I am particularly pleased this morning to be debating the future of tourism in the United Kingdom. It is an appropriate time for such a debate, given that the World Travel Market, the main event in the global travel industry—it is now in its 22nd year—is taking place in Earls Court this week.

My concern is for tourism throughout Britain. I am aware that some aspects of tourism and travel have been devolved to other assemblies, including the Scottish Parliament and the Greater London Authority. Nevertheless, I am particularly happy that the British Tourist Authority, which has a crucial role, is working in partnership with the national tourist boards of Scotland, England, Wales and Northern Ireland. I congratulate the Scottish Parliament on its wisdom in accepting the logic of the BTA's argument that it should project tourism abroad for the whole of Britain, including Scotland: we can already see the benefits.

Tourism and hospitality is a big industry, with the potential for enormous growth. Tourism and travel drive the UK economy. Last year, the industry was worth £64 billion, and tourism accounts for about 4 per cent. of Britain's gross domestic product. In 2000, the industry employed 1.8 million people. That is 7 per cent. of the UK work force and five times as many people as are employed by the car industry. In 2000, 25.2 million overseas visitors came to Britain, spending £12.8 billion. Our top five overseas markets last year were, first, the United States of America, followed by France, Germany, the Irish Republic and the Netherlands. At the start of last year, we had every reason to feel confident and optimistic, and the industry's hopes were high.

That confidence should be set against the backdrop of the publication in 1999 of "Tomorrow's Tourism: a growth industry for the new Millennium" by the Department for Culture, Media and Sport. That important document presented a strategy for the industry, and I congratulate my right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith), the former Secretary of State, and my hon. Friend the Member for Rossendale and Darwen (Janet Anderson), the former Minister for Tourism, Film and Broadcasting, on the heavyweight contributions that they made to that document. I hope that I, too, was able to make some contribution to it.

Hopes were high until we were struck with foot and mouth disease, which was followed by the terrible events of 11 September. Before the outbreak of foot and mouth disease, spending by overseas visitors was expected to rise by 2 per cent. to about £13 billion. The presentation overseas, night after night, of television scenes of the outbreak had a severe impact on inbound tourism, and not only in contaminated and restricted areas. The BTA estimates that losses for 2001 attributable to foot and mouth disease represent 10 per cent. or £1.5 billion fall. It welcomes the £14 million that is being given in addition to existing Government grant in aid to implement an intensive marketing strategy to encourage overseas visitors to come to Britain.

Passengers' fears of air travel following the terrorist attacks in the United States have also had a serious impact. On 26 September, the BTA announced that Britain's inbound tourism industry stood to lose about £2.5 billion because of the combination of foot and mouth disease and terrorism. Spending by overseas visitors is likely to drop by about 20 per cent., which will be a big blow to the industry. In September, the number of overseas visitors decreased by 11 per cent. and spending decreased by 16 per cent. compared with the same period last year. The BTA said:

"This is deeply worrying for the tourism industry—the critical months for inbound tourism are from July to September when a third of all visit ors come to Britain."

In common with my right hon. and hon. Friends, I sincerely thank everyone in the industry for applying themselves positively and with dedication to an extremely difficult challenge that could not have been predicted. We also thank the Department for Culture, Media and Sport, the BTA, the Foreign and Commonwealth Office, the regional tourist authorities and the local authorities, which have not had an easy time.

I recently visited Cumbria—I have a soft spot for that beautiful part of Britain—and I saw evidence of that dedication, particularly in the Lake district. I congratulate those who serve the Cumbria tourist board, including its chief executive, Chris Collier. I also congratulate Vicky Robinson and Graham Lamont, the joint chairmen of Theatre by the Lake, which they kept packed almost every night even as they were surrounded by the problems that I have described. I saw Zeffirelli's cinema, which serves two cultures in Ambleside, in the heart of Wordsworth country. That is important to me and many others and represents something very attractive for Cumbria.

I was reminded again this week of the fact that those associated with the Cumbria tourist board do not rest on their laurels. They reminded me of the importance even today of opening all footpaths, including the coast-to-coast footpath, which they have been told might not open until Easter. The path is important to them, and I hope that things will be cleared up long before then.

I want to base my remarks about Scotland on a comprehensive letter that I received from Jim Torrance, the Scottish policy convenor of the Federation of Small Businesses—we must remember the huge number of small businesses involved in tourism. For the most part, the letter was upbeat, which is consistent with the situation in Scotland. Tourism is our fourth largest industry and employs 7.9 per cent. of those in employment. Let me give a flavour of the letter. Among other things, the federation said:

"There is strong—but anecdotal—evidence (official statistics are not yet available) that tourism is doing relatively well in many areas of Scotland … Argyll for example had had its best tourist season since 1997. The main widely expressed concern was about finding adequate staff."

On a less positive note, perhaps, the letter continued with the important point that

"Businesses experiencing a bad season have cited the strength of sterling"—

I would describe it as the weakness of other currencies—

"fuel prices, staff problems, competition, foot and mouth, the effects of the 11th September and inadequacies at Area Tourist Board and visitscotland/STB."

I do not necessarily share that view of the last of those perceived problems, but it is fair to put it in context. The letter stated:

"The individual impact of these differing variables has not been assessed."

I would not do justice to the letter or the views of the people of Scotland if I did not repeat its main point, as I want to underline the plea made by the Federation of Small Businesses. It reminded us of the delicate decision still to be taken about the need for the ferry link between Rosyth and Zeebrugge. It welcomes, as I do, the fact that my right hon. Friend the Secretary of State for Transport, Local Government and the Regions has given his stamp of approval for it, as well as funding. The FSB also knows that what is happening in Europe is important to that decision. The link is vital not only to tourism in Fife, but the rest of Scotland, and we would all welcome its spin-off effects on other industries.

My right hon. Friend the Secretary of State for Culture, Media and Sport and my hon. Friend the Minister my right hon. Friend the Secretary of State and my hon. Friend the Under-Secretary of State for Culture, Media and Sport set up the Tourism Alliance, an umbrella body designed to deal with the fragmentation that my right hon. Friend said was taking place in the industry. I would like to hear from my hon. Friend how that matter is progressing.

My hon. Friend would be extremely surprised if I did not mention the document published by the Department for Culture, Media and Sport last month. "Tourism—The Hidden Giant—and Foot and Mouth" as the Government's response to the report of the Select Committee on Culture, Media and Sport, which is chaired by my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman). I hope that the debate will give my hon. Friend the opportunity to respond further to three important points that it raises.

Page 3 of the document tells us that the Select Committee took the view that

"the English Tourism Council had been designed more…to the needs of the Government than…the customer".

Page 4 states that the spread of funding was uneven geographically, according to the Committee, and that the Committee talked of

"under-investment by the public sector in tourism".

Page 7 refers to claims of slow response by not only the Government, but other public bodies, on the outbreak of foot and mouth disease. I look forward to what my hon. Friend the Minister has to say about those points, as I seek to understand the complex issues.

I want to be much more positive now, and have every reason to be so. Much in the 1999 review offered great practical and welcome encouragement to the many people who contributed to its conclusions. Its recommendations were based on making the most of the talents of all our people in the tourism and hospitality industry. During my short time as a Minister, the issue that seemed to dominate every discussion was the minimum wage. We do not hear much about it now. It seems to have settled down to offer fulfilment to those in the industry, which is important to them. The evidence that I have seen suggests that staff turnover is falling. I welcome that, as I do the new deal, which has substantially contributed to jobs in the industry.

Transport is important to tourism. The terrible events of 11 September hit London tourism hard, as my hon. Friend will know from his meetings with industry representatives. However, he will also know of opportunities for the public to visit local attractions and to take time to enjoy a vast array of theatre performances and concerts in cities, including London. As transport is of the essence for successful tourism, will my hon. Friend join me in welcoming the excellent initiative of the Heathrow, Gatwick and Stansted express air-rail links, which allows the public to buy a return ticket on any of the three express routes into central London for only £10, having parked their cars without extra cost at any one of the three south-east airports? That is good for families, it is good value for money, and it is a good way to keep cars away from busy London roads.

In addition to that achievement I shall cite others in my constituency. I hope that the Summerlee heritage park in Coatbridge will serve as a model of how to attract tourists and visitors to see the best industrial archaeology. Yesterday I took part in discussions with representatives of North Lanarkshire and East Dumbartonshire councils. I am sure that my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Lyons) will welcome the reassurance that they are highly aware of the importance that we accord to attractions such as the Antonine wall and the Roman fort. Perhaps those responsible at the heritage lottery fund are following our discussions; I assure them that the two councils are paying great attention to the opportunities that are no doubt on offer.

Among the very welcome action points in the strategy document are the development of several creative industries, including film and sports, in relation to tourism. I congratulate the BTA on the various film maps that it has produced. I understand that, for example. it and other tourist boards plan promotions such as a Harry Potter map of Britain.

I remind my right hon. Friend of the importance of film in developing tourism. I know that he recently suggested that the film "The Full Monty" had created a lot of potential for Sheffield and that he was criticised by Mr. Johnson and others for that. However, there are good examples—such as, in Scotland, "Braveheart"— of films helping to increase tourism.

I was a little amused by Mr. Frank Johnson's sketch when the matter was raised in the House last week. He is entitled to laugh at his own jokes, but sometimes he must feel a bit lonely. It is rather distressing that he does not seem to read his own newspaper. The Daily Telegraph perceives the link between film and tourism. It stated that researchers had recently concluded that a tourism location featured in a successful film can expect the number of visitors to increase by 54 per cent. over four years. My hon. Friend was right about Scottish films. "Rob Roy", "Braveheart" and "Loch Ness" together produced an extra £7 million to £15 million in tourism revenue. Any sensible person would welcome that.

The strategy for tourism covered the importance of marketing and of quality control and the need for development of skills and training. It called for more integrated promotion of our wonderful cultural heritage and countryside attractions. It welcomed, as I do, the regeneration of our traditional resorts. I am pleased that my hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith) is to initiate a debate on that subject later this week. The English tourist board tells us that about 900,000 people—almost 1 million potential holidaymakers—have changed their plans between now and the end of September and will now holiday at home instead of abroad.

It is important to make the most of the outstanding regeneration of our cities and what is happening in the resorts. I have seen the regeneration of Newcastle, Manchester, Liverpool, Cardiff, Glasgow, Belfast and London, with huge improvements to the dockyards here. That represents a welcome invitation to domestic and international tourists. There is a plea in the document for more central Government support for the regions. That debate will, rightly, continue. The Minister will want to comment on the annual tourism summit, bringing together industry and Government, which is also very welcome. The new technology of the internet and computerised booking services is important as we seek to serve a growing public.

I would like to conclude by wishing the industry well. The people serving the industry—in restaurants, hotels, castles and theme parks, as well as those working in transport to bring people to every region of the country—matter. They represent the best of Britain and we wish them and their industry the very best of British.

First, I congratulate the right hon. Member for Coatbridge and Chryston (Mr. Clarke) on securing this important debate. I agree with almost everything he said, except that I think that the Scottish, English and Welsh tourism products are quite different. I believe that it is better to advertise them separately, not for political reasons but because they are distinct and should be marketed distinctly.

I was born and brought up in Betws-y-Coed, which is probably the most famous tourist village in Wales and probably one of the first tourist areas in Wales, so I am well aware of the benefits of good, sustainable tourism to the local economy. Gwynedd council has had a film site officer for the past 10 years, so it agrees with the right hon. Gentleman about the importance of film to tourism. Tourism is obviously an important component in the British economy. In the Welsh economy it brings in about £2 billion per annum, which is approximately 7 per cent. of Welsh GDP. In many coastal areas, and some rural areas as well, the relative contribution of tourism is even higher.

Several external factors, however, have had an impact on the performance of the tourist industry during the past 12 to 18 months. Even before the outbreak of foot and mouth disease there was the question of the strength of the sterling against the euro, which has already been referred to. Recent research demonstrates that there is a direct link between the value of sterling and international tourism receipts. Every 1 per cent. rise in the external value of the pound leads to a decline in UK international tourism receipts of about 1.3 per cent. The relative strength of the pound has an effect, as the right hon. Gentleman said.

A second factor is the relatively high price of petrol and the unfortunate publicity surrounding the petrol blockades in the UK. Those were brakes on growth for some key international markets. Added to that there are, unfortunately, signs that the US economy is slowing down, and growth in consumer spending throughout Europe remains sluggish. Despite these constraining external factors, the British Tourist Authority was forecasting before the outbreak of foot and mouth disease that spending by overseas visitors in Britain would rise by about 2 per cent. in 2001—In other words, that it would rise from £12.8 billion to slightly more than £13 billion, which is a huge sum. By the end of May, that figure had to be revised down by between 10 and 20 per cent. to take into account the consequences of foot and mouth disease. Even after that revision, the market is still significant.

Foot and mouth has hit many parts of the United Kingdom, and not uniformly. It has hit harder in some areas than others. Areas such as my constituency where, fortunately, an outbreak did not occur, were constrained by the closing of footpaths. The right hon. Member for Coatbridge and Chryston said that they should be opened, and of course they should. I am sure that the time is right for that to be done. Those constraints had a heavy impact on Snowdonia, for example, which is part of my constituency. I understand that the Minister climbed Snowdon on Saturday morning, so he is doing his bit for tourism and for my constituency.

The café was closed.

Perhaps that was not the greatest loss, but I will not pursue that red herring.

Some businesses record a downturn of about 75 per cent. in their receipts. We know about that because there have been several debates on the subject in the Chamber and elsewhere. Turnover fell by 22 per cent. in the Easter period, and more than two thirds of businesses said that the bookings for the rest of 2001 have declined by about 60 per cent. on average. That is a huge drop. On the basis of previous experience, the UK domestic market is likely to recover first. That is good news for Wales because at least 80 per cent. of spending from overnight visitors derives from the core UK market. I hope that there will soon be an urgent recovery.

In summary, the Welsh tourist board estimates that tourism spending in Wales during the first six months of the year declined by 15 per cent., which is equivalent to £182 million. As a direct result of the impact of foot and mouth disease and the awful events of 11 September, the board estimates that further losses of at least another £100 million will be incurred by the end of the year. That amounts to a loss of some £280 million in the year. Such an impact could place 10,000 jobs at risk in Wales. The multiplier effect from tourism means that the total number of jobs affected could be as high as 15,000.

However, we must not dwell on all this doom and gloom. The right hon. Gentleman finished on a high note and he is right to talk up the tourist industry. One positive outcome of the foot and mouth outbreak—if there can be such a thing—is that it has shown the business community and the public the important contribution made by tourism to local economies. That does not happen merely in rural areas but in cities such as York and London. People have now realised that it is a poor industry that needs nurturing and that benefits will accrue to all businesses as a spin-off from a healthy tourism industry.

In Wales, the industry supports around 100,000 jobs which is about 10 per cent. of the work force. It is Wales' largest industry. It is estimated that it supports around 25,000 jobs directly in rural Wales, and others indirectly. Farm-based tourism is a growth area that needs developing, especially with the forthcoming changes to the common agricultural policy. Green tourism needs to be considered and diversification should be introduced when possible. Of course, all farmers will not be able to diversify—that is common sense. However, diversification will be possible in many areas, and we should work to assist the process in those areas.

The future of the £2 billion tourism industry in Wales depends on nurturing a highly skilled work force to provide the high quality holiday experience that is expected by an increasing number of discerning visitors. The tourism training forum, which is a new independent body that was set up by the Welsh tourist board, Education and Learning Wales and the National Assembly is considering ways of matching available training with what is required in terms of work in the tourism business, whether we are talking of restaurants, hotels, leisure facilities or visitor attractions.

I recently had the great pleasure of attending a function at the Porthmeirion hotel, which is unique, to note the launch of a flagship project in my constituency. The Meirionnydd chef project is a publicly supported venture by the tourist board and the local further education establishment. Young chefs go to 10 or 12 flagship designations within the constituency, moving from one hotel to another and learning best practice in each one. It is an excellent step forward that will raise our game immensely. I am proud that it is being piloted in my constituency.

We need to raise our game, and we have done so during the past 15 years or so. The standard of accommodation is generally better, as is the standard of fare at local pubs. Standards are improving, but the dreadful events of 11 September pose a considerable challenge. The impact will vary from country to country, but recent information from the BTA suggests that the number of visitors from the USA will fall by 40 to 60 per cent., those from Canada by 30 to 40 per cent., those from Australasia by 20 to 25 per cent., and those from Europe by 10 to 15 per cent. Those are only estimates, but there is a huge challenge ahead.

I am pleased that a rural recovery plan is now being discussed in the National Assembly for Wales and that a similar initiative is being pursued in this place. I am also pleased that the Minister for Rural Affairs has realised that tourism is an integral part of rural life and must form a central plank of any rural recovery strategy to be pursued by Westminster. He pointedly restated that at a function last week, and we all hope that that aspiration will be transformed into urgent action to arrest the sharp decline in the rural economy in recent years. That is of particular moment to Wales because many rural areas support our Welsh-speaking communities, which are under threat. I welcome that indication from the Minister and hope that there will be progress in the coming weeks and months. We must make it possible for young people to work in good, well-paid jobs in high quality tourism, to branch out into the industry and to think positively about remaining in their local communities and developing their careers locally.

One area that is ripe for further development is diversification in the agriculture sector. Agri-tourism is an untapped resource and we should look for high-quality diversification projects that are sustainable in terms of local economies and the environment. We must also have regard to our competitors. The marketing budget in Wales is only £300,000, but in Illinois in the United States it is £24.5 million, in Florida it is £16.6 million and in Canada it is £21.3 million. In Wales, alas, where the industry is hugely important, the budget is only £0.3 million. That is a plea for greater assistance for the Welsh tourist board and the tourist industry generally—[Interruption.] The Minister seems to disagree. The marketing figures were printed in the Western Mail a week or so ago.

So they must be right!

As the Minister says, they must be right. The Western Mail was also right in what it said about the Welsh Affairs Committee.

We in Wales are proud that the Ryder cup will be played in Wales. That is a vote of confidence in the tourism infrastructure of the country and there will be a considerable spin-off. I do not want to fall out with my Scottish colleagues, but I have no doubt that they will learn from the Welsh experience—I say that with tongue in cheek and humour.

