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Resolved in the negative, and amendment disagreed to accordingly.
The Under-Secretary of State, Department of the Environment, Transport, and the Regions (Lord Whitty): My Lords, I wish to repeat a Statement which is to be made in another place by my right honourable friend. The Statement is as follows:
"As I explained to the House last year, we inherited an investment backlog of £1.2 billion. We intend to modernise the Underground through a £7 billion public/private partnership which will bring long-term stability to the investment programme.
"Train and station services will continue to be operated by a publicly owned, publicly accountable London Underground. However, in order to raise long-term finance, we will invite private companies to take responsibility for upgrading the infrastructure, including track, tunnels, signals, escalators and trains. This would be for a limited period only, after which the upgraded assets would return to the public sector.
"This means that for the first time in living memory London Transport will know what it can spend on investment for years to come. Until now, London Transport investment plans have been approved in theory for a three-year period; in practice, they were chopped and changed every year. I cannot over-estimate to the House the value of being able to plan ahead in this way and to secure greater productivity in the use of capital. It will mean the travelling public--and London Underground employees--will get more reliable, better quality investment, delivered far more efficiently and cost-effectively.
"Over the past year LT has been laying the foundations for the public/private partnership. We have restructured the LT Board with Sir Malcolm Bates as chairman, Denis Tunnicliffe as chief executive, and Derek Smith as managing director of the Underground. New board members with substantial financial and other experience will be announced shortly.
"London Underground is creating within itself three infrastructure companies as well as the operating company which will remain in the public sector throughout, and will be made properly accountable to Londoners through the new mayor.
"I am pleased to announce that London Transport is, today, inviting companies to pre-qualify as bidders to invest in the Underground. Bidders will need to demonstrate the right mix of professional and project management skills and to harness the finance needed to take the Tube into the 21st century.
"Some concern has been expressed about the time needed to get to this point. I can assure the House that we do not intend to repeat the mistakes made by the previous administration in planning the Jubilee line extension (now more than £1 billion over budget), the money wasted in British Rail privatisation, or the Channel tunnel rail link deal, which we had to rescue from financial collapse. We decided to take the time to get it right.
"In the autumn, selected bidders will be invited to submit tenders, based on the rigorous performance and payment system LT has devised. For passengers this will mean fewer delays, greater capacity and a
"We are aware of considerable interest in the market so we have good reason to expect keenly priced bids. However, as I have made clear before, we will not contemplate deals being done if they do not offer best value to the taxpayer.
"I have therefore decided to allow LT to explore with Railtrack the a way of linking the national rail network to sub-surface lines in a public/private partnership under which Railtrack would undertake and finance the maintenance and upgrading of the subsurface lines for London Underground--under contract to London Underground; and Railtrack would build links between the Underground and national rail lines.
"This 'London Link' plan opens up exciting new possibilities for integration between surface and Underground rail, providing fast new connections between all the major transport hubs, including London's five airports and the Channel tunnel rail link terminals. In particular, new services could run directly from Heathrow in the West into the City. There will be improved links from Brighton via London Gatwick and East London to North London and beyond. Once these are all in place, all five London airports, including Stansted, Luton and the City airport, will have direct rail links into and through London, all connecting with the Channel tunnel rail link. This plan will deliver a joined-up London--real integration for a world-class city.
"There has been considerable speculation about a possible Railtrack take-over of the Tube. That has never been part of our thinking. Unlike the party opposite, we reject the approach based on selling everything in sight quickly and then hoping for the best.
"Railtrack has confirmed and will announce that it will not be seeking to pre-qualify for the two deep-tube public/private partnership competitions. Let me make it clear that throughout the negotiations we will be imposing rigorous conditions. Railtrack will have to improve on its previous record, particularly on project management.
"The vast majority of London Transport staff serve the public well, often suffering the same frustrations with the ageing infrastructure that passengers experience. I would like to place on record our appreciation for their efforts; and I would like to reassure them of two things--first, that they will benefit more than most by having an upgraded system with a secure investment programme for years to come. Nothing could be worse for LT staff than to leave the Underground to rot. Secondly, I would reiterate the assurances which I gave them last year on employment rights, concessionary fares and pensions.
"People have welcomed the guarantees given to staff who transfer to a London Underground infrastructure company; but they ask what will happen to those who transfer to a sub-contractor. I can confirm today that the concessionary travel and pension arrangements also apply to any current LU staff who subsequently transfer to a sub- contractor, provided they remain in Tube work. We will take the necessary steps to ensure this.
"London is withstanding severe competitive pressure. We are determined that London should remain the premier city in Europe as we enter the new millennium. Investing in a world-class transport system is a vital element of these plans. We are already expanding the public transport network. By the end of 1999 London will have four major additions to its transport network--new Riverbus services, the full Jubilee Line extension, the Croydon Tramlink and the Docklands Light Railway extension. From next year, the mayor for London will be able to build a properly integrated transport strategy for London.
"At the end of the last century the London Underground was the world's first metropolitan railway. During this century, it enabled London to grow as a great capital city. Our aim as we enter the 21st century is to ensure London remains a global city, with a world-class transport system.
