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Rail Services (South-East)

Volume 127: debated on Thursday 11 February 1988

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To ask the Secretary of State for Transport what has been the response from the British Railways Board to the Monopolies and Mergers Commission report on rail passenger services supplied by the board in the south-east of England; and if he will make a statement.

The British Railways Board has responded to the report and I have placed copies of its reply in the Library of the House. It shows that it has accepted all the Commission's recommendations, and sets out the action it intends to take. I have discussed the commission's report with Sir Robert Reid, and I welcome the board's positive response. I shall be monitoring BR's progress in following up the commission's recommendations and I shall make a further statement on this in the autumn.Our policy is that by improving its efficiency BR should provide its customers with an attractive and reliable service and at the same time reduce its call on the taxpayer. I believe the commission's findings show that we have got this right, but there is still room for improvement and I agree with the commission's view that investment will be needed on some routes to relieve overcrowding and cater for traffic growth. I have already approved some investment in new rolling stock on this basis and I am pleased to see that BR is investigating options to identify what further investment is required to meet the quality standards I have agreed with it. In deciding BR's future investment ceilings, the Government will take account of any additional requirements that are shown to be justified. The expenditure figures incorporated in the public expenditure White Paper already contain provision for much of the investment mentioned by the commission, including improvements to the south-eastern approaches to London. I am always happy to receive sensible proposals from BR for cost effective new projects.The report suggests that we clarify the purpose of the public service obligation grant (PSO) for Network SouthEast and whether it is directed at certain groups of passenger rather than others. The grant is not intended to distinguish between different groups of passenger. Its main purpose is to enable BR to provide essential services and to subsidise fares where that is the most cost-effective way of contributing to the relief of road congestion in the south-east. I shall be discussing with the board in the light of the MMC's report whether its current fares structure reflects both the purpose of subsidy and the proper allocation of costs.The commission has taken a close look at BR's employment practices and the report contains a number of recommendations. This is an important area for BR to tackle and one where I hope that swift and substantial progress can be made.Finally, I must comment on the commission's statement that the board has failed to meet its statutory requirement to break even on revenue account, taking one year with another. The Government do not accept this conclusion. The statutory requirement allows for fluctuation between profit and loss in individual years. The period covered by this report includes the ASLEF strikes in 1982 and the miners' strike—both of which had serious "one-off" effects on the board's revenue—and the taking of substantial provisions for the restructuring of British Rail Engineering Ltd. The board has also now changed its accounting policies so that the contribution made by the substantial proceeds from property sales is, for the first time in the 1986–87 annual report and accounts, reflected in the profit and loss account. Over the longer term, the fluctuation between profit and loss has been in balance. I do not, therefore, accept that the board can be said to have failed to meet its statutory duty.We are grateful to the commission for this comprehensive and detailed report, which follows up its 1980 investigation into BR's London commuter services. I am sure that it will prove to be an equally effective stimulus for further improvements in the way BR runs its services in the south-east.