ` (a),.

    With this it will be convenient to discuss the following amendments:

    No. 169, in page 49, line 26, at end insert—
    `and (b) to ensure the co-ordination of public passenger transport services in the area.'.
    No. 170, in page 49, line 27, after '(1)% insert ` (a) '.

    No. 171, in page 49, line 29, at end insert—
    '(2A) The Passenger Transport Executive for any area shall secure and maintain systems the co-ordination of local services with railway passenger services ferry services provided or secured by the Executive to meet the public transport requirements within the area'.
    No. 172, in page 49, line 34, after 'subsection', insert
    `and the description of systems which the Executive may secure and maintain under subsection (2A) above'.
    No. 173, in page 49, line 36, leave out 'that subsection' and insert 'those subsections'.

    No. 174, in page 50, line 23 after '(6)', insert
    'Except as required in pursuance of the duty imposed by subsection (1) (b) of this section'.

    I suspect that this will be one of the last chances for us to endeavour to inject some sanity into a Bill that is riddled with lunacy. We have spent four months in Committee trying to show the Government that if they are determined to push through this measure, at the very least there should be some reserve element given to the passenger transport executives so that they can have overall control and responsibility for the co-ordination of the transportation system in their areas. So far, we have not had those guarantees from the Government. They refused to accept the amendments that we tabled, and so we have had to table the amendments again on Report.

    The amendments do not seek to undermine the basic thrust of the Bill. The Minister knows full well that Opposition Members are opposed to the whole wretched concept of the Bill. We are endeavouring yet again to draw to the Minister's attention the serious and real damage that will be caused if the PTEs and the joint boards are unable to have control in the way outlined in the amendments.

    The fare levels of most, if not all, of the metropolitan counties are charged on buses and are so organised that the fares structure and system is uniform throughout the county. Co-ordination of fares by the PTE and PTA will be possible under clause 55(5), which permits any measure to promote the operation of commercial services to meet public transport requirements and to increase the convenience of the use of public transport. However, this depends on the willingness of all operators to participate. Clause 85 enables the PTA to establish a county-wide travel concession scheme for the elderly, the blind, children and disabled people.

    With numerous operators under no obligation to accept county-wide tickets, it is unlikely that the present system, which operates in many metropolitan councils and other places, such as metrocard, day rover, saverstrip and off peak travel concessions applying to bus and to rail services can survive. Operators will probably be unable to reach agreement on revenue sharing because of differences in fluctuating fares scales.

    The present fares systems are all based on a countywide fares scale. For example, when I visited Bradford last Friday I was informed by Mr. Reed of West Yorkshire passenger transport executive that the saverstrip, the 12-ride multiple journey ticket, offers a uniform discount on a small number of bus fares which are in the lop steps. It is a complicated formula, but that is its objective. With a wide variety of fares scales, this would no longer be possible. Similarly, metrocard, offering unlimited travel across the county, will probably be unworkable if there are large variations in fares between different operators.

    The powers in the Bill will enable the continuation of county-wide concessionary fares schemes, particularly as we have been assured by the Secretary of State, following an amendment that we made yesterday, that operators must participate in such schemes. However, there will be considerable problems over determining reimbursement. That will require information being gathered about the level of concessionary scheme patronage, a subject that we debated at length yesterday. The local PTEs and PTAs will also need some control over the way in which operators are given routes and operate them.

    As I explained, I visited West Yorkshire PTE on Friday. I went to Bradford and discussed the matter with the busmen and their trade union representatives and members of the professional staff. I was extremely impressed by their presentation of the issues involved. That is an extremely good PTA providing public transport to meet the needs of the people.

    I note that the hon. Member for Dewsbury (Mr. Whitfield), who was a member of the Standing Committee, is not in his place. That is a shame because he was the only Conservative Member on the Committee with a constituency in a metropolitan area. I should have thought that he would be interested enough in our debates to have been present. In his area, county-wide fare systems have been shown to be of substantial benefit both to operators and to passengers.

    Under the West Yorkshire system, the tickets available include a saverstrip, which is a bus and rail multi-journey ticket offering 12 rides for 10p each. That type of ticket is used by 40 million passengers per annum and has a peak take-up of 20 per cent. Metrocard is a bus and rail travel card which is used by 23 million passengers per annum and has a peak take-up of 30 per cent. Off-peak maximum fares—that is, 30p for adults and 15p for children—are available at off-peak times and weekends. The system has increased passenger journeys by 19 million annually. I could go on giving details of how the system has created many improvements.

    All of that—through ticketing, Travelcard, the ability of people to travel on buses and trains without buying separate tickets, of being able to buy a strip of tickets to cover 12 journeys, with the strip being punched into a machine—will be in jeopardy as a result of the Bill. Only by introducing amendments such as those which we propose shall we safeguard a system of logistical transportation planning that has been built up in the last decade.

    My hon. Friend the Member for Sunderland, North (Mr. Clay) will explain what is happening in Tyne and Wear, an area of the country which has developed a metro system and where the transportation system generally is second to none. He, like I, believes that that system will be in jeopardy unless we can enshrine safeguards in the statute. After all, that is our job; we make the law, and we should ensure that there is no dubiety in its interpretation. I trust, therefore, that the amendment will be accepted. PTEs should have power to co-ordinate their transportation systems in their areas in future as they do now.

    In our long debates in Committee—

    My hon. Friend is right, and today we shall have to make do with what time is available.

    During our debates in Committee the metropolitan counties were often criticised because, it was claimed, they had been content to pay ever-increasing sums by way of revenue support to buy in passengers without seeking reductions in costs and improvements in efficiency. That is not true of most of them.

    It is certainly not true of west Yorkshire. I am informed by the PTA there that patronage has increased by 8 per cent., compared with a typical decline nationally of 3 to 4 per cent.; that fares have fallen by 20 per cent. in real terms; that revenue support has dropped by 23 per cent.; that unit costs have gone down by 7 per cent.; and that total costs have gone down by 10 per cent. in real terms. Revenue has risen by 5 per cent. in cash terms and the PTE has reduced its number of operational properties from 36 to 28. That has happened in west Yorkshire under a system of properly co-ordinated transportation planning.

    I do not question the hon. Gentleman's statement about what is happening in west Yorkshire and about revenue support having declined. I think that he will agree, however, that his hon. Friend the Member for Sunderland, North (Mr. Clay) refused to give way to me earlier because he knew that his halo would become tarnished. In his part of the country it was decided not to increase fares, even in line with inflation, although to have done so would have meant increasing the passenger figures.

    Had the fares been increased in line with inflation, Tyne and Wear would have had between £15 million and £20 million in additional revenue with which to improve even further the local system. That is what my hon. Friends and I mean by sensible local management. That is not available in that area because of the colour of the council.

    6.45 pm

    I will leave my hon. Friend the Member for Sunderland, North to deal with that intervention.

    Repeatedly, Ministers and Conservative Members claimed in Committee that the Bill was designed to stop planners telling people what services they could have and, instead, to let the people have the services that they wanted. Indeed, the Secretary of State said, referring to franchising:
    "It allows the network to be laid down by the planners but does not permit the customers to say where they want to go and when, and with what frequency, price and standard of service". —[Official Report, Standing Committee A, 30 April, 1985; c. 1641.]
    Not once have Conservative Members spelt out what transport planners really do. They speak as though an overlord imposes bus times and routes that the public do not want. Have any of them considered what actually happens?

    The planning of bus services involves discovering what the people need and then meeting that need. That is the duty and responsibility of the PTEs. The executives have market surveys, ask people what they want and examine the running speeds of buses and the siting of route furniture. They take cognisance of public opinion and try to provide the services that the people want. That is sensible transportation planning.

    If we go ahead with deregulation, restructuring and competition, as will occur if the Bill reaches the statute book without some of the amendments that my hon. Friends and I propose, we shall have absolute chaos. Not only are Labour Members convinced of that, but some Conservative Members believe it, too.

    To mitigate at least some of the consequences of this awful legislation, we have tabled this series of amendments to ensure that an element of local transportation planning may be maintained. Only by that means shall we have co-ordinated services for the benefit of the customers, about whom we are just as concerned as are Conservative Members.

    My hon. Friend should be careful. I expect that the reply he will get from the Minister is that the market will respond to what the people want. That is not the case because the market will take on the profitable routes and will not care about the routes that are not profitable. Would my hon. Friend dwell on that point? If planning takes account of what the people want and is done properly, there can be a properly integrated service. The market will not provide that. Can my hon. Friend spell that out?

    My hon. Friend anticipates me; I was about to conclude my remarks by doing precisely that.

    The Bill will remove the voice of the passengers from the planning of bus services. There will be no more consultation and no more independent surveys but just brand marketing of busy routes. Market forces produce nothing to look after people; they just impose what an operator thinks he can make money on. Market forces remove all sense of caring and, more important, reliability and stability, which are essential ingredients for those passengers whose jobs or way of life are dependent upon them. That is the point that my hon. Friend the Member for Wrexham (Dr. Marek) was making, and I subscribe to that view. [Interruption.] Does the Parliamentary Under-Secretary of State for Scotland wish to come to the Dispatch Box to contradict what I have said? No. Then I shall ignore his mutterings.

    Before the hon. Member finishes, will he address himself to clause 55(2)? It refers to a new section to be inserted in the 1968 Act. Subsection (1) provides:

    "it shall be the duty of the Executive for any passenger transport area …."
    Subsection (3) of the new section says:
    "The Authority for any passenger transport area shall from time to time formulate general policies …."
    Why does he think that that does not cover completely the whole of what he is seeking to do in these unnecessary amendments?

    I apologise to the House for the action replay of what took place in Standing Committee, but this often happens when a Bill is contentious and has been in Standing Committee for a considerable time. We tabled these amendments because we did not get satisfaction from the Minister in Committee. We did not accept the arguments that the Minister used in Committee to counter our arguments. Therefore, we are taking this final opportunity—it is the final opportunity for the House of Commons—to try to write some sanity into a Bill that is riddled with lunacy. That is what we are attempting to do — nothing more, nothing less. Our proposals do not destroy the basic thrust of what the Government intend to do. We are trying to fashion a better Bill. That is the purpose of the amendments. I hope that the Minister will find it possible to accept them.

    I am pleased to support the hon. Member for Wigan (Mr. Stott). The answer to the hon. Member for Nottingham, South (Mr. Brandon-Bravo) is that only yesterday the House approved, against the wishes of the Opposition, the deletion of certain sections of the Transport Act 1968 which called for co-ordinated and integrated services. It is a tragic shame that those sections have been deleted. We are trying to do something about it now.

    We have heard vivid descriptions from the Minister and the Secretary of State about what they expect to happen in Tyne and Wear. They contemplate that if an operator wishes to run a bus service from Whitley Bay to the centre of Newcastle that will be OK. However, they think that he will not do that but will run the service to the nearest railway station because that will be more profitable. I doubt whether that will happen.

    I remember the senior Conservative councillor who appeared before the Select Committee on Transport when it was considering the bus legislation. With tears in his eyes he said, "I have worked for the Tyne and Wear metro for 20-odd years. Now my Government are about to destroy what we have achieved." That is on record for the Minister to read, if he wishes.

    I am sorry to weary the House with yet more stories of the Sealink saga but I will not miss this opportunity because in amendment No. 171 we are asking for co-ordination not only with railway services but with ferry services. I must give the House a warning. The Government let my constituents down when they sold Sealink because they did not write into the contract of sale a requirement for co-ordination of services.

    Only today there arrived on my desk another letter—unfortunately I have not got it with me—complaining about the lack of co-ordination between Sealink and British Rail. A new constituent who has moved from Kent was travelling on 3 May for the bank holiday weekend. He was supposed to connect with the 8 o'clock boat from Lymington. The railway company had even rung up from Brockenhurst to tell Sealink that the train would be late and to ask it it hold the boat. Did it hold the boat? No. The boat went and that man was stranded because there was no later boat. He had to find accommodation for the night. He wants me to take up the matter with the Minister, but what is the point because the Minister will not answer for Sealink which is a private ferry service? If it wants to run the service at 8 o'clock and not wait for passengers who are coming on the train it is entitled to do so. I have already taken up the matter with the local manager.

    My mail contains such letters daily. They are increasing all the time. If we do not insist in legislation that services should be co-ordinated and integrated this will continue. There will be services where co-ordination will not happen.

    So that I may understand clearly what the hon. Gentleman is saying about the ferry that sailed without waiting for the train, does he feel that all the people who were on the ferry, with a timetable that they had been told the ferry would run to, should have arrived late because there was a mishap on a train?

    I did not say that there was a mishap on the train. I said that the train arrived late. That was the last boat of the night, and it should have waited. It would have waited if it had been under British Rail control. There is a limit — perhaps up to half an hour. That would not have held people up very long. I would expect that. That is co-ordination. With a population of 100,000 people, and many more coming for a holiday weekend, they do not expect to see the boat going without them, particularly if the company has been asked to hold the train.

    There always has been co-ordination. If the boat had gone, it would have come back and run a special service, but that did not happen on this occasion because the company would have lost money. When we start privatising some sections of the public transport service this is the sort of thing that will happen. It will happen with bus services and on metros. Even the hon. Member for Nottingham, South may find in years to come that his mail contains examples of services not being co-ordinated.

    I am sorry to intervene again, but surely the hon. Member is not suggesting that he has never been left on a British Rail platform because the train he was supposed to connect with had already left?

    I can recall a number of instances of being put on a goods train, but one is cut off when there are five miles of sea. There is not the alternative of getting a taxi or even flying. The position is different. I believe the example I have given to be true. That is why I feel so intensely that we are at risk of breaking up what has been a very good system.

    We have heard about West Yorkshire and we know about Tyne and Wear. There have been connections of services. For over 80 years it has been the practice for ferries to wait for trains unless they have been too late. In those cases they have run a special service. That is at risk and that is why I support the amendment.

    I was fascinated by the intervention of the Under-Secretary of State in the speech of the hon. Member for Isle of Wight (Mr. Ross) when he asked sarcastically whether the hon. Member thought that the ferry should have waited for this passenger. We have heard a great deal about Hereford and Worcester all through the debate on the Bill. I have been to Hereford and it is clear that the one remaining operator in the city centre waits for the last passenger. That is why there is no timetable on the bus stand in the town centre. The operator does not run to time; he parks his bus and waits until it is full before he leaves. That is the most profitable way of operating and that is why he does it. That is the only way in which he can operate a service with the ludicrously uncommercial fares that he charges, which have forced the National Bus Company to reduce its fares. Conservative Members have taken great delight in that forced reduction of fares while we have been discussing the Bill.

    The Hereford service is unplanned and unco-ordinated. It is a sordid cowboy operation and that is why there is only one private operator left in the area. I suspect that he will not be there for very much longer.

    In the example given by the hon. Member for Isle of Wight (Mr. Ross) he argued that the boat should have waited. Is the hon. Member for Sunderland, North (Mr. Clay) complaining because in Hereford the private operator's bus waits? Perhaps he will settle the argument with the hon. Member for Isle of Wight. It seems that there is disagreement over which form of service is desirable.

    I am arguing with the Minister and not with the hon. Member for Isle of Wight. In a sarcastic intervention the Minister implied that vehicles should not wait for late passengers. The success of the cowboy operation in Hereford, such as it is, is based on waiting. There is no timetable. The operator waits until his bus is full before he drives off. The Minister asked the hon. Member for Isle of Wight to consider the position of other passengers. If I go shopping in Hereford and I study a timetable to decide which bus I want to use for my return journey, I do not expect to sit in the bus for 15 or 20 minutes until the bus is full. That is an example of the ludicrous nonsense that is to be found in experimental areas.

    My right hon. and hon. Friends are arguing for co-ordination and that is what the amendment is designed to achieve. We wish to ensure that the nonsensical operation in Hereford does not continue. We want proper ticketing systems, for example.