We in this Chamber realise the importance of tourism, but we must ensure that everyone realises that it is important. Tourism needs to be developed further and in a sustainable manner. We must concentrate on this great, untapped potential, and rise to the challenges to which I have referred.

I, too, want to congratulate my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) on securing this debate. One can have nothing but the utmost sympathy for anybody who is trying to run a tourism business in this country or, indeed, anywhere in the world. The events of 11 September have had a devastating effect on tourism and travel worldwide. I was on holiday in the United States at the time of the attack, and I remained there for a further 10 days. After touring some of the beautiful national parks of the south-west of America, it was disheartening to return to Las Vegas to discover that it was 90 per cent. empty. Indeed, Las Vegas was to prove a pointer for the deep impact of 11 September on other places, including this country.

Yesterday's crash underlines a difficult situation. In the past, we might have overcome such a terrible disaster relatively quickly. We know that air travel is statistically very safe, but in spending considerable time wondering about the cause of yesterday's crash, we add to the pall of uncertainty and fear that this new era of terrorism—with the fear of anthrax in the background—has cast over the world, and which has put people off travelling anywhere. There are those who still say, "What are we doing in Afghanistan and is it our war?" However, 11 September was an attack on us all: on the world economy, and on tourism as much as any other sector. The sooner we can put an end to this business, the sooner we will rebuild people's confidence in travelling, so that they can sample the delights we have to offer in the UK.

There has been a clear impact on the home-grown business of sending people abroad, and on the number of visitors to this country. The foot and mouth crisis showed us the value of tourists from America and other parts of the world, and recent events have only compounded the misery of foot and mouth. Although the business of Hoseasons—a great company in my constituency that specialises in holidays in this country—is not concentrated in the main areas affected by foot and mouth, it nevertheless took quite a hit.

Tourism is alive everywhere. Every town, village and community in this country has something of interest to show to visitors. My constituency, for example, has some great natural assets, but we do not make enough of them so we do not benefit from tourism as much as we should. I should say that Lowestoft officially has the best beach in the country. Although the English tourist board granted the award back in 1991, the contest has never been held since, so I say that we are still champions.

The River Waveney, which gives its name to my constituency. forms the southern boundary of the broads, and Oulton Broad, Beccles and Bungay all have delights to offer. However, there is a worry in my constituency that a wind of change is blowing through the Broads Authority. Certain proposals have caused disquiet. Some are saying that perhaps the business of attracting people to enjoying the broads—an activity that will always remain water-based—may be downgraded in the interests of conservation. I ask my hon. Friend the Minister to keep a close eye on this matter because it will take an Act of Parliament or an order to make changes, should the Broads Authority propose them. I am keeping an eye on the issue, and I hope that he will too.

The other great asset in my constituency is the fact that Lowestoft is Britain's most easterly point. The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) is present, so perhaps we can form a cardinal points club. Unlike John o'Groats and Land's End, Lowestoft is not famed as a cardinal point, but the potential is there.

To exemplify my point, I shall tell a brief story about our efforts to address the fact that we are not well known as the most easterly point in Britain. We have tried to develop a landmark because we do not have a natural point like Land's End—I must confess that I have not been to John o'Groats. We planned to install a great sculpture, and we found an artist to design it, but it has proved difficult to obtain funding. When we applied for European objective 5b funding, we were told that the site was 50 yards on the wrong side of a boundary, even though a landmark would clearly benefit the whole local area. When we tried the lottery, our case was considered to be funding for the arts. The fine art buffs thought, "We have never heard of this artist: the sculpture would not be of a high quality." They should have considered the case from the perspective that a sculpture could regenerate an area that has suffered from declines in manufacturing and fishing.

Although tourism is arguably Britain's biggest industry, it is not treated as such by the various layers of government. For example, many councils consider tourism with leisure services. Tourism connects with running swimming pools and parks, but people who run tourist businesses say, "Why can we not work with the economic development department that helps other industries?" It is difficult to access assisted area status funding. My constituency has that designation, but it is difficult to access those funds, which are considerable, for tourism. I have already described the difficulty that we had in accessing European funding, in which we currently have objective 2 status. There are unwritten rules that hinder tourist businesses and prevent them from accessing funds.

We can obtain funding to develop physical facilities. When my right hon. Friend the Member for Coatbridge and Chryston was Minister with responsibility for tourism, he was proud to come to Lowestoft to open our new yacht marina, which was a grand occasion. We have had funding to put on events such as Lowestoft airshow, which brings many people into the town. Events are a good way in which to draw in visitors and to attract attention to one's area, but tourism today involves looking after people when they arrive. Businesses that look after people need support and help to raise their game.

My remarks are mirrored in national Government. The previous Government had a Department of National Heritage, which created the impression that people would be attracted here if we merely preserved historic buildings, pageantry, Stonehenge and castles. The Department for Culture, Media and Sport is broader than that, but I am sometimes concerned that tourism, the country's largest industry, is tucked away where it could easily be lost. People sometimes ask, "Who is responsible for tourism?" We have an excellent Minister and he is doing wonderful work. However, it is difficult for him to push tourism in the way in which the Department of Trade and Industry pushes the industries that it serves.

This is hard to say at a time when the tourist industry is suffering, but we must confront its biggest failing. Tourism is about not only attractions but the standard of hospitality that we offer to visitors. Hospitality is an important word, and I am pleased that we now talk about the hospitality industry. In general terms, our standard of hospitality is dismally low. When I travel around the world it is clear to me that we do not compare well with other places in terms of what we have to pay at hotels.

It is a similar story with our standards of service—in hotels, restaurants and shops, we are found wanting. Whenever I return from a holiday in the United States, I wonder why Americans want to come here, given the standard of hospitality that they receive. We sometimes mock them for their "Have a nice day" culture, but it counts for a lot—it is part of a national effort to train people to be pleasant and welcoming. Having returned from holiday, I went to the Labour party conference in Brighton. I queued for 10 minutes to get a bottle of water at a place where the four or five people who were behind the counter all thought that stacking boxes was more important than serving me. When I asked for a bottle of cold mineral water, the woman rummaged in the fridge and produced one that was not remotely cold. I said, "I asked for a cold one," and she replied, "Well, it's just come out of the fridge." That spoke volumes about the relationship between the service industry and the customer. During my three weeks in America, I visited public conveniences in deserts, mountains and cities that were spotlessly clean; those that I found on my return to Heathrow stank. That is not a good advertisement for this country.

The main task is to drive up our standards of hospitality, and I hope that my hon. Friend the Minister will take that as an important part of his mission. As well as naming and shaming the worst examples, we should give a helping hand to people who want to improve. We must find better ways of using existing funds to help our tourist businesses to invest to modernise and to improve their standards. We have so much to offer in the United Kingdom; I hope that we do not throw it away.

For the benefit of hon. Members, given the time available I intend to start the Front Bench replies at half-past 10 and to call the Minister no later than 10 minutes to 11.

I compliment my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) on taking the time to secure the debate.

My right hon. Friend referred to diversity. That is important, because all too often we think about tourism only in terms of foreign visitors coming to the United Kingdom. Yet nowadays much of the market consists of visitors from other parts of the UK. People come to this country to travel around for many reasons—we should never underestimate the diversity of their tastes and interests.

I support my right hon. Friend's comments about the contribution of the film industry. When it comes to film, there is only one issue: location, location, location. It is a great plus to an area's local economy when a film is shot there, because hundreds of people—actors, actresses, sound recordists, and so on—live locally meanwhile. Moreover, once the film is made it brings a tremendous boost to the area's profile. For example, the second series of the BBC's "Monarch of the Glen" stimulated tourism in the area where it was filmed—people saw it on the screen and wanted to sample it for themselves.

The UK has traditional tourist areas, but many other areas want to be opened up and be considered attractive to tourists. Tourist boards must assist areas that have not been flavour of the month or even of the year, as they need help, too.

Many of these areas have great potential as tourist attractions. The Forth and Clyde and Union canal, which goes across central Scotland nearly all the way from Edinburgh to Glasgow, is one example. It was closed for 30 or 40 years and has been reopened with hundreds of millions of pounds of public money. There is a towpath for cyclists and walkers, a line of Roman forts and the Antonine wall alongside the canal These features make it attractive to many people, not only to those who want to use it for boating. Such areas need support because often industries and tourist attractions need to be reinvigorated and made attractive to people from abroad and throughout the UK.

I agree with what was said about service and making ourselves attractive to visitors; we need to get the basics right. I would be happy to talk all day about the good examples, of which there are many, but unfortunately, there are bad examples. If we do not face them, people will not revisit attractions. I had visitors from Italy for four weeks in the summer and I had to show them round Scotland. which was a pleasure, but it was discouraging that information at some major attractions was not translated into Italian or, in many instances, any other language. That makes it appear that we are turning our back on foreign visitors. It would not take much to get the basics right. We want to attract people to the UK for the first time, and then see them come back again and again. That is the most important issue for the tourist authorities, and, if they can get it right, tourism has a healthy future.

The debate this morning has a Scottish flavour. Listening to my right hon. Friend the Members for Coatbridge and Chryston (Mr. Clarke) and my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Lyons) made me want to get on the GNER and go up to Scotland. It could not be colder there than it is in the Chamber.

Scotland has a lesson for England and Wales, which would help to boost the tourist industry. It has nothing to do with "Monarch of the Glen" or "Rob Roy" but with the Scottish liquor licensing laws. In that respect, England and Wales are at a competitive disadvantage compared with Scotland, and that affects tourism. When he introduced liquor licensing laws in England and Wales, Lloyd George famously remarked: "We are fighting three enemies: Germany, Austria and the drink, and the greatest of these is the drink." That legacy has lived with us since that day, inhibiting entrepreneurs in the hospitality and tourist sectors.

All political parties now believe that it is time to reform the liquor licensing laws. During the last days of the election campaign, a significant number of the people working with me received a text message on their mobile phones saying, "If you don't give a 4X for the liquor licensing laws, vote Labour." I was waiting for one myself when I realised that it was being sent only to those under the age of 25.

I make the point seriously: it is wrong to advertise the advantages of reforming the liquor licensing laws as being only in the interests of the young, who perhaps go to pubs and clubs most. The main advantage of reforming the liquor licensing laws is that it would boost the tourist sector, and towns and cities in England and Wales would have a more civilised environment. Entrepreneurs could open premises where there was a demand. Tourists in London, York or Manchester cannot understand why pubs have to shut at 11 o'clock at night and they have to move on to a venue where they must pay over the odds to get in and for drinks when often all they want to do is have a quiet drink.

Large organisations like London First that represent our tourist industry and big cities say that in our current tight market the liquor licensing laws are a big disadvantage to London in attracting conferences and conventions, for example. When the all-party beer group went to Scotland to hear evidence on this matter, one Scottish pub executive, who shall be nameless, looked at us pitifully and said, "Even Cinderella was allowed to stay up until midnight." We are hampered by these laws in England and Wales. I know that their reform is high on my hon. Friend's agenda, and all power to him. I hope that we will have a Bill to reform our liquor licensing laws in the next Queen's Speech. I hope that there may even be the prospect of a draft Bill before then, because it would be widely welcomed by many Members and certainly by a hard-pressed tourist industry.

I, too, congratulate the right hon. Member for Coatbridge and Chryston (Mr. Clarke) on securing this important debate. As he will know, tourism is vital for my constituency. Obviously this has been a truly dreadful year for tourism. The foot and mouth crisis devastated tourism for many months in Perth and many parts of rural Scotland. The countryside was closed, and in places such as Perthshire it is a principal attraction. Some hotels in places like Crieff lost all their advance bookings for June and July overnight. It is hard to imagine how any small business that is already suffering is supposed to cope with such a devastating reduction in its cash flow.

Not only did we have foot and mouth, we had the terrible events of 11 September, which many hon. Members have mentioned. We must now work out ways to get Americans to fly to Scotland and elsewhere in the United Kingdom, and that is a difficult task, not least because of the awful crash yesterday in New York.

All these issues have had a serious impact on tourism, but I should like to focus on two specific structural points relating to UK Government policy. Although tourism per se in Scotland is devolved to the Scottish Parliament, economic policy continues for the present to be set in London. The high pound policy is terribly damaging to tourism, as the right hon. Member for Coatbridge and Chryston alluded to when he quoted the Federation of Small Businesses in Scotland. The high fuel tax policy is equally devastating, as my hon. Friend the Member for Meirionnydd Nant Conwy (Mr. Llwyd) mentioned.

It is a puzzle to us in Scotland how, as the oil rich nation of the European Union, we pay the highest fuel taxes in the industrialised world. These two aspects of economic policy are extremely damaging to tourism. How does the Minister feel that the interests of the tourism industry can be promoted and fostered against the backdrop of such damaging economic policies? We also have high value added tax rates in the tourism sector. We have swingeing business rates that are once again higher than business rates in England because our former Finance Minister, Jack McConnell, soon to be our latest First Minister, I believe, decoupled the rates poundage between Scotland and England. Our tourism sector, which mostly comprises small businesses, is struggling.

In short, Scotland is in danger of being perceived as a high-cost destination, and that, allied with the poor transport infrastructure links in certain places, is causing serious problems. The right hon. Member for Coatbridge and Chryston talked about the direct ferry link between Rosyth and Zeebrugge, which the Scottish National Party welcomes. We have been calling for a link for many years, and want any such measure expanded to include direct air links. We also want an undertaking that the Government will secure a public service obligation for flights from Inverness to Gatwick and Heathrow, which are vital for business and tourism in Scotland. I agree with the hon. Member for Meirionnydd Nant Conwy that the potential for tourism in Scotland and elsewhere in the UK is huge. I laud those involved in the industry.

Order

Before I begin, I should declare my interests because I am involved with several tourist bodies. I am president of the Tourism Society, patron of the Hotel and Catering International Management Association and chairman of the British Hospitality Association leisure panel. I am involved in many other bodies and I especially want to declare my presidency of North of Scotland Hospitality, which goes under the great acronym of NOSH. I am also a director of several companies and own a small hotel in the village of Halkirk in my constituency.

I have spent my entire life working in the industry and I am delighted that we are having this debate during World Travel Market week, as the right hon. Member for Coatbridge and Chryston (Mr. Clarke) said. I am grateful to him for giving us the opportunity to debate this important industry. He mentioned the size of the industry and the number of people it employs. Tourism is the third largest industry in the United Kingdom and is projected to be the largest employer and the largest industry in the world in the next five years. We want to be a key part of that market.

I agree with the right hon. Gentleman that much of Scotland has had a surprisingly good year. I lost a great deal of money in March and April, May was dicey, but things picked up from June. Hoteliers in my constituency tell me that they have had a rather good season after a terrible start because of foot and mouth disease. Indeed, Dornoch has had one of its best seasons ever, which might have something to do with the fact that Madonna got married there last winter.

Location, location, location.

Absolutely. Even the Dornoch caravan site has had an excellent season. It is well run, and if the hon. Member for Waveney (Mr. Blizzard) is looking for superb quality, that is what the site offers.

Scotland has, however, had a bad time in the international market, which was badly hit by foot and mouth disease and the events of 11 September. I have no doubt that yesterday's tragic accident will have a further effect on the industry.

Fuel prices are definitely a barrier. That is not only because of the high cost of fuel, but because of the 15p a litre differential between Inverness and Thurso. It would be a great help if the Government could deal with that.

The UK tourism industry faces challenges in three areas: structure, quality and productivity. To state the obvious, tourism is an economic activity and is no different from a factory in that it creates social and environmental damage if it is not properly located. To take an extreme case, allowing passengers from 20 buses to get out in a Cotswold village of 50 houses, wander round, leave their rubbish and move on without spending any money would result in great inconvenience and disruption but no economic benefit. The key question for tourism must, therefore, be how to extract the maximum economic benefit with the minimum environmental and social damage.

Of the three challenges that I mentioned, I shall deal first with structure. The current structure of the BTA, visitscotland.com and the English Tourism Council is not working. In another place four years ago, I predicted that the way in which tourism was being devolved would be bad for the workings of the industry, as the industry itself now largely accepts.

There is a curious anomaly. I agree with tourism being wholly devolved to the Scottish Parliament and visitscotland.com, which has a full budget and responsibility for marketing. The BTA is a cross-border authority with responsibility for marketing Britain, but has all the money and marketing for England. The ETC, which was created some years ago from the ashes of the English tourist board, has no marketing budget. That is perfectly ludicrous, and I urge the Minister to rethink it. We must give it marketing clout. I am a federalist. I believe in the union, and a key point is equal devolution for England and Scotland. We also need a much clearer idea of what the BTA can do.

I disagree with the criticisms of quality made by the hon. Member for Waveney. The United Kingdom has some bad products and some superb ones. Talk of rip-off Britain and ghastly products does an immense disservice to those in the industry who work hard to achieve quality. I shall give an example. Skibo castle, Morangie house and Ackergill tower in my constituency are world-class properties. They are world beaters. One would not find a finer conference venue in the world than Ackergill tower.

We have many great products—London is now the world leader in food—but we need to root out the bad. There is only one way to do so, which is to grasp the nettle of statutory registration of accommodation providers. Until every accommodation provider is registered, we will not be able to deal with the problem. I advise the Minister of the consensus in the industry, which was not there five years ago. The Government should act on it.

I want to touch briefly on productivity and squaring the employment circle. The industry is a large employer and pays out—not to individuals, but in bulk—a great deal in wages. The industry has to become more productive, so that fewer people earn more money. Until they do, the sort of careers that we would like to see will not be possible. The right hon. Member for Coatbridge and Chryston mentioned the minimum wage, and I agreed with him. In another place, I voted and spoke in favour of it. My businesses had a minimum wage of £4 an hour two years before the Government brought in their minimum wage, and I always raised mine ahead of that. Happily, I am now out of the business and I do not know what it is doing. The minimum wage did a tremendous amount to force the industry to understand that it had to improve conditions. We must find new ways to work, to re-engineer businesses in the industry and to be more productive.

It is important to consider the Government's role. They must create a structure that works, as I mentioned, by considering the relationships of the national tourist boards and the regional tourist authorities in England and ensuring that they can be made to work better. The Government must also decide whether they want to sponsor the industry, or whether it is appropriate—there is an intellectual argument for this, although I do not accept it—simply to let the industry get on with its job. However, the Government must not dive in from the touchline to administer the occasional pat or, as has more often happened in the past, the occasional kicking, and then dive back again. The industry views the Department for Culture, Media and Sport in an unfavourable light. Much has been done, but there is a pretty clear consensus in the industry in favour of a return of tourism to the Department where many people think it properly belongs—the Department of Trade and Industry, where there are Ministers who understand the concept of supporting an industry. I ask the Minister to realise that the industry really desires the Department for Culture, Media and Sport to do something to help it.

It is good to debate tourism in your presence, Mr. O'Hara, as you and I had a very happy visit, with the Inter-Parliamentary Union, to Athens last week, where we saw something of the Greek tourism industry and perceived the need to promote Britain abroad. I, too, congratulate the right hon. Member for Coatbridge and Chryston (Mr. Clarke) on securing the debate, and particularly on doing so to coincide with the World Travel Market. I agree with him and the hon. Member for Strathkelvin and Bearsden (Mr. Lyons) about film tourism. Television tourism is very big in Ryedale. After "Brideshead Revisited", the number of visits to Castle Howard increased dramatically. Some people in the villages affected would still say that we have almost more tourists than we want, because of the "Heartbeat" programme. My view is that that is a tremendous advertisement for North Yorkshire.

The well documented difficulties experienced by many tourism businesses in this difficult year still overshadow any debate on tourism. The right hon. Gentleman highlighted the losses. The English Tourism Council's estimate of losses from foot and mouth disease this year is £4.2 billion. Many of those losses will never be made up. That sum translates into the losses sustained by individual businesses and organisations. We all, I am sure, could tell of personal tragedies in our constituencies or, for those of us pursuing a tourism brief, in other parts of Britain. Today's news that the National Trust, which owns an important property at Nunnington in my constituency, has this year suffered losses from foot and mouth estimated at £7 million to £8 million, suggests the impact on many organisations.

Kate Mount and Christine Ames of New Forest Tourism have urged on me the point that in areas like the New Forest, where there was no outbreak of foot and mouth, the effect on tourism was nevertheless catastrophic because of a perception that people should not go there. It was almost as bad as if the disease had broken out. The losses were just as serious.

I fully endorse that. My experience in Ryedale was the same. We had only one foot and mouth case there, in the north-west part of the constituency, as part of the Thirsk cluster. However, the impact on tourism has been devastating because most of the tourism in Ryedale is rural.

Other hon. Members have spoken about the events of 11 September and yesterday's horrific accident. Today we should say only that we recognise the importance of putting across the message that the skies are safe and that we are doing all we can to continue to improve passengers' safety and security.

Tourism is a £64 billion industry. There were signs in the immediate aftermath of the foot and mouth crisis that the Government and opinion formers recognised the value and importance of tourism to the economy. That recognition has not been followed through with sufficient action and zeal, although I do not believe that that is entirely the fault of the Department for Culture, Media and Sport. The difficulty is in the Government as a whole, and particularly in the attitude of the Treasury. Back in the spring, it was mooted that the Government were considering making an additional £50 million available to the BTA and the ETC for promotion. In the end, only £18 million was provided, £14.2 million of which went to the BTA.

It is our view also that support for small businesses in many areas is inadequate. especially in the foot and mouth hot spots. The right hon. Member for Coatbridge and Chryston mentioned Cumbria, which I have visited three times. More could have been done to help, especially with interest-free loans, but the problem now is that many of these cash-strapped businesses will have to start making some of the deferred payments of rates and VAT.

The Government have been reasonably generous in providing additional funds for the British Tourist Association—I have already said that it has received £14.2 million. I warmly congratulate the BTA: its tourist promotion programmes show great ingenuity and originality. However, they need to be repeated again and again if we are to win back lost customers from overseas.

I shall concentrate on Government support for the domestic market— particularly that in England, which represents four-fifths of the tourist industry. Support for the domestic market remains inadequate; post-11 September it is even more likely that revival of tourism businesses will come essentially from domestic business and perhaps from the near continent. A further ferry link from Zeebrugge was mentioned; we have such a link in Yorkshire at Hull.

I agree with the right hon. Member for Coatbridge and Chryston—I have been saying so for the best part of a year—that the ETC must have a marketing role. It is nonsensical that the Government should still refuse to accept that fact. Funding for English tourism needs to be increased in order to catch up with that for Scotland and Wales. The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) said that Wales, Scotland and England are different; he is right, but tourism businesses in England look with envy at the resources that the Welsh Assembly and the Scottish Parliament are giving those parts of the United Kingdom.

Our regional tourist boards are doing an excellent job but they are underfunded. In recent weeks, Yorkshire and Humber regional development agency and other agencies in the north-west and the north-east of England have given additional resources to their regional tourist boards. That is a good example of what can be done. However, the picture across England as a whole is haphazard and inconsistent, which leads to the conclusion that, when it comes to government funding for tourism, England is the poor relation.

Despite the current crisis, the ETC has received no additional money since April, when it received its £3.8 million share of the £18 million that I mentioned earlier. At last night's BTA reception, people were asking me how the Government could find £20 million to keep open an empty dome but could not make additional resources available to support tourism in England. The £3.8 million that the ETC received gave a return of £27 for each pound invested in tourism. The Government therefore have a stake in the tax revenues that would result from increased tourism activity as well as from a reduced demand for social security support for the staff of failed tourism business who are laid off. That suggests that extra Government help for promoting tourism in England would be a good investment. Above all, it would have a beneficial effect on the hard-pressed rural economy. I commend the concept to the Minister.

The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) suggested that the Government should sponsor the industry. I cannot agree with him that it would make sense to put tourism in the arms of the Department for Trade and Industry. However, it would make sense if "Tourism" appeared in the title of the Department for Culture, Media and Sport—a suggestion that was made in the Conservative party manifesto. One of the reasons why I do not agree with the hon. Gentleman is that, having been the shadow Minister in this area for nearly two years, I know that the present Minister, his predecessor and Department officials are sympathetic to some of the thoughts that I have expressed today. I hope that the concerns that have been expressed during our debate will help the Minister and the Secretary of State in their battles with the Treasury.

The right hon. Member for Coatbridge and Chryston said that we wish the industry well. Indeed we do, but the industry needs more than good wishes. It needs practical help and support.

I join other hon. Members in congratulating my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) on securing this important debate. I agree with much that has been said about the importance of tourism. There is no question that it is a hugely important industry. It is interesting that we rarely debate tourism in Parliament. That is because Parliament never debates successful industries—it only ever debates failing ones. It is important to remember that we have had very few debates on tourism during the past 20 years because it is a rapidly growing, successful industry. I would be the last person in the world to say that we politicians should get our sticky little fingers on tourism and start making choices for the industry as though we know what is best for it. We do not know what is best for it. It has grown out of the entrepreneurial expertise of those such as the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), who are at the sharp end of the industry.

The industry has been tested in a way that it has never experienced before, first by the blight of foot and mouth and then by the effects of the terrible events of 11 September. The industry has been tested as hard as any has ever been tested. I have been to many of the places that have been mentioned today and seen the hardships, especially of micro-businesses, whose raison d'etre was to serve tourists on a footpath in, say, the northern fells of the Lake district. That is how they have always existed. There is no option for them to diversify into anything else. Once those paths were closed they were in desperate trouble.

I agree with many of the remarks made this morning, including those of the hon. Member for Ryedale (Mr. Greenway), who said that experience ought to have taught us something since last February and March about the importance of not making blanket statements about the countryside being closed and about the advice given to people not to go anywhere near paths that they may have walked on for many years. The question is complex. Only this week I have heard discussions on radio programmes and on television during which farmers have complained about the right-to-roam legislation. There will be big debates about whether people can go on certain parts of our hillsides and farms.

The issue is not one-sided. The National Farmers Union wanted the culling of animals. It wanted people to be prevented from going on our countryside. We should remember that it was not only the Government. It was, to say the least, an extraordinarily steep learning curve, and great mistakes were made that had a serious effect on the industry.

My right hon. Friend the Member for Coatbridge and Chryston is right in saying that that should have taught us about the nature of the industry. The industry generates huge amounts of revenue and it is labour intensive. It demands skills and is a great provider of them if things are done properly. Most importantly of all, it is sustainable in a way in which so many of those industries that were closed in the 1980s and 1990s, such as coal mining and shipbuilding, were not. That is the difference between those industries and tourism.

The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) is right to say that we must up the game and play to our strengths. That means, above all, that we must train our young people. We must go further than that; we must give them a real belief in the industry—that it has a future. We are the only major economy that I know of anywhere in the world in which to work behind a bar in a pub or to serve at a table in a restaurant is regarded as a second-rate or third-rate job. In France, Germany and Italy, those skills are regarded as key, but by kids in our schools such jobs are regarded as something that they might do only if they can get nothing else or want to make a few bob on the side to see them through to some other career.

We have to get real, and that will demand a great cultural change. The hon. Member for Ryedale is right in pointing out that the word "tourism" does not even appear in the title of the Department of which I am proud to be part, although it is a business with a yearly turnover of £64 billion. That is symptomatic of our perception of it as a not entirely serious industry. I am glad that hon. and right hon. Members have made that issue clear.

I could argue about the sums made available and the arrangements in place for the support of tourism in Britain, but instead I Will shock my colleagues by saying that I agree with much of the criticism. It was a mistake to take the marketing role away from the ETC, and we must put that right, although it will take some doing. We must not react to the crisis in the industry in a knee-jerk way, because this is tourism's big chance. The spotlight is on tourism in not only rural areas, where no other employment exists for those who are suddenly without a livelihood, but London, which is the greatest city in Europe. Central London was hit harder than anywhere else in Britain by the first foot and mouth outbreak and the terrible events of 11 September.

I am glad that we are beginning to get the agencies together to tackle these issues in a co-ordinated way, because all too often the response in the past has been fragmented. We must consider carefully the configuration between the ETC, the BTA and regional tourist boards, including those in Wales and Scotland. No one has mentioned Northern Ireland, but it is an interesting case. It realised some time ago that its fate as a tourist destination was bound up with the phenomenal success of the Irish Republic, and it has made great strides in developing links.

I take on board everything that my right hon. Friend the Member for Coatbridge and Chryston said, especially on avoiding pessimism, which the hon. Member for Meirionnydd Nant Conwy repeated. The current issue of "Travel GBI " says:

"Tourism business in the UK showed a dramatic upswing last month in what many in the industry feel is a foretaste of things to come in 2002."

The article went on to mention a group that had

"enjoyed a 'hugely successful' 2001 season."

When I was in Taunton last week, the chief executive of the south-western tourist board, which is our most successful regional tourist board, described the situation as serious but said that for many businesses in the southwest this was the best autumn for 20 years. He said that some resorts were reporting the best season that they had on record.

As several right hon. and hon. Members said, the impact has been patchy. Some places have sustained themselves well while others have done poorly. No matter where we are, we must up the game and play to our strengths in delivering a product that is much better than the one we have delivered up to now. The hon. Member for Caithness, Sutherland and Easter Ross was right to say that we should not talk ourselves down. We have some superb establishments and we should do all that we can to publicise them and to spread best practice. Wherever I go in the country, everyone tells me that there is a shortage of good chefs. That fact is an indictment of the way in which we have approached education and training. We must give the industry a much better name and ensure that we learn from this crisis and build on our strengths. I am positive that we can go from success to success and that the industry will in future be a great one—as great as it has been in the past.

I am delighted that so many hon. Members have joined us for the first of two debates today on Railtrack and the Secretary of State for Transport, Local Government and the Regions. We also have an interesting Select Committee meeting on the subject tomorrow.

Over the weekend of 5 to 7 October, the Government engaged in an act of confiscation without compensation against Railtrack. Until recently, Railtrack was one of the top 100 quoted companies in the country. By their action, the Government precipitated one of the largest ever corporate failures in the United Kingdom. The events leading up to that weekend and the role of the Secretary of State are the subject of a major debate in the House this afternoon. The motion in the name of my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith), which I enthusiastically support, condemns the Government and the Secretary of State and calls on the Secretary of State to resign his post.

In our debate, I shall concentrate on the implications of 7 October, when the order that put Railtrack plc into railway administration was made. The actions of the Secretary of State over that weekend have made the problems of the railways far worse for the travelling public, those who work for Railtrack and the taxpayer. The travelling public are faced with a long period of uncertainty during which vital decisions on investment will be delayed. The situation for those who work for Railtrack is even worse. More than 10,500 of Railtrack's 12,000 employees are angry and disillusioned, having lost £1,000 or more each from their savings in Railtrack shares. One signalman, a lifelong Labour supporter—but not any more—has lost £33,000. The Conservative party regards those shareholders as loyal employees of a company providing a vital public service, while the Labour party's view is to condemn them as naïve, greedy and deserving of the fate that has befallen them. The Liberal Democrat party, in the words of its amendment on the Order Paper, "regrets the confusion arising".

It is more than confusion; it is confiscation. Indeed, some shareholders draw a parallel with the confiscation without compensation that President Mugabe resorted to against white farmers. The Government of Zimbabwe regard the mass trespass of their supporters on to private farms not as a threatening act but merely as the logical consequence of refusal to do as instructed—the same defence used by the Secretary of State in countering charges that he threatened the Rail Regulator. Fortunately, in this country the rule of law and parliamentary democracy still function, and that is why aggrieved Railtrack shareholders are intent on seeking compensation through the courts, while the independent regulator and the chief executive of Railtrack have spoken out fearlessly against the actions of the Secretary of State.

I ask the Minister a simple question: how can one run a better railway by making employees angry at their betrayal? I will give way to the hon. Gentleman if he wishes to reply to that now—or perhaps he will reply to it at the end of the debate. The answer, of course, is that one cannot do that While the Government claim that they want to run a better railway, they have betrayed its key stakeholders: the people who work for it. Significantly, the Government have not mentioned the people who work on the railway in their public statements since 7 October. Indeed, not only have employee shareholders lost out, but so have many other small shareholders, either directly or through holdings in pension funds. Who will pick up the bill for the loss of investor confidence? It will be none other than the taxpayer.

We have heard that American fund managers, far from being attracted to invest in the railways, will stop investing as a direct result of what the Secretary of State has done. Franklin Mutual of New Jersey, which has one of the largest holdings in Railtrack with 4 per cent. of the shares, said that the Secretary of State's political decision to force the company into administration has changed for ever its involvement in the British market.

Fund managers would say that.

If the hon. Gentleman wishes to expand on that, I shall give way to him. Franklin Mutual is absolutely right. It runs an investment organisation and realises as a result of the Government's action that they can no longer be trusted. David Winters, Franklin Mutual's portfolio manager, said:

"An injustice has been done. We did not expect the UK to do something like this. If the Government is willing to do this, it sets the tone for the entire market. A bigger risk premium is to be attached to investing in British companies now."

That is not only the American view. The director-general of the Confederation of British Industry said on Sunday:

"The capital markets like stability, they don't like surprises"

They had no stability and a lot of surprises when all this happened.

Without private sector investment, the Government's 10-year transport plan for the railways is unachievable. To deliver a "bigger, better, safer railway" requires £60 billion. It is common ground, at least between the Government and the Conservative party, that all that money cannot be afforded by British taxpayers.

The Secretary of State led us to believe that placing Railtrack into administration reduces the burden on British taxpayers. Is it not odd, then, that on Sunday a senior official in the Department for Transport, Local Government and the Regions said:

"The relationship between the Department and the Treasury is the worst I have ever known. It is very sour indeed."

That official reported that the Secretary of State had become so isolated from the Chancellor that he had had to enlist the help of the Deputy Prime Minister to obtain a more sympathetic hearing. As someone who once served as a Transport Minister, I can only say that if the relationship between the Department for Transport, Local Government and the Regions and the Chancellor of the Exchequer is worse than ever before, it must be dire indeed.

It would be extraordinarily out of character for the Chancellor of the Exchequer or any Treasury Minister to be at odds with a Secretary of State who had just taken a course of action to save taxpayers' money. The perception in the Treasury and elsewhere is that taxpayers will have to foot a much larger bill as a result of railway administration. The implications extend not just to investment in Railtrack and the railway infrastructure, but to all the Government's public private partnerships. Last Sunday, the Independent on Sunday printed an article under the headline, "Railtrack collapse might cost British taxpayers an extra £7.5bn." The article included a reference to whether we would receive the investment, and at what price, in the public private partnership being arranged for the London underground. It seems that the price will be significantly above what it would have been before the Government's actions on 5 to 7 October.

Under the Government's 10-year transport plan, the Strategic Rail Authority is responsible for using public funding to attract private sector investment to enhance the railways. How will Railtrack administration facilitate that objective?

The Secretary of State recently appointed a new chairman of the Strategic Rail Authority at an annual salary of £250,000 for a five-year contract. Has his remit changed from that of his predecessor and, if so, in what way? The glossy leaflet produced jointly by the Strategic Rail Authority and the Office of the Rail Regulator in May this year stated:

"The Strategic Rail Authority sets the overall strategic vision, brings together passenger and freight interests and ensures that passenger services, fares and other interests are controlled and protected in a way that provides better value."

Nine months have now passed since the Strategic Rail Authority started operations, but it has not yet produced a strategy. A strategy document has been promised for this month. I hope that the Minister can tell us this morning when it will be published and whether it will address the issue of how the strategic objectives will be furthered by putting Railtrack into administration. There are rumours that the document may be published in a truncated form and issued subject to review, which would not be of much use in setting a clear strategy for the railways.

What about the role of the Rail Regulator? I asked the Minister to explain how the Rail Regulator will fulfil his principal statutory duty to regulate Railtrack's stewardship of the national rail network now that it is in administration. The Rail Regulator is statutorily independent of the Government. Parliament invested him with a range of statutory powers under the Railways Act 1993, as amended by the Transport Act 2000 and the Competition Act 1998. His job is to ensure that Railtrack's income—a combination of private finance and public subsidy that is set by the regulator—is spent on the right things at the right time.

The Rail Regulator has not been without his critics, but he has been a vital servant of customers. As the glossy leaflet to which I have referred makes clear:

"By using his powers proactively, proportionately and fairly the Regulator is helping to create a better railway for passengers and freight customers."

How can investors in any company that emerges from the Railtrack administration be assured that the Rail Regulator will not be second-guessed and threatened by the Secretary of State? Does the Minister accept that the Secretary of State's actions on 7 October have destroyed at a stroke the credibility of the Rail Regulator's independence? Is it not obvious that the role of a regulator will vary greatly, depending on whether the company that takes Railtrack out of administration is a not-for-profit company or a for-profit company?

The administrator is legally independent of the Government and is obliged to consider all offers for the business on their merits. However, how can companies and organisations interested in taking Railtrack out of administration be convinced of the administrator's freedom of action? In his initial statement following the railway administration order, the Secretary of State made it clear that he was wedded to the creation of a not-for-profit company staffed by a miscellany of Government toadies. At that stage, the Secretary of State had it in mind that the chairman of Railtrack would be one such toady, but it was great to discover that he was not to be seduced in that way.

My hon. Friend has hit on a very important point. Bearing in mind the vicious way in which the Secretary of State attacked the chairman of Railtrack in his statement to the House a few weeks ago, is it not surprising that he was the first person to come to the Secretary of State's mind as chairman of the new company?

My hon. Friend is absolutely right. The Secretary of State is behaving in an extraordinary way. He is making many enemies among those who have made career changes in order to do their best to provide a good railway for our country. When they do not do as the Secretary of State insists, all they get is abuse. The issue is one of trust in the Secretary of State. When he decides, under schedule 7 to the Railways Act 1993, whether to accept the administrator's proposals, he will be judge and jury in his own favour on his own pet proposal.

On 23 October, the Secretary of State told the House that

"it will ultimately be for the administrator to assess and make recommendations on proposals for the transfer of Railtrack's assets out of administration, as a going concern."

That was an accurate statement. However, he continued:

"Under schedule 7 of the Railways Act 1993, I will have to approve any such transfer. However, there is every possibility that"—

as recent press coverage has made clear—

"there will be more than one proposal before the administrator. The Government and I welcome that."—[Official Report, 23 October 2001; Vol. 373. c. 163.]

Like hell they do. The Secretary of State said from the outset that he had a proposal, and he implied that it would be implemented immediately on commencement of the administration.

For how long will the administration continue? I am told that it may be for at least a year, during which time it will cost an enormous amount of money. In effect, the same people will be running Railtrack as before, with the exception of the four administrators from Ernst and Young and one other person.

What are the implications for the administrator's freedom of action? For example, what freedom is he being given to reduce the staff overhead, which Railtrack had been preparing to announce in October? Is the £800 million that has been allocated to keep the administrator in funds the only payment that he will receive, or will there be more? Are those payments coming from the DTLR budget or from the contingency reserve?

When will a new business plan be produced? When will a prospectus be prepared? How is the anger of 10,500 employees who have lost their savings to be assuaged? The Government are talking about special purpose vehicles. How will that safeguard the west coast line project? How will not-for-profit companies be able to create surpluses? All the statements by the Secretary of State suggest that they will be able to create surpluses and will not be at risk of making any losses. The only way in which they can create surpluses is by charging more for access to the tracks. Where are the upgrades to come from, and how are they to be financed? How will the risks of performance and train operator compensation be handled through special purpose vehicles? The Minr needs to answer a whole host of questions.

As the hon. Gentleman draws to a conclusion, I wonder whether he intends to refer at all to the customers of Railtrack, as so far he has not done so. Is anything to be gained by customers or taxpayers from bailing out an incompetent company, and what price is he prepared to pay for that?

I did refer to customers and to taxpayers; perhaps the hon. Member for Vale of Glamorgan (Mr. Smith) was preparing his notes for his own speech. I am keeping mine shorter than the normal 20 minutes because I know that many hon. Members want to join in.

I want to concentrate on the way ahead.

Will the hon. Gentleman give way?

No. Those who work for Railtrack, private sector investors and taxpayers all have a role to play in solving the problems precipitated by the Secretary of State. One thing above all is clear: there will be no solution without his resignation.

The first thing that I want to say is that the Secretary of State's decision was the right decision, a brave decision and a hard decision. The alternative proposed by the Opposition is to drip-feed, unsustainably, a casualty that was on a life-support system.

In the run-up to 1997, when the Conservative Government were facing inevitable election defeat, they sold off Railtrack at a fraction of its value—around £2 billion, although the markets valued it at around £8 billion. That is acknowledged by the Public Accounts Committee. That enormous rip-off cost every taxpayer about £100—let us put shareholder loss in the wider context of taxpayer loss. The public were left not only out of pocket but with an unco-ordinated and fragmented mess and an absurd corporate structure. People have talked about false markets. Railtrack consisted of Government money—taxpayers' money—that had been paid to it. Some of that money could be lifted out for shareholders and some of it was invested in services, but the focus on cost reduction inevitably led to difficulties on the safety front.

I remember seeing the headline of an article in the trade press in which Railtrack put the case that signal investment did not make business sense. It made safety sense, but it did not make business sense to Railtrack's incompetent managers. When I say "incompetent managers", I am, of course, referring to Mr. Winsor's testimony to the Select Committee on Transport, Local Government and the Regions:

"At my first meeting with the Secretary of State after the election, I said I believed that the core problem of the railway industry was the competence of the management of the company"—

Railtrack. When Mr. Winsor was asked why Railtrack chose to turn to the Government, rather than to him, for help, he replied:

"I have no duty or inclination to give taxpayers' money to the company to make up for it being inefficient and incompetent. It is possible that the company thought that if I would not give them money for being inefficient and incompetent, maybe the Government would. I think that would be an extraordinary judgment for the company to make".

His view was that there was incompetent management in an unsustainable and crazy false market.

If Railtrack was badly structured and incapable of delivering success, why did the Government choose to make it the principle investment vehicle in their 10-year plan?

The 10-year plan was predicated on our starting point. However, we are moving toward a stakeholder model. A non-profit making corporate governance will bring together the various stakeholders who were in the business of blaming each other for our shambolic railway system. The shambles was caused by the previous Government's under-investment combined with an absurd and unsustainable corporate structure. We shall move toward train operating companies, the Strategic Rail Authority, customers and employees working together for a better future that will be supported by record Government investment, which is something that we did not see when the Conservatives were in government.

I am concerned about the hon. Gentleman's political career. Earlier, he rebuked the Deputy Prime Minister for suggesting that safety had not been compromised under privatisation. Will he clarify those remarks? Was the Deputy Prime Minister wrong?

Perhaps the hon. Gentleman can explain what he means.

The hon. Gentleman said earlier that safety was compromised under Railtrack and privatisation. The Deputy Prime Minister went out of his way in the House to say that safety had not been compromised under privatisation. The hon. Gentleman clearly feels that the Deputy Prime Minister was wrong. Will he clarify his remarks?

The Deputy Prime Minister will stand by his remarks. The regulator requires the system to be safe, but in a private corporation such as Railtrack there is evidence, which I quoted, that there is a trade-off between investment and shareholder needs. Investment in signals, which is an overhead, has a bearing on safety. There has been an on-going discussion about signals, investment and time scale. It would be silly to suggest that there was not a trade-off between investment and shareholder needs.

The Government inherited Frankenstein's monster. To pretend that that will scare away investors in the private market is to misunderstand that market. There is no doubt that the hon. Member for Christchurch (Mr. Chope) has correctly quoted American fund managers. If one can, one will invest in what appears to be a risk-free corporation. If one can buy shares in the knowledge that the Government will always bail one out, one will invest more money. Compare that with, for instance, private finance initiatives, of which the Government have completed more than 100. On 26 November the National Audit Office will publish a report on the relative success of all those projects.

I will not run through all the questions, but one was about the level of risk transfer and added value. There is not much risk transfer if the corporation thinks that it will be continually bailed out by the taxpayer. That was the false market of Railtrack—the absurd monster that was created by the Conservatives, who sit here smirking. I presume that their policy would have been to continue to drip-feed that monster never-ending amounts of money simply to support their prejudice. The British public know that that would not be the right thing to do, although it would be the easy thing to do. We have done the right thing, which is to issue no blank cheques. I know that the hon. Member for West Derbyshire (Mr. McLoughlin) wants to offer £1 billion from his coffers.

I should like to take the hon. Gentleman back to what he was he saying about safety. It is important that this point is not misunderstood. Does he say that the Health and Safety Executive has failed in its duty on railway safety over the past five years?

No, of course I do not. I simply say that Railtrack is losing confidence and has issued press releases saying that various investments in safety matters did not make business sense. That is clearly borne out by the cuts that Railtrack has made. It seems rich that in his opening remarks the hon. Member for Christchurch said that the workers had been betrayed on the issue of costs, yet a moment later he asked the Minister to clarify what facility there was to reduce the staff overhead as Railtrack planned. In his opening remarks the plan was to look after the workers, yet later it was to sack half of them to reduce overheads. That is ridiculous.

In 1996, as we approached privatisation, the Conservatives adopted a scorched-earth approach. The idea was to sell off a publicly-run industry at any price, just to get it out of the system so that it could not be publicly accountable or represent value for money again. We have managed to turn that round. We have got rid of the system that I have described in which a corporate intermediary pays Government money to shareholders while cutting investment.

There have been horrendous failures in rail safety such as at Paddington and Hatfield. It was notable that the then chairman of Railtrack, Gerald Corbett, who had apparently been running a very safe system, closed it down to change all the tracks. We are led to believe that until that point the system was safe, yet all of a sudden he had to close it down and then he resigned and ran off to India to go on a diet, having been given an undisclosed amount of money. We are supposed to support that system of secrecy. The same week that Gerald Corbett went off to India with his massive pay packet, Kevin Keegan, another well-known figure, resigned because he was not doing his job properly. He did not take any money with him. The whole system was absurd.

rose—

I shall give way to the hon. Member for Epsom and Ewell (Chris Grayling), as I should like him to comment on how that step change took place overnight.

I thank the hon. Gentleman for giving way again. This is a hugely important point. Is he aware that Lord Cullen made two very clear statements in his second report—first, that the nature of the privatisation of the railways did not have an adverse effect on safety and secondly, that the railways have continued to become safer since privatisation? None of us feel anything but the deepest horror and shock about the accidents at Ladbroke Grove and Hatfield, but they are not typical of the safety trends in the rail industry.

There certainly have been fewer fatalities and greater safety over time. My point, as the hon. Member for Epsom and Ewell will know if he was listening, was that the chairman of Railtrack was in charge of a system that was apparently completely safe, in the aftermath of Paddington but decided to close down the rail industry because it was not safe. Either it was safe or it was not. I respect what Lord Cullen said, but it is strange. He said, too, that in the immediate aftermath of the sale there should not necessarily have been a systemic reason for safety problems. It is bizarre to say, "This is a completely safe system," and at the same time say also that it is fair to close it down because there are problems with the track.

Will the hon. Gentleman give way?

No. I will move on, as other hon. Members may wish to speak.

The previous Administration had no record of building public-private partnerships or levering in private money; they sold off our assets on the cheap. However, there is an enormous groundswell of investment from this Government. The Conservative policy on the tube was simply to sell it off, but when the private sector cut costs and services and raised fares to maximise profit, there would have been a problem again. The Opposition have no understanding of the culture of public-private partnership and bringing the best to bear in terms of risk transfer and added value; to them it is a matter of selling the industry to the market and perhaps having to bail it out. That is not what the public want, and their verdict at the election made that clear.

The Conservative focus on the issue is non-strategic; the Opposition are not addressing the strategic interests of a customer-driven rail network in the new millennium. They are interested only in the tittle-tattle of who said what in a meeting. That is all they talk about in the Tea Room. What the public want to know is whether they can get on a train, and whether they can have an environmentally sustainable fast system that works for Britain. They were let down by 20 years of under-investment and the virtual destruction of the rail system as the Conservative forces backed away from the public, who threw them out on their ear.

We are now rebuilding a new corporate governance to bring together the different parts of the rail industry to work with a public investment commitment that has never been seen before. That will renew the culture of working with the private sector, perhaps on project-based delivery to provide the best value for money and the best quality for customers. Workers, customers, Government, business and environmentalists will clap their hands and welcome this great change.

I wish the Secretary of State the best of luck. I am sure that he will not be distracted by the rubbish, tittle-tattle and trivia of Conservative Members, who will stay in opposition for many years to come.

rose—

Order. It may assist the many hon. Members who want to participate in the debate to know that the winding-up speeches will start at 12 o'clock and the Minister must be called not later than 12.20 pm.

The speech of the hon. Member for Croydon, Central (Geraint Davies) was typical of Labour contributions to debates on the railways: they simply retell history and give no reason why, if what happened was so catastrophic, they did not do something at the start of their Administration, rather than wait for four and a half years. They claim that they are doing something decisive, but they are merely reacting in panic to events to which they have contributed.

The second aspect of the Government's lamentable performance since they came to office is that they have simply dumped everything on the Railtrack management and staff in a disgraceful manner. They inherited the innovative and new structure of Railtrack and the operating companies when they came into office. They had the opportunity to nurse it and to achieve the good management that would have delivered better service and, crucially, retained private sector confidence so that private money could be levered in, as was intended all along.

The hon. Gentleman talked about the Government's expertise and success but totally ignored the fact that my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) created the present structures. He introduced the public-private partnership and the private finance initiative, and was extremely successful in dealing with prisons, roads and motorways. That happened well before the hon. Gentleman was even a Member of the House of Commons, and he should not rewrite history in the way that he did.

It is worth telling the hon. Gentleman that, as leader of Croydon council, I oversaw the tramlink public-private partnership. We started discussing the issue in 1986 and it went through the House under the previous Conservative Government. The idea that I have no hands-on experience of projects worth hundreds of millions pounds is quite false.

I accept what the hon. Gentleman says about tramlinks, which are an excellent idea. He should not, however, distort the history of the private finance initiative and public-private partnerships, which were well advanced before a Labour Administration ever thought of them. The Government have simply carried on with the good aspects of Conservative Government policy but, sadly, they have failed to take advantage of some initiatives.

When they came into office, the Government had an opportunity to manage the situation in a way that would have produced better results for those who use trains regularly or take long journeys and for employees—my hon. Friend the Member for Christchurch (Mr. Chope) was right to focus on those groups. The Government had an opportunity to make the industry viable but, sadly, they failed.

We are where we are today because the Government failed to take the opportunities offered by the innovative and new structure that they inherited from the Conservative Government. They have totally failed, and it is apparent to all concerned—Members of Parliament, railway users and Railtrack employees, who are undoubtedly angry—that the Secretary of State is in a mess.

In a spirit of fairness, I fully accept that the railway management cannot entirely escape blame. It did not always live up to its operational responsibilities in the way that we would have wished. Equally, the Rail Regulator cannot entirely escape blame for some of the things that happened. He gave punctuality and regularity of service too much priority over safety, which gave Railtrack wrong incentives, for which we have paid. However, when anything has gone wrong in the past four and half years, Ministers have regularly and repeatedly dumped all the blame on the Railtrack management—the executives and board—like a shot.

I know Railtrack well because I represent a commuter constituency in outer London, and I have often talked to Railtrack and Connex, which is my local operator. I know that their morale has suffered because repeated and unfair Government statements have dumped all the blame on them. Even this summer, when I last talked to Railtrack, it thought that things were beginning to come round post-Hatfield. Indeed, Tom Winsor, the rail regulator, said that things were beginning to move in the right direction, that some major problems had been resolved and that those involved were close to getting things right—but then the right hon. Member for Tyneside, North (Mr. Byers) became the Minister responsible for the issue. From his point of view, it is probably unfortunate that he, as a law lecturer with no experience of management, has been put in jobs that demand some understanding of the role of management. People often think that management is simple, but it is quite difficult and requires skills and experience. In a previous incarnation, the Secretary of State completely messed up the BMW affair, and he has messed up again now.

A propos the remarks made by my hon. Friend the Member for Christchurch about the relationship between the Treasury and the Department for Transport, Local Government and the Regions, it is probably true that a Blairite Minister was confronted with a Chancellor of the Exchequer who was not always his best friend.

The Under-Secretary of State for Transport, Local Government and the Regions, the hon. Member for Plymouth, Devonport (Mr. Jamieson), knows that a Treasury Minister should be in the Chamber as well, because the Treasury is, to a considerable extent, to blame for some of the problems that have occurred in the industry. In relation to London Underground and Railtrack, the Chancellor of the Exchequer's attitude has not been fundamentally posited on giving a better service to users and a better job to employees. He has simply considered the subjects from a narrow Treasury point of view.

It is sad that what has to be done with Railtrack was already beginning to be done. It needs to be run in a decentralised way, with the organisation structured so that it can respond sensibly to the investment needs of operating companies.

After privatisation, had passenger numbers on railways not reached a post-war high? Passenger numbers, investment and safety levels were increasing. Now there is a complete lack of confidence in the railway system. Surely my hon. Friend's constituents want increased investment in the railways and some hope that their rail service will improve.

My hon. Friend is right to stress hope. The present situation is disastrous. I talked this morning to servants of the House, some of whom are my constituents. They said that their train was late every day last week as they came to work. Such problems are regular. Overcrowding is severe and safety remains a problem. People want hope, but at the moment they have no hope. Hope has receded as a result of the measures taken by Ministers.

The company could have been nursed into life, but now we face total uncertainty. We do not know whether a not-for-profit company, another private organisation or something else will succeed Railtrack. There is huge delay. What will happen to schemes that my local Connex rail managers had banked on to improve problems such as overcrowding and regularity? For example, there were schemes to invest in platform lengthening and signal re-siting so that the trains could carry 12 coaches rather than eight or six, which could mean that more people were carried in greater comfort and with greater regularity. That is what commuters in Orpington want.

The hon. Gentleman talks about a lack of investment. Will he confirm that on 18 February. long before the Secretary of State's action, Railtrack announced that it was slashing its major project budget?

I am not familiar with that fact. A report in The Observer made the point that

"Improvements worth billions of pounds for Britain's ailing rail network are to be put on hold indefinitely because of the Government decision to force Railtrack into administration."

They had not been put on hold before that. I have talked to Connex South Eastern, my local rail operator, which was to have talks in September about the schemes that I mentioned—platform lengthening, signal re-siting and so forth—to improve the capacity of trains. Those talks have been postponed because Railtrack was put into administration.

The report in The Observer continued:

"Industry sources have told The Observer that modernisation schemes for struggling commuter lines, improvements to mainline routes between cities and track maintenance to reduce delays will have to be put off because of worries about the railways' future."

It suggests that the delay will be between six months and two years, so I disagree with the hon. Member for Bath (Mr. Foster). A package was clearly emerging for my local rail operator, which is the only one about which I can confirm anything, but all that has been put into the future.

I have pressed the Minister on such matters before and I will do so again. I want to know when there will be clear investment plans that will benefit the users of the railway. I also want to see the commuters into central London getting proper priority against the more visible main line track improvements. London is one of the great wealth creators of the country, as I am sure the hon. Member for Croydon, Central will agree. I will continue to press the Minister, because transport under this Government has been a disaster. Jonathan Porritt, appointed by the Government as chairman of the Sustainable Development Commission, singled out transport as the biggest area of total disaster under this Government when he made a speech at the beginning of this year in the presence of the Minister for the Environment and others.

Transport. whether one examines the case of Railtrack or that of London Underground, has gone backwards under the Government. We are now work off than we were five years ago, when progress was being made. That is a disgrace, and I am delighted that my hon. Friend the Member for Christchurch secured this debate so that we could discuss these important issues.

I will keep my contribution as brief as I possibly can, Mr. O'Hara, to allow other Members to speak.

A specific aspect of the placing of Railtrack in administration was featured on the front page of the South Wales Echo last week. The newspaper pointed out that we have been assured by the Secretary of State that, under any new arrangement anticipated by the Government, the Vale of Glamorgan railway line will be reopened for a passenger service at the beginning of 2003. That will be the largest single investment in railways in Wales since the days of Beeching. The service will be fine and passengers will flock to it and be able to catch the train, which will now run from Barry all the way to Bridgend, to stations in Rhws and in Llanilltud Fawr. If we are lucky, it will run to Llandow, but we will have to wait and see.

My other point is one that I did not anticipate making until I heard the speeches of Conservative Members. Sitting here, I wondered what sort of "Alice in Wonderland" world we were living in. I never thought that we would hear Tory Members, with their alleged commitment to the private sector and their ideological commitment to free enterprise and the market, defend a clearly incompetent company. Mr. Winsor made it clear, in his evidence to the Select Committee, that the company was incompetent and believed that if it could not keep going back to the regulator for more money, it could go straight to the Government and demand whatever it wanted for as long as it wanted.

Railtrack believed that the Government would carry on pouring money into a black hole, irrespective of the outrageous record of this allegedly private company. I have had the privilege of managing a limited company and recognising the commercial disciplines of answering to its shareholders and—most important in any successful company—meeting its customers' needs. If a private company fails to meet its customers' needs, it will never satisfy its shareholders. Yet Conservative Members want to bail out a failing company. Until now we have not heard a figure, and I hope that at some stage in the debate they will tell right hon. and hon. Members exactly how much taxpayers' money they would be prepared to use to bail out a failing private sector company. Will it be £1 billion extra to bail out their shareholder friends, or £1.5 billion, or £2 billion?

I look forward with interest to hearing what price a party committed ideologically to privatisation and the success and achievement of the private sector is prepared to pay to bail out a failing private sector company. I have never heard anything so absurd in my life. Somehow, the Opposition suggest, confidence in the private sector and private-sector partnerships will be regained by a massive taxpayers' bail-out, but that is not how the private sector works. If investors see that money is being pumped in to bail out a failing company, they will desert that company as surely as night follows day. Exactly how much taxpayers' money should be spent on bailing out an incompetent company?

I picked up a point from this morning's debate that is important for the people of this country. What alternative do the Opposition propose? We have heard no alternatives apart from some fuzzy reference to a decentralised organisation—a suggestion that came from a member of a party that created one of the most centralised, centrally planned and inefficient structures ever seen. Let us hear of an alternative. And what of their crocodile tears for small shareholders? They do not give a damn about small shareholders—they care only for the institutional shareholders, who are now crying out because the company that they invested in, which has been a total failure, is not going to be bailed out indefinitely. I am glad that that company will not be bailed out indefinitely, and the sooner we replace it with a new structure that puts the customer first, the better. I recognise the interests of stakeholders at every level, but services must be customer focused or they will not succeed. That must be top of the agenda.

Does my hon. Friend think that the Opposition might move towards privatising the industry again, given that it originally cost £6 billion, which, along with the £1.5 billion compensation package, comes to quite a lot of money? Everything added together comes to a total of £13.5 billion. Does he think that they will propose privatisation again, as it was clearly such a good idea?

My hon. Friend makes an interesting point. After this morning's contributions from the Tory Opposition, I would think them capable of doing it again. The company was privatised in an ill-considered way and was given a huge advantage when the taxpayer was ripped off by its undervaluation. It was given a huge capital base to work from as well as revenue support from central Government. The fact that it failed so badly only shows how incompetent the company was.

The regulator has been mentioned in the debate—specifically, the disagreement between the regulator and the Secretary of State. That does not bother me so much; what interests me is that the regulator said that the company had neglected both its assets and its customers. I think that he was right.

I think that the hon. Gentleman needs a little break—and to keep taking the tablets. Does he think that lambasting the private sector as he is doing will make it more or less likely that it will invest the £30 billion that the Government need for their 10-year plan?

The hon. Gentleman has no idea what he is talking about, unfortunately. Unlike him, I have worked for the private sector and for a limited company. I know how the real world works. I am not running down the private sector—far from it. The private sector will see through the Conservative party's ridiculous proposals quicker than anyone else.

The structure of any future company must be customer focused and customer driven. From my limited experience I suggest that, whatever formula the Government devise for partnerships, they recognise their strengths and weaknesses and the fact that one cannot make the private sector do what it is unable to do. It is driven by a commercial imperative, so they should ensure that any accountabilities and responsibilities belong to the relevant part of the partnership.

Similarly, one cannot ask the Government and the public sector to do what they cannot do. The successful formula is one that demarcates responsibilities clearly and gives the two sectors the freedom to do what they do best without interference. If that formula is used we can look forward to the outcome, as it will deliver a service to the hard-done-by train passengers, who have suffered for so long.

I want to make a point that has been overlooked in at least two contributions to the debate. There is a difference between a not-for-profit company and a non-profit-making company. It is wise not to confuse the two. We should strive for a not-for-profit company that is organised on clear commercial lines, but is customer driven.

I thank the hon. Member for Vale of Glamorgan (Mr. Smith) for keeping his remarks brief and leaving me three minutes in which to speak.

On 18 June, the Secretary of State said:

"I am not going to embark on big structural changes. What the industry needs now is a period of stability and certainty so it can concentrate on the vital job of delivering safe. reliable services for passengers and freight".

Two weeks later, he turned Government policy and the previous statements of the Strategic Rail Authority on their head by saying that he wanted to progress not 20-year franchises, but two-year franchises. Nine days after that was the famous meeting between him, his officials and John Robinson, the chairman of Railtrack, at which there was or was not, depending on whom one believes, a discussion about Railtrack's viability as a business.

The dominant issue over the past three months is whether Railtrack was really insolvent or whether the Government attempted to push it into insolvency to deliver nationalisation at no cost. If it was insolvent, what happened between May and October to make it so? There is no evidence of any major adverse financial developments. The financial results due at the end of October were likely to be in line with market expectations, so what problems did Railtrack face?

The first problem was that the regulator's review had offered the company an increase in spending for repairs, renewals and operational expenses for the next five years from £12.9 billion to £13.3 billion. That is extremely little, given the huge challenge that Railtrack faces if it is to cope simply with the increase in passengers during the past five years, let alone the Government's target of a 50 per cent. increase in the next 10 years.

Another problem concerns Renewco, the company agreed by the Government to be established as an alternative vehicle for some of the investment finance. It was due to be set up in June, but it was delayed and delayed and never happened. The £162 million grant that was supposed to underpin the next stage of investment never appeared. Then the Government scrapped their own regulatory system to remove any option that the industry had to sort out its financial predicaments.

On what information did the Secretary of State act? He did not talk to the Strategic Rail Authority, the regulator or, I suspect, the Minister. So who was involved in the discussions? What due diligence was there with regard to the financial position? Did the Secretary of State really take his decision on the basis of a single meeting with the Railtrack chairman, or had he already taken it? Was he looking for an excuse? We now see investment plans on the shelf in all directions. I shall listen with interest to the Minister's comments about that and about what happens next.

Given what will happen later, I suspect that we are at the beginning of what can truly be described as groundhog day.

I listened with interest to the thoughtful and analytical speech of the hon. Member for Christchurch (Mr. Chope), whom I congratulate on securing this Adjournment debate. However, I remind him that one is in danger of losing the plot if one exaggerates too much. The hon. Gentleman went way over the top by comparing the Secretary of State's actions to those of President Mugabe in Zimbabwe. I noted with interest that his thoughtful speech neither acknowledged that significant problems needed to be tackled nor offered solutions.

I also noted with interest the sedentary suggestion that the hon. Member for Brentwood and Ongar (Mr. Pickles) would give us some solutions. We look forward to them. I understand that he will suggest the precise sum that should be invested. I have taken a small risk—

Order. The hon. Gentleman risks anticipating what other hon. Members might say.

I suspect that you might be right, Mr. Hancock. However, I have taken a risk and written down the sum to which I suspect the hon. Gentleman will refer.

There is no doubt that significant problems needed to be tackled within Railtrack. At least the hon. Member for Orpington (Mr. Horam) was prepared to acknowledge that there were some problems with the management of Railtrack. There were concerns about the golden goodbyes that various people were given. When he retired, one of the recipients, Mr. Gerald Corbett, was prepared to acknowledge that there were significant problems with Railtrack. There were concerns about the management and supervision of contractors, project cost overruns and the organisation's financial viability. As hon. Members will no doubt discuss later in great detail, Railtrack was placed on credit watch and its rating was reduced. We are all aware of its frequent attempts to go around Whitehall with its begging bowl and its plans to sack one in 12 of its staff. I do not entirely share the view, but there are concerns in some quarters that safety remains a problem, as the hon. Member for Orpington said.

Many of those who are close to what is happening are highly critical. The hon. Member for Vale of Glamorgan (Mr. Smith) referred to the critical comments that the Rail Regulator, Mr. Tom Winsor, made about Railtrack during his evidence to the Select Committee last week. For example, he said:

"They are the authors of their own misfortune."

He continued:

"The core problem is the competence of the management of the company."

He talked later of Railtrack's failure to look after both its assets and its customers. It was interesting to note from his answers that he had tried on three separate occasions to persuade Railtrack voluntarily to produce something as simple as a register of all its assets, but that it had not done so.

The train operating companies have been critical of Railtrack. The passenger figures for the four weeks up to 13 October have fallen by 2 per cent., which means that more than 2 million passengers have deserted the railways. Phil White is the chief executive of the largest train operating company, National Express, which has nine out of the 25 rail franchises. He has blamed Railtrack for much of the problem:

"Passengers are becoming increasingly frustrated at the number of speed restrictions still in place."

Railtrack has repeatedly given us dates by which the system will be back to normal. Time after time it has given us dates; time after time it has failed to deliver.

I was fascinated to hear from the hon. Member for Orpington that he had had discussions with Railtrack as recently as this summer, when he was told, "we are beginning to come round". We were promised that the problems would be over by last Christmas, but now we are told that the company is still coming round.

There were significant problems with Railtrack, and the Government had to make a decision. One solution, which was not sensible, was to continue to pour more and more taxpayers' money into this ailing and failing company. The time had come to pull the plug and to find an alternative way forward. Let us remember that Railtrack's advisers calculated that there were only three options: to restructure, to renationalise or to put the company into receivership. The Secretary of State's decision was correct. For far too long there has been an obscene conflict in a monopoly between shareholder profit and passenger safety; it had to be brought to an end.

Does the hon. Gentleman accept that, excluding the west coast main line project, Railtrack had been given a standstill budget for repairs and maintenance for the next five years?

There were many difficulties in the funding arrangements, but the real difficulty was Railtrack's inability to attract the necessary private sector finance to carry out its work. I remind the hon. Gentleman of my earlier intervention: it was in February, not in the past few weeks, that Railtrack acknowledged that it must make significant reductions in its funding for a variety of projects. Something had to be done, and the not-for-profit public interest company approach is correct. I would say that, of course, because Liberal Democrats proposed the idea on 14 February 2001. One week after we proposed it, the Institute for Public Policy Research came up with a similar proposal.

My criticism of the Secretary of State relates to the way in which he has handled the issue. There is no doubt in my mind that had he given serious thought to the matter at an earlier date, when everybody knew the problems, there would have been a variety of ways in which to introduce the new model. He did not have to adopt the nuclear option. There would have been an opportunity for discussions with Railtrack given that its advisers had raised that possibility. The speed with which the Secretary of State operated, and the way in which he did so, has led to considerable confusion.

There is also confusion about who owns which assets. That is an understandable concern for Railtrack's shareholders. However, the shareholders should point the finger of blame not at the Secretary of State but at Railtrack's managers, who have let the shareholders down.

Huge confusion has arisen about who said what to whom and when. The hon. Member for Croydon, Central (Geraint Davies) has described that debate as "tittle-tattle". The travelling public are not interested in that—they want to know when they will have a safe, reliable and affordable railway. Many key issues relating to the future of our railways need to be addressed. They include not just the structure of Railtrack, but ways of reducing fragmentation, sorting out the problem of ridiculously high fares, bringing together train and track, further improving safety and so on. Those are the issues that the travelling public are concerned about. They will not be interested if Members on both sides of the House spend all their time discussing what the hon. Member for Croydon, Central described as tittle-tattle. They want to know how the Secretary of State will end the current confusion and how we will move forward.

I congratulate my hon. Friend the Member for Christchurch (Mr. Chope) on securing this excellent debate. As the hon. Member for Bath (Mr. Foster) said, he approached it analytically and with his customary moderate and middle-of-the-road style, which was most welcome and refreshing.

My hon. Friend the Member for Orpington (Mr. Horam) said, rightly, that the Government were reaping what they had sown and and that they had failed to take various opportunities that were offered to them. My hon. Friend the Member for Epsom and Ewell (Chris Grayling) raised some pertinent points on whether Railtrack was bust. I suspect that we shall remember the opening part of the debate and the speech of the hon. Member for Croydon, Central (Geraint Davies), who organised the equivalent of a parliamentary egging of the Deputy Prime Minister by suggesting that he was silly to suggest that privatisation had not in any way compromised safety. I wish the hon. Gentleman godspeed when he leaves the Chamber.

We are aware of exactly what the Labour Whips wanted.

It is quite wrong for the hon. Gentleman to suggest that I said that my right hon. Friend the Deputy Prime Minister was silly. I simply made a point about what Railtrack had done and what was said in the press—that it had closed down the system and issued press notices saying that there was a trade-off between signal investment and business sense.

rose—

Order. I remind the hon. Gentleman that the Minister will expect and need 10 minutes in which to reply. If the hon. Gentleman takes further interventions, he will not have extra time.

We have been chums for a long time, Mr. Hancock. I am like a chronometer and will stop. I was merely concerned about the hon. Member for Croydon, Central.

We shall return to the matter later. The Minister may be Secretary of State before the day has passed and, if he is, we wish him well.

We need to know whether Railtrack was bust. The various questions would then be relevant. Was Railtrack bust according to the classic balance sheet or cashflow definition? We know, because my hon. Friend the Member for Epsom and Ewell said so, that Railtrack was operating from its business plan and there was nothing new. Everyone knew what the position was and it was clear that the company needed an extra £1.5 billion in January and March this year. The hon. Member for Bath reminded us that Railtrack was taking steps to cut back, but he drew the wrong conclusion. On 2 April an agreement was made between the Strategic Rail Authority, the Government and Railtrack to obtain the extra £1.5 billion.

We know that that work was undertaken with City advisers Lazard and with Linklaters and Paine to create a company, to which my hon. Friend the Member for Epsom and Ewell referred, called Renewco. Half was to be owned by Railtrack and half by the Strategic Rail Authority. We also know that by triggering Renewco, Railtrack would have received £162 million under schedule D of the April agreement. That in turn would have generated an extra £318 million from the banks, so Railtrack would have had not much less than £0.5 billion at its disposal. With the Government's payment of £330 million, on which the Secretary of State was keen to comment, and the extra money, Railtrack would have received only a little less than £1 billion.

We now know that during the summer, the Treasury dragged its feet on the creation of Renewco. We know that until days before the Government pulled the plug on Railtrack, they were still promising the £162 million. That was equivalent to saying, "The cheque is in the post". The Government are now able to pay the £162 million, so they have made an offer to Railtrack. What has changed? Why can they now pay the money? The only explanation is that offering the money earlier would have prevented Railtrack from going into receivership. It is because of the Government's decision that Railtrack is in precisely that position.

As for future funding, a chief civil servant at the Department for Transport, Local Government and the Regions said at a meeting with Credit Suisse First Boston that the creation of a not-for-profit company would be neither appropriate nor attractive. Before the Select Committee, the regulator warned the Secretary of State against a decision that would fundamentally undermine policy on public-private partnership deals. In future, City institutions will be looking for between 0.5 per cent. and 1.5 per cent. on all deals.

In a few weeks, the first of two public-private partnership deals involving London Underground and two consortiums—Metronet and TubeLines—will be signed. Some £8 billion will have to be raised. The City estimates that an extra £10 million a year in interest will have to be paid as a direct result of decisions taken by the Secretary of State.. That is £10 million less for public services and improvements to the line. Hospitals, roads and rail will cost more because this Government have decided to pull the plug on Railtrack. In an earlier intervention, the hon. Member for Oldham, East and Saddleworth (Mr. Woolas), who is Parliamentary Private Secretary to the Minister, said, "They would say that, wouldn't they?" That is more than £1 million a word.

We hear the mocking of those hard workers who decided that they wanted not only to work for the rail industry but to make a contribution. Some 92 per cent. of Railtrack employees made investments. They are not highly paid: a grade 1 signaller gets a little less than £12,000, and a clerical worker gets only £18,000. Overnight, those people have had the equivalent of a wage cut. Signallers lost 9 per cent., and clerical workers lost 6 per cent. Some signalling managers lost £7,500, and some assistant area production managers lost £20,000. Most of those shareholders decided to take script dividends because they were committed to the railways. However, the Government have kicked them in the teeth.

I shall let one example speak for all. In an e-mail sent to my office, a railway worker asked me to put the following question:

"How can the railways improve now that he"—

the Secretary of State—

"has just robbed 90 per cent. of railway workers of their savings and pension contributions?"

He continued:

"I myself worked on the railway between 1992–1997, and have invested £11,000 in Railtrack...This year I have been made redundant, and lost 90 per cent. of my savings. New Labour, New start?"

That railway worker was encouraged by the Government to take out an employee share ownership scheme. Today, we will see whether the Secretary of State is prepared to do the right thing and put the interests of the railways above those of his own political career, and whether he will ensure that the only blockage to substantial investment in the railways is the Secretary of State himself. We look forward to his ultimate departure.

I congratulate the hon. Member for Christchurch (Mr. Chope) on securing the debate. I constantly marvel at how often Conservative Members give us an opportunity microscopically to examine their handling of transport when they were in government. I believe that the hon. Gentleman was a barrister in his former incarnation. If this had been a court of law, Mr. Hancock, you as the judge would have thrown the case out after a few minutes owing to the total lack of evidence.

People who listen to these debates or read Hansard will be interested to note how Conservative Members talk endlessly about personalities, but seldom about the needs of passengers. The former Prime Minister, Winston Churchill, must have been in a debate like this when he said,

"When the eagles are silent, the parrots begin to jabber."

Today's Opposition Benches confront us with a row of budgies, endlessly repeating half truths, hearsay, innuendo, supposition and false rumour. One of those false rumours, which seriously undermines the Tories' case, was the newspaper story that occasioned the private notice question a week ago about the so-called scandal of the leaked fax. I have that document in my possession. It is a statutory instrument that was laid before the House on 8 October, but that did not stop Conservative Members getting very excited about it. The document was not actually a fax—what hon. Members thought were fax codes at the top were printers' references. If the Opposition are to make a case, they need to do their homework first.

Will the Minister give way?

I shall not give way—there is a lot to cover.

The hon. Member for Christchurch raised several matters. The new chairman of the SRA, Richard Bowker, will consider a strategic plan, and I anticipate that that will he published by the end of the month.

I have already dealt with funding for the administration in a written answer. The immediate funds are to be provided from the contingency reserve, to be replaced by departmental funding in the winter supplementary round.

I liked the summary by my hon. Friend the Member for Croydon, Central (Geraint Davies) of how privatisation was undertaken. The people who should be in the dock are sitting on the Opposition Benches, not the Labour Benches. Sir Philip Beck, who was the chairman of Railtrack until early this year, said on the "Today" programme as recently as 9 November:

"I've also said...that the privatisation was initially conceived with some perverse incentives which were unhelpful to the railway industry and...as a consequence to the travelling public".

The hon. Member for Orpington (Mr. Horam) said that a Treasury Minister should be in the dock. I should be interested to hear some Conservative Members answering questions about how privatisation took place and why we find ourselves in the current situation. The hon. Gentleman made a wide, sweeping claim that the Government had done nothing for transport. He did not mention that the funding for his local transport plan in Kent had been increased by 76 per cent. The hon. Member for Epsom and Ewell (Chris Grayling) was obsessed with personalities. We heard him rattling through the personality questions.

My hon. Friend the Member for Vale of Glamorgan (Mr. Smith) raised a good point and even invited the hon. Member for Brentwood and Ongar (Mr. Pickles) to intervene. He did not and I shall give him a further opportunity.

rose—

The hon. Gentleman has not heard what I want him to intervene about yet. He should be patient. My hon. Friend invited him to tell us how much would be needed to compensate the shareholders at the suggested level of £3.60 per share. Like the hon. Member for Bath (Mr. Foster), I wrote down a figure. We will see whether the hon. Gentleman gives us a figure that matches those that we have before us.

I am happy to do so. Perhaps I could trade a quote from Sir Philip Beck, who said that the Secretary of State would

"find it very difficult to get any private sector funds in"

under the new arrangement. The Minister does not seem to have been listening to the shareholders—

Order. The hon. Gentleman is making a speech. Interventions should be short.

I will just finish my point, Mr. Hancock. The shareholders have made it clear that they do not require any help from the Government. There are plenty of assets in Railtrack. The Minister must therefore address the problem of finding that investment.

That was very interesting, Mr. Hancock.

When asked by my hon. Friend the Member for Vale of Glamorgan, the hon. Gentleman said from a sedentary position that he would say how much they would compensate to the penny. He did not. I can tell him what the figure is. I do not know whether the hon. Member for Bath has written down a similar figure. To compensate the shareholders at the level that has been talked about would cost £1.5 billion. I should be interested to know whether the hon. Gentleman has cleared that with the shadow Chancellor who, only last week, told us that he wanted the state's proportion of gross domestic product to be reduced to 35 per cent. I do not know how he will do that in the context of providing £1.5 billion.

Will the Minister give way?

The hon. Gentleman must be patient; I am just warming to my task. If that £1.5 billion is to be paid to the shareholders, how will that improve any of the services for the travelling public?

The Minister makes my point exactly. The Government can do nothing to prevent that compensation. It will all take place in the courts. Railtrack and the rail industry will be locked up for years. The Minister will be unable to deliver any of the promises.

We have clearly rattled the hon. Gentleman's budgie cage today. He has not got an answer to the points that we made.

My right hon. Friend the Secretary of State was faced with continuing and increasing difficulties with Railtrack. On 15 October he outlined the further measures that he intended to take to put the travelling public first. That was his priority. The House will be familiar with the history of Railtrack. I will not delve into all the details today, but in 1996 Railtrack was privatised. It was the only publicly floated utility that was directly subsidised by the Government; the subsidy made up for two thirds of its revenue. After the Hatfield crash, the whole of the network was urgently reviewed and fundamental safety issues were addressed.

The hon. Member for Orpington said that safety was a problem. Perhaps he could write to tell me exactly where those safety problems lie in his area, as I am not aware of any.

Is the Minister inviting me to seek an Adjournment debate? I should be delighted to bring those facts to his attention.

If the hon. Gentleman would like to apply for an Adjournment debate to discuss rail safety, I should be happy to answer his points.

As always in these debates, there is not enough time for the Minister to give a full response to every point. This has been a curtain-raiser for our debate this afternoon on the Floor of the House. I am sure that we shall hear again this afternoon what we heard this morning. We have a Tory party that is putting passengers in second place. We have a Labour Government who are putting taxpayers and the travelling public first. I know where the interests of the British people lie. The people will listen to what we have to say and not to the Opposition's obsession with personalities.

The hon. Member for Moray (Angus Robertson) has asked me whether he can make an intervention. He has cleared it with the hon. Member for Selby (Mr. Grogan) and I see that the Minister has also agreed to that.

We have heard a great deal lately about firefighters' sense of public service, public spiritedness, selflessness, bravery, and brotherhood and sisterhood. Our Prime Minister rightly praised New York's finest for their dedication to duty, humanity and bravery. Within hours of the dreadful occurrences of 11 September, more than 100 men and women from our Ministry of Defence fire service volunteered to go to New York to help with the rescue. As far as I know, there are no plans to privatise New York's fire service. The House and the country will be surprised to learn that, on the other hand there is, every possibility that the Ministry of Defence fire service will be privatised.

Under the Ministry of Defence's airfield services study project, the work of nearly 3,000 defence fire service and air support staff at about 100 military sites across the UK and abroad is potentially the subject of bids for a contract worth around £4 billion over 15 to 25 years. In Yorkshire, the bases covered by the Ministry of Defence fire service include RAF Linton-on-Ouse, RAF Dishforth, RAF Topcliffe, RAF Church Fenton, which is in my constituency, RAF Fylingdales and the US air force base at Menwith Hill. As I said, the bases are scattered throughout the country. My hon. Friend the Member for Stafford (Mr. Kidney) has a base in his constituency, for example.

On 20 September this year—with impeccable timing—three private consortiums were invited to tender for the work of the Ministry of Defence fire service and associated support services. "Associated support services" may be an anodyne phrase, but it means tanker drivers, mechanics, vehicle technicians and refuellers—the very people upon whom our pilots rely for their lives and whose sense of public service, professionalism and patriotism we all too often take for granted.

The origins of this sorry situation go back to the late 1980s, when a major study was undertaken to review the Ministry of Defence fire services. The study recommended that the existing Navy, Army and Air Force departmental services should be rationalised into one fire service under central control. The trade unions, led by the Transport and General Workers Union, backed the proposals in full, showing great farsightedness; it was a failure of management not to implement them. At the time, the total concept was resisted by the management of the three services, principally because it was believed that commanding officers should retain control of their own fire service personnel. Partial rationalisation followed, in the form of a renamed Ministry of Defence fire service with common technical standards and training. However, each service continued to manage its element of the fire service in different ways, to suit its service culture. Duplication inevitably occurred—the very reason the trade unions had argued for a unified structure in the late 1980s.

Parliamentary answers to my hon. Friend the Member for Thurrock (Andrew Mackinlay), who has taken a particular interest in the subject, show that in 1995 the then Government initiated a feasibility study to look at the viability of privatising the provision of airfield support services to the Ministry of Defence worldwide. The new Labour Government received the report, which indicated that there was, not surprisingly, significant private sector interest in the idea. Further work continued. Some negotiations with the trade unions were held, and in September this year, with no statement of any kind to the House, invitations to tender were issued.

I have much respect and regard for right my hon. Friend the Minister of State for Defence. I cannot imagine that he has ever got up in the morning with privatising the jobs of Ministry of Defence firefighters at the top of his agenda. When I first heard about the issue, I thought that perhaps he was faced with a recalcitrant work force who refused to contemplate change, put safety and security at risk by their inefficiency, and gave public service a bad name, and that in those circumstances he had to contemplate drastic change. However, the truth is that his work force has been crying out for change and modernisation for a decade.

I repeat: the work force has backed far-reaching change in the defence fire service in the 1980s and more recently, the trade unions and the stakeholders—the defence fire service management, the lieutenant colonels and the wing commanders—have got together and produced the Ministry of Defence "Fire Study 2000", which shows clearly how to cut costs by 20 per cent. and retain the fire service as a true public service in the public sector. The study states:

"This report identifies that, although previous reports have proposed changes for efficiency and effectiveness, reluctance to change has meant that all possible savings have not been realised... The Study Team proposes in this Report the creation of a new organisation—Defence Fire Risk Management Organisation—as an agency to be responsible for all fire risk management and fire support for military capability worldwide...The study team identifies that...there would be substantial cost savings (at least 20 per cent. per annum on current operating costs) through a leaner, more efficient structure, localised service provision, functional support direct to service providers with reduced travel and subsistence costs. There will be efficiency gains through multi-skilled personnel, reduced levels of management, effective IT and communication and personnel with devolved responsibility".

That is management speak, but staff who have given their working lives to the defence fire service and the associated services felt for the first time that their ideas for improvement were being taken seriously. The irony is that because the external tendering process has now started and will not be finished for a year or two, there is no start date for implementing the public sector solution outlined in the report. In the meantime, taxpayers' money is being wasted and best value set aside.

There are three elements to the airfield support services project: first, the procurement of equipment in which the trade unions are happy to embrace private sector involvement; secondly, the defence fire service where a robust public service comparator has now been established; and, thirdly, all other support services. Under the chairmanship of Wing Commander Bob Waldegrave, who initially met the trade unions at Transport house—I do not know whether it was over beer and sandwiches. An intense effort was made to identify future inefficiencies to provide the most efficient and effective in-house support service for the Ministry of Defence. The Ministry set a deadline of 2002 for the work, which is unrealistically tight and restrictive; it will not allow enough time for a robust public sector comparator to be established for the support workers, whose jobs I mentioned earlier and who are outside the defence fire service. The private sector has had five years to put its case together and it seems strange to go out to tender before a complete public service comparator is available.

What is to be done? I paraphrase the Ministry's line. which is, "We've started so we'll finish. We will only privatise if there is demonstrable value for money and if operational effectiveness is not affected. It is too early to say what the outcome will be." But operational effectiveness cannot be guaranteed in a contract, no matter how clever the lawyer. Operational effectiveness in the military and, crucially, its support services, depend on men and women being prepared to go the extra mile, to set aside their own interests and to be flexible out of loyalty, duty and patriotism; men and women who have a clear sense of belonging to the organisation that they work for and are part of, not that to which their boss is contracted or subcontracted.

For example, the defence fire services currently provide free cover to support the civilian services in counties such as my own—North Yorkshire. That is particularly valuable in a big rural area. Last year, during the floods in York and Selby, crews from the Church Fenton station spent hour after hour trying to assist local people. Moreover, in the past two years, parliamentary answers reveal that defence fire service personnel have been deployed overseas 91 times on military operations and exercises. Perhaps firefighters from a privatised force would have to go overseas as part of their contract; however, Darren Gribben, a firefighter recently returned from several months' service in Kosovo, said:

"I was proud to serve in the hostile conditions of war-torn Pristina, but I would be unsure of returning under a privatised service."

I believe in the power of the public service ethos. It should be constantly tested and probed, but it should always be acknowledged out of respect for those for whom it is a driving force. I hope that the Government would prefer to have an efficient and modern defence fire service in the public sector. If not, some will ask what are our limits. They will want to know whether the Government will consider privatising the whole fire service.

Three consortiums are bidding to win the contract under offer which, remarkably, will be for between 15 and 25 years; however, the media and politicians have only just started scrutinising them. One consortium, Logicair, includes Serco, whose safety record was criticised when it bid unsuccessfully for the civilian air traffic control service. All three consortiums are considering drastic job cuts.

On grounds of safety and security, in light of all recent circumstances and of the services' efficiency plans, the Minister should today remove the threat of privatisation from the defence fire service. He should also announce an extension of next February's deadline to allow those working in associated support services—they, too, have served our country well—a chance to get their act together, so that a fair public sector comparator for their work can be established.

I start by praising the hon. Member for Selby (Mr. Grogan) for securing today's debate. It is timeous and necessary. I also thank him and the Minister for allowing me to speak. Knowing that time is short, I shall be brief.

Like the hon. Member for Selby, I have strong concerns about the proposed privatisation, not least because my constituency contains two of the most significant Royal Air Force bases in the United Kingdom—Lossiemouth and Kinloss. Many of my RAF constituents have raised the planned privatisation with me, and I voice those concerns today.

I share the view of the hon. Member for Selby that the proposals are misguided and ill timed. In the short time available to me, I shall raise also a number of other matters. The concerns expressed by the hon. Gentleman are shared by Moray trades council, which has written to me on the subject, the Transport and General Workers Union and the Scottish National party.

I wish to raise several questions with the Minister: I hope that he will be able to respond. Many of the firefighters at RAF Lossiemouth, whose morale is at rock bottom, are extremely concerned about back-fill—the ability to bring in extra firefighters to cover changes in the category of planes that use those bases. In general, Tornadoes operate from RAF Lossiemouth, but an increasing number of VC10s and Tristars now use it. Those planes are large and have heavy fuel loads, and their status for firefighting goes from category 4 to category 7. The base also has squadrons on detachment, and there is flying every day.

Will the Minister confirm that squads at RAF Lossiemouth will be reduced from seven to six? I would be keen to hear his views on how airfield commitments can be met with fewer men. I wish also to bring to his attention the fact that morale is at rock bottom. Is he not concerned about the safety implications?

Lastly, I wish to speak of some specific measures that were incorporated in the minutes of the local works Whitley council, which met on 28 September. It noted that RAF Lossiemouth is to be re-categorised as a category 3 station and that its four firefighter crews will be

"reduced from 7 to 6...However, the Command Fire Officer at the time"—

who is named in the report—

"stated in writing that these figures did not include crew commanders, only the operational firefighters."

The report adds that the person in question has, however,

"now retired and Command Fire has not subsequently substantiated his statement. It transpires that the revised manning figures do include crew commanders and are now enshrined in Joint Services Publication 426."

The document adds that

"the Trade Union side wished to record its dissent over the deceitful and underhanded way in which this issue has been handled."

I should be grateful if the Minister could deal with those matters.

I congratulate my hon. Friend the Member for Selby (Mr. Grogan) on securing this debate on the future of the Ministry of Defence fire service and providing the House with an opportunity to discuss a subject that is important to him and to other hon. Members. Many have raised issues with me by way of parliamentary questions and other means.

Some emotive language has been used, and I understand why, but I want to remove some of the emotion from the debate, not because I cannot become as exercised as other hon. Gentlemen about the valuable and important service performed by the staff in question, but because we need to think about the matter in a logical, reasonable and structured way. It is better, therefore, that I define the work that is being undertaken in the Department that has clearly given rise to the debate.

Two separate but interlinked work streams are under way in the Department: the airfield support services project—known as ASSP—and "Fire Study 2000". I want to explain their key features to put them in context. The ASSP is investigating whether a public-private partnership would be the most viable and cost-effective way of providing airfield support services to the Ministry of Defence worldwide without compromising operational effectiveness or safety. That final phrase is, of course, crucial and nothing that is done will detract from operational effectiveness or safety.

Fire cover is an important element of ASSP, but we are considering the full range of airfield support services: aircraft fuelling, movements and air cargo handling, airfield clearance, which includes sweeping and snow and ice clearance, and other more general aircraft services such as towing, water, waste and lifting services. The ASSP approach came out of "Front Line First", where specific defence cost studies suggested that airfield support had potential to yield efficiencies, possibly by public-private partnering. Indeed, a number of multi-activity contracts—private contractor arrangements—have been in place at RAF airfields for some years. It is now intended through ASSP to draw together the experience and lessons learned from running those contracts and to consider whether one overarching contract encompassing all the necessary services would provide the best value for money. It is a tri-service, defence-wide project. All the key stakeholders have been involved, as we tried to ensure that, if it proceeds, ASSP provides the right service and outputs.

In September we issued an invitation to negotiate to three consortiums, inviting bids against the statement of requirement. Hon. Members and the trade unions were informed that the invitation to negotiate had been issued. Bids for 15 and 25-year terms are invited. The three bidders involved— Airside, Approach Services and Logicair—are companies that already run multi-activity contracts at many Ministry of Defence airfields. They are not new to the territory, and the concept that we are examining is not a new one. Existing multiactivity contracts already include fire cover—fire cover is not separate—for a number of the RAF stations and airfields, so this is not an unprecedented step into the unknown.

In terms of the next stage of the project, bids are due back by the end of February 2002. There will then be a comprehensive and detailed evaluation before the next major decision stage, which is planned for the end of 2002. If the ASSP is judged to offer the best way forward, and I stress that no decision has been made—this is not top and tail and there are no preconceptions about the outcome—we would then announce a preferred bidder with a view to letting the contract in late 2003. The new service would be implemented in a rolling programme during 2004. That is the background to the matter and the time scale that could apply if a preferred bidder was chosen and we decided to proceed on that basis.

Entering this process by issuing an invitation to negotiate does not mean that a PPP solution is inevitable. There is still a lot of work to be done before any final decisions are taken about the preferred solution. I want to return to some the issues that were raised relating to the ASSP project in a moment, but I would like to turn now to "Fire Study 2000", which is a separate issue running concurrently with the ASSP.

The Ministry of Defence fire service is a large and complex organisation based both in the UK and overseas. The service covers some 108 operational fire stations and employs some 1,320 civil servants, 673 RAF firefighters, 450 Royal Navy aircraft handlers, 422 contractors and 263 locally employed civilians at overseas stations. In addition to their regular duties, it has also made its expertise available in areas of tension across the world including, at the present time, in the Balkans. My hon. Friend the Member for Selby referred to that role.

Although we recognise the fire services' outstanding record of service, it became clear in the late 1980s that a rationalisation of the Ministry of Defence fire service structure was overdue. A major review was undertaken at that time, which recommended that the fire services of the Royal Navy, the Army and the Royal Air Force should be rationalised into a single fire service under central control. Although the proposal was embraced by the fire services themselves, other concurrent organisational changes within the Department meant that some important aspects of the rationalisation did not go ahead. I agree with my hon. Friend the Member for Selby that that was an opportunity lost, and not because of a lack of commitment from the work force at the time.

Following the over-arching strategic defence review undertaken by the Government in 1998, it was clear that the structural problems of the defence fire service had not gone away and that a fresh study was needed. A major review known as "Fire Study 2000" was accordingly launched in January 2000 with a remit to review the current organisation and operation of the defence fire service and develop an optimum strategy for meeting the Department's current and future requirements for fire risk management in times of peace, crisis, and war.

The first stage of "Fire Study 2000" was completed in July of this year and the second stage, involving a more detailed financial appraisal, is due to be completed by the end of December. The proposed future organisation embraces all fire safety support services required by the MOD and comprises a single totally integrated organisation that provides opportunities for a more effective and efficient organisation delivering improved value for money.

Does the Minister accept that one of the support services for the defence fire service is training? Is he aware that the fire service college in Moreton-in-Marsh provides high-quality cost-effective training? Will he consider carefully whether defence fire service staff could receive their training at that college?

I shall take those comments on board. I accept the point that training is an important aspect of how any defence service is delivered at airfields and elsewhere and I shall write to the hon. Gentleman about the point that he raised.

By explaining the two strands of examination, I want to point out the clear relationship between ASSP and "Fire Study 2000". We must be driven partly by the desire to ensure that all that we deliver is as efficient as possible. The public sector comparator—an essential aspect of the public-private partnership scheme that we envisage—must be as taut and well constructed as possible. It should inform the overarching examination of the delivery of service at our airfields. "Fire Study 2000" informs the public sector comparator, so it will help to provide a robust comparator against which we can judge the bids. That seems a sensible approach. I would like to hear any dissent from that—any logical argument against trying to ensure that maximum efficiency is brought into play and that we exercise our best minds to ensure best value for money in all aspects of service delivery.

My hon. Friend the Member for Selby and I have commented on the trade union commitment overall, in terms of approaches to study. The trade unions are heavily engaged in developing the public sector comparator. I want to compliment them on their close examination of the subject. However, that does not mean that we then assume that the private sector can necessarily provide the right level of service and best value for money. The next step, logically, need not follow. Similarly, we cannot assume that the existing service necessarily offers best value for money to the taxpayer.

We are dealing with a big organisation with huge inefficiencies that have been identified time and again, and have not been tackled in the past for reasons that we need not discuss. Now we are tackling them in a logical and coherent way. We have to test the market and then assess the bids. We should not refuse to consider what the market can provide, and we must recognise the fact that the market is already in place through several schemes linked to the overall delivery of service. We should see what they can do to ensure best value for money.

Will the Minister use his limited time to answer one or more of the questions that I asked him?

The hon. Gentleman wears on his sleeve great concern about what is happening in his constituency, but his party would probably close down the activity of bases in Scotland. It is opposed to NATO and the defence posture of our country. I am trying to deal with the main issues raised by my hon. Friend the hon. Member for Selby, who secured the debate. I will deal with the questions posed by the hon. Member for Moray (Angus Robertson) in writing, because sufficient time is not available. As ever, we have to make do with the time available.

We are simply guaranteeing the safety and security of all services delivered at the airfields. There is no privatisation initiative. The allegation that we are privatising the Ministry of Defence fire service will not stand up to an examination of the explanation that I have given. Jobs will not suddenly be cast aside. Many protections will be put in place to maintain the jobs of the civilian staff who provide the service. My hon. Friend accepted that the unions recognised the need to ensure a rational approach, so that there is a logical development. Overall employment plays a part in the equation on efficiencies. Everyone is facing up to the need to tackle the problem constructively and responsibly.

The two studies being conducted on two strands are closely interrelated. However, our overall strategy will be to ensure that operational effectiveness and the safety of our armed forces are never put at risk. Those services exist to provide that safety, albeit with armed forces personnel as part of their delivery. We recognise the important role played by those who deliver the services. but we must get value for money from them. We must regard every penny as having the value of a pound.

Order. I ask hon. Members and others who are not staying for the next debate to move quietly and quickly out of the room.

I am grateful to Mr. Speaker for granting me the debate and to you, Mr. Hancock, for allowing me to start so promptly. I also thank the Minister for being here to reply to the debate. There have been several similar debates during the past few weeks and I anticipate that she will be kept busy responding to further debates in the forthcoming months as health care in the United Kingdom continues to decline and deteriorate.

There are only two hospitals in my constituency: Pilgrim hospital, in Boston, which is the main one, and the community hospital in Skegness. The two hospitals are approximately 22 miles apart and are connected by a poor road, requiring a 25-minute journey by car and a 35 to 40-minute journey by ambulance. The town of Skegness is growing, and the inherent population is now some 18,000. The town has doubled in size since Pilgrim hospital in Boston was built. Many people retire to Skegness, especially from the former coalfields of the midlands, and some of them require continuing medical treatment.

Skegness is also a strong tourist destination. Hundreds of thousands of people visit the town and its immediate surrounds each year. It is no longer just a summer destination—it is visited irrespective and in spite of the weather. Butlins holds 8,000 to 9,000 people at a time and is open almost all year round. The enormous population fluctuations that used to occur are now more evenly spread throughout the year.

I am concerned about the future of Skegness and District hospital for my constituents and for those who spend their holidays in the area. With the creation of the primary care trusts and, in particular, the establishment of the proposed East Lincolnshire primary care trust from 1 April 2002, the transfer of Skegness community hospital is inevitable. It will be the responsibility of the primary care trusts to develop the future strategy and level of provision of health care. It is essential that all medical staff work with colleagues in the community, including community nurses, social services, the voluntary sector and most importantly the users, and take note of their views and concerns. I have no issue in principle with the responsibility, provision or level of health care being entrusted to the medical professionals in east Lincolnshire, with local clinicians and managers ensuring that the local services reflect the needs of the local community. That is apparently one of the thrusts of the Government's National Health Service Reform and Health Care Professions Bill.

I understand that the transfer of Skegness community hospital to the proposed primary care trust is to take place on 1 April 2003. An enormous amount of work must be done, and the purpose of this debate is to ensure that sufficient funding and importance of service are attributed to enable the hospital to remain open and guarantee that there is no diminution of service provision for the people of Skegness and its visitors. Current service provision at the hospital provides two wards, X-ray, physiotherapy, a day unit, out-patients and an accident and emergency department. It is my duty to represent all my constituents, to convey their concerns and to ensure the provision of top-quality health care.

I will refer specifically to some matters. First, the accident and emergency department is an essential prerequisite for any thriving town, especially one with such an enormous and growing tourist population. I have heard medical professionals talk about the best geographical location for accident and emergency services, and the implications of that need not be spelled out. The best location is and must remain Skegness, even though it would still be managed by the United Lincolnshire Hospitals trust under the new proposals.

Second the general thrust of the proposed primary care trusts is to provide modern surgeries that are accessible, particularly by car. That is admirable, but the poor car parking facilities at the Skegness community hospital are not at the apex of the agenda for the town's many elderly retired people who have no alternative to public transport. New surgeries tend to be in fringe or out-of-town locations, so a centrally located hospital is a must. Primary and intermediate care must complement and be in addition to services in Skegness hospital—it must not replace them.

Thirdly, the two existing wards have 39 beds, 15 of which are GP led and 24 of which are consultant led. It is feared that those could be used solely for general practitioners under the proposed primary care trust. That would not allow consultants to transfer patients back to Skegness from Boston's Pilgrim hospital for aftercare treatment. That could cause further bed blocking and exacerbate already difficult problems, lengthen already unacceptably long waiting lists and increase cancellations of operations. Furthermore, if the proposed primary care trusts ran short of money, an obvious saving could be made by shutting a ward and using fewer beds. What safeguards will the Government put in place to ensure that that will not happen?

Fourthly, I am concerned that consultants' clinics and out-patient departments might be moved away from Skegness to Boston under the proposed primary care trust. That is a concern particularly because of the terrible shortage of consultants in Lincolnshire. In one recent example, the United Lincolnshire Hospitals trust had to stop the portable breast screening service because of consultant shortages. There is also an ever-worsening shortage of general practitioners—indeed, the Government's figures suggest that there were 19 GP vacancies in Lincolnshire in 2000 and 49 this year. There is a similar problem with nurses. If there is to be any improvement in service provision, staffing levels must be improved throughout. The cost of moving the outpatient department would be enormous both financially and in terms of the health of the people of Skegness.

There is an ever-growing trend in the national health service to specialise. That is understandable given the enormous cost, for example, of providing a specialist cardiac department. However, there must be scope to provide a general level of service in a community, and the Government are ultimately responsible for that.

The safety of nursing staff is not an issue that is unique to Skegness or Boston, but it concerns many of my constituents. Skegness hospital was recently broken into during the night, staff were attacked and knocked to the floor and patients were robbed. We all know that that is an unacceptable state of affairs, and I ask the Minister to make additional resources available for security and staff safety in the hospitals in my constituency. If that is not the Department of Health's responsibility, will she assure me, as the representative of the dedicated health professionals in my constituency, that she will speak to her counterpart in the Home Office or wherever else the funding comes from to secure that extra funding?

In conclusion, I want health care provision in Skegness to be improved and widened to allow more patients to be treated nearer their homes, particularly because we have an ever-increasing and ageing indigenous population and an ever-increasing number of tourists. Neither I nor my constituents will be happy if Skegness hospital is turned into a glorified surgery under the proposed primary care trust. It is a hospital and must remain one.

Skegness hospital is a good, well used, well established and modernised hospital that must be maintained. Will the Minister give an assurance and an unconditional guarantee that sufficient emphasis will be placed on maintaining Skegness hospital in its totality, without any diminution of service provision? Delivery of a satisfactory level of health care is ultimately the responsibility of the Government.

I congratulate the hon. Member for Boston and Skegness (Mr. Simmonds) on securing this important debate on the future of Skegness and District hospital. I am aware of some concerns among local people in the hon. Gentleman's constituency, as he ably outlined, about the future level of provision at the hospital. I reassure them and him that they need not fear for the future of what is an excellent community hospital: there are no plans to close or to downgrade it.

Skegness and District hospital dates back to 1913 and, as I am sure the hon. Gentleman will agree, has served its residents and the summer tourist population as a community hospital admirably since then. It has been part of the United Lincolnshire Hospitals NHS trust since April 2000, when all the acute hospital trusts in the Lincolnshire health authority area merged. As I am sure the hon. Gentleman is also aware, that was a merger of management teams rather than a reconfiguration of services. As a result, management costs have been reduced with no consequent detriment to services.

As the hon. Gentleman said, Skegness and District hospital currently provides 39 in-patient beds, 15 of which are GP run and 24 of which are consultant-managed medical beds. I will come to the issue of the primary care trust management but I assure the hon. Gentleman that there are no proposals to change the balance or use of those beds. The hospital also has X-ray, physiotherapy, out-patients, and day unit facilities and services and an accident and emergency department. As a thriving community hospital, Skegness dealt with nearly 25,000 accident and emergency attendances and almost 500 admissions or transfers into the hospital in the last financial year.

As the hon. Gentleman acknowledged, the accident and emergency department in particular experiences peaks in demand at certain times, particularly in summer with the influx of tourists, although those seasonal differences have decreased over recent years. Routine discussions are, therefore, held regularly between the United Lincolnshire Hospitals NHS trust, Boston and Skegness primary care group, Lincolnshire social services and Lincolnshire ambulance and health transport service NHS trust to ensure that accident and emergency services continue to be provided in the most appropriate manner to best meet the needs of the patients who use it.

For some time, some patients have been stabilised at Skegness hospital and then transferred to Pilgrim hospital, Boston, if their condition has allowed that. A clinical working group at the United Lincolnshire Hospitals NHS trust has just begun the process of formalising protocols that will enable ambulance personnel to identify patients who would be better taken directly to Pilgrim hospital. This might include people seriously injured in road traffic accidents or who need specialist diagnostic facilities such as CT scans. On current numbers, that might mean that up to 10 people a day who would previously have been transferred to Pilgrim hospital following stabilisation at Skegness could be taken there directly, thus speeding up their treatment.

The purpose of the proposals is to maintain the accident and emergency services at the hon. Gentleman's local hospital. In the past 18 months, the Government's commitment to the national health service has translated into leading—edge service developments at the hospital. The most obvious example of that is the introduction of thrombolytic treatment by paramedics prior to arrival at the hospital. Since it was introduced in July 2001, ambulance paramedics have been liaising directly with hospital doctors at Skegness in order to administer clot-busting drugs that give patients with suspected heart attacks the best possible chance of a successful outcome. That is on top of the fact that Lincolnshire ambulance service is consistently meeting its eight-minute response time targets in 75 per cent. of category A emergencies.

A telemedicine project in the accident and emergency department at Skegness means that more complex cases can be dealt with locally through the telemedicine link with specialists at the neighbouring acute hospital in Boston. Additional services have been added on to dovetail with accident and emergency services, such as the development of care pathways for cases of fractured neck of femur and heart attacks. Nurse practitioner training continues, and a weekly fracture clinic has been introduced.

The out-patient department continues to provide the local community with a comprehensive service, and it is always keen to create new opportunities for improving services in conjunction with its partners. Examples of that include the addition of a home blood pressure monitoring service and the introduction of the Lincolnshire visual impairment service to consultant ophthalmology clinics. This means that trained volunteers can provide patients with extra information and support on their conditions, and the benefits and aids that are available.

There are many other recent examples of improved and increased service provision at Skegness hospital. The important point is that this is indicative of a thriving hospital, with excellent services and a clear commitment from everyone in the health and social care community to continue the current level of those services at Skegness hospital.

It would appear that some local concerns about the future of Skegness hospital relate to the proposed formation of East Lincolnshire primary care trust from 1 April 2002. Under these proposals, Boston and Skegness primary care group and its counterparts in neighbouring East Lindsey and South Holland will, subject to the approval of my ministerial colleagues, come together to form East Lincolnshire PCT.

Public consultation on these proposals took place between 11 June and 10 September this year. The proposals were supported by the health community, local community health councils, Boston borough council, Lincolnshire county council and the vast majority of general practitioners, nurses and members of the public.

Within those proposals, and as detailed during the thorough public consultation, it is planned to transfer the day-to-day management of the community hospital in Skegness from United Lincolnshire Hospitals NHS trust to the East Lincolnshire primary care trust. However, that will not take place until April 2003, to ensure that this transfer of management responsibility to the PCT will not disrupt services, staff or patients. This has always been a top priority of the local PCT development board.

If approved, East Lincolnshire PCT will be able to commission services such as acute hospital care and directly provide community health services through its community hospitals from April 2002. It will also be able to provide health visitor services and district nursing services, so that there will be greater opportunity to integrate primary and community health services within one organisation for the benefit of local patients. Although the proposals would mean that East Lincolnshire PCT would take the lead in developing any future strategy for Skegness hospital, this will be in partnership with acute and mental health trusts.

Out-patient facilities will continue, there will be further development of intermediate care services, which will be important for the older constituents whom the hon. Member for Boston and Skegness mentioned, and there will be a new range of minor surgery procedures available based on the skills of local general practitioner specialists. Crucially, it is planned that accident and emergency provision will continue at Skegness hospital. It will be managed by the United Lincolnshire Hospitals NHS trust to continue to meet the needs of both the local and the holiday population of Skegness.

The primary care trust's vision for Skegness hospital also includes the development of a model of care that will facilitate the complete integration of community and intermediate services for the older population in particular. That will include in-patient day care with access to day hospital services, care in nursing or residential homes and the provision of care at home.

I am sure that the hon. Gentleman agrees that in a user-centred service, particularly for older people, the emphasis of primary care trusts on both modernisation and local determination of the needs of patients will be important. It is clear, therefore, that any developments in Skegness will be designed around the needs of patients with services that can be delivered and managed locally in accordance with local needs and for the direct benefit of patients in and around Skegness.

To alleviate any concerns that the hon. Gentleman may still have, the United Lincolnshire Hospitals NHS trust board has publicly made a commitment to have community focus groups or even a citizen's panel in any future discussions of the pattern of services. Any significant planned changes to service provision down the line would be subject to full public consultation and the Department of Health would monitor any changed processes to ensure that they are carried out properly in line with national policy and established rules on public, patient and stakeholder involvement.

The hon. Gentleman placed his concerns about Skegness hospital in the context of the Government's overall approach to supporting the NHS. We have set out our plans for investment and reform of the NHS. In March 2000, my right hon. Friend the Chancellor of the Exchequer announced the biggest ever investment in the history of the NHS. This unprecedented investment will allow the NHS to grow by one half in cash terms and by one third in real terms in just five years. That additional resource will fund extra investment to benefit every part of the health service. The NHS plan announced by my right hon. Friends the Prime Minister and the Secretary of State for Health on 27 July 2000 is the most fundamental and far-reaching programme of reform in the history of the NHS. Most importantly, within the NHS plan is the recognition that future care and treatment must be redesigned around the needs of patients. The investment, coupled with the plan for reform, will provide 7,000 extra beds in hospitals and intermediate care, more than 100 new hospitals by 2010 and 500 new one-stop primary care centres. There wi0ll also be increased investment in staff with more consultants, GPs and nurses in addition to the increased number of nurses and doctors that the Government have already provided in the NHS.

