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Br: Locomotive Tenders

Volume 489: debated on Monday 9 November 1987

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2.43 p.m.

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

The Question was as follows:

To ask Her Majesty's Government what proportion of the 100 Class 60 new locomotives for British Rail were tendered for by British Railway Engineering Limited and by United States and European companies respectively.

The Parliamentary Under-Secretary of State, Department of Transport
(Lord Brabazon of Tara)

My Lords, I understand that in August the British Railways Board issued invitations to tender for new diesel locomotives to a number of British and overseas engine manufacturing companies. British Rail Engineering Limited, which does not manufacture engines, was not invited to tender as a main contractor. Tenders were due to be submitted to the Railways Board by last Friday, 6th November. The Government have no information on the tender responses, which are commercially confidential.

My Lords, I am grateful for that detailed reply from the Minister. Is he aware that, because I was formerly a locomotive engineer of 20 years' standing, I am absolutely appalled to learn that the workforce of BREL were not allowed to tender for that work, which they should have done? We shall not therefore even know whether the price from abroad is really competitive compared with that from our own people. Will the Minister use his best endeavours to place a moratorium on the letting of this contract in order to give the British workforce an opportunity to tender, and not once again appear to be making it easier for our competitors both on the Continent and in America to take work that is sorely needed from this country?

My Lords, as I said in my original Answer, British Rail wished the tender to go to manufacturers of engines rather than manufacturers of locomotives, and British Rail Engineering Limited does not manufacture engines. It is not true to say that British firms have not been invited to tender. I understand that both GEC and Hawker Siddeley (Brush) have tendered.

My Lords, does the Minister not consider it a strange attitude towards competition policy for the board to issue, as recently as 26th October, a statement to the effect that the fact that BREL has not been asked to tender is not disadvantageous to the company, as it might become the major subcontractor? Does he not agree that it could possibly work the other way: that one of the other firms could be the main subcontractor to BREL, if BREL were successful in its arguments? This procedure seems to be standing competition policy on its head. Is it not a fact that when BREL was reorganised one of the groups was called the New Build and Repair Group? Does that not imply that it was able to build equipment of that kind? Is this decision not also linked with the terrible cuts and redundancies in the railway works?

My Lords, I do not believe that it is disadvantageous to BREL not to be able to tender as the main contractor. In fact, in many ways it gives it a better chance of getting business than if it had been the main contractor. If BREL had been the main contractor it would have either won or lost the tender. As it is, it can tender for subcontracting work from anybody who wins the tender. The redundancies at BREL have no connection with the question of tenders for the new locomotive. Job losses are due to a fall in the repair and maintenance workload and much of that is an inevitable consequence of investment in modern rolling stock, which is designed to need much less maintenance and repair.

My Lords, I apologise for rising after my noble friend but I should like to put a question on the issue of employment because it seems to me to be a very important one. Is the Minister aware that the trade unions were advised last September that there would be reductions of 2,939 jobs at Crewe, Derby and York, 487 of them being salaried posts, and that those redundancies have been announced by BREL? Does the Minister agree that we must give some priority to trying to maintain the skilled workforce at BREL and that work should be put its way wherever possible.

My Lords, if BREL is a successful subcontractor in this contract, it will of course gain from it. But as I said, this proposed contract is not a reason for the redundancies at BREL.

My Lords, is the Minister not aware that the workforce in BREL are of the opinion that they could be a successful main contractor? Bearing in mind that the French, the Germans, the Americans and other people involved in the tendering never appear to make it easy for us to obtain work in those countries and also bearing in mind the terribly adverse balance of payments on manufacturing industry in this country, with special emphasis on engineering, may I ask the Minister whether this policy will he looked at again? I am sure that if this work were done over here, it would have a beneficial effect on our balance of payments in manufacturing industry.

My Lords, as I have already said, British Rail decided that it wanted to go to an engine contractor rather than a locomotive contractor as the main contractor for this project. British Rail Engineering does not make engines. The chairman of British Rail has, however, said on a number of occasions that B.R. would prefer to buy British if UK manufacturers can match overseas competition. I am sure that my right honourable friend would endorse that thinking of the board.

My Lords, while fully subscribing to the ideals of competitive tendering for contracts, does my noble friend agree that we might learn something from our French friends across the Channel when they look at tenders from friends nearer home with a slightly favourable eye?

My Lords, that would be a matter for British Rail. It has of course invited two British firms, anyway, that I know of, to tender for this work, and I hope that they are successful.

My Lords, while thanking the noble Lord for the factual nature of his replies, are Her Majesty's Government aware of the local feeling—for example, in Derby where there are to be 1,500 job losses—that these redundancies are due to this particular element of government policy? Can he do something to allay the suspicion there and elsewhere that the Government have in mind a policy of reducing British Rail Engineering to such an extent that there will he more and more job losses in the future?

My Lords, obviously I appreciate the concern of the right reverend Prelate the Bishop of Derby, but I have to say that British Rail Engineering has to compete for new build orders both at home and abroad. So far as at home is concerned, British Rail plans to spend 1 billion on new locomotives and rolling stock over the next five years, so there will be plenty of business around to be tendered for.

My Lords, will there not be many more complaints if British Rail buys the wrong engine and so increases its losses, which then have to be paid for by the taxpayer? One man's subsidy is another man's tax rise.

My Lords, I certainly sympathise with the views of my noble friend. In the past British Rail has not always got the best equipment that it might have got. That is why I believe that it is taking a more commercial view about the tendering process in the future.

My Lords, can the Minister give any details in relation to the reply that he has just given, criticising British Rail? He said that off the cuff so easily, and his noble friend asked the question so easily, that I think we are entitled to know if he has any details to substantiate that.

My Lords, I have no details with me at the moment. But I think it is a fact that is widely recognised that some of the equipment it has had in the past has not been reliable.