    I hope that the hon. Member for Nottingham, South (Mr. Brandon Bravo) is now familiar with the Tyne and Wear system, but against that background his comments on fare increases were somewhat naive. My hon. Friend the Member for Wigan (Mr. Stott) has said that Tyne and Wear and many other metropolitan counties have PTEs that offer many different systems to the public. Single journey tickets are beoming increasingly a minority means of travel. The Tyne and Wear PTE is introducing a carnet system. In addition, there is a full range of travel cards, including day rovers, weekly travel cards, monthly travel cards, annual travel cards, two-zone and three-zone cards, a countrywide zone, off-peak tickets and all-day tickets. When there is a fare increase, some fares increase and some are held at the current level.

    The Tyne and Wear PTE system has been trying to move passengers on to travel cards as the system is more efficient. If a passenger steps on a bus and displays his card, the bus can proceed more quickly along its route than if the passenger has to buy a ticket. I presume that that is what we all want to achieve.

    I accept all the glorious compliments that the hon. Gentleman is paying to the Tyne and Wear system. In an earlier intervention I merely said that if fares had risen since 1982 generally in line with inflation and no more, the Tyne and Wear PTE would have had £15 million to £20 million of extra revenue with which to make the system even better. Will the hon. Gentleman respond now to that argument?

    Yes, I will. The Tyne and Wear PTE's calculations produced a result different from that which the hon. Gentleman has put before us. It undertakes processes known as planning and market research, which Conservative Members find appalling. Within the county of Tyne and Wear there have been 55,000 redundancies in the past four years, mainly as a result of Government policies. There is a population of 1·2 million and with such a devastatingly high level of redundancies it is clear that the average person's income is not increasing to meet inflation. It is remarkable even to maintain ridership during a redundancy holocaust. The Select Committee on Transport heard evidence that for every redundancy that is created 150 passenger trips a year are lost. As I have said, there have been 55,000 redundancies in Tyne and Wear over the past four years. However, ridership has increased, which is a reversal of the national trend.

    The success of the Tyne and Wear PTE has not been achieved by holding fares at the same level and not by reducing them either. The PTE has been selective in increasing fares. Travel cards have been introduced and discounts have been offered to the unemployed. The PTE has examined the market. It has studied how people want to travel and it has produced a system that suits the travelling public.

    Whenever my right hon. and hon. Friends have talked about co-ordination and integration there has been abuse from Conservative Members. They suggest that planners are the most evil people under the sun. Such an attitude is extraordinary from a Government who are so committed to capitalism. The very foundation of the capital system is the multinational company. Are the Government saying that multinationals do not plan and do not engage in market research? Do ICI or Marks and Spencer say that they do not know what their next product will be, how many examples of it they will produce and where they will sell it? Do they not know where they want their new outlets to be or which outlets they will close? Are they unsure about the number of supermarkets that they want to build and from where they will buy their products? Large companies employ more and more staff on extremely high salaries to plan and engage in market research.

    The metropolitan counties have adopted the sophistica-tion of large companies and have introduced their techniques to the provision of public passenger transport. They have adopted market research and innovation. They are producing a new product and co-ordinating it. Apparently Conservative Members find this either laughable or despicable. They fail to understand that the system that they claim to find so worth while in Tyne and Wear will be damaged unless the modest aims of the amendment are added to the Bill.

    We have been told repeatedly by the Secretary of State and the Under-Secretary of State that the metro system took a considerable amount of public investment and that if it is as good as we believe the bus services that compete with it will fail. It will not take a great loss of ridership on the metro to put the entire system in danger. The system is dependent on bus services because 60 per cent. of its passengers use a bus before or after their metro journey. It is a system of fixed costs and if the ridership declines slightly the service cannot be reduced slightly. The fact is that the money has been spent. It is not, as the Under-Secretary of State suggested in Committee, a free gift. Interest charges must be paid even if the entire system is sold tomorrow for scrap and closed down. Interest charges will continue and the cost of the rolling stock will have to be met. The system will require the same number of signallers, the same permanent way and the same controllers irrespective of the frequency of the metro cars.

    If the metro loses 5 per cent. of its passengers, it is not possible to reduce the service by 5 per cent. It is recognised within public transport that there is a fatal spiral. If an operator loses passengers, he has to increase his fares. When he increases his fares he loses more passengers. If he is left with fewer passengers, he has to increase his fares again. The metro will be liable to that danger. Many people from Tyne and Wear have tried to explain that to the Minister but he has failed constantly to understand their submissions.

    I urge the House to try to understand the need for the metropolitan areas, especially those which have pioneered integration, to be allowed the powers that the amendment would give them so that whatever happens to the National Bus Company, the PTEs and the private operators that enter the system and try to compete there will be a network of public transport that is highly planned, co-ordinated and popular with a ticketing system that allows the travelling public conveniently to use the entire system. There has been an enormous amount of investment, both of capital to build the system and of human lives to make it work. There have been years of negotiation between different bus companies, because the system is not a monopoly. It operates between the PTE, the National Bus Company and the private operators. All those private operators support the system and are opposed to the damaging effects that the Bill will have.

    The area is completely united, as the hon. Member for Isle of Wight pointed out. Senior Conservative politicians in the area are terribly afraid of the damage that the Bill will do, and are committed to opposing it. For all those reasons, we should at least pass the amendment, which gives the PTA some continuing part in making sure that the co-ordination of services, the through ticketing system and the other benefits of bus-metro integration in Tyne and Wear can continue, and that similar systems in other metropolitan counties can also continue.

    As I said in Committee, I have had my worries about the continuation of an integrated transport policy. In Committee, too often subsidy became mixed up with an integrated transport policy, which is basically a concept in transport. It has nothing to do with subsidies but is a method of running a bus and transport system.

    I have looked carefully at the Bill and formed the view that there is nothing in it that will prevent a PTA laying down an integrated policy for its area. I should be grateful if my hon. Friend the Minister would comment on this. In particular, I looked at clauses 55 and 59, which relate to the function of local councils in respect of passenger transport in areas other than those covered by their PTAs.

    Clause 59(1) says:
    "(1) In each non-metropolitan county of England and Wales it shall be the duty of the county council
  • (a) to secure the provision of such public passenger transport services as the council consider it appropriate to secure to meet any public transport requirements within the county; and
  • (b) to formulate from time to time general policies as to the descriptions of services they propose to secure under paragraph (a) above."
  • The councils will apply their common sense to that, and sense means integration. It will be essential, with a system such as that of Tyne and Wear, in which millions of pounds of public investment have been made, to continue that service. That will appear sensible to the passenger transport planners, and to the private operators who will realise that they will not be competing against the PTEs' metro systems in Tyne and Wear and Merseyside. They will see where their business lies, and under the Bill it will be to make money running buses. They will realise that the way to do that is to run the buses to the railway stations. I hope that in Lancashire the NBC successor will run its buses to interchanges and railway stations on the Merseyside metro and railway stations.

    There has been much discussion of this matter, but, having looked at it carefully, I feel that we should be considering only one thing in the Bill—can we have an integrated system within the parameters laid down by my hon. Friend the Minister in drawing up the clause? The answer to that must be yes, and the PTEs and the PTAs must take the tools with which they have been provided by the Bill, exercise their common sense and realise that they can run such a system under the Bill. In that case, the amendment is unnecessary.

    7.15 pm

    The speech of the hon. Member for Lancashire, West (Mr. Hind) shows clearly that, after some 200 hours of debate on the Bill, both in Committee and in the Chamber, many Conservative Members have failed to understand what the Bill will mean and what deregulation will imply. The county councils will have a duty to provide transport services within their areas. The hon. Gentleman pointed that out, but he failed to recognise that, whether those services can be run on a commercial or a subsidised basis, any other person who wishes to operate a similar service can register to run one in competition. That may destroy the basis on which the county council has planned.

    New operators will be able to register a service for the whole of the day, or part of it, for all the route or part of it. That will cause chaos. Any plans that county councils may have for an integrated and co-ordinated system will not be possible once the Bill has been passed.

    Yesterday, we debated an amendment to stop undertakings agreeing a basis on which they may compete. The Minister opposed that because he felt that that would be unfair competition. That shows how the Government are thinking. County councils such as Lancashire have been trying to get more co-ordination. Although the amendment refers to PTAs, the real point with which we are concerned is the principle of running co-ordinated transport.

    Over the past few years, the Lancashire county council has made strenuous efforts to co-ordinate transport in, for example, Burnley and Pendle, where we have had an agency agreement for a number of years. The six bus operators within Burnley and Pendle co-ordinate their services to make the best use of the staff and resources. That is sensible planning.

    Lancashire county council has encouraged the use of the red rose rambler ticket, and many other different types of tickets. It has co-ordinated the dates on which fare increases will be applied throughout the county and has tried to co-ordinate a countywide basis for concessionary fares. It opened a railway station at Lostock Hall a couple of years ago, and that is a tremendous stride forward. It has encouraged British Rail, and as a result a long discontinued rail service from my constituency to Yorkshire has been reopened. That is a welcome move and we are hoping to see that develop so that we can have a better rail service between the two areas. I should like Lancashire county council to support the idea that British Rail should run a service to Manchester via the Yorkshire side of the county, thereby providing a more direct service. Lancashire county council and I are convinced that such proposals, which will provide a new railway station in my constituency, will not be possible if the Bill is passed.

    Deregulation will mean competition at peak hours and destroy the basis of the transport system. It will rob the present transport operators of finance. It will be a disaster. I am sorry if the Government cannot envisage the disaster that will result from the Bill. Labour Members will be proved right, and the Government will see the disaster when it is too late.

    We have had an interesting, although not wholly new, debate on co-ordination. There are two possible forms of co-ordination — where the service is provided or controlled by a single body, and where the market is allowed to produce the services best tailored to meet public demand but provisions are retained for facilitating proper co-operation between diverse services—through joint timetabling, through ticketing, multi-journey tickets, and so on — with contracts provided at public expense for additional socially necessary services. The Government believe that the first of those choices imposes a dead hand on enterprise. The second is much to be preferred, and that is why it is in the Bill.

    I turn from the basic principle to the points made by the hon. Member for Wigan (Mr. Stott). The hon. Gentleman wants "overall control" — his words, not mine. How Socialists love power over other people's lives. The hon. Gentleman went on to say that the PTE provides the service that the public wants. The PTE provides the service that it thinks is good for people: the gentlemen in town hall know best.

    I have only a few minutes in which to speak and I wish to deal with some of the hon. Gentleman's other points.

    The hon. Member for Wigan sounded a paean of praise for the West Yorkshire PTE, which he recently visited. I do not know how much the PTE told him. I accent that, as PTEs go, the West Yorkshire PTE is reasonably efficient. Did the PTE tell him that it has one of the lowest load factors of any PTE? That does not indicate great efficiency. Did the PTE tell him that the planned reduction in mileage in 1984–85 was 3·6 per cent.? If one extrapolates that rate of decline, in 29 years there will be no buses at all. Did the PTE tell him that? Did it tell the hon. Gentleman that 76 per cent. of the buses in that area are on one-man operation, instead of 91 per cent., as with the National Bus Company? Did the PTE give the hon. Gentleman that criterion of efficiency? Did it tell him that the costs per bus mile in west Yorkshire are 10 pe: cent. above those in the west midlands?

    I wonder what sort of picture the hon. Gentleman came away with. Did the PTE tell him that the National Bus Company's costs are, on average, between 20 and 25 per cent. below those of the West Yorkshire PTE? If the PTE told the hon. Gentleman those things, he would not have uttered that paean of praise. If it did not, the PTE did not give him a balanced picture of the position in west Yorkshire.

    The hon. Member for Wigan mocked the profit motive. What is wrong with a motivation of finding, pleasing and serving customers? If the hon. Gentleman thinks that the profit motive is so bad, I ask him to look at the magnificent services that Marks and Spencer and Sainsburys provide for the public. If removing the profit motive was the signal to marvellous success, would not the co-operative shops have swept the country and put Marks and Spencer out of business? They have not, because pleasing the customer is an enormous motivator when profit is made. That is what we want in the bus services. We want happy customers who are given a service that they want, and the profit motive will help to ensure that that happens. A profit is not made unless one provides the service that the people want, because if the service is not provided the company does not get the passengers.

    The essential argument of the hon. Member for Sunderland, North (Mr. Clay) was that there is a super system on Tyne and Wear which provides the service that the people of the area want. He went on, however, to make an extraordinary, illogical point. He said that the service should therefore be protected. If the system is providing the super services that the people of the area want, it does not need protection. Courage, mon ami: if one is providing what the public wants, one does not need the crutches and protection from competition for which the hon. Gentleman asked.

    I am sorry that my hon. Friend the Member for Hereford (Mr. Shepherd) is momentarily not in the Chamber. The hon. Member for Sunderland, North talked about a bus waiting in Hereford and not running until it was full. We had a trial area in Hereford, and we learnt the lessons of what was wrong. That was one of the lessons. The Bill therefore provides that a service must be registered and that a company must run according to its registered timetable. If it does not, penalties, including a fine of up to 25 per cent. of the company's fuel duty rebate — a severe penalty — are imposed. Eventually, the company might lose its operating licence. That does not happen at present. If the hon. Member for Sunderland, North is in any doubt, let him wait for a No. 11 bus. He will soon find that he will wait 20 minutes and then get three buses. At present, no penalty is imposed on the operators. Under this legislation penalties will be imposed on people in the areas outside London and, as soon as possible, in London who fail to run services as registered.

    The hon. Member for Sunderland, North showed that ICI, Marks and Spencer and other private sector companies undertake market research. What leads him to believe that the motivation for profit which drives Marks and Spencer to seek out surveys to ascertain where customers can be found will not also be a motivation for bus operators to undertake the same activities in the metropolitan counties? [Interruption.] The hon. Member for Wigan laughs. I suppose that if he ran a bus service, he would not bother to carry out those surveys. Is the hon. Gentleman saying that, or will he admit that, if he ran a bus service, he would be sufficiently shrewd and sensible to conduct surveys to ascertain where potential customers were? If the hon. Gentleman is sufficiently shrewd and sensible to seek to know where his potential customers are, he deserves to be a spokesman for his party. If he is not sufficiently shrewd, he has no right to occupy the seat he now occupies.

    The House knows perfectly well that the hon. Member for Sunderland, North was talking complete nonsense in suggesting that private operators would not have the necessary shrewdness to do what is done by private operators in a host of businesses, motivated by the profit motive and a desire to find and satisfy customers and use their services again as good will is built up.

    The Under-Secretary of State knows perfectly well that he is misrepresenting what I said. At the moment, PTEs plan and conduct market research. That has been denigrated by the hon. Gentleman and his colleagues as bureaucracy and undesirable. I simply made the point that the big firms which he supports and admires do the same. The hon. Gentleman implies that bus operators will not need to do that, because the mystical hand of the market will tell them where to go. They will not need to carry out market research. The Under-Secretary of State — not Opposition Members — has totally contradicted himself.

    The hon. Gentleman fails to recognise that what he refers to as the "mystical" power of the market is the motivation to ascertain where one's potential customers are and where the company can build up business. That is exactly what the private sector does.

    I hope that the House will reject the amendment and accept that we are providing a system that enables PTEs to facilitate proper co-operation between diverse services through joint timetabling, through ticketing, multi-journey tickets and the like. Facilitation rather than compulsion is the way. We want to enable the customer to be the king.

    Question put, That the amendment be made:

    The House divided: Ayes 162, Noes 244.

