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9.8 pm

Mr. Tom Brake (Carshalton and Wallington): It is a pleasure to follow the hon. Member for Croydon, Central (Mr. Davies). I am pleased that he has had a new child, but in that case, he might have followed what I believe is current Government policy and taken two weeks' parental leave, rather than one.

It is my pleasure to focus on just one aspect of the debate: the part privatisation of London Underground. The tube is the lifeblood of our capital city. Just last week, a report by Business Strategies said that

so having a smooth-running tube is not optional. It is a vital service for Londoners and visitors to London. It needs to be safe, clean, affordable and reliable. The way in which London Underground is funded is vital in ensuring that those objectives are met.

After 18 years of underfunding that left the tube with a £1.2 billion investment backlog, privatisation is the best option that the Tories can think of. Conservative Members' ideological commitment to privatisation is very reassuring. It shows that they are incapable of change, and that they will be flying the tube privatisation banner high as they lose their seats at the next general election.

Privatisation will not work for the underground. It would be a repeat of the railways disaster. Gerald Corbett said that railway privatisation was designed

--and he should know about the effect of railway privatisation.

In view of their priorities, we can only hope that Conservative Members never get their hands on our public services again. They have already made their intentions, including at least £8 billion of cuts nationwide, very clear. That amounts to a cut of £24 million in my London borough.

If underground privatisation follows the Tories' past record of stunning business acumen, the underground will be sold off for much less than it is worth. As we have heard today, privatisation and undervaluation of Railtrack lost taxpayers £6 billion. Additionally, privatisation does not even guarantee that the private sector will invest in the tube. Railtrack has had to be dragged kicking and screaming to deliver its investment programme.

Labour's public-private partnership may seem better than privatisation, but in an attempt to get the best of both worlds, Labour runs the risk of getting the worst of both. There are a number of problems with the public-private partnership. The Minister quoted the Industrial Society, but he did not quote its statement, as reported on BBC

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news in September, that the Government's plans to modernise London Underground represent "poor value for money" and could put passenger safety at risk.

The Government can no longer dismiss those safety concerns--

Mr. Hill: The hon. Gentleman should read the whole report.

Mr. Brake: The Minister should read it again.

Fragmentation of the railway industry led to deteriorating communications. How can the Government guarantee that a similar break-up of London Underground will not lead to an identical breakdown in communications? We have heard nothing from the Minister on that point.

PPP does not make sense financially. Glaister, Scanalon and Travers suggests that over a 30-year period, a bond issue would work out at about £80 million cheaper per annum. That would be a very significant saving.

PPP could also cost travellers more. Under the Government's current expenditure plans, grant funding for London Underground is to be withdrawn and the underground is to be funded by fares revenue alone, with the possible exception of major extensions to the network. I have heard rumours that the Government may cave in and accept that grant funding will remain necessary in 2001-02 and beyond. If that is correct, I hope that the Minister will confirm as much, as it would set many Londoners' minds at rest. If he cannot give us that reassurance, the public-private partnership and the withdrawal of grant, taken together, could mean that investment costs are shifted even more on to passengers.

Additionally, public-private partnership could mean that one of the problems with our tube system--affordability--is exacerbated. If fares continue to increase at current rates--the figure of 30 per cent. has been mentioned today--the tube will be out of the reach of many of London's citizens.

PPP is also about standing still--maintaining and upgrading the current system and dealing with the repairs backlog, but ignoring the desperate need for expansion and new lines.

The infrastructure charges that London Underground will have to pay to the PPP companies are expected to increase almost annually as more work is done on the network. Once contracts are signed, London Underground will have to meet those charges regardless of whether revenue increases. Responsibility for meeting any shortfall will rest, ultimately, with the Mayor and the Greater London Authority. The shortfall after two years of the operation of PPP has been estimated at around £175 million--a substantial sum.

On accountability, Labour is to bring in a system that the GLA members--London's elected representatives--do not want. They will be the ones left to pick up the pieces if it all goes wrong.

The Minister was worried earlier that he was not going to get his fix of Liberal Democrat public interest companies; he was wondering why no one had referred to them. I can reassure him that I am about to do exactly that. We believe that public interest companies provide a true alternative to the PPP fudge. Allowing those companies to raise their own capital, freed from the public sector requirement constraints, would provide a far

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cheaper means of finance than the private sector--a point the Minister did not respond to. We will be happy to put up this proposal for analysis with the public sector comparator--something that the Government have still to use on PPP. Incidentally, their plans could still unravel at this very late stage.

Public interest companies can work to public sector objectives; this has been done in New York. As we know, New York's successful tube supremo Mr. Kiley has been drafted in to London Underground. He must be somewhat disillusioned with his scope for action, as he is stuck with PPP. It is as if that other foreign import, the England team manager, had been asked to put together his best team but could only use left-footed players.

With public interest companies, the tube would not lose all Government-supplied revenue, which would run the risk of raising ticket prices. Additional sources of future funding, such as congestion charging, could be used later to top up the investment fund. Public interest companies do not carry the safety problems caused by fragmentation into different parts--another point that the Minister did not respond to. He has not explained how he will address the risks of a fragmented system under PPP--risks that we have already seen following rail privatisation.

Public interest companies would provide a financing system that truly would be in the public interest--bringing in desperately needed finance, but also safeguarding the public interest, not just businesses.

The Minister talks about the delays that would arise if a public interest company if were introduced now. The PPP was expected to be completed in April this year, yet no contract has been signed for the two deep tube lines. For the sub-surface line, the fiasco of attempting to cobble together an agreement between London Transport and Railtrack--which many felt was anti-competitive--means that a deal is not expected until April 2001 at the latest, four years after the Labour Government came to power.

The Government have inherited one of William Hague's Conservatives' least attractive features--obstinacy. However, it is not too late for the Government to abandon PPP--

Mr. Deputy Speaker: Order. The hon. Gentleman should know by now that we do not refer to Members of this House in that way.

Mr. Brake: Thank you for pointing that out, Mr. Deputy Speaker.

It is not too late for the Government to abandon the public-private partnership. The Minister should think again, learn the lessons from railway privatisation, hear the voices of millions of Londoners and dump PPP.

9.18 pm

Mr. Geoffrey Clifton-Brown (Cotswold): The Liberal Democrats' motion is opportunist, and much of what the hon. Member for Bath (Mr. Foster) said was inconsistent with their own manifesto. If we compare the manifesto with what he said tonight, we will see whether this is a case of the Liberals being consistent--or, as usual, facing both ways at the same time.

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In the manifesto, the Liberal Democrats said that they would

We have not heard much from them today about how they propose to bring in the £7 billion that the Government will raise on the public-private partnership for London Underground. The hon. Member for Carshalton and Wallington (Mr. Brake) criticises the lack of investment in London Underground without giving us any clues about how his party proposes to raise the money.

The Liberal Democrats said that they would

Again, they did not tell us how they would raise the money. They vaguely said that they would

but we heard nothing from their spokesman about what that really means. It is pure words.

The only point in their manifesto with which I can agree is when they said that they would

I must give the Government credit: the Strategic Rail Authority brings into one pot a number of different authorities, and that is badly needed for the railways. However, I will not let the Government entirely off the hook on safety, to which I shall return.

The Liberal Democrats said that they would

Goodness knows what that will do. It will surely make matters worse. If Railtrack cannot increase its own investment and there is no public subsidy, the railways will suffer.

The motion is opportunistic and the Liberal Democrats have failed to explain their policies, but this is still an important debate, in which we must get one or two facts on the record. Much has been made of the failure of my party's privatisation of the railways. Let us look at the facts. Between May 1997 and September 1999 there was a 5 per cent. increase in passenger journeys, and we now have the largest number of passenger journeys on the railways for 40 years.

Privatisation can hardly be called a failure if we have that record number of passengers--which has, of course, given rise to some of the problems that we now face. The rails are simply not standing up to the huge increase in traffic, and are suffering from metal fatigue. We want to encourage more freight and passengers onto the railways, but we must be extra vigilant on safety.

Despite what the Liberal Democrats want, domestic rail freight increased by 15 per cent. in the two years to March 1999, to a record 17.4 billion tonnes moved. There are 1,300 more trains being run daily to meet increased demand since privatisation. Since 1997, 13 new stations and more than 50 new freight terminals have opened and £1.95 billion of rolling stock has been ordered. That is not a bad record.

The Government claim the credit for increased investment in the railways, but in the next breath they

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criticise us for privatising them. They cannot have it both ways. Their own spokesman, Lord Macdonald, said:

To listen to some of the scaremongering, one would think that the whole system was falling apart.

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