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Lord Brabazon of Tara: My Lords, is the Minister aware that Mr Kiley has described the public private partnership as "fundamentally flawed" and a "prescription for potential disaster"? Does the noble Lord not recognise that Mr Kiley has a good deal more experience in running an underground railway than many other people in this country?

Lord Macdonald of Tradeston: My Lords, it is worth emphasising that there is a great deal of experience in running London Underground in its present management. Indeed, it is that management which is carrying on the negotiation at the moment. But I do stress that we have had a series of constructive meetings with Mr Kiley. We are both looking for the best management system. We understand that Mr

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Kiley accepts that the private sector has an important role to play. Despite the statements that we read, I emphasise again that discussions continue.

Lord Marsh: My Lords, but is not Mr Kiley still committed to financing the new situation on the basis of direct access to the bond market? Is there a compromise between that and the PPP?

Lord Macdonald of Tradeston: My Lords, I stress again that in our discussions we have made it clear that we are trying to seek as much common ground as possible. I am not aware that the question of bond finance would in the end frustrate an agreement were that agreement to be possible.

Lord Harris of Haringey: My Lords, does my noble friend agree with the views of the Labour group on the Greater London Assembly--I declare an interest as its leader--that any scheme for the funding of the Tube should deliver money quickly to deal with the under-investment over many years but should also be capable of external validation as to safety and value for money for Londoners? Does he also share the widespread amazement at the Mayor of London's stance in supporting the proposed strikes on London Underground?

Lord Macdonald of Tradeston: My Lords, we look both to the Health and Safety Executive to ensure that the safety regimes put in place are as rigorous as they should be and to the National Audit Office to ensure that whatever deal we do produces best value. I stress that we have said that the PPP must show itself to be the best value for London.

On the question of the dispute, I am aware of the judge's decision but I am not aware of the full details of the judgment. However, it is worth pointing out that, although safety has been one of the points made by the rail unions in the dispute, the other areas are no compulsory redundancies, established staff levels to be maintained and all employees employed at the date of the present dispute to remain on their existing terms and conditions of employment. It is a concern about change that the unions are expressing--in a way, I think, we would all believe is of great inconvenience to the travelling public. But change is, I believe, inevitably in prospect if we want to get into the railway the kind of investment to which the noble Lord referred.

Viscount Cranborne: My Lords, can the Minister satisfy what may be a rather selfish question? Did the Government welcome unequivocally the appointment of Mr Kiley and are they now happy to see him in place?

Lord Macdonald of Tradeston: My Lords, we were not consulted on that appointment and we did not expect to be consulted. However, I have met Mr Kiley on a number of occasions, most recently half an hour ago. I explained to him that I had to leave our meeting to come to the House and answer a Question about

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whether I would be meeting him. We have found Mr Kiley to be extremely able. He has engaged with us in constructive discussions.

Baroness Hamwee: My Lords, the House will glad to hear those comments. The Minister has pointed out that the Government are doing what they can best to accommodate Mr Kiley's thinking within the PPP framework. Does that not suggest that the Government's willingness to be flexible in their thinking is very limited? What further assurances can the Minister offer noble Lords that he is prepared to consider the framework so that ultimately we achieve the best outcome?

Lord Macdonald of Tradeston: My Lords, I stress again that our primary objective is to secure the best value for money for Londoners and to ensure that investment is put into the Tube as quickly as possible. We believe that the PPP is the best system for achieving that. However, we have been open in our discussions with Mr Kiley and have made it clear to him that we are prepared to discuss all of his objectives for the railway, for the Underground--I apologise to noble Lords for using American terms--and that we shall be happy to try to accommodate them where they do not threaten our core intention of providing best value.

Lord Berkeley: My Lords, can my noble friend assist me on a matter regarding the performance of the London Underground? He stated that the objective of the PPP is to improve performance. Can he confirm that recent press reports stating that the PPP will not require the contractors to improve on their performance are totally incorrect?

Lord Macdonald of Tradeston: My Lords, I can do so.

Lord Lawson of Blaby: My Lords, does the Minister recall that a few moments ago his noble friend asked him whether he would condemn the Mayor of London's explicit support for the proposed strike? Does he also recall that inadvertently he forgot to answer that question? Perhaps I may give him an opportunity to do so now.

Lord Macdonald of Tradeston: My Lords, I do believe that the Mayor of London is wrong to say that he will support the strike and take part in picketing. I think that it is also regrettable that, although the strike has been described as a one-day strike, it appears that it will be conducted in such a way that it will hit travellers over two days. That seems inherently unfair on the travelling public. As I have said, I think that the Mayor's actions are regrettable.

Baroness Gardner of Parkes: My Lords, is the Minister aware that a statement was made in a news broadcast to the effect that the Mayor intends to borrow a considerable number of millions of pounds from the fire brigade pension fund to commence immediately and without further delay the transport

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work? Can the Minister tell the House what are the implications of that action? How will it fit in with the other proposed financial arrangements for the Tube? Furthermore, is there any risk that ultimately the people of London will need to pay the money back through a higher levy?

Lord Macdonald of Tradeston: My Lords, many noble Lords will be aware that one of the underlying intentions of the PPP is to transfer risk to the private sector. We believe that if the intended PPP is disrupted in any way it would take one to two years to put in place alternative financing systems. However, I am not aware of any intention to use fire brigade pension fund money for that purpose.

Earl Attlee: My Lords, can the Minister tell the House what is the size of the public subsidy to London Underground and what is the capital requirement?

Lord Macdonald of Tradeston: My Lords, those questions will be covered by the rules governing commercial confidentiality. The noble Earl will understand that at this time that must influence many of our public statements as regards capital needs. As to past funding, in recent years that funding has been running at an average of around 500 million per year. By the end of 2001, I believe that, since the Government came to power, we will have put in around 3.4 billion. That figure contrasts with the previous government's spending plans, which included the elimination of any kind of grant to the Underground.

Hammond Inquiry: Terms of Reference

3.25 p.m.

Lord Roberts of Conwy asked Her Majesty's Government:

Whether they will publish the terms of reference for Sir Anthony Hammond QC's inquiry in connection with matters relating to Mr Peter Mandelson's resignation.

Lord Bassam of Brighton: My Lords, the terms of reference for Sir Anthony Hammond QC's review, announced by the Prime Minister on Wednesday, 24th January, are:

    "To establish what approaches were made to the Home Office in 1998 in connection with the possibility of an application for naturalisation by Mr S.P. Hinduja, and the full circumstances surrounding such approaches and the later grant of that application; and to report to the Prime Minister".

Lord Roberts of Conwy: My Lords, I am grateful to the noble Lord for that detailed reply relating to this sorry affair. Can he confirm that the inquiry will be able to look into the question of how the Home Office appears to have succumbed to extraneous ministerial

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pressures brought to bear when the issue arose over whether passports should have been granted to the Hinduja brothers?

Lord Bassam of Brighton: My Lords, it would be wrong for me either to describe or circumscribe in any way the extent of the inquiry being carried out by Sir Anthony Hammond. I believe that it would also be wrong to pre-empt the outcome of that review. No doubt the review will be as extensive as the noble Lord wishes.

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