    Division 219]

    [7.30 pm


    Archer, Rt Hon PeterFoulkes, George
    Ashdown, PaddyFraser, J. (Norwood)
    Ashley, Rt Hon JackFreeson, Rt Hon Reginald
    Ashton, JoeFreud, Clement
    Bagier, Gordon A. T.Garrett, W. E.
    Banks, Tony (Newham NW)George, Bruce
    Beckett, Mrs MargaretGilbert, Rt Hon Dr John
    Beith, A. J.Godman, Dr Norman
    Bell, StuartGolding, John
    Benn, TonyGourlay, Harry
    Bennett, A. (Dent'n & Red'sh)Hamilton, W. W. (Central Fife)
    Bermingham, GeraldHancock, Mr. Michael
    Bidwell, SydneyHarman, Ms Harriet
    Blair, AnthonyHarrison, Rt Hon Walter
    Boyes, RolandHattersley, Rt Hon Roy
    Bray, Dr JeremyHealey, Rt Hon Denis
    Brown, Gordon (D'f'mline E)Heffer, Eric S.
    Brown, Hugh D. (Provan)Hogg, N. (C'nauld & Kilsyth)
    Brown, N. (N'c'tle-u-Tyne E)Home Robertson, John
    Brown, Ron (E'burgh, Leith)Howells, Geraint
    Bruce, MalcolmHoyle, Douglas
    Buchan, NormanHughes, Dr. Mark (Durham)
    Caborn, RichardHughes, Robert (Aberdeen N)
    Callaghan, Rt Hon J.Hughes, Roy (Newport East)
    Callaghan, Jim (Heyw'd & M)Hughes, Sean (Knowsley S)
    Campbell, IanHughes, Simon (Southwark)
    Campbell-Savours, DaleJanner, Hon Greville
    Canavan, DennisJohn, Brynmor
    Carter-Jones, LewisJones, Barry (Alyn & Deeside)
    Cartwright, JohnKaufman, Rt Hon Gerald
    Clark, Dr David (S Shields)Kirkwood, Archy
    Clarke, ThomasLamond, James
    Clay, RobertLeadbitter, Ted
    Clwyd, Mrs AnnLeighton, Ronald
    Cocks, Rt Hon M. (Bristol S.)Lewis, Ron (Carlisle)
    Cohen, HarryLewis, Terence (Worsley)
    Cook, Frank (Stockton North)Lloyd, Tony (Stretford)
    Cook, Robin F. (Livingston)Loyden, Edward
    Corbett, RobinMcDonald, Dr Oonagh
    Corbyn, JeremyMcKay, Allen (Penistone)
    Cowans, HarryMcKelvey, William
    Craigen, J. M.McNamara, Kevin
    Crowther, StanMcTaggart, Robert
    Davies, Rt Hon Denzil (L'lli)McWilliam, John
    Davis, Terry (B'ham, H'ge H'l)Madden, Max
    Deakins, EricMarek, Dr John
    Dixon, DonaldMarshall, David (Shettleston)
    Dobson, FrankMartin, Michael
    Dormand, JackMaynard, Miss Joan
    Dubs, AlfredMeadowcroft, Michael
    Duffy, A. E. P.Michie, William
    Dunwoody, Hon Mrs G.Mikardo, Ian
    Eadie, AlexMitchell, Austin (G't Grimsby)
    Eastham, KenMorris, Rt Hon A. (W'shawe)
    Ellis, RaymondMorris, Rt Hon J. (Aberavon)
    Evans, John (St. Helens N)Nellist, David
    Fatchett, DerekO'Brien, William
    Field, Frank (Birkenhead)Orme, Rt Hon Stanley
    Fisher, MarkOwen, Rt Hon Dr David
    Flannery, MartinPark, George
    Foot, Rt Hon MichaelPatchett, Terry
    Forrester, JohnPavitt, Laurie
    Foster, DerekPenhaligon, David

    Pike, PeterStewart, Rt Hon D. (W Isles)
    Prescott, JohnStott, Roger
    Radice, GilesStrang, Gavin
    Randall, StuartThome, Stan (Preston)
    Redmond, M.Tinn, James
    Rees, Rt Hon M. (Leeds S) >Torney, Tom
    Robertson, GeorgeWainwright, R.
    Rooker, J. W.Wallace, James
    Ross, Stephen (Isle of Wight)Wareing, Robert
    Rowlands, TedWeetch, Ken
    Sedgemore, BrianWelsh, Michael
    Sheerman, BarryWhite, James
    Shore, Rt Hon PeterWilliams, Rt Hon A.
    Short, Ms Clare (Ladywood)Wilson, Gordon
    Silkin, Rt Hon J.Winnick, David
    Skinner, DennisWrigglesworth, Ian
    Smith, C.(lsl'ton S & F'bury)
    Smith, Rt Hon J. (M'kl'ds E)Tellers for the Ayes:
    Soley, CliveMr. Frank Hayes and
    Steel, Rt Hon DavidDr. Roger Thomas.


    Aitken, JonathanGoodlad, Alastair
    Alexander, RichardGow, Ian
    Amess, DavidGower, Sir Raymond
    Ancram, MichaelGreenway, Harry
    Atkins, Robert (South Ribble)Gregory, Conal
    Baldry, TonyGriffiths, E. (B'y St Edm'ds)
    Banks, Robert (Harrogate)Griffiths, Peter (Portsm'th N)
    Bellingham, HenryGrist, Ian
    Bendall, VivianHamilton, Hon A. (Epsom)
    Best, KeithHamilton, Neil (Tatton)
    Body, RichardHampson, Dr Keith
    Boscawen, Hon RobertHannam, John
    Bottomley, PeterHarris, David
    Bowden, Gerald (Dulwich)Harvey, Robert
    Brandon-Bravo, MartinHaselhurst, Alan
    Bright, GrahamHavers, Rt Hon Sir Michael
    Brinton, TimHawksley, Warren
    Brooke, Hon PeterHayes, J.
    Brown, M. (Brigg & Cl'thpes)Hayhoe, Barney
    Buchanan-Smith, Rt Hon A.Hay ward, Robert
    Buck, Sir AntonyHenderson, Barry
    Burt, AlistairHickmet, Richard
    Butcher, JohnHicks, Robert
    Carlisle, John (N Luton)Hind, Kenneth
    Carlisle, Kenneth (Lincoln)Hirst, Michael
    Carlisle, Rt Hon M. (W'ton S)Hogg, Hon Douglas (Gr'th'm)
    Carttiss, MichaelHolland, Sir Philip (Gedling)
    Cash, WilliamHolt, Richard
    Chapman, SydneyHordern, Peter
    Chope, ChristopherHowarth, Alan (Stratf'd-on-A)
    Clark, Sir W. (Croydon S)Howarth, Gerald (Cannock)
    Clegg, Sir WalterHowell, Ralph (N Norfolk)
    Coombs, SimonHubbard-Miles, Peter
    Cope, JohnIrving, Charles
    Crouch, DavidJackson, Robert
    Currie, Mrs EdwinaJenkin, Rt Hon Patrick
    Dicks, TerryJohnson Smith, Sir Geoffrey
    Dorrell, StephenJones, Gwilym (Cardiff N)
    Douglas-Hamilton, Lord J,Jones, Robert (W Herts)
    Dunn, RobertJoseph, Rt Hon Sir Keith
    Dykes, HughKellett-Bowman, Mrs Elaine
    Eyre, Sir ReginaldKershaw, Sir Anthony
    Fallon, MichaelKey, Robert
    Farr, Sir JohnKing, Roger (B'harn N'field)
    Favell, AnthonyKing, Rt Hon Tom
    Fenner, Mrs PeggyKnight, Gregory (Derby N)
    Fookes, Miss JanetKnowles, Michael
    Forsyth, Michael (Stirling)Knox, David
    Forth, EricLamont, Norman
    Fox, MarcusLang, Ian
    Franks, CecilLatham, Michael
    Fraser, Peter (Angus East)Lawler, Geoffrey
    Freeman, RogerLawrence, Ivan
    Fry, PeterLee, John (Pendle)
    Gale, RogerLeigh, Edward (Gainsbor'gh)
    Gardner, Sir Edward (Fylde)Lennox-Boyd, Hon Mark
    Garel-Jones, TristanLester, Jim
    Glyn, Dr AlanLewis, Sir Kenneth (Stamf'd)

    Lightbown, DavidRyder, Richard
    Lord, MichaelSackville, Hon Thomas
    Luce, RichardSainsbury, Hon Timothy
    Lyell, NicholasSt. John-Stevas, Rt Hon N.
    McCurley, Mrs AnnaSayeed, Jonathan
    Macfarlane, NeilShaw, Giles (Pudsey)
    MacGregor, JohnShelton, William (Streatham)
    MacKay, John (Argyll & Bute)Shepherd, Colin (Hereford)
    Maclean, David JohnShepherd, Richard (Aldridge)
    Madel, DavidSilvester, Fred
    Major, JohnSims, Roger
    Malins, HumfreySkeet, T. H. H.
    Malone, GeraldSmith, Tim (Beaconsfield)
    Marland, PaulSoames, Hon Nicholas
    Marshall, Michael (Arundel)Speed, Keith
    Mates, MichaelSpencer, Derek
    Mather, CarolSpicer, Jim (W Dorset)
    Maude, Hon FrancisSpicer, Michael (S Worcs)
    Mawhinney, Dr BrianSquire, Robin
    Maxwell-Hyslop, RobinSteen, Anthony
    Mayhew, Sir PatrickStevens, Lewis (Nuneaton)
    Mellor, DavidStewart, Allan (Eastwood)
    Merchant, PiersStradling Thomas, J.
    Meyer, Sir AnthonySumberg, David
    Miller, Hal (B'grove)Taylor, John (Solihull)
    Mills, lain (Meriden)Taylor, Teddy (S'end E)
    Mills, Sir Peter (West Devon)Tebbit, Rt Hon Norman
    Mitchell, David (NW Hants)Temple-Morris, Peter
    Moate, RogerThomas, Rt Hon Peter
    Monro, Sir HectorThompson, Donald (Calder V)
    Montgomery, Sir FergusThompson, Patrick (N'ich N)
    Moore, JohnThornton, Malcolm
    Morrison, Hon C. (Devizes)Thurnham, Peter
    Morrison, Hon P. (Chester)Townend, John (Bridlington)
    Murphy, ChristopherTownsend, Cyril D. (B'heath)
    Neale, GerrardTracey, Richard
    Needham, RichardTwinn, Dr Ian
    Nelson, Anthonyvan Straubenzee, Sir W
    Neubert, MichaelVaughan, Sir Gerard
    Nicholls, PatrickViggers, Peter
    Norris, StevenWaddington, David
    Oppenheim, PhillipWakeham, Rt Hon John
    Oppenheim, Rt Hon Mrs S.Waldegrave, Hon William
    Osborn, Sir JohnWalden, George
    Page, Richard (Herts SW)Walker, Bill (T'side N)
    Parris, MatthewWall, Sir Patrick
    Pattie, GeoffreyWaller, Gary
    Pawsey, JamesWard, John
    Peacock, Mrs ElizabethWardle, C. (Bexhill)
    Pollock, AlexanderWatson, John
    Porter, BarryWatts, John
    Powell, Rt Hon J. E. (S Down)Wheeler, John
    Powell, William (Corby)Whitfield, John
    Powley, JohnWhitney, Raymond
    Prentice, Rt Hon RegWiggin, Jerry
    Proctor, K. HarveyWinterton, Mrs Ann
    Rathbone, TimWinterton, Nicholas
    Renton, TimWolfson, Mark
    Rhodes James, RobertWood, Timothy
    Ridley, Rt Hon NicholasYeo, Tim
    Ridsdale, Sir JulianYoung, Sir George (Acton)
    Rifkind, MalcolmYounger, Rt Hon George
    Roe, Mrs Marion
    Rossi, Sir HughTellers for the Noes:
    Rowe, AndrewMr. Peter Lloyd and
    Rumbold, Mrs AngelaMr. Tony Durant.

    Question accordingly negatived.

    It being after half-past Seven o'clock, MR. DEPUTY SPEAKER proceeded, pursuant to the order [1 April] and the resolution yesterday, to put forthwith the Questions on amendments moved by a member of the Government to the end of part IV of the Bill.

    Amendments made: No. 68, in page 50, line 40, at end insert—

    ' (d) in Scotland, a partner or (as the case may be) an employee of a partner of such an operator;'.

    No. 69, in page 50, line 44, after 'director', insert `, partner'.— [Mr. Ridley.]

    Schedule 3

    Amendments Consequential On Section 55

    Amendment made: No. 133, in page 119, line 19, leave out from 'from' to 'Schedule' in line 20 and


    '"or with the consent"' to "Act" (which refer to consents under'.—[Mr. Ridley.]

    Clause 57

    Orders Excluding Powers Of Executives To Run Bus Undertakings

    Amendments made: No. 70, in page 53, line 29, at beginning insert 'This section applies'.

    No. 71, in page 53, line 33, after 'area', insert ("the Executive")'.

    No. 72, in page 53, leave out from beginning of line 34 to 'Act' in line 4 on page 54 and insert—

    '(2) At any time after the Secretary of State has given to the Executive a direction under subsection (3) of that section the Secretary of State may by order provide that the Executive shall cease, on a day specified in the order, to be under the duty imposed by section 24(2) of the 1968'.

    No. 73, in page 54, leave out lines 7 to 20 and insert—

    '(3) Where an order is made under subsection (2) above, any duty of the National Bus Company and the Scottish Transport Group under section 24(2) of the 1968 Act to co-operate with the Executive (or with each other) shall cease on the day specified in the order to apply in relation to the Executive's area.
    (3A) Any order under subsection (2) above may include provision for the termination of any agreements made under section 24(2) to which the Executive are a party, on such terms and such dates as may be specified in relation to those agreements in the order (and different terms and dates may be so specified in relation to different agreements).
    (3B) At any time after the transfer required under section 56(8) of shares in or other securities of the initial company to the Passenger Transport Authority for the Executive's area has taken place the Secretary of State may by order provide that the Executive shall cease, on a day specified in the order, to have the powers under section 10(1)(i) and (viii) of the 1968 Act (powers to carry passengers by road and to let passenger vehicles on hire with or without trailers for the carriage of goods).
    (3C) Where an order is made under subsection (3B) above in relation to the Executive, section 16(2) of the 1968 Act (which relates to the provision of special information in the annual report of Authorities and Executives as to certain businesses of providing services for the carriage of passengers by road) shall cease to apply in relation to any accounting period of the Executive beginning on or after the day specified in the order.'.

    No. 74, in page 54, line 22, leave out from first 'of' to end of line 27 and insert—

  • ' (a) section 24(2) of the 1968 Act; and
  • (b) section 10(1)(i) and (viii) of that Act;
  • on the date on which, by virtue of the cumulative effect of orders made under this section, there ceases to be any Passenger Transport Executive in Great Britain who are under the duty imposed by section 24(2) or have the powers under section 10(1)(i) and (viii).'.-[Mr. Ridley.]

    Clause 58

    Division Of Undertakings Of Companies Formed Under Section 56

    Amendments made: No. 75, in page 54, line 34, leave out from beginning to `the' in line 35 and insert

    'Where in the case of any passenger transport area the transfer required under section 56(8) of this Act of shares in or other securities of the initial company to the Passenger Transport Authority for that area has taken place.'.

    No. 76, in page 54, line 36, leave out

    `the Passenger Transport Authority for that area'

    and insert 'that Authority'. — [Mr. Ridley.]

    Clause 60

    Exclusion Of Powers Of Certain Councils To Run Bus Undertakings

    Amendments made:> No. 77, in page 59, line 8, leave out 'section' and insert 'Part of this Act'.

    No. 78, in page 59, line 13, leave out `and'.

    No. 79, in page 59, line 20, at end insert 'and

    c references, in relation to any council operating a bus undertaking, to the council's bus undertaking are references to all activities carried on, whether by the council themselves or by any other authority or person in persuance of any such arrangements as are mentioned in paragraph (b) above or otherwise, in or for the purposes of the provision by the council of any such service. '. —[Mr. Ridley.]

    Clause 61

    Formation Of Companies To Run Council Bus Undertakings

    Amendments made: No. 80, in page 59, line 32, after `any', insert 'other'.

