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Lord Falconer of Thoroton: My Lords, I did not realise that the noble Lord had sat on that committee and I did not realise that it had left him so upset about the way in which it had performed or that it had failed to reach a decision. We believe that the right course in relation to entitlement cards is to have a proper debate; that is what we have encouraged. The consultation comes to an end on 31st January 2003. The right thing is for the Government to make a decision in the light of that debate.

London Underground Contracts: Consultancy Costs

2.45 p.m.

Lord Newby asked Her Majesty's Government:

Lord McIntosh of Haringey: My Lords, I understand from London Transport that it has spent 96.3 million on external consultants for developing

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the PPP modernisation plans since the Government's announcement on 20th March 1998. This represents less than 1 per cent of the 16 billion investment that will be delivered over the first 15 years of the contracts.

Lord Newby: My Lords, I am grateful to the Minister for that Answer. Is he aware that during the course of the second judicial review on the PPP, the barrister for London Underground, John Howell QC, said that negotiations on the contracts had involved very considerable amounts of money, some 400 million since the beginning of the programme and 100 million since the selection of the preferred bidders? Will the Minister confirm that the figures quoted by the QC are correct? Will he acknowledge that spending such ridiculously large amounts on contracts that are not yet signed leads many people in London and beyond to believe that this is a fatally flawed project?

Lord McIntosh of Haringey: My Lords, I do not know how the QC reached his figures. I tried very hard to come to a global amount but failed. I gave the Answer in relation to external consultants for London Transport. One could add London Transport staff costs but some of those are not related to the PPP. Much of that amount relates to reorganisation and restructuring. Those costs would have been incurred anyway. There is an argument about whether one should include them. One could also include as part of the contracts the costs incurred by the bidders, which will have to be repaid by the taxpayer in due course. Again, that is normal commercial practice. What should and should not be included is not entirely set. I cannot therefore confirm or deny what the QC is quoted as saying.

Lord Barnett: My Lords, my noble friend told us previously that matters involving PPP or PFI are decided not on an off balance sheet basis but in terms of value for money. Would he care to publish figures showing the costs of PPP, including these enormous consultancy fees, in comparison with the proposals from the Mayor of London?

Lord McIntosh of Haringey: My Lords, I can certainly give the assurance that the costs of consultancy have been taken into account. When the calculation was made by Ernst & Young, external consultants, the PPP was found to be value for money to the tune of 2 billion.

Lord Marsh: My Lords, does the Minister agree that our experience of the Dome and other enormous projects, some having the potential for massive losses, suggests that expenditure on consultancy fees of less than 1 per cent of the total cost is a pretty good bargain?

Lord McIntosh of Haringey: Indeed, my Lords; the whole principle behind the PPP is a transfer of risk from the public to the private sector. That transfer of risk involves not only construction costs, as is always

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the case for work carried out for the public sector by the private sector, but also the maintenance of the infrastructure being created by the initial investment over a period of more than 15 years. The transfer of risk justifies the costs. The noble Lord, Lord Marsh, is entirely right.

Lord Saatchi: My Lords, does the Minister remember saying last week in the debate on the Pre-Budget Report—I believe I have it correctly—that all contingent liabilities above 100,000 are declared in the Red Book? I have been looking for the rail and Tube borrowings to which he referred, which are guaranteed by the Government, but I cannot find them. Can he tell me on what page they appear?

Lord McIntosh of Haringey: My Lords, I am sorry to say—I wish it were not so—that we have not reached a conclusion on the public/private partnership for London Underground. Therefore, there is no final figure.

Lord Ezra: My Lords, following on what the Minister said, can he indicate when he expects the much-needed investment under the PPP will begin to flow?

Lord McIntosh of Haringey: My Lords, again, I wish that I could. We have virtually reached financial close. We are expecting the state aid approval from the European Commission any day now. Then the outstanding issue will be whether the Mayor chooses to appeal against the European Commission decision on state aid. If so, there will be another substantial delay.

DTI Strategy Unit

2.51 p.m.

Lord Peyton of Yeovil asked Her Majesty's Government:

    What is the role of the Department of Trade and Industry's strategy unit; what achievements the unit has to its credit; and what is the total number of its staff and its cost.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, the role of the strategy unit is to measure and assess the country's enterprise and innovation performance, to compare our performance with other countries, to consult our stakeholders and to help develop new policies in areas such as competition policy, enterprise, science and technology, skills and corporate governance. The unit was set up in April by bringing together the department's strategic planning, economic and statistical analysis and communications sections, which consist of 18, 57 and 68 staff respectively. The associated annual staff cost is 5.733 million.

Lord Peyton of Yeovil: My Lords, I believe that the noble Lord will forgive me if I say that that Answer

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does not get us much further. Is he aware that my curiosity drove me to the Civil Service Year Book? To my great surprise I discovered that this gem of a human organisation exists,


    "to drive up UK productivity and competitiveness",

and—mark these words—to ensure,


    "that this strategy is clearly communicated".

Will the Minister think me rude if I say that his Answer has not contributed to a clear communication on the strategy?

Lord Sainsbury of Turville: My Lords, on the contrary. I thought that in 75 words I did extremely well to cover at least five or six different questions. I hope I was clear. I explained exactly the areas where the unit measures performance, the activities that it undertakes in that respect and how it will help to deliver policy in those areas. I thought the Answer extremely clear and that it conveyed exactly what the unit does.

Lord Razzall: My Lords, perhaps I can help the Minister. Does he recollect that Mr Peter Mandelson, missed by some in what was a short-lived appointment as Secretary of State for Trade and Industry, originated a report detailing the objectives and the benchmarks against which the Department of Trade and Industry would be measured? Can the Minister say when an up-to-date report will be available detailing achievement against such objectives and benchmarks?

Lord Sainsbury of Turville: My Lords, the strategy unit has already published the 2002 update of our productivity and competitiveness indicators. In the spring of next year we shall publish both where the resources are allocated within the DTI and the targets for the different parts of the department against which its performance can be measured.

Lord Hodgson of Astley Abbotts: My Lords, did the Minister see in The Times today the remarks of Sir Stephen Brown, the chief executive of British Trade International? They appeared under the heading:


    "Trade chief says red tape and costs hurt UK".

In the light of the response he has given the House, will the Minister ask the strategy unit to investigate this critical issue which we on this side of the House have been trying to make the Government focus on for some time?

Lord Sainsbury of Turville: My Lords, that is exactly the kind of issