1 April 1998

The Viscount Thurso (Lib Dem)

In common with many other people, I have been very sad to see the remorseless decline of the rail system. I am therefore particularly grateful to Baroness Thomas of Walliswood for having introduced this debate, and at a particularly appropriate time.

It is appropriate for three reasons. First, the decline in real use has been reversed, and that is good news. Secondly, the concern for the future and for the future direction of transport policy in relation to railways has never been more acute, and that is bad news. Thirdly, it looks as though the Government will do something about it, and that is an opportunity.

Whilst the decline to which I refer has in part been caused by the increasing comfort and convenience of the motor car, coupled with the massive extension of the road network, and in part by an equally considerable increase in the variety and efficiency of regional air transport, there is a third and very important reason: that is the hostile political climate under which the railways have operated, stretching back decades, perhaps even beyond the infamous Dr. Beeching.

It is very telling that when governments in the past have referred to expenditure on roads it has been called "investment in infrastructure", but whenever they have referred to similar expenditure on the railway it is described as "a subsidy". Until such time as we are prepared to regard expenditure on rail infrastructure as an investment—and perhaps even to consider road expenditure as a subsidy—then we will not have the political will to do anything to improve its current dilapidated state.

It is vital when considering the future of the railways that one makes a correct comparison—what one might term "an apples for apples comparison"—with other forms of transport. The cancellation of the motor rail service is an example I was a regular user of the service, making two or three return journeys a year. The service was well used, as I often witnessed, and yet in the run-up to privatisation the service was closed. The reason given at the time was that it was simply too costly to run.

The only reason why de-regulated buses have proliferated and can offer a cheaper service is because they bear virtually no infrastructure costs. The same is true for road freight. It is difficult to get accurate figures and I am grateful to Mr. Simon Miller of Railtrack for providing me with some. Rail freight users pay 100 per cent. of the cost of service provision; rail passengers pay on average 60 per cent. of the full cost of service, which will rise to 80 per cent. on current franchise commitments. This compares with road users paying on average about 30 per cent. of the full internal cost of motoring at point of use. These are the hard costs and take no account of external collateral or social costs of these choices.

Again according to Railtrack, road activity is variously estimated to have external costs ranging from anything between 10.9 billion a year up to 52.9 billion a year. The comparable external costs of rail transport are negligible. The plain fact is that road users are not paying for the full cost of their transport decisions.

The same discrimination appears when it comes to investment. Something in the order of 9 billion was spent on roads last year, whereas Railtrack are rightly proud of the fact that their increased expenditure will only total 1.5 billion a year.

There is one area where the Government can have an impact without increasing public expenditure or amending the terms of the franchises, and that is the area of fiscal policy. We are one of the very few countries in the world which has taken the cult of the company car to the extreme. Like many others I benefit from a company car, but under the present system there is no incentive for me or my company to change. If the benefit of a company car were to be fully taxed, and particularly if scale charges for petrol were to be fully abolished and replaced by genuine business mileage to be claimed from the company, I foresee two effects. The first is a reduction in the number of cars given as perks. The second is companies paying people in cash which would then be taxed in the normal way.

On the other side of the equation, I should like to see, at least for a limited period, some or all of the cost of rail season tickets being tax allowable. That would encourage more use of the railways by creating greater revenue streams and better cashflow.

Recently I spoke to the chief executive of the BHA. We were talking generally about tourism and I asked him what, if he had one wish, he would wish for to improve tourism in this country. He thought for a moment and said, "Transport, and particularly the railways". We must not underestimate the value to all businesses, particularly tourism, of having an integrated and efficient transport system, in particular an efficient rail system.

The key to achieving the shift in emphasis which we all desire and to achieving the levels of investment necessary to make railways the first choice for passengers and freight alike is a change in the political language and climate in relation to the railway system. In that regard, I am glad that the Government are committed and I am sure that their heart is in the right place. But we need to see some real commitment if these good wishes are to be turned into reality.

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