    No. 81, in page 60, line 2, leave out from 'if' to end of line 12 and insert

    'any service for the carriage of passengers by road provided by the council, being a service for which a PSV operator's licence is required, is provided under any agreement or arrangements provided for—
  • (a) the provision or operation of any services for the carriage of passengers by road by any person acting on the joint behalf of that council and any other person; or
  • (b) the joint provision or operation of any such services provided by the council in conjunction with any such services provided by any other person
  • and (in either case) the joint ownership of any assets used or appropriated for use for the provision of any such services under the agreement or arrangements in question.
    (4) References in this Part of this Act, in relation to a council whose bus undertaking forms part of a joint undertaking, to the joint undertaking are references to all activities carried on, or (according to the context) to all property used or appropriated for use and all rights and liabilities subsisting for the purposes of any activities carried on, in pursuance of the agreement or arrangements by reference to which that council falls within subsection (3) above. '. — [Mr. Ridley.]

    Clause 62

    Schemes For Transfer Of Individual Council Bus Undertakings To Companies Formed Under Section 61

    Amendment made: No. 82, in page 60, line 24, at end insert

    ', except where any of the activities of the council's bus undertaking ("the separate activities") are carried on by the council otherwise than in pursuance of any such agreement or arrangements as are mentioned in section 61(3) of this Act; and in the latter case the reference in subsection (1)(a) above to property rights and liabilities of the council shall be read as limited to property used or appropriated for use and rights and liabilities subsisting for the purposes of the separate activities.'. — [Mr. Ridley.]

    Clause 65

    Exemption For Councils Running Small Bus Undertakings

    Amendments made: No. 83, in page 65, line 20, leave out `to which section 60(1) of this Act applies' and insert

    `which requires a PSV operator's licence'.

    No. 84, in page 65, line 24, after '60(1)', insert 'of this Act'.— [Mr. Ridley.]

    Clause 79

    Interpretation Of Part Iv

    Amendments made: No. 85, in page 77, line 33, at end insert—

    '(bb) references to—
  • (i) a service for the carriage of passengers by road which requires a PSV operator's licence;
  • (ii) the provision of any such service by any council; and
  • (iii) the bus undertaking of any council operating a bus undertaking;
  • shall be read in accordance with the relevant provisions of section 60(7) of this Act;'.

    No. 86, in page 77, line 36, after `(3)', insert 'and (4)'. — [Mr. Ridley.]

    Clause 80

    Expenditure On Public Passenger Transport Services

    I beg to move amendment No. 87, in page 78, line 11, at end insert

    'provided that any such authority shall have the option of adopting a system of comprehensive competitive tendering'.
    I am pleased that I have the opportunity to initiate the debate on what I consider to be a genuine and middle-way attempt to ensure that the Bill is more workable. I should like the Minister to appreciate that I tabled the amendment in an attempt to provide a genuine alternative to the subsidy system outlined in the Bill. Competitive compulsory tendering was proposed by the Transport Select Committee in its second report during the 1984–85 Session. At the risk of wearying the House I shall read one or two extracts from it to explain the purpose of the amendment. Page 66 says of comprehensive competitive tendering:
    "This option consists of a co-ordinating authority being responsible for planning the provision of services, but being required to put all services, whether profitable or unprofitable, out to tender. That could be done on a gross cost basis, with all revenues accruing to the authority … or on a net cost basis, with competing operators offering either to pay for the privilege of providing a specified service or to undertake it for a declared subsidy. The profits from the sale of the profitable franchises could then be ploughed back into the payments for the unprofitable franchises. Either version makes the subsidy system more transparent … and fully retains the potential to use internal cross-subsidy within the bus sector without giving any individual operator a secure profits base from which to engage in predatory competition in other parts of the network."
    It is significant that such schemes have already been tried in Oslo, Paris and Munich, to name but three major continental cities. It is interesting to note that when the Select Committee took evidence from the guru of the Government's philosophy, Professor Beesley, and pressed him to give an example of anywhere in the world with a system such as that outlined in the Bill, he was hard pressed to find one. The amendment's proposals have been tried elsewhere, but the Government's proposals are completely untried on the scale on which they are intended to operate.

    7.45 pm

    The House is entitled to ask why it is necessary to put forward an alternative. The answer is contained in an interesting report from Hertfordshire county council, before the recent county council elections, when it had a somewhat bluer tinge. That study examined the changes in transport supplementary grants, and the probable alteration as a result of the ending of cross-subsidy. It is interesting that the county council estimated that, because of the loss of cross-subsidy, it could need up to £2 million of extra revenue support, or would need to reduce its support by about £2 million. In any event, it forecast the danger of about a 30 per cent. loss of services should the Bill be put into operation. The cost of school transport, social services transport, district health transport and works transport would escalate. That one report shows the need to pause before accepting the Government's proposals on tendering.

    It may be no accident that a range of local authority organisations have expressed doubt about this aspect of the Bill. The Association of District Councils, which is Conservative-controlled, stated:
    "The basic weakness of the proposals stems from the fact rhat they are a product of political and economic theories with no practical input and will not stand up in practice."
    I seek to put forward a proposal that is based on practice and that is practical.

    The Association of Metropolitan Authorities in its recent publication states that the problems of the Bill
    "can be avoided by use of a suitable system of competitive tendering within a co-ordinated network of services."
    I ask the House to note the following words:
    "This is the solution being used by London Regional Transport (London is excluded from deregulation for the present, although the Bill gives the Secretary of State reserve powers to deregulate in London in due course)."
    The most significant comment comes from the Association of County Councils, which has deliberately set out not to oppose the Bill but merely to improve it. In a letter dated 17 May, the ACC stated:
    "We do not believe that the tendering system set out in the Bill can operate satisfactorily unless in appropriate cases the tendering authority can obtain protection for the tendered services against competition on the road from other operators."
    All those comments show the strength of feeling in local government. When the idea was put to my right hon. Friend the Secretary of State by hon. Members who represent Kent, they received replies which stated that such ideas were a franchise. The Government believed that the great danger was that such a franchise, once having been granted, would mean that the incumbent was protected from competition, and that the franchise conferred monopoly power and the scope for exploitation of the passenger. That was the answer given to my hon. Friend the Member for Maidstone (Sir J. Wells) and others on 7 March. Even if that were entirely true, the Government must explain why it is satisfactory to pursue such a policy in London and not elsewhere.

    The leader of Kent county council, Mr. Tony Hart, wished to rebut the arguments in that letter, especially the arguments produced in a document entitled "Problems with Franchising". Anyone who has read that document will understand Mr. Hart's comment that the arguments in it are merely an academic prediction. He pointed out that one of the most interesting remarks in the document appeared in paragraph 9, which states:
    "This paper"—
    a paper in the Bell Journal of Economics in 1976—
    "is the source of a considerable number of the comments made in the present paper."
    That shows that this interesting document has been culled from someone else's intellectual or academic exercise.

    In his letter to members of the Standing Committee of 29 March, Mr. Hart said that it was odd that the Government had leaned so heavily on that paper. He said that they quoted from it only selectively. He went on to quote from page 102 of the paper, which states:
    "I should point out that there are circumstances where I suspect that regulation or public ownership can be supplanted by franchise bidding with net gains."
    It gave the specific example of local service airlines. Even from that paper, which shows that the Government are hostile to the idea of an alternative method of tendering, it appears that their source is not secure.

    In his letter to members of the Committee, Mr. Hart came down firmly on the side of competitive tendering. He said that, as matters stand, under total deregulation,
    "Kent county council's revenue support could escalate from £3·2 million to £5 million, in order to retain the current levels of service."
    The interesting point that he makes is this:
    "Under a system of franchise tendering, it is estimated that for this county there could be a reduction in revenue support to under £3 million."
    The Government's objective to keep down the cost of revenue support can be achieved in another way, which will cause considerably less dislocation.

    There is a tendency to confuse franchising, as it has been interpreted in the Government's document, with comprehensive competitive tendering. But the two are different. Comprehensive competitive tendering would allow an authority to define the network of services that it considered necessary to meet the needs of the area. It would then divide those services into different sized packages that could be put out to competitive tender on a rolling cycle to ensure that, in any area, there were regular opportunities for operators to compete for packages or services.

    The specification of services in the package would be flexible enough to encourage operators to develop innovatory services. Where operators believed that they had spotted a gap in the services specified by the authority to develop a new market, they would still be able to apply to register the service with the traffic commissioner. The authority would have to demonstrate that it was against the public interest.

    Such a system would largely solve the problem with franchising that was identified by the Secretary of State and outlined in the pamphlet to which I referred. The problem of an authority being captured by an operator who would be protected from competition would not occur, because there would be a constant cycle of reletting of contracts.

    It is interesting to note that, far from that proposal being seen by many bus operators as an opportunity to make a great deal of money, the trade association of the operators —the Bus and Coach Council—is not happy about the ideas that I am putting forward. Indeed, it rejected proposals for comprehensive competitive tendering. That shows that the argument is not one of allowing the operators to be protected ad infinitum. Existing operators would be kept on their toes by new operators bidding for the smaller packages that can be operated by local authorities. It would be for the local authority to ensure that the packages suited companies that had only one bus. At the same time, because of the constant ringing of the changes with the contracts, there would be room for the innovation of new services.

    I commend that system to the House, because its great advantage is its flexibility. It is flexible because it is a genuine option. I suggest not that it should replace the proposals in the Bill, but that local authorities could use it if they wished. The proposal is flexible because the authority could introduce the scheme throughout its area or only in parts of it. It is flexible because it could be introduced and as easily withdrawn by allowing contracts to lapse and other operators to register their services.

    The Government's ideas on tendering are based on hope rather than certainty. Whatever one says about Hereford and Worcester—I do not wish to become involved in an argument about whether those schemes were successful —to say that we shall fundamentally change support on the basis of two experiments, one of which the Transport and Road Research Laboratory study said was inconclusive and one of which was debatable, may lead the Government into severe trouble in a year's time. If the Government are determined to innovate and if they wish to move from the present system, it must be right to experiment with at least two alternative systems to see which is the best. That was the view of the Select Committee.

    The last paragraph of the Select Committee report states:
    "We therefore favour comprehensive competitive tendering as a system capable of catching the largest proportion of the cost saving potential (as all routes go to competitive tender), consistent with an acceptable ability to maintain the benefits of integration and co-ordination, and a very explicit and transparent responsibility of the local political authority. The fact that the responsiblity and power was very explicit should, we think, encourage local authorities to show the kind of enterprise and skill which has been shown in this aspect of the behaviour of the County Council in Hereford. We therefore recommend that the Government should amend its proposals by retaining the overall responsibility of the local authority for the planning of public transport provision; by extending the obligation to undertake competitive tendering to cover all services; and by requiring all authorities to devise modes of operation of the regime which give proper scope for the development of innovatory services."
    8 pm

    That recommendation and others were not passed by one odd Conservative voting in favour of them. In fact, in the Division on that section of our report, three Conservatives voted for it and only one against. The one honourable exception was my hon. Friend the Member for Derbyshire, West (Mr. Parris). What was the amendment that he suggested, which the rest of us voted down? While not accepting the recommendation that I have just read out, he suggested that the idea of tendering on that basis was very useful as a backstop for the Government. Therefore, even he could see that there was a necessity for something to be there in case the Government ran into trouble.

    I say to the Under-Secretary that, if the Government can accept that there is an alternative way which can keep some of the best of the present system and, in terms of negative tendering, produce extra funds to subsidise many other services that are unprofitable at the moment, it would give a flexibility to the Bill which, I regret, has not been too apparent so far during our deliberations. I want flexibility. The Bill has to be made to work, so I think that the best alternative should be put in it. It is not obligatory; it is something that local authorities can pick up or lay down as they choose.

    I support the hon. Member for Wellingborough (Mr. Fry). He has taken most of my guns from me because his was the speech that I would have made on clause 1 yesterday had the appropriate amendment been called. However, I do not deny him that, because he has much more knowledge and expertise than me.

    Comprehensive competitive tendering is under attack from two directions—first, from those, including some hon. Members, who believe that almost any change in the status quo is an attack on our current bus services, and, secondly, from the Government, who took the unusual step of publishing a detailed rebuttal of the Select Committee's case for adopting CCT about a month or more ago under the heading "Problems with Franchising". That document has been perused by many people. They find it full of holes, as does the chairman of Kent county council, to whom the hon. Member for Wellingborough referred. While those supporting the present organisational arrangements for bus services hold their views strongly, and no doubt sincerely, it is clear that the status quo cannot continue. I accept that, as I did on Second Reading and in Committee. There is no doubt that the threat of competition has stimulated cost cutting and innovation. One has seen it in the railways in particular. Furthermore, while the public no doubt cherish the bus services, they are not all satisfied with the present arrangements.

    The Government's paper, "Problems with Franchising", is disingenuous. Many of the criticisms that it ascribes to such a system also apply to a significant extent to the Government's proposals for limited competitive tendering for loss-making services. The Government's argument seems to be, first, that franchises offer protection to the incumbent, as it is in the local authority's interest to maintain continuity of contract; secondly, that franchises are an abuse of monopoly power — that argument is poorly developed in the paper; thirdly, that the performance specifications in the contract cannot accurately reflect customers' wishes; fourthly, that invitations to tender are likely to be biased towards incumbency or variety; fifthly, that the criteria for finally awarding the contract will be artificial; sixthly, that the franchisees will tend to use imprecision in the contract as room for manoeuvre and/or to press for renegotiation; seventhly, that monitoring of franchisees' performance will create new bureaucracy; and finally, that new operators will find it difficult to win contracts.

    I wonder whether the Department of Health and Social Security is aware of those arguments against franchising hospital cleaning, for qualitatively they are true. However, in the case of buses, the pros and cons of comprehensive competitive tendering must be balanced quantitatively against those of the present system and the Government's proposals — in other words, deregulation plus limited competitive tendering. On that basis, CCT comes out a clear winner. It ensures the benefits of competition but minimises the danger. Furthermore, many of the problems attributed to CCT can be overcome if the contracts are not homogenous, as the Government assume. Thus, there would be a mosaic of short contracts, of perhaps three years, and long contracts, of perhaps five years, covering large and small networks of services. Some contracts would cover a network of profitable routes only, the operator paying the local authority for the privilege of running the service exclusively. Other contracts would be for networks of loss-making services, for the provision of which operators would be paid by the local authority.

    Thus, at a stroke, a large proportion of cross-subsidy would become transparent to public inspection, as the cross-subsidy would be going through the local authority's books rather than remaining hidden within the operator's paper franchise. Clearly, some contracts would, for operating purposes, cover a mixed network of profitable and unprofitable routes. If the opacity of cross-subsidy is to be significantly reduced, the number of such internally subsidising contracts would need to be kept to a minimum. Cross-subsidy would not be totally eliminated by CCT, but even the Government accept that eradication is neither possible nor commercially desirable.

    For the success of CCT, it is essential that, first, local authorities must have a clear statutory obligation to co-ordinate transport provision—-unfortunately, we failed to get that written into the Bill under the previous amendment —and, secondly, that at the very least contracts should ensure that a minimum standard, agreed nationally, of frequency, reliability, network and price is attained.

    I call one other important witness in support of the idea of franchising — Dr. Quarmby, the former managing director of buses on London Regional Transport. 1 think that he is now running the Sainsbury fleet. In evidence to the Select Committee on 19 December 1984 he said:
    "Deregulation is likely to lead, at the end of the day, to less competition because it is likely to lead to the re-establishment of the territorial monopolies, of the kind we were familiar with 50 or 60 years ago. I think tendering within a planned framework is more likely to maintain real competition. In order for that to happen one has to parcel out routes in a way that reflects the ability of the supplying market to produce the service."
    I know of at least four county councils, perhaps more—1 know that the Association of County Councils also goes along with the idea—which would very much like to go down the path of comprehensive competitive tendering. Three of those councils are Hertfordshire, Essex and Kent. The councils should have that option. I go further and say that it is the right way forward. I support the amendment.

