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British Rail Subsidiaries: Restrictions

Volume 416: debated on Thursday 22 January 1981

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3.22 p.m.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what further plans they have for removing restrictions on British Rail subsidiaries so as to allow them more freedom to operate commercially.

My Lords, the Transport Bill, which received its Second Reading in another place on 13th January, contains proposals that the Railways Board support, to remove four of British Rail's non-rail subsidiaries from the public sector—Sealink, hotels, hovercraft and non-operational. Although there are at present no firm plans to introduce private capital into the board's other subsidiaries, the Government believe that there may be a role for private investment here, especially in British Rail Engineering Limited, and this is an issue which we shall be considering with the board at a later stage.

My Lords, while welcoming these proposals to allow British Rail to raise cash by the sale of some of its non-rail subsidiaries, may I ask my noble friend what assurances he has that every effort will be made to ensure that the sum so raised will not be wasted upon such things as over-manning or excessive wage settlements, but that these sums so raised will be spent upon maintaining the maximum railway network efficiency possible and also, incidentally, maintaining the jobs that will go with that?

My Lords, the proceeds of disposals will go to the Railways Board as owners of the businesses. These will, however, form one element of a financing forecast which the board will submit to the Government. It is not possible to say at this stage what effect this will have on the board's external finance limit in future years, but I think the board's continuing effort towards increased productivity is itself the answer to my noble friend on the question of over-manning.

My Lords, although I appreciate that the whole question of the subsidiaries will be debated when we have the Transport Bill in this House, does the criticism about operating commercially apply to Sealink, which according to the last published report in 1979 had a surplus which was 13·5 per cent. on capital, and the Rail Property Board, which according to the last report of 1979 had an operating surplus of 79 per cent. on capital? Is this the reason for the transfer to privatisation (shocking word!) and would it not be advisable to leave the Property Board with British Rail so that they could take the advantage of income from appreciating land values?

My Lords, it is true that taken together these businesses have been profitable in recent years, but before we go into a full debate on it on this occasion I think we might leave it until the Transport Bill comes to this House. In so saying, I feel that we may have different figures from Sealink for the current year.

I think it is our turn! My Lords, while agreeing in principle with the sale of subsidiaries which will bring useful capital to the Government, may I ask whether the noble Earl is aware that the British Transport Hotels in particular have a very high standard of service to the public, in which tourism plays a great part? When the Government are negotiating the sale of such hotels, will he do something to ensure that the standards are maintained and the assets are not stripped?

My Lords, I am delighted with the intervention of my predecessor. I join with him in saying how good we think British Transport Hotels are. However, as he is well aware, they are in need of quite a lot of capital expenditure and perhaps this is the moment to think of getting rid of them.

My Lords, would the subsidiaries include the private operation of branch lines which are no longer used by British Rail?

My Lords, arising from what the noble Lord, Lord Mowbray and Stourton, said, to whom I was very glad to defer, may I ask the noble Earl what is to be the future of the hotel at Gleneagles which, although it is owned by nationalised industry, is without doubt one of the best hotels—possibly the best—in the whole of the British Isles?

My Lords, I agree with the noble Lord on part of his remarks. At the moment I do not know the ultimate conclusion because it has not been arrived at.

My Lords, can the noble Earl say that, while it is possible for the British Railways Board to sell capital assets to the private sector, it is also going to be possible for the British Railways Board to borrow capital from the private sector?

My Lords, that is rather wide of the Question and I should like it to be tabled as a separate Question.