"Madam Speaker, the public/private partnership will bring £7 billion to modernise the Tube. It will get away from stop-go investment and improve the quality of service for passengers. By exploring the imaginative 'London Link' of through-running surface railways and sub-surface Tube lines, London can look forward to a genuinely joined up transport system--no less than Londoners deserve."
Lord Dixon-Smith: My Lords, the House is most grateful to the Minister for repeating the Statement on London Underground made by his right honourable friend the Secretary of State in another place. I suspect that that is so if only because it gives some welcome relief from the intensity of the earlier debate.
After a two-year period of gestation, I must admit to feeling somewhat let down. Instead of witnessing the birth of a new dawn for London Transport and the Underground system, what we have is news that we can only hope will bring improvement to perhaps part of the system. The background of this Statement is that, under the previous government, investment in the Underground system as a whole was running at around £700 million per annum--£7 billion over a decade. The Government's announced programme of £7 billion is to take place over an undefined but possibly longer period. The people of London may feel that they have been short-changed.
The Government in the persona of the Secretary of State and the Department of the Environment and Transport and the Regions have been running a consistent campaign of vilification against Railtrack, and threatening ever-tightening regulations to bring them under control and reduce their profitability.
The Government have done that to such effect that shares in Railtrack have lost 25 per cent of their value over the last few months. Now, having had their capacity to raise capital diminished as a result of that lower share value, they are suddenly trusted, perhaps, to take over a large part of the Underground system without the apparent necessity of competing through a tender process.
That is a remarkable turnaround. The House is entitled to ask what has brought it about. While there is logic in the integration of Railtrack's system with the sub-surface parts of the Underground system wherever possible, there is no logic in simultaneously campaigning to diminish the economic viability of the preferred contractor. Will the Minister assure the House that that inconsistency will now stop and that the Government will work to ensure that those responsible for the running and improvement of the system will feel that the Government are allies rather than opponents?
The Statement itself does not mention the period of time involved in the possible arrangement with Railtrack. In today's Evening Standard--and it is funny that one has to obtain such information from a newspaper--the period is stated as being 30 years. Will the Minister either confirm that this figure is correct or give the appropriate duration of the arrangement?
Londoners will have rightly been concerned that the disintegration index for the Underground system coined in the Chantrey Vellacott survey as reported in the Evening Standard yesterday has worsened by 20 per cent since the Government came to power. The Government have ducked the issue of clear-cut privatisation for the Underground. They have instead favoured the public/private partnership route that we now see emerging from the smoke screens which have been clouding the atmosphere for so long. Londoners will welcome the clearing of the air, but in view of the past mixture of prevarication and obfuscation, they must be forgiven if they remain sceptical about the future of this system which is so vital to the well-being of the whole of their great community, as it carries so many of them to and from their daily work. Will the Minister give the House any clear information about the time scale for announcements determining the future of the remainder of the Underground system? Without such information, this Statement, while welcome, is incomplete. Londoners are entitled to know when they will be informed of the remainder of the necessary arrangements to secure the future of this essential service.
First, perhaps I may mention some aspects of the Statement which I welcome. The first is the proposal for links between London Underground lines and the surface rail lines to provide rail connections between all of London's airports and between all of them and central London and the CTRL. That will make a useful contribution as a substitute for road travel in those areas.
Thirdly, I welcome the reassurance offered by the Minister and his colleague in the House of Commons to the employees of London Underground. It is a period of great change for them. It must be hoped that they will be treated with good sense and encouraged to take a positive view of the changes which affect them. No one likes change and they need reassurance.
However, we regret, even now, that the Government have chosen the PPP route, albeit that it is far preferable to outright privatisation and total loss to the public sector of the assets involved. We should prefer some sort of public interest company. However, given that that is the Government's decision, I wonder what has been the reaction among government Members to the Tony Travers's articles which confirm what many of us had supposed for a long time; namely, that because it is more expensive to borrow money in the private than in the public sector, there must be a danger that financing public services from private money will mean an increase in fares--in other words, the cost to the user. Will fares be capped?
Secondly, Railtrack has apparently been allocated the near-surface level of the London Underground track to play with, thereby avoiding the problems inherent in modernising the deep-track lines--for example, the Piccadilly line. Are the Government confident that they can make Railtrack perform to its promises? Everyone knows that it is now facing about £20 million in fines arising from lower than promised performance in relation to rail services. Londoners will not forgive a government who allow similar back-sliding on the London Underground.
As the noble Lord, Lord Dixon-Smith, said, the Statement is defective with regard to any information about timing. With tenders being invited in the autumn, when do the Government expect the tender process to be completed? How does that fit in with the election of the mayor? When will the strategic thinking and planning for London transport by rail be in the hands of London's mayor? The noble Lord spoke about joined-up thinking. Will joined-up thinking and joined-up London begin before or after the election of the mayor?
I turn briefly to the competition for the two deep-level rail contracts. What criteria will the Government use to test bidders beyond their financial viability? What are the building blocks of what are called London
Perhaps I may recap my main areas of query. We are worried about the likely fare increases and we want to know whether they are to be capped. We want to know about the public sector comparator. We want to know about minimum passenger level services; and we want to know when the mayor will have an impact on the various negotiations.
We share the Government's stated ambitions for London. Like the people of London and its visitors, we shall be watching to see what happens. By their acts, we shall judge them--and I do not mean Acts of Parliament.
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