    I voted with considerable reluctance for the Second Reading of the Bill because I recognised that, incontrovertibly, change was and is needed in the present bus licensing arrangements. The Bill is an expression of political will and I think that virtually all Conservative Members recognise the Government's courage in trying to achieve their objective in the Bill. My support for the amendment is based on a transport rather than a political view, and I support it for transport reasons, not for political reasons and certainly not for party political reasons. I do not believe that any public transport system can be run without an element of cross-subsidy.

    Like my hon. Friend the Member for Wellingborough (Mr. Fry), I believe that experimentation is necessary. The Government have rightly expressed the hope that new ideas will permeate the whole bus transport industry as a result of the Bill and I believe that that is likely to be the case. What I do not like is the attitude, "We support experiments in public transport provided that they are the experiments laid down in our legislation". To me, that smacks of Henry Ford's dictum that people could have any colour motor car so long as it was black.

    My hon. Friend the Member for Wellingborough has proposed the amendment with great conviction. I hope that my hon. Friend the Minister will recognise that the amendment is essentially modest in both spirit and wording. By no stretch of the imagination is it motivated or likely to be taken up by people inherently hostile to the Bill. I put it to my hon. Friend the Minister in these simple terms: if he wants my vote for the Third Reading of the Bill, will he please accept my hon. Friend's amendment?

    The hon. Member for Isle of Wight (Mr. Ross) seemed rather bewildered by the brief that he was reading and I am sorry to say that I did not understand it any more than he did. I believe, however, that the point that he was trying to make was encapsulated in the speech of my hon. Friend the Member for Wellingborough (Mr. Fry) and supported by my hon. Friend the Member for Christchurch (Mr. Adley).

    The hon. Member for Isle of Wight quoted evidence from the Select Committee in support of his view, based on a package of profitable and loss-making routes so that the cross-subsidy from the profitable routes could be used to run the loss-making routes. In fact, that is the root of much of the trouble with the existing system and I would not wish it to be perpetuated.

    My hon. Friend the Member for Wellingborough, supported by my hon. Friend the Member for Christchurch, put the case for comprehensive competitive tendering—a form of franchising which, I grant, would be some improvement on the present system. There is, however, the inherent disadvantage that the pattern of services would be decided by the county transport planners and not by the market. It was scarcely surprising that my hon. Friend the Member for Wellingborough was able to pray in aid the views of the Association of County Councils and the Association of Metropolitan Authorities as the proposal would give them the decision-making power that they sought.

    With a franchising system, we would never know how much the market could do on its own. Cross-subsidy would be retained, thus losing passengers on the better routes and the lower fares and more frequent services that would come with free competition. Cross-subsidy is essential to the package proposed by my hon. Friends and would undoubtedly be seen by county and district councils as a way through, based on a continuation of the existing system of overcharging customers on the better routes and providing an inferior service in order to generate the profits needed for cross-subsidy to take place. I appreciate the moral compulsion behind my hon. Friends' case, but my hon. Friend the Member for Christchurch must know from his knowledge of transport that if one overcharges customers or provides substandard services to create profits for cross-subsidy one drives away customers. That is the economic reality at the heart of much of the failure of the present system.

    8.15 pm

    As both my hon. Friends know, cross-subsidy is a feature of a multitude of businesses, but in that case it is commercial cross-subsidy — providing attractive loss leaders to bring customers into the main business. The reverse is true of cross-subsidy in the bus industry where it means damaging the main business to provide for minority customers. That is not commercial and it is totally damaging to the health of the industry. The chairman of the National Bus Company, in his report last year, identified excessive use of cross-subsidy as one factor leading to the early demise of efficient and profitable services.

    I understand what my hon. Friends are trying to do and I do not lack sympathy with them. I also accept that the proposal would be some improvement on the present system. Nevertheless, it would have the fatal flaw of perpetuating a system which drives away customers on the best routes. For every 10 per cent. increase in fares or reduction in the value of services there is a 3 per cent. loss in customers. The effect of my hon. Friends' proposal would thus be to perpetuate the weaknesses of the present system.

    My hon. Friend the Minister is proffering a one-option high-risk proposition in the Bill which we may all live to regret. I repeat the question that I asked before: how many major cities can he name in which the scheme that he is propounding in the Bill is in operation and working successfully?

    I shall be happy to deal with that in a moment.

    A franchising system would lack flexibility. Worst of all, once the franchise was awarded competitive pressure would be off. There would be no on-going pressure for efficiency, high productivity and control of costs. There was a dramatic change in Midland Red when it had to face open competition rather than a closed franchise. That company managed to improve its productivity by 25 per cent. If we adopted the franchise system proposed by my hon. Friends, that kind of pressure would be off once the franchise was granted. I accept that the amendment would make some improvement, but it would provide nothing like the revitalisation of the industry that is needed.

    It may help if I draw attention to some of the other consequences of my hon. Friend's proposal. The level of fares, the pattern of routes and the frequency of services would all be settled by the planners—perfect in theory, but in practice lacking the ability to change and to respond to the market.

    The Minister is back on his favourite theme about planners. Has it never occurred to him that planners who work for local authorities and have spent years obtaining proper qualifications are far more likely to be responsive to the needs of bus travellers than anyone planning for the needs of just one company? Why does he show such deep contempt for anyone who knows anything about transport?

    I assure the hon. Lady that I feel no such contempt. Perhaps she has not heard of consultants, who are available to provide specialised services to a multitude of operators and who form an inherent part of the private sector system for identifying markets and ascertaining what the public want.

    Invitations to tender and awards put a premium on the incumbent operator. I shall return to that point because, in practical terms, it is important. Moreover, it is exceedingly difficult, if not impossible, properly to assess bids in the way that would be necessary in this case. How does one assess a cheaper, older vehicle and compare it with a smaller, newer fleet? How does one assess differential peak fares proposed by one operator and compare them with those proposed by another operator? As soon as a contract is awarded for the term period—the proposed franchise—the operator is protected from all of the normal business pressures to improve efficiency. And how does one police it? If there is a gradual deterioration, at what point does one say that the gradual deterioration is sufficiently bad that something must be done about breaking the contract? The reality is that there would be a drift which embodied many of the weaknesses of the present system. I accept that it would be an improvement upon the present system, but it would be nothing like the improvement to be obtained from an open, competitive market.

    What would happen in practice in a place like Manchester? How many other operators in Manchester would be prepared to compete with the passenger transport executive for these market franchises? What proportion of the market could conceivably be taken other than by the existing Manchester PTE? In that case, what would happen under the rolling system of replacement franchises when they are relet and the number of private sector operators is increased? Is my hon. Friend the Member for Wellingborough prepared to face the Manchester PTE bus workers and tell them that at the toss of a coin their jobs will be lost and they will be unemployed simply because a contract has been let like that? That would not be acceptable to a very high proportion of the bus workers in Manchester, but it would be the inevitable consequence of the high proportion of the contracts that the Manchester PTE would have to have in the first place because of the insufficient number of competing operators.

    My hon. Friend the Member for Wellingborough asked why competitive franchising is not good enough for the rest of the country when there is competitive franchising for London. I think he knows that the arrangements for London are only temporary. The interim franchising arrangement is better than the previous monopoly system, but it is not as good as the system that London will enjoy when the Bill is enacted.

    My hon. Friend also referred to Kent. He said that the revenue subsidy for Kent is now £3·2 million and that it will rise to £5 million when the Bill is enacted. What figure has my hon. Friend placed on the potential improvement in efficiency of the Kent operation? Does he expect a 5 per cent. or a 10 per cent. improvement in productivity because of competition? I shall be happy to give way to my hon. Friend because it will help to take the argument forward.

    The figures I gave for Kent were submitted by the Conservative leader of Kent county council. As my hon. Friend the Under-Secretary of State knows, Kent has been working on this proposal for some time. I do not know the entire basis of its calculations, but occasionally it is worth trusting some of the experts in the counties who are on our side to come up with the right figure.

    I do not doubt the wisdom of what my hon. Friend is saying, but I have to make two points to him. Kent is operating the same system as was operated by Norfolk before it went out to competitive tender. When Norfolk went out to competitive tender, it saved over 60 per cent. of ratepayers' money. I understand the theory of my hon. Friend's argument, but he has failed to take account of the reality that as soon as there is competition operators' costs are brought tumbling down.

    Let me give another example to my hon. Friend. In Kent there is both a municipal undertaking and a National Bus Company undertaking. When the private sector challenged the National Bus Company, Surrey county council was not sure that it could believe the figures that it had been given. Therefore, it called in consultants to make an assessment. They said, "No, we do not think that it could be quite so good as the private operators say, but we think that it could be 20 per cent. below the operating costs of the National Bus Company." If my hon. Friend could demonstrate that the Kent figures to which he referred would stand up to a 20 or 25 per cent. improvement in productivity and would still result in an increase in the subsidy that would be required, I should concede the argument. However, my hon. Friend cannot do so.

    If one takes the turnover for Kent and expects a 20 or 25 per cent. improvement in productivity, one finds that there is an enormous difference in terms of the prospective amount of subsidy that would be required. If my hon. Friend the Member for Christchurch can show that, with the improvements in efficiency which have demonstrably been obtained, he cannot minimise this subsidy, then he has made a good point. If he cannot do that—and I do not believe that he can—I hope that he will join me in the Lobby in voting down the amendment.

    It is clear that the figures that have been bandied about for Norfolk were comparing like with like. The problem is that the level of services has not been entirely the same.

    My hon. Friend has slightly missed the point about the improvement in productivity in Kent. When tenders are competed for, an opportunity is provided for those who have increased their productivity to put in lower bids. As it is a competitive tender, it will allow certain costs to come down. The innovative entrepreneur will be encouraged. I fail to see why the system I have put forward should not lead to a considerable improvement.

    My hon. Friend was seeking to demonstrate that the existing system will lead to increased costs falling on the ratepayers of Kent. I have sought to demonstrate that that is not so.

    My hon. Friend says that in the case of Norfolk one is comparing like with like. It was, in fact, a case of comparing equivalent with equivalent. There were considerable cutbacks in Norfolk, but they took place before the county council went out to tender. If my hon. Friend examines in detail what happened when the county council went out to tender, he will discover that there was a substantial reduction—from £500,000 to £150,000—in the tenders for the equivalent routes. However, inherent in it was a very curious fact: that, faced with competition, the National Bus Company suddenly discovered that it could run a block of those routes without a subsidy, although previously it had said that it required a subsidy. That is a further argument to set against those that have been advanced by my hon. Friend. When the chips are down, competition will get the costs down and make marginal routes viable to an extent that my hon. Friend has not fully taken into account.

    My hon. Friend may have difficulty in withdrawing his amendment. I do not know how far he is committed. I hope that he will feel able to do so. In view of the arguments that I have deployed, I hope that my hon. Friend the Member for Christchurch will at least feel that his support for the amendment has been weakened.

    I apologise to my hon. Friend. I have failed to answer two points. My hon. Friend asked me to name the other cities which had introduced the system. I shall not name the other cities which have introduced this system because I am not afraid to be a pioneer. My hon. Friend is a great exponent of the railways and knows that in their day they were pioneers. If those who pioneered the success of the railways, which my hon. Friend cherishes, had adopted the chicken-hearted approach that my hon. Friend has tried to suggest, we should not have railways in this country today.

    8.30 pm

    My hon. Friend said that the Hereford and other trial areas were too small on which to base such a major change. But we have not built this Bill solely on those trial areas. We have built it on the known effects of competition where it has been introduced to replace monopoly. One example is the aviation industry, where internal air services have been improved, where there has been substantial investment, and whose services more travellers are now using. Another example is the long-distance coach services that have modern coaches, more investment, better quality services, such as video shows, lower fares, and more people travelling on them. Those are things that the customers like. We have no reason to believe that the principle that has been well tried in other areas will be found to be flawed when applied to the bus industry.

    I am not surprised that the hon. Member for Wellingborough (Mr. Fry) has been looking mildly bemused throughout the Minister's peroration. He was treated to the kind of monologue that we heard ad nauseam in Committee. The reality is that, when the Minister was asked to name one city, or even a suburb, in which the proposal has been tried and found to be successful, he was overcome with the most incredible inability to discover any area where it had worked.

    The Minister told his hon. Friend not to worry because the Government knew that it worked in competition with express coach services—omitting, as he always does, to say that he was not comparing like with like, that the express coach services do not go to all the places that they did previously and that the costs of running those services is largely borne by reduced revenue for British Rail. He sticks to his theory that if it works for the express coach services, it must work for everything.

    I do not believe that franchising is the ultimate answer, but that will not come as any surprise to Conservative Members. I would prefer to lose the Bill entirely—it is a disaster. Conservative Members, when they are being honest, realise that. They know that such a major change, which will produce utter chaos, will not be to the advantage of the Conservative party or any other party. If the Bill goes through — and heaven forfend that that should be so—anything that is slightly better than what is intended in the Bill may be an improvement.

    I find it amusing when Ministers get up with such vigour, if not sense, and defend their refusal to accept amendments. I have discovered something interesting. In the brave new world of 1961, a certain Mr. Nicholas Ridley, Member for Cirencester, proposed to the then Minister of Transport that bus services should be allocated to operators on the basis of franchising. I suppose that we should at least be grateful because we have absolute proof that it takes only 20 years for the Secretary of State to change his views, so we can wait around and, with any luck, will find a new public transport system in the next 20 years—although the right hon. Gentleman will not be left in charge of it for more than 20 minutes.

    It is amusing to read that the Secretary of State told a conference at Bristol university last year that since 1961 he had seen the error of his ways. I am afraid that that is not all consistent with his record either as a Treasury Minister or as a Transport Minister. If that is the case, there is always the hope that the worst sinner will eventually repenteth.

    The Opposition regard the whole theory of franchising as inadequate compared with our present system. The argument is not whether franchising would do as good a job as is being done at present, but whether franchising could ameliorate the chaos that will happen under the Bill. Certainly the Government are not prepared to talk sensibly about transport. On that basis we are prepared to listen to the arguments put forward by the hon. Member for Wellingborough, but, if this appalling Bill becomes law, we want it struck off the statute book as soon as possible.

    I apologise to my hon. Friend the Member for Wellingborough (Mr. Fry) for missing part of his speech. However, I heard him say, quite rightly, that the members of the Select Committee did not agree on every point. But all Members of all parties did agree that something was seriously wrong in the bus industry and that radical change was needed. Some of us thought that comprehensive competitive tendering was the answer, while others thought that the proposals in the Bill were the answer.

    In Committee I listened to Labour Members and wondered whether they accepted that something was seriously wrong in the bus industry and that radical change was necessary. They appeared to waver, and I thought that they would come down on the side of comprehensive competitive tendering—that is, franchising. However, the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) has now rejected that and said that the Labour party does not think that franchising is the answer. I wonder whether Opposition Members accept that anything needs to be done in the bus industry. I wonder what their analysis of the problems may be and what their thinking is on possible solutions. From what the hon. Lady says, it appears that there is no thinking at all and that they have no solutions to put forward. I find that interesting.

    Some of the comments of my hon. Friend the Minister about this form of tendering assume that the remainder of the Bill has not happened. The very fact that bus services will be referred to the Office of Fair Trading is one way of ensuring that there is not a monopoly or that one operator does not take an unfair advantage. I must tell him—and I never thought that I would do this—that I call to my defence my right hon. Friend the Secretary of State, who I have heard say at least twice that he objects to cross-subsidy that cannot be discovered. He has said that if cross-subsidy is transparent, it is acceptable. I believe that the cross-subsidy in this system would be transparent. Now that transport support grant does not relate to revenue support, every local authority will want to keep down the amount of money that it will be using out of its rate support grant to subsidise public transport, so it will be demanding value for money.

    My hon. Friend may live to regret boasting about rates of improvement of 25 to 30 per cent. across the country. I accept that such improvements are possible in some places, but they are clearly not possible in other places. If he had listened to the evidence given to the Select Committee, he would realise that the experts were divided. Most of them said that, while there were improvements in some cases, in others improvements were not possible. If my hon. Friend thinks that he will obtain a 25 to 30 per cent. improvement in costs across the country, he is in for a sad shock.

    My hon. Friend will be aware that one authority that took the view that no further improvement could be made in its efficiency and productivity was Plymouth. He will also be aware that, when Plymouth went to a firm of consultants, its report suggested a 20 per cent. potential for improvement. Yet Plymouth is one of the most efficient municipal operators in the country. If the most efficient operator has the opportunity for a 20 per cent. improvement in productivity on the basis of a consultant's external report, perhaps my hon. Friend would like to consider again whether there are many such areas. I do not ask for every authority, but I should be interested to have my hon. Friend's list of those which are so good that there is not this improvement. However, Plymouth stands out as one of the best.

    I do not deny that there are areas in which there could be considerable improvement, but I say that one cannot make such a generalisation. It is because I believe that the Government's stand is based on hope rather than knowledge that I think it would be valuable if the Bill were amended as I propose, to provide an alternative. I hope that my hon. Friend will not live to regret not having accepted the amendment. I think that he probably will.

    The Secretary of State for Transport, the right hon. Friend of the hon. Member for Wellingborough (Mr. Fry), rubbished the report of the consultants in Plymouth and said that it was not accurate and that the figures in it could not be accepted. Would the hon. Gentleman mind asking his right hon. Friend why it is that, when the report states that Plymouth will have to pay a considerable amount more to supply its existing level of services, he does not like the figures, but, when he wishes to argue with his hon. Friend the Member for Wellingborough, he suddenly finds it an extremely convincing report and one that should be accepted?

    The report states:

    "We believe that we have demonstrated, in Plymouth's case, that there is a strong likelihood that this will not be true if the proposals are implemented in their present form."
    In other words, there will be savings, and it is likely to cost the local authority considerably more if it implements the schemes as proposed by the Government. That is the overall conclusion of the document.

    There are certain fundamental flaws in the report. It assumes, for example, that there will be no cross-subsidy, but every commercial undertaking has cross-subsidy.

    Not commercial cross-subsidy. The report assumes that there will be no increase in the patronage on the loss-making services as a result of competition. However, neither of those arguments will stand up to careful analysis.

    If I may help my hon. Friend the Member for Wellingborough, I think that what is not at issue is that there is a potential for a 20 per cent, increase. We do not disagree with that. If we and the consultants are agreed, perhaps my hon. Friend will accept that at least there is a strong probability that such a potential for improvement in productivity exists.

    I apologise to the hon. Member for Wellingborough (Mr. Fry) for having missed the first part of his opening remarks.

    As a first choice, comprehensive competitive tendering for any such scheme is not one for which I would opt. On the other hand, I do not have the luxury of choosing an integrated transport system. I am not particularly interested in whether there is cross-subsidy. If there were a choice between its being hidden or perceived by the public, I would always go for the latter, because there is nothing to hide and the public should be informed if there is a cross-subsidy. I am sure that most people in a town would recognise that bus services must extend to the outskirts and make provision for everybody in the town rather than, as will happen if the Bill is enacted unamended, bus services being provided in the centre of the town and the outskirts generally having a poor bus service, if they have one at all.

    However, as I said, I do not have the luxury of opting for an integrated transport service. In the circumstances —I do not know whether I speak for my hon. Friends— I support the amendment and, if the hon. Gentleman presses it to a vote, I shall support him.

    8.45 pm

    It is a pity that such a Bill has been presented to Parliament. The Bill was based originally on the Hereford trial area. It was vaunted throughout the country that it had succeeded beyond the wildest dreams of the Government who had proposed the scheme. In the last two days, I have noticed a change in the attitude of the Government. They have said that they learnt a great deal from the Hereford trial area, and it is no longer a fantastic success. It is regrettable that the country at large will have to learn from the experiment that the Government are now foisting on it.

    Question put, That the amendment be made: —

    The House divided: Ayes 91, Noes 225.

    Division No. 220]

    [8.47 pm


    Adley, RobertAshton, Joe
    Archer, Rt Hon PeterBeith, A. J.
    Ashdown, PaddyBennett, A (Dent'n & Red'sh)

    Bermingham, GeraldLester, Jim
    Bidwell, SydneyLewis, Ron (Carlisle)
    Boyes, RolandLitherland, Robert
    Bray, Dr JeremyLoyden, Edward
    Brown, Gordon (D'f'mline E)McKay, Allen (Penistone)
    Brown, Ron (E'burgh, Leith)McKelvey, William
    Callaghan, Jim (Heyw'd & M)McNamara, Kevin
    Campbell, IanMcTaggart, Robert
    Campbell-Savours, DaleMadden, Max
    Canavan, DennisMarek, Dr John
    Carlile, Alexander (Montg'y)Marshall, David (Shettleston)
    Cartwright, JohnMeadowcroft, Michael
    Clark, Dr David (S Shields)Michie, William
    Clarke, ThomasMillan, Rt Hon Bruce
    Cocks, Rt Hon M. (Bristol S.)O'Brien, William
    Cohen, HarryO'Neill, Martin
    Corbett, RobinOwen, Rt Hon Dr David
    Deakins, EricPark, George
    Dixon, DonaldPatchett, Terry
    Dubs, AlfredPenhaligon, David
    Duffy, A. E. P.Pike, Peter
    Dunwoody, Hon Mrs G.Richardson, Ms Jo
    Evans, John (St. Helens N)Rooker, J. W.
    Fisher, MarkRowlands, Ted
    Flannery, MartinShort, Mrs H.(W'hampt'n NE)
    Foot, Rt Hon MichaelSilkin, Rt Hon J.
    Foulkes, GeorgeStewart, Rt Hon D. (W Isles)
    Freeson, Rt Hon ReginaldStott, Roger
    Fry, PeterStrang, Gavin
    Golding, JohnThomas, Dr R. (Carmarthen)
    Gould, BryanThompson, J. (Wansbeck)
    Hamilton, W, W, (Central Fife)Thorne, Stan (Preston)
    Hancock, Mr. MichaelTorney, Tom
    Harrison, Rt Hon WalterWainwright, R.
    Hattersley, Rt Hon RoyWallace, James
    Haynes, FrankWareing, Robert
    Home Robertson, JohnWhite, James
    Howells, GeraintWilson, Gordon
    Hughes, Sean (Knowsley S)Winnick, David
    Hughes, Simon (Southwark)Wrigglesworth, Ian
    Janner, Hon Greville
    John, BrynmorTellers for the Ayes:
    Kirkwood, ArchyMr. Stephen Ross and
    Lamond, JamesMr. Malcolm Bruce.
    Leighton, Ronald


    Alexander, RichardEyre, Sir Reginald
    Amess, DavidFallon, Michael
    Ancram, MichaelFarr, Sir John
    Atkins, Robert (South Ribble)Favell, Anthony
    Beaumont-Dark, AnthonyFenner, Mrs Peggy
    Bellingham, HenryFookes, Miss Janet
    Benyon, WilliamForsyth, Michael (Stirling)
    Best, KeithForth, Eric
    Body, RichardFox, Marcus
    Boscawen, Hon RobertFranks, Cecil
    Bowden, Gerald (Dulwich)Fraser, Peter (Angus East)
    Brandon-Bravo, MartinFreeman, Roger
    Bright, GrahamGale, Roger
    Brooke, Hon PeterGarel-Jones, Tristan
    Brown, M. (Brigg & Cl'thpes)Glyn, Dr Alan
    Buck, Sir AntonyGoodlad, Alastair
    Burt, AlistairGow, Ian
    Butcher, JohnGower, Sir Raymond
    Carlisle, Kenneth (Lincoln)Greenway, Harry
    Carlisle, Rt Hon M. (W'ton S)Gregory, Conal
    Carttiss, MichaelGriffiths, Peter (Portsm'th N)
    Cash, WilliamGrist, Ian
    Chope, ChristopherGummer, John Selwyn
    Clark, Sir W. (Croydon S)Hamilton, Hon A. (Epsom)
    Clegg, Sir WalterHamilton, Neil (Tatton)
    Coombs, SimonHampson, Dr Keith
    Cope, JohnHannam, John
    Crouch, DavidHarvey, Robert
    Dicks, TerryHaselhurst, Alan
    Douglas-Hamilton, Lord J.Havers, Rt Hon Sir Michael
    Dunn, RobertHawksley, Warren
    Durant, TonyHayhoe, Barney
    Dykes, HughHayward, Robert

    Henderson, BarryParris, Matthew
    Hickmet, RichardPawsey, James
    Hicks, RobertPeacock, Mrs Elizabeth
    Hind, KennethPollock, Alexander
    Hirst, MichaelPorter, Barry
    Hogg, Hon Douglas (Gr'th'm)Powell, Rt Hon J. E. (S Down)
    Holland, Sir Philip (Gedling)Powell, William (Corby)
    Holt, RichardPowley, John
    Hordern, PeterPrentice, Rt Hon Reg
    Howarth, Alan (Stratf'd-on-A)Proctor, K. Harvey
    Howarth, Gerald (Cannock)Rathbone, Tim
    Howell, Ralph (N Norfolk)Renton, Tim
    Hubbard-Miles, PeterRhodes James, Robert
    Hunt, David (Wirral)Ridley, Rt Hon Nicholas
    Irving, CharlesRidsdale, Sir Julian
    Jackson, RobertRoe, Mrs Marion
    Jenkin, Rt Hon PatrickRossi, Sir Hugh
    Johnson Smith, Sir GeoffreyRowe, Andrew
    Jones, Gwilym (Cardiff N)Rumbold, Mrs Angela
    Jones, Robert (W Herts)Sackville, Hon Thomas
    Joseph, Rt Hon Sir KeithSainsbury, Hon Timothy
    Kellett-Bowman, Mrs ElaineSt. John-Stevas, Rt Hon N.
    Kershaw, Sir AnthonySayeed, Jonathan
    Key, RobertShaw, Giles (Pudsey)
    King, Roger (B'ham N'field)Shaw, Sir Michael (Scarb')
    King, Rt Hon TomShelton, William (Streatham)
    Knight, Gregory (Derby N)Shepherd, Colin (Hereford)
    Knowles, MichaelSilvester, Fred
    Knox, DavidSims, Roger
    Lamont, NormanSkeet, T. H. H.
    Lang, IanSmith, Tim (Beaconsfield)
    Latham, MichaelSpeed, Keith
    Lawler, GeoffreySpencer, Derek
    Lawrence, IvanSpicer, Jim (W Dorset)
    Lee, John (Pendle)Spicer, Michael (S Worcs)
    Leigh, Edward (Gainsbor'gh)Squire, Robin
    Lewis, Sir Kenneth (Stamf'd)Steen, Anthony
    Lightbown, DavidStevens, Lewis (Nuneaton)
    Li 1 ley, PeterStewart, Allan (Eastwood)
    Lloyd, Peter, (Fareham)Stradling Thomas, J.
    Lord, MichaelSumberg, David
    Luce, RichardTaylor, John (Solihull)
    McCurley, Mrs AnnaTaylor, Teddy (S'end E)
    Macfarlane, NeilTebbit, Rt Hon Norman
    MacKay, John (Argyll & Bute)Temple-Morris, Peter
    Madel, DavidThomas, Rt Hon Peter
    Malins, HumfreyThompson, Donald (Calder V)
    Malone, GeraldThompson, Patrick (N'ich N)
    Marland, PaulThornton, Malcolm
    Marshall, Michael (Arundel)Thurnham, Peter
    Mates, MichaelTownend, John (Bridlington)
    Mather, CarolTownsend, Cyril D. (B'heath)
    Maude, Hon FrancisTracey, Richard
    Mawhinney, Dr BrianTwinn, Dr Ian
    Maxwell-Hyslop, Robinvan Straubenzee, Sir W.
    Mayhew, Sir PatrickVaughan, Sir Gerard
    Mellor, DavidViggers, Peter
    Merchant, PiersWaddington, David
    Meyer, Sir AnthonyWakeham, Rt Hon John
    Miller, Hal (B'grove)Waldegrave, Hon William
    Mills, lain (Meriden)Walden, George
    Mills, Sir Peter (West Devon)Walker, Bill (Tside N)
    Mitchell, David (NW Hants)Wall, Sir Patrick
    Moate, RogerWaller, Gary
    Molyneaux, Rt Hon JamesWard, John
    Monro, Sir HectorWardle, C. (Bexhill)
    Montgomery, Sir FergusWatson, John
    Morrison, Hon C. (Devizes)Watts, John
    Morrison, Hon P. (Chester)Wells, Bowen (Hertford)
    Murphy, ChristopherWheeler, John
    Neale, GerrardWhitfield, John
    Needham, RichardWhitney, Raymond
    Nelson, AnthonyWiggin, Jerry
    Neubert, MichaelWinterton, Mrs Ann
    Nicholls, PatrickWinterton, Nicholas
    Oppenheim, PhillipWolfson, Mark
    Oppenheim, Rt Hon Mrs S.Wood, Timothy
    Osborn, Sir JohnYeo, Tim
    Page, Richard (Herts SW)Young, Sir George (Acton)

    Younger, Rt Hon George
    Mr. Mark Lennox-Boyd and Mr. John Major.Tellers for the Noes:

    Question accordingly negatived.

    It being after Nine o'clock, MR. DEPUTY SPEAKER proceeded, pursuant to the order [1 April] and the resolution yesterday, to put forthwith the Questions on the amendments moved by a member of the Government to the remainder of the Bill.

    Clause 81

    Obligation To Invite Tenders For Subsidised Services

    Amendment made: No. 89, in page 79, line 38, leave out from 'below' to 'a' in line 40 and insert

    ', any such invitation—
  • (a) must be issued generally, in such manner as the authority issuing the invitation consider appropriate for bringing it to the attention of persons who may be interested; and
  • (b) must also be issued individually to all persons who have given to that authority'.— [Mr. Ridley.]
  • Clause 85

    Travel Concession Schemes

    Amendments made: No. 91, in page 84, line 16, after 'area', insert

    ', or in Scotland the area of an islands council. '.

    No. 92, in page 84, line 18, after 'case', insert '(i)'.

    No. 93, in page 84, line 18, leave out 'and' and


  • '(ii) any services for the carriage of passengers by road at separate fares which require a PSV operator's licence; and
  • (iii)'.
  • No. 94, in page 84, line 20, at end insert—

    'For the purposes of paragraph (b)(ii) above, a service for the carriage of passengers by road at separate fares is a service which requires a PSV operator's licence if vehicles used in providing the service are used in such circumstances that a PSV operator's licence is required in respect of that use.'.

    No. 95, in page 84, line 30, at beginning insert

    'Subject to subsection (4A) below'.

    No. 96, in page 84, line 34, after 'service', insert

    'qualifying for fuel duty grant'.

    No. 97, in page 84, line 34, at end insert—

    '(4A) The Secretary of State may, on the application of the authority or authorities responsible for administration of a scheme under this section, exempt the authority or authorities in question from the obligation under subsection (4) above in relation to any description of services; and the Secretary of State may at any time withdraw or vary any exemption granted under this subsection. '.

    No. 99, in page 85, leave out lines 15 to 17.

    No. 100, in page 85, line 18, leave out second 'section' and insert 'sections'.

    No. 101, in page 85, line 19, after '86', insert `

    (Compulsory participation in travel concession schemes) and(Further provisions with respect to participation notices)'.

    No. 102, in page 85, line 24, after 'area', insert 'in England and Wales'.