I take very seriously the point made by the hon. Gentleman about staff security in Skegness hospital. I understand that the incident was an isolated one, nevertheless, it is absolutely clear that staff in the NHS must be able to work without fear.

I should like to clarify the matter. The Minister is correct in saying that the recent incident at Skegness hospital was an isolated one. However, nurses' representative and nurses I have met from Pilgrim hospital, Boston are worried about the constant stream of not only verbal abuse, but often physical abuse, particularly in the accident and emergency department late on Friday and Saturday nights. It is not consistent throughout the week, but it is a matter that I should like the Minister to address, in the future if not now.

The hon. Gentleman makes an important point and my right hon. Friend the Secretary of State has already announced the NHS zero tolerance campaign on violence against staff. Trusts will be able to prosecute people who are violent towards our NHS staff and I assure the hon. Gentleman that we are taking the matter very seriously.

The Government and the local NHS are implementing developments locally and nationally to ensure that the future and the services of Skegness hospital are secure. The hospital will benefit from the Government's reform of the NHS and the extra investment that will ensure that the needs of the hon. Gentleman's constituents are at the centre of developments.

I thank the hon. Gentleman for giving me the opportunity to debate the development of the NHS, which is an important matter for his constituents and more widely. Given his earlier comments, I look forward to plenty more opportunities in the House to outline the Government's progress on delivery in the national health service.

As the Minister is not yet present for the concluding Adjournment debate, our proceedings will be suspended for a couple of minutes.

I am pleased to have secured today's Adjournment debate because it allows me to raise a matter that is of particular significance to my city, my constituency and many other communities situated on the east coast main line, and is also of national importance.

As hon. Members will know, in terms of both passenger and freight transport the east coast main line is one of the most heavily used lines in the country. Perhaps not unsurprisingly, the line is operating at or near to full capacity. As with other services, increased demand for passenger and freight services in recent years has stretched the line to its limit and exposed a number of structural weaknesses, such as overhead power lines that are in need of remedy. As the Minister, will know, the matter has been the subject of several recent parliamentary questions.

I know that the Government are committed to upgrading the east coast main line, and I welcome that, but today I want to raise several concerns about the short-term extension of the franchise. As hon. Members will know, earlier this year my right hon. Friend the Secretary of State for Transport, Local Government and the Regions announced that the Government favoured a two-year extension to the current franchise, rather than the longer-term franchise that was originally envisaged. I share some of the worries about granting a two-year franchise, and I shall return to them briefly later. Having said that, I can appreciate why my right hon. Friend decided to ask the Strategic Rail Authority to proceed on the basis of a two-year franchise, and I do not wish to argue against that decision in principle. Instead, I want to express my view that a short-term franchise extension should not result in a freeze on improvements to east coast main line passenger services for Scotland in general and Edinburgh in particular.

Hon. Members might recall that when the Secretary of State invited the SRA to negotiate extension of the existing franchise, he set out a number of new passenger benefits that he wanted to emerge from those negotiations. According to the press release, those benefits should include a service every 30 minutes from London to Leeds, early placement of orders for a new fleet of inter-city trains, improvements to existing rolling stock, early investment in station improvements, for example at Doncaster and York, and a range of other potential benefits, including spare locomotives to improve service reliability.

Those are all admirable objectives. However, my concern from a constituency perspective is that the bulk of the benefits will be enjoyed by those using the more southerly sections of the line. Improvements to the London-Leeds services and at Doncaster and York were mentioned, but nothing was said specifically about improvements to services to and from Scotland or the north-east of England, or about long-awaited station improvements such as those required at Edinburgh Waverley. The apparent concentration of benefits on the more southerly sections of the line in the requirements for the franchise negotiation is paralleled by the fact that the first two phases of the infrastructure upgrades will feature improvements at Leeds, Peterborough and King's Cross, but not further north.

I appreciate that improvements at any point on the line have benefits elsewhere on the line—for example, more trains on the London-Leeds service will benefit services running further north by providing extra capacity. I also acknowledge the references to new investment, namely a new fleet of inter-city trains and spare locomotives.

Notwithstanding the promised improvements, I am concerned that the basis on which the SRA has been asked to negotiate the two-year franchise extension is too limited and that consequently services to Edinburgh, the east coast of Scotland and the north-east of England will not be improved over the next three years as they should and could be. I ask my hon. Friend the Minister to consider some specific ways in which the negotiations on the franchise extension could be widened to bring benefits to the communities on the northern section of the line. I shall outline a few suggestions that are supported by a body of opinion in south-east Scotland and beyond.

First, we need a faster service with fewer stops between London and Edinburgh. Cutting out some stops should be possible, given the new half-hourly service from London to Leeds and the additional services that Virgin Cross Country is beginning to provide on the northern section of the route.

Secondly, we want guaranteed journey times of four hours or less from London to Edinburgh on as many trains as possible, preferably all. Shorter journey times are needed to compete to any greater extent with air travel, and reliability and consistency are also important, especially for business passengers.

Thirdly, we need to increase the frequency and consistency of the journey time of trains running from London to Newcastle and Edinburgh. That would allow for greater consistency of departure times and, perhaps more importantly, arrival times at Edinburgh. Arrival and departure times should, as far as possible, remain consistent throughout the day in summer and winter timetables and from one year to the next. As well as bringing benefits to the inter-city traveller, that would have the knock-on effect of making it easier to plan local train services on the basis of inter-city timetables. Another advantage of a more fixed timetable is that it would enable the scheduling of more local trains on the tracks south and east of Edinburgh.

Finally, we need improvements in track capacity in the Edinburgh area. That is important for long-distance services, not only for Edinburgh, but to serve cities and towns further north such as Dundee and Aberdeen. Track capacity improvements also allow for improvements to suburban rail services in the Edinburgh area, for which the city council and the Scottish Executive have ambitious plans.

All those improvements could be included in the short-term franchise extension, and I urge Ministers to consider asking the SRA to include them in the negotiations with the franchise holder.

As the Minister will no doubt be aware, a rail capacity study is under way in central Scotland, but it seems to be proceeding at a snail's pace. The lead body is the Scottish Executive, but I urge the Minister to do what he can to ensure that the study is completed as soon as possible. I have little doubt that the study will also recommend capacity enhancement. I ask the Minister to ensure that the Strategic Rail Authority takes early steps to begin the enhancements identified in the study, rather than waiting until the end of the two-year extension of the franchise before making any commitment recommended by the study.

I ask the Government to ensure that the SRA takes steps to ensure that the promised early placement of an order for a new fleet of inter-city trains is carried out, by including some funding or guarantee, if that should be required. Some in the industry suggest that the current franchise holder will be unable to commit itself to such orders on the basis of a two-year extension and that the SRA will be required to make a purchase, or underwrite such a purchase, if the new trains are to be provided. I do not know whether that is correct and I appreciate that there will have to be tough negotiations on such matters with the franchisee. It is essential that the order for new stock is placed and I ask the Minister to do everything he can to ensure that that is done.

I congratulate my hon. Friend on securing this important and timely debate. I agree with him about the importance of improving services to Scotland and the north-east of England, as well as to my constituency of York. New rolling stock is essential to such improvement because without additional trains we cannot have more services.

Order. The rules for debate allow only for short interventions in speeches by hon. Members, and a speech can be made only with the prior agreement of the Member and Minister concerned, and notified to the Chair.

We had spoken about this beforehand, Mr. Hancock, but I shall be brief.

Does my hon. Friend agree that it would be sensible for the SRA to consider whether it is necessary to extend the franchise by a further one or two years to ensure that we get additional rolling stock?

My hon. Friend makes a valuable point. If the short extension already proposed were necessary to ensure the provision of new rolling stock, it would have much merit.

I ask the Government to reconsider providing direct passenger train links from Scotland and the north of England to the continent through the Channel tunnel. As hon. Members will be aware, such links were promised when the channel tunnel legislation went through Parliament but that promise was not fulfilled. Those of us who use the east coast main line regularly can enjoy the fine, new White Rose train service from London to Leeds in the trains that were originally built for the European service and that have now been leased to operate from London to Leeds by GNER.

In the present economic climate, and given the current contraction of the airline industry, the need for our tourist industry to have direct European links is stronger than ever. Although I appreciate that it is a separate issue from the east coast main line franchise, there is no better time to reconsider the possibility of acquiring such services and I urge the Minister to look at the issue.

I shall to dwell a little longer on the two-year franchise extension rather than the granting of a longer franchise. I understand why the Government took that decision but it is essential that once the current restructuring of Railtrack and the rail industry and the strategic and regulatory framework is completed, the long-term strategic vision for the east coast main line must be clear. We need a 10, 15 or 20-year perspective, not just a five to seven-year one. That position of long-term certainty needs to be reached sooner rather than later. There is no need to wait until well into the term of a two-year franchise to reach decisions for the long term.

I know that the Government do not want a lengthy hiatus in decisions about the future upgrading of the east coast main line. I urge them to ensure that the negotiations for a two-year or perhaps slightly longer franchise extension, hopefully including the improvements to services to Scotland that I have outlined today, are brought to an early conclusion. Thereafter, the industry needs an early decision and a response to the Strategic Rail Authority's strategic plan when it is published. Like other hon. Members, I welcome the vision and commitment to the future of our rail industry shown in the 10-year plan and I want to see that vision resulting in concrete improvements in the long term. If we are to give travellers faith that the longterm vision will be delivered, we also need significant improvements in the short and medium term.

First, I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz) on securing the debate. I have had the pleasure of hearing him on a few occasions and, at the risk of embarrassing him, I must say that his contributions are well considered and well argued. He speaks well and powerfully for his constituents. I am delighted that my hon. Friend the Member for City of York (Hugh Bayley) is here. His interest in the subject that we are considering is well known.

You were in the Chair, Mr. Hancock, for our debate on Railtrack. I contrast the positive and inquisitorial way that my hon. Friend has tackled matters with the point scoring in the earlier debate. I am glad that my hon. Friend also recognises that the improvements on the line that benefit England also benefit his constituents in Scotland. At the outset, I reassure him that the Government remain committed to delivering a better, safer railway with increased punctuality and reliability, reduced journey times and higher standards of customer services. Our intentions are clear and our 10-year plan provides the mechanism to achieve our aim of 50 per cent. more passengers and 80 per cent. more rail freight over the next decade. The east coast main line is a strategically important route that will no doubt have a key role to play in achieving those targets.

As my hon. Friend knows, the east coast main line carries Britain's fastest passenger train service and also handles heavy bulk freight and mail trains. On an average day it caters for 1,900 passenger trains carrying 200,000 people. Yesterday it was 200,001 because I, too, was on the line, although not travelling as far as York. The latest figures, for the period from 24 June to 21 July, show that 69.9 per cent. of GNER's services arrived on time. Since those statistics were published, I understand from the Strategic Rail Authority that performance has improved over each of the last three months. I hope that that trend in service improvement will continue. The SRA will publish updated statistics in due course.

The spring 2001 national passenger survey revealed that 84 per cent. of GNER passengers were satisfied with their overall service. Only 52 per cent. were satisfied with the punctuality and reliability of services and a disappointingly low 38 per cent. of passengers believed that GNER offers value for money. My hon. Friend explained that the SRA is negotiating a potential two-year extension to GNER's east coast franchise. We are looking to the SRA to use the negotiations to secure improvements that will make a real difference to passengers' journeys, the need for which my hon. Friend articulated so well.

We want better rolling stock, refurbished stations and new services. New services are on the table but I cannot say today exactly what a two-year extension would deliver. In a single-tender negotiation such as this, it would be irresponsible of the SRA or Ministers to be wedded to particular outputs, regardless of the price. Whether a deal can be reached will ultimately depend on what is on offer. Similarly, I trust that the House would not expect me to weaken the SRA's negotiating position. There is potential value in terms of saving the taxes of my hon. Friend's constituents in setting a public deadline by which negotiations will be completed. We will not let them drag out indefinitely and good progress is being made. Passengers rightly demand improvements and, as my hon. Friend outlined, we want them to be delivered as quickly as possible.

I am aware of the accusations of short-termism generated by the decision of my right hon. Friend the Secretary of State to ask the SRA to negotiate a two-year extension to the franchise. I would therefore like to put the decision in context, which would be helpful to my hon. Friend. The Secretary of State could give the SRA the required direction to award a new franchise early if he were satisfied that there were particular benefits to be achieved. A 20-year franchise would have provided extra capacity through additional rolling stock and improved infrastructure. The costs and design of the east coast main line upgrade were therefore central to maximising the benefits of a long-term franchise. However, it had become clear that neither the design nor the cost of the upgrade was finalised. Indeed, SRA papers indicated that it could take a further two years to finalise.

My right hon. Friend the Secretary of State concluded that better terms with reduced risk for both parties were more likely to be achieved nearer the expiry of the current franchise, when the upgrade would be better defined. No one wanted a repeat of what happened with the west coast main line. He was also clear that benefits should in the meantime be obtained for passengers on that important route. That is why we believe that a two-year extension is the best way forward. It delivers investment quickly without prejudicing options for the longer term.

The objectives of the east coast upgrade project are to provide for an increase in passenger and freight capacity between London King's Cross, Leeds and Edinburgh. I summarised earlier how busy the line is; it is clearly running out of capacity, and accommodating extra trains for both passenger and freight operators is not possible within the existing infrastructure. The proposed solution is to reduce the number of conflicting movements through infrastructure works at known pinch points and to use better parallel lines for freight. The SRA. which is working closely with Railtrack, continues to drive forward the upgrade project.

As recently as 14 September, a further £17.5 million of development work was provided for phase two of the upgrade. That has not been affected by the decision to put Railtrack plc into railway administration. My right hon. Friend the Deputy Prime Minister announced last April that we had reached an agreement with Railtrack that the east coast upgrade would be taken forward as a joint venture project known as a special purpose vehicle—an SPV. Special purpose vehicles bring together specialist project managers, private sector financiers, relevant train operators, the SRA and Railtrack to provide a specific major enhancement or project. They are also being developed for other projects such as the infrastructure elements of the south central franchise. The SRA will set out its proposals for SPVs in more detail in the forthcoming strategic plan.

I also assure my hon. Friend that the enhancement project for Edinburgh Waverley station will not be affected by Railtrack's current situation. I hope that that brings some comfort to him. Railtrack is working on a business as usual basis, and we have no reason to believe that that will change once its successor is in place.

I would like to comment on some of my hon. Friend's other specific points. He mentioned direct services through the channel tunnel to Scotland. The Channel Tunnel Act 1987 placed a duty on the British Railways Board to prepare and publish a plan for the provision of regional Eurostars. The board's original plan was published in 1989 and last year a revised plan was published following a review. The plan concluded that regional Eurostar services would make a heavy loss and that there were no economic, environmental or social grounds for providing a subsidy. The Transport Act 2000 requires the SRA to formulate a strategy relating to services in various parts of Great Britain for facilitating the carriage of passengers or goods by rail through the channel tunnel. The formulation of the strategy is currently under review.

My hon. Friend also rightly raised the matter of the two-year extension for the northern section of the east coast main line. I have noted with interest the list of improvements that he would like to be included in the franchise extension and I undertake to ensure that the SRA is aware of them. He will understand that I cannot commit myself to the improvements in this debate, but I will ensure that they are brought to the attention of the relevant parties.

There are two main reasons for that. First, negotiations have been under way for some time and are already working within established parameters. Shifting them now could significantly delay agreement on an extension. Secondly, and more importantly, the development of a railway timetable is a complex and long-term process. Making some of the changes that my hon. Friend suggests could reduce the capacity on the east coast main line and potentially conflict with our objectives of improving performance and reliability. I recognise my hon. Friend's concerns and I agree that he raises some real issues that the SRA will examine within the flexibility available to it.

On franchising policy, it may be useful if I set out our proposed new approach, which the Secretary of State announced in July. It focuses on key 10-year plan targets and aims to deliver early passenger benefits such as better performance, rolling stock and passenger facilities. It points to the possible alternative of shorter-term improvements that make a real difference to passengers by making existing franchises work better and, where necessary, improving or extending their terms.

Such short-term improvements sit alongside longer-term investment. It is not, as was widely reported, a short-term policy but a horses for courses approach. We are not precluding the early replacement of the shorter seven-year franchises, but that approach will be adopted only when benefits cannot be obtained in other ways. Neither does our approach rule out a long-term franchise for east coast services in due course. However, long-term franchises need to be tied to long-term investment and in the case of the east coast, that investment is most likely to take the form of the upgrade of the line.

We also issued for consultation new draft directions and guidance for the SRA. The draft sets the authority objectives that cover the need to improve standards of punctuality, safety and comfort throughout all franchise services and the much clearer and more focused approach to franchising that I have just mentioned. The consultation period ended on 21 September and we hope to issue the guidance and directions formally as soon as possible.

I am sure that I do not need to remind hon. Members that the Secretary of State appointed Richard Bowker as the new chairman of the SRA on 24 October. He will play a key role in delivering a better, safer railway. Under his leadership, the priorities of the SRA will include working alongside train operators to give passengers a better deal, implementing its strategic plan for the industry, increasing passenger numbers and the rail share of the freight market, and driving forward the £60 billion, 10-year rail investment programme.

I hope that my hon. Friend is reassured by the SRA's approach to balancing the short-term delivery improvement to passengers with the long-term needs of the east coast line. We are aware that much needs to be done. but we are moving in the right direction, as I am sure he agrees. The 10-year plan provides the investment and the mechanism to improve the national rail network and achieve our aim of 50 per cent. more passengers and 80 per cent. more freight over the next 10 years. The SRA's forthcoming strategic plan will set out its priorities for enhancing the network, and will identify improvements that can be achieved in the short term.

I am grateful to my hon. Friend for allowing us to discuss the subject, and I was interested to hear what he said. If he feels that any of his points have not been covered in the clarity or detail that he would like, I would be happy to correspond with him.