    No. 103, in page 85, line 26, at end insert—

    '(9A) For the purposes of this section and sections 86, (Compulsory participation in travel concession schemes) and (Further provisions with respect to participation notices) of this Act, a registered local service is a service qualifying for fuel duty grant if grants under section 92 of the Finance Act 1965 (grants to operators of bus services towards duty charged on bus fuel) are for the time being payable in respect of fuel used in operating services of the description to which it belongs.'.

    No. 104, in page 85, line 38, at end insert—

    '(lOA) An exemption may not be granted under subsection (4A) above on the application of a Passenger Transport Executive unless the application was made with the consent of the Passenger Transport Authority for that Executive's area. '. — [Mr. Ridley.]

    Clause 86

    Reimbursement For Travel Concessions Under Schemes

    Amendments made: No. 105, in page 86, line 17, leave out 'each such operator' and insert

    `all operators of registered local services qualifying for fuel duty grant'.

    No. 106, in page 86, line 28, at end insert—

    '(4) Section 85(10) of this Act shall apply, with any necessary modifications, in relation to arrangements adopted by the authority or authorities responsible for administration of any such scheme with respect to the reimbursement of operators participating in the scheme as it applies in relation to the scheme. '. — [Mr. Ridley.]

    Clause 91

    Unregistered And Unreliable Local Services: Reduction Of Fuel Duty Grant

    Amendment made: No. 110, in page 89, line 10, leave out from 'service' to 'or' in line 12 and insert

    `in contravention of section 6 of this Act;'. —[Mr. Ridley.]

    Clause 92

    Interpretation Of Part V And Supplementary Provisions

    Amendment made: No. 111, in page 90, line 8, after 'that', insert—

    ('cc) "registered local service" means a local service registered under section 6 of this Act;'. — [Mr. Ridley.]

    Clause 93

    Exclusion Of References Of Questions With Respect To Certain Bus Services To Monopolies And Mergers Commission

    Amendments made: No. 112, in page 90, line 25, leave out from 'section' to end of line 27 and insert

    '11 of the Competition Act 1980 (references of public bodies and certain other persons subject to statutory controls to the Monopolies and Mergers Commission), in subsection (3) (which lists the persons who may be the subject of such a reference)'.

    No. 113, in page 90, line 38, at end insert—

    '(I A) In Part I of Schedule 5 to the Fair Trading Act 1973 (which lists certain goods and services in respect of which references under section 14 of that Act to the Consumer Protection Advisory Committee or under section 50 or 51 of that Act to the Monopolies and Mergers Commission are excluded or, as the case may be, subject to restrictions not applicable in other cases) —
    (a) for paragraph 4 (which at the passing of this Act refers to the carriage of passengers by road or rail) there shall he substituted the following paragraph—
    "4. The carriage of passengers by road in Northern Ireland"; and
    (b) in paragraph 5 (which at the passing of this Act refers to the carriage of goods by rail), after the word "goods" there shall be inserted the words "or passengers".'.

    [Mr. Ridley.]

    Clause 94

    Reconstruction Of The Transport Tribunal

    Amendment made: No. 114, in page 91, line 8, leave out subsection (3).— [Mr. Ridley.]

    Clause 95

    Railways Board's Road Passenger Transport Services

    Amendment made: No. 116, in page 92, line 31, leave out '36' and insert '37'. — [Mr. Ridley.]

    Clause 107

    Stamp Duty

    Amendment made: No. 117, in page 103, line 44, after `transfer', insert

    `authorised by section 48(1) or (as the case may be)'.— [Mr. Ridley.]

    Clause 109

    Regulations And Orders

    Amendments made: No. 118, in page 104, line 17, leave out 'Parts I and' and insert 'Part I or'.

    No. 119, in page 105, line 11, after 'Regulations', insert 'or rules'.

    No. 120, in page 105, line 15, after 'regulations', insert `or rules'.

    No. 121, in page 105, line 15, after 'be)', insert `to which'.- [Mr. Ridley.]

    Clause 114

    Transitional Provisions, Savings, Amendments And Repeals

    Amendment made: In page 109, line 18, at end insert—

    '(4) Paragraph 4 of the Schedule to the Restrictive Trade Practices (Services) Order 1976 is revoked.'. — [Mr. Ridley.]

    Clause 115

    Short Title, Commencement And Extent

    Amendment made: No. 123, in page 109, line 33, after '(1)(a)', insert 'and (1A)'. — [Mr. Ridley.]

    Schedule 4

    Constitution, Powers And Proceedings Of The Transport Tribunal

    Amendments made: No. 134, in page 125, line 30, leave out from 'determination' to second 'of in line 31.

    No. 135, in page 125, line 32, after 'under', insert

    'Part V of the 1968 Act,'.

    No. 136, in page 125, line 34, leave out 'licensing authority or'.

    No. 137, in page 125, line 41, leave out 'licensing authority or'.

    No. 138, in page 126, line 1, leave out from 'absence' to 'shall' in line 2 and insert

    'such one of the other judicial members as the president or (if the president is unable for any reason to exercise the power conferred on him by this sub-paragraph) the Secretary of State may direct'.

    No. 139, in page 126, line 4, leave out sub-paragraph (2).

    No. 140, in page 126, leave out lines 12 to 20.

    No. 141, in page 126, line 36, at end insert—

    `(cc) the number of members of the tribunal to constitute a quorum;'.

    No. 142, in page 127, line 10, leave out '(or licensing authority)'.

    No. 143, in page 127, line 41, leave out from `Schedule' to end of line 42. — [Mr. Ridley.]

    Schedule 5

    Transitional Provisions And Savings

    Amendments made: No. 144, in page 134, line 27, at end insert—

    '(5A) Any person who, immediately before section 94 of this Act comes into force, is a member of the special panel mentioned in subsection (4)(a) of that section, shall be treated as if he had been appointed by the Lord Chancellor, on the coming into force of that section, as a chairman of the Transport Tribunal under paragraph 2(1)(a) of Schedule 4 to this Act.
    (5B) Sub-paragraph (5A) above applies in relation to any such person whether or not he would be qualified for such appointment in accordance with paragraph 2(2) of that Schedule; and, subject to paragraphs 3 and 6 of that Schedule, the terms and conditions applicable to any such person's tenure of office as such a chairman shall be the same as those applicable to his office immediately before section 94 of this Act comes into force.
    (5C) Any person other than the president of the Transport Tribunal who is a member of the tribunal at the time when that section comes into force shall be treated as if he had been appointed as such a member by the Secretary of State under paragraph 2(1) (b) of Schedule 4 to this Act for a term ending when his current term of office expires, and otherwise on the same terms and conditions as those applicable to his office immediately before that section comes into force.'. — [Mr. Ridley.]

    Schedule 6

    Minor And Consequential Amendments

    Amendments made: No. 145, in page 135, line 15, after `of,' insert 'or'.

    No. 146, in page 136, line 38, after 'vehicle', insert 'licence'.

    No. 147, in page 137, line 48, at end insert—

    '(5A) In section 53(1) (payment of expenses) for the words "for the purposes of Part I, II or III or section 45 of there shall be substituted the words "under paragraph 7 of Schedule 2 to". '. — [Mr. Ridley.]

    Schedule 7


    Amendments made:

    No. 148, in page 141, line 7, column 3, at end insert `Section 24(3)'.

    No. 149, in page 141, line 18, column 3, at end insert `Section 59(3)'.

    No. 150, in page 142, line 23, column 3, at beginning insert—

    'In section 1(3), the word "II.'.

    No. 151, in page 142, line 43, column 3, leave out from beginning to end of line 44.

    No. 152, in page 143, line 5, leave out 'and'.

    No. 153, in page 143, line 8, after 'end', insert 'and paragraph (d)'.

    No. 154, in page 143, leave out line 31 and insert

    'In section 76, the words from "except" to the end.'.

    No. 155, in page 143, line 34, at end insert "'community bus service";'.— (Mr. Ridley.]

    9.2 pm

    I beg to move, That the Bill be now read the Third time.

    We have reached the end of a long consideration of a Bill which I entirely accept is complex although its purpose is simple. Its purpose is to provide better services for the customer and to achieve better value for money for the ratepayer and the taxpayer. In turn, this will secure a better future for the industry and for those who work in it. The Bill will achieve this by removing the obstacles to enterprise, initiative and efficiency while retaining the essential framework of safety controls and provision for social needs.

    It is a radical Bill. I am surprised at the absence of radicals on the Opposition Benches. Radical reform is necessary to free the industry from the stifling effects of restrictive licensing and the debilitating effects of network subsidy which have brought the industry to such a perilous state. They frustrated the industry in making the adjustments necessary to meet the needs of passengers in the 1980s.

    We introduced competition into the long-distance coach sector in 1980. We were told then that complete deregulation would lead to all sorts of difficulties and problems. Some even suggested that it would lead to the demise of express coach services altogether. In fact, the result has been better services, lower fares and more passengers. The passengers now using long-distance coaches will all agree that deregulation has benefited them. That is even admitted by those in the industry. A report of an interview with Mr. McLaughlin, the chairman of the independent sector of the Bus and Coach Council, appears in the most recent edition of Coaching. He was asked about long-distance coaching deregulation and he said:
    "No, I was not happy about coach deregulation initially but I have changed my views now. Like anything else, we learnt to live with it and to adapt to change. Am I enthusiastic about the Bus Bill?"
    that is the Bill that we are now considering
    "Yes, I am. That is not just for the independents alone but for the good of the whole country. One part cannot do without the others anyway, so we have got to work together."
    That is the truth. The 1980 legislation was fought tooth and nail by many of the same Opposition Members who have fought this Bill, yet I have heard no one on Second Reading, in Committee or on Report suggest that we should reintroduce regulation for express coaches. Not even the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) has suggested that. Passengers on local services deserve the same benefits. If we fail to act now, bus services will continue to decline. Other forms of transport, more successful in meeting the needs of the customer, will gain an even larger share of the total travel market. Those who would suffer from declining services would be those living in the four out of 10 households who do not have cars as well as the many other groups—for example, housewives, children and the elderly—who rely on the bus to get about.

    The Bill will give enterprise and competition the chance to serve the passenger. The Bill does not mean that safety standards will be put at risk. It does not mean that operators will be allowed to run dangerous or unreliable services. It does not mean an end to subsidy for uneconomic services in rural areas or anywhere else. It does not threaten the continuation of concessionary fares schemes, as we proved last night. Indeed, the return of a Labour Government would be the only threat to concessionary fares, and that is an extremely unlikely event.

    The Bill has been fought tooth and nail by the vested interests. The Labour party in particular has tried to mislead the public by putting round scare stories. It will have spent vast sums of public money on its propaganda. However, the Bill as introduced contained virtually all the necessary safeguards. We have since introduced a number of further improvements, many of them in response to initiatives by my hon. Friends in Committee. We have, indeed, fashioned a better Bill.

    The Opposition's performance in Committee and on Report has been lamentable. It has been predictably defensive and negative as well as incompetent. After 34 sittings in Committee and two days of debate on Report we still do not have an idea of the Opposition's policy towards the industry. Do they believe in a system of franchising like the Select Committee on Transport? They offer it as a policy tentatively and then shy away front it. Even the hon. Member for Crewe and Nantwich seemed to withdraw from it even further this evening. We must presume from what she said tonight that the Opposition want to retain the present system of restrictive licensing. They have not produced a scrap of evidence to show why a policy which has so patently failed the nation in the past offers any hope for the future. They have held up to us the model of the metropolitan areas where subsidy and Socialist planning are the guiding principles. Subsidy is used to make good the lack of efficiency and responsiveness which is now proved to be the result of a planned and protected system that has produced a financial burden that cannot be sustained by the nation.

    The prime example of this is south Yorkshire. I hope that the hon. Member for Sheffield, Central (Mr. Caborn) is in his place because I am told constantly by him and his hon. Friends that the south Yorkshire public transport system is very popular with those who use it. I am not surprised. At 3p a mile it has to be the best bargain going. But of course it is an illusion. The south Yorkshire public transport system is not cheap. The costs per PTE bus mile are higher than those in any other metropolitan area, let alone the shire counties where costs per bus mile are lower still. But who pays? It is the ratepayer and the taxpayer. Some of the subsidy has, of course, come out of the rates and taxes of people who use the buses. For those people, the cheap fares are just a trick with mirrors. They have to pay far more in rates and taxes than they save on bargain fares. Most of the cost of fares support is paid by those who do not use the buses, but have no choice but to pay for them through their rates and taxes. In south Yorkshire only 23 per cent. of the costs of the public transport system are paid for directly by the users through their fares. The result is that people have lost the link between the services that they enjoy and their cost. That is a system in which the principal beneficiaries are the bus operators whose inefficiencies can be passed on to the ratepayer. This is objectionable in principle; the sums involved are not trifling. From south Yorkshire county council's inception in 1974 to the end of the financial year 1983–84, the cost of fares support has been £445 million. Let Labour Members laugh at that.

    The cost has escalated from £4·8 million in 1974–75 to £79 million in 1984–85. Over the same period, south Yorkshire rates have had to rise from 17.8p to 83.3p in the pound. The taxpayer has pitched in more every year. This is money taken from ordinary taxpayers and ratepayers which could have been spent on improved living standards. It is money taken from businesses and industries in south Yorkshire, which can result only in loss of jobs. Killing industries and destroying jobs to provide cheap travel is a marvellous example of Socialism in action.

    My hon. Friend the Under-Secretary of State for Scotland is here. In Strathclyde, we find the opposite policy—although these are both Socialist councils—of bus fares being deliberately kept high to protect rail services. The fare in south Yorkshire to travel three miles is lop; the equivalent fare in Strathclyde is 55p. Differences of that order distort the market and prevent the public from making the economic choices which suit them. It is the sort of madness that happens when Socialist planners rule supreme.

    The Bill offers a better way forward—one which is sustainable and which the nation can afford. The challenge of competition is a challenge which we are confident that the industry will seize. We reject the negative ideas of those who can only suggest more regulation, more state ownership and more subsidy as a solution to the problems of the industry. There is no point in taking the easy option and tinkering at the margins with a system that has so clearly failed and less point still in the Labour party's policy of sitting on its hands and hoping for the best.

    In this Bill, we have put forward a radical, imaginative and well-constructed package of measures to revitalise an ailing industry. The Bill is overwhelmingly in the interests of the travelling public. I confidently commend it to the House.

    9.13 pm

    Let us be clear. Whatever the Bill is about, it is certainly not about improving facilities for the bus passenger. From the tired and rather bored performance that we have just had from the Secretary of State, we have assumed that it is about something much more simple—the prejudices of a Secretary of State who has probably never been on a bus in his life and assumes that to use public money to provide public services is wrong. He thinks that it is not wrong to use public money to provide something like Trident, but that it is wrong to use public money to make sure that anyone who wants to get to school, go shopping or get to work on time uses a bus. That obsession with and deep hatred of the need to provide proper state services are what the Bill is all about.

    The Secretary of State has suddenly discovered that, for the past 30 years, public transport, especially bus services, has steadily declined. Between 1951 and 1981 the proportion of passenger miles travelled on the buses decreased from 41 per cent. to a mere 8 per cent. Ever downwards twists the spiral—cuts and public services on offer have forced the fortunate to invest in cars and deprived the unfortunate of any public transport.

    Action was long overdue. I suppose that the Government can rightly claim that this destructive trend must be reversed. Today we are debating their grand strategy for rolling back the shrinking frontiers of public transport. We could congratulate the Government on their determination, because they are only about 10 years too late. That is the time that has elapsed since Labour councils began successfully tackling the vital problem of decline. For the past decade, Labour local authorities have combined low fares, high service levels and investment in new technology and integration to free travellers and entice them out of their cars.

    Since 1975, the south Yorkshire authority, which is so much the object of scorn of the Secretary of State, who has about as much commitment to transport as this desk has to intelligent conversation, has frozen fares and produced a real fall of 55 per cent. in the cost of public transport. The right hon. Gentleman never mentions that. The result has been a 10 per cent. increase in passenger journeys at a time when national bus patronage has declined by 23 per cent.

    Tyne and Wear, which understands what integration is about, has invested a considerable amount of money in joining bus and rail in an effective system, producing a 10 per cent. increase in patronage when national patronage has declined by 11 per cent. Mersey county council has increased patronage by 20 per cent. following its 1981 12 per cent. fares cut. Today 75 per cent. of Liverpool city centre shoppers are using the public transport network to do their shopping. In west Yorkshire, the bus and rail fare structures have yielded benefits six times the cost of the changes. West Midlands PTE has combined integration and Travelcard schemes to hold up bus patronage by between 7 per cent. and 13 per cent. The GLC's Travelcard and low fares policies have increased demand for public transport by 16 per cent. while reducing car commuting by 10 per cent.

    Anyone who thought that Conservatism was about learning from the lessons of the past and other people's experiences would be forgiven for assuming that the Government's master plan for reviving public transport would expand the benefits of Labour's success to the rest of the country. It is clear from looking at the White Paper on buses and at the Transport Bill that the Government have a very different idea of Conservatism and a different plan for the revival of public transport.

    Of course, it is always possible to improve on the enormous success of Labour councils. It is even possible that this success can be improved on by a completely different method and approach, because that is supposedly what we are offered in the Bill. However, if there is to be a radically different approach to the decline, the Government have a responsibility to think carefully about the problems and alternatives.

    Emergency action is all very well in a crisis, but when there is a clearly successful solution to the problem of decline, it is inexcusable to destroy policies without carefully considering how the alternatives will work. Yet that is exactly what is happening in this disastrous Bill. The Government threw out the normal procedure of consultation before publication of plans in a White Paper. When they did consult, the time allowed was often as short as two months, and those were the late summer months when staff shortages made it unlikely that either the local authorities or the transport undertakings — let alone individual travellers — would be able to give proper responses. Nevertheless, the responses poured in—more than 7,000 of them, and virtually all of them were hostile.

    The Secretary of State must think the whole world is as blind, deaf and uncaring as him. Hon. Members who merely read their correspondence know what the responses were and that the right hon. Gentleman is utterly uninterested. It is of course possible that 7,000 people and innumerable organisations are wrong and that only the Secretary of State is right. He has argued throughout that everybody who opposes the Bill must be part of a vested interest. His definition of a vested interest was interesting and included the women's institutes, people in rural areas, local authorities, people who use buses to get their children to school, groups of women and people who work in the bus industry. My goodness, all these vested interests, all these appalling people who dare to need some form of public transport. That did not worry the Government. They ploughed ahead without any thought for anyone under any circumstances.

    And the all-party Select Committee on Transport, the majority of which opposed the substance of the Bill.

    Another vested interest, as the hon. Member for Lancaster (Mrs. Kellett-Bowman) says—a vested interest where Conservative Members are in the majority, people who dare to learn something about transport. Even worse, they dare to take information and evidence from people in the country who were appalled by the Bill. Of course we can dismiss the Select Committee. If we cannot dismiss the Select Committee's evidence, we can always rubbish the Chairman on the basis that he exercised the Chairman's right to ensure that the report was printed in the proper way.

    The Government were not concerned about the general public or anybody interested in the Bill. They nevertheless had some difficulties, and publication was delayed. During the three months in Committee that followed, it became clear that the Government had not bothered to consider any of their theories in detail. It was not until the Committee's 32nd sitting that the Government realised the glaring holes in their plans for concessionary fares. It was not until Report that the Government decided that they must ban co-operation between British Rail and Strathclyde passenger transport executive. The Bill is so ill considered that, after the consideration of 125 amendments in Committee, of which 122 were tabled by the Government, they had to introduce 136 amendments and new clauses on Report just to shore up the more glaring inconsistencies and drafting errors.

    Far worse than that, however, the Government have not accepted one amendment which would improve local authorities' ability to pay for concessionary fares. Nor have they accepted one amendment today which would give people who have worked, or who currently work, in the bus industry any guarantee about their pension entitlement. It is a good job that there are controls on parliamentary language, or I should call that an outright fraud.

    For any Government to treat people in the bus industry as the Secretary of State is treating them in regard to their pension entitlement is a disgrace of which any civilised Government should be ashamed. Still the Secretary of State is not prepared to accept the genuine worries of current pensioners, those who will have to make the system work after the National Bus Company disappears or those who will have to find a decent pension entitlement.

    A policy which ignores proven success in transport management and is not even considered in detail is highly unlikely to succeed. It is always conceivable that the Government have come up with a general theory so powerful and persuasive that, despite all its flaws, it will slot into the system and produce the enormous success about which we have heard so much throughout the Committee stage. If that is true, the Government have a responsibility to tell us why the policy is not to be applied to the capital city. Few people realise that we have a Secretary of State who on the one hand says, "The only way that we shall have an effective transport system ts to produce open competition, to remove subsidies, to act on the basis of wholly inadequate schemes, such as the Hereford trial area, and to proceed on the basis that open competition is the answer.", and on the other says, "The capital city will be excluded from all the advantages that are inherent in the Bill." What hypocrisy!

    If this is such a good transport measure, why will the people of London not get the same advantages as the people in my rural area? Why will the people of London not be deprived, as we shall be? Why will they not be subjected to the same pressure? In case it is believed that somewhere along the line there must have been a great demonstration, it should be known that none of the experiments carried out under the 1980 transport legislation was conducted in Scotland. It is interesting that the Scottish Consumer Council, in its comments on the White Paper, observed that while it
    "normally sees great merit in increasing competition"
    there is no practical experience in Scotland of the deregulation being proposed.

    According to the Scottish Consumer Council,
    "to move from a position of total regulation to total deregulation … The risks are high, and the consequences of failure could be costly."
    No wonder my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) probed the Under-Secretary of State for Scotland in Committee about the Strathclyde predicament after deregulation. His ministerial colleague went off the track when he answered the question about the future of the Blackpool trams. It is hardly surprising that he left us in considerable doubt about whether the Government understand what will happen, even in their areas.

    There is considerable doubt whether the proposals for the Strathclyde buses and the financial safeguards for Glasgow's underground system will be adequate. There are unsatisfactorily answered queries about the three municipal bus services in Scotland—Lothian, Grampian and Tayside. The Government even managed to miss out concessions on the ferries, which is of some importance in Scotland, although they promised us that somewhere along the line they would do something about it.

    If the hon. Lady had read the amendments tabled tonight and passed by the House, she would have found that we had done something for the ferries and the airways to the islands.

    I am glad that on Report the Minister has suddenly discovered that he has ferries and islands other than those which he knew of in Committee. Only when my hon. Friend the Member for Maryhill raised the Bill's implications did the Minister realise that there were difficulties about concessionary fares. We are glad that even now, at the last minute, the Minister has got round to doing something about that.

    Will my hon. Friend make the point to the Under-Secretary of State for Scotland that he has wholly failed to persuade the Conservative administration in Lothian of the merits of the measure, and that the chairman of the transport committee and the leader of the council remain opposed to the measure, which will do immense damage to the bus service in Edinburgh?

    Lothian is not unusual in that. The Bill is not being greeted with wild acclaim by Conservatives, especially not by those in the country who know something about the provision of transport. They recognise the basic fallacy. According to the Government, the decline in the number of bus passengers is due entirely to regulation, not to the rise in car ownership, nor to other problems. They believe that regulation is the great difficulty. In the 1985—

    Does the hon. Lady object to the increase in the number of people who own cars? Does she say that they should all go by bus?

    I knew that I should not have given way to the hon. Gentleman. Had he paid more attention to our proceedings, he would have known what the Bill was about.

    With the Transport Bill 1985, the Government have boldly set out to conquer regulation once and for all. However, they will create even more anomalies. While buses are deregulated, British Rail routes will be converted to regulated bus routes. The most glaring inconsistency is that London Regional Transport—which the Secretary of State believes represents everything that is bad in public transport—is exempted from the immediate effects of the Bill. The Government believe that the transport system that most urgently requires attention could not survive the surgeon's knife of deregulation. It is an extraordinary theory, and it makes nonsense of everything that we have been told during the passage of the Bill.

    It is important for hon. Members to understand how the Government have managed, where so many others have failed, to understand that the problems of bus services are not unacceptably high fares, the fact that in many areas buses do not arrive at the correct time, or the lack of timetabling or integration to link buses and trains; the only appalling problem is the evil of regulation.

    The Government cannot have come to that conclusion by considering the systems in other countries. The only place where anything like this system has been tried is Santiago, in Chile. Even there it took seven years to achieve its objectives, not one year as the Bill proposes. Furthermore, in Santiago, every operator is obliged to continue providing the service that he initiated as long as even one passenger asks for the route to be retained. I regret that neither I nor the Government can tell the House whether the scheme is popular, because the Chilean Government have methods of ensuring public acceptance of their schemes which even this Government have not yet managed to implement.

    We must understand that the deregulation of coach services, which is what the Government have proposed throughout the passage of the Bill, is not the panacea that has been suggested. As the Select Committee on Transport said, allowing coaches to compete with the rail service deprived British Rail of £7·5 million a year—money that had to be found from transport support. In addition, the NBC was planning a major expansion of coach services before deregulation was proposed.

    We always hear about the trial areas, and the Government's attitude to them is interesting. The Transport and Road Research Laboratory concluded that in Norfolk the changes were due to financial restriction, and that in Devon the results of the exercise were disappointing. Only in Hereford do the Government see any evidence in support of deregulation. However, the chaos and panic in Hereford were an example of what happens when a transport system is changed without proper regard for the things that matter.

    The Bill will be a disaster for the transport industry. It is not based on careful thought, and it will not improve the lot of the bus passenger. It was not conceived by a Government who care about those who use buses. It is something much simpler. The system was evolved because the Government had one aim in mind—the desire to destroy the entire bus service and to save money. That was the point at which they began. First, they asked themselves, "How can we cut the bus subsidy?" They discovered that the easiest way was to deprive the country of buses; the easiest way to do that was to deregulate and to say, "Competition will provide a good, planned transport system, and we need not give subsidies to local authorities or to other operators."

    Within a short time the House and the country will see the real effects of the plans that the Secretary of State has in mind. It is not surprising that so little support can be found in the country. It is not surprising that the effects of the Bill have been felt even before it has reached the statute book. It played a major part in the results of the shire county elections, and Conservative Members know it. They have become exceedingly edgy. The longer the Committee went on and the more that the absolute disasters of the Bill became clear to Back-Bench Conservative Members, the greater was the loss of support.

    Not even the Secretary of State can pretend that he has any friends in the House of Commons. However, what frightens us is something much more important. In destroying the bus system, he will discover that he has no friends in the country. As always, the cost will be borne not by him and his friends, but by the people. His name will be remembered as probably the most destructive Secretary of State for Transport that we have ever had.

    Order. Before I call Back-Bench Members, I should say that, unfortunately, there are only 15 minutes left for Back-Bench speeches, so I ask for brief contributions.

    9.36 pm

    As I said on Second Reading, some competition is desirable in the bus industry because all is not well, and I accept that. However, this measure is far too drastic. Some regulation is still vital. Unfortunately, co-ordination, planning and integration are all left out of the Bill.

    Possibly the greatest mistake is that registration has gone to the commissioners, not to the county councils. I believe that that will prove to be an error. Undoubtedly the Secretary of State had representations from Hereford and Worcester county council that registration should have been with the council. After all, that case has been quoted to us time after time, but it was decided to give registration to the commissioners. That will lead to all sorts of problems.

    Despite what the Under-Secretary said on amendment No. 87, moved by the hon. Member for Wellingborough (Mr. Fry), I still believe that comprehensive competitive tendering is preferable to a total free-for-all. Unfortunately, due to the guillotine, we have not even debated the taxi clauses. They are nightmarish and not properly thought through. They will mean many more problems for local authorities, let alone the police, who will be called in to prevent the fights and fisticuffs on many taxi stands in the months and years ahead.

    My hon. Friends and I are not dogmatically opposed to privatisation, but the units into which the National Bus Company is likely to be split must be large enough. It is wrong for the Secretary of State not to give us adequate assurances on pensions, which should have been written into the Bill. He has a direct responsibility, and he knows full well that not just those presently employed in the industry but the retired busmen and their widows are affected, and those are the people who are coming to see us at our surgeries on Saturday mornings. Why does not the right hon. Gentleman follow the example of the water authorities? When the National Water Council was wound up, I believe that the Yorkshire water authority took over responsibility for the pensions of those employed in the water industry. I cannot understand why that cannot be done. The pension scheme should be maintained in its entirety.

    The Under-Secretary talked about the No. 11 bus, and how long he has to wait, if he ever gets on it, and said that three or four would come together. He suggested that if London were blessed with the benefits of the Bill, the operators of those buses would be fined if they did not run to time. I wonder whether the Secretary of State has looked up Whitehall or down Millbank in the past three days. It has been totally jammed. At times one can count up to 40 coaches, if not more, and buses galore. How on earth can there be any freedom of bus services in London if he does nothing to deal with congestion?

    The greatest gift that the Secretary of State could bestow on the nation, apart from leaving office, would be to tackle the congestion in our towns and cities. That is the real problem, and the Government should have tackled it when they first came to power. There will now be even greater delays. Any criticism of south Yorkshire pales into insignificance compared with the cost in time and money of the hours spent waiting to get through Earls Court or Wandsworth and similar areas in other cities. Until the Government tackle that problem they will never get their system to work. That is what is wrong with the Bill—the Secretary of State has got his priorities all wrong.

    9.40 pm

    The Select Committee report was being decided when the Bill when into Standing Committee, and it has made a significant contribution to the debates. My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) shouted, "Vested interests" when the Select Committee was mentioned earlier, and I have no doubt that she was getting at me. If she and others would read the report and study the voting in the Divisions, they would know that only twice did a Conservative Member vote with the Opposition. On one occasion the Conservative Member was myself and on the other it was my hon. Friend the Member for Birmingham, Yardley (Mr. Bevan). In one Division after another, several Conservative Members agreed with the majority view. My hon. Friend the Member for Lancaster would also discover that at no time did I vote on any clause in connection with the NBC. Moreover, I consistently voted in support of the local authority role, although the NBC did not approve of it. I hope that my hon. Friend will reflect on that.

    Briefly, because I put my name to the Select Committee report and because I believe in that report, my right hon. Friend the Secretary of State will not be surprised to hear that I cannot support him in the Lobby today. I said on Second Reading that if the Bill were sufficiently amended I would consider voting for it in its later stages but that otherwise I would have to vote against it. Because I put my name to the Select Committee report, because I am concerned about pensions, about tendering and about the role of local authorities, I hope that I am wrong and that my right hon. Friend the Secretary of State is right, but as I believe that the Bill is based too much on theory and not enough on practice I have great fears on that score and I regret to have to tell my right hon. Friend that I shall be voting against Third Reading.

    Order. It may be for the convenience of the House if I repeat that the Under-Secretary of State will seek to rise at 9.50 pm. Perhaps hon. Members will bear that in mind.

    9.43 pm

    Unlike those who considered the Transport Act 1980, members of the Standing Committee on this Bill had the benefit of hindsight. In 1980 we could only predict but the record of those debates shows that all that has happened in the succeeding five years was predicted in detail at that time. In the 34 sittings of the Standing Committee on this Bill, my hon. Friends had the benefit of being able to refer to the Hereford and Worcester trial areas and to other experiences such as the case of Yeowarts in west Cumbria, the way in which the Minister overruled the traffic commissioner and the two appeals to the divisional court and the higher court to try to remove Yeowarts from the streets of Whitehaven.

    In considering the Bill we should also consider the consistency shown by political parties on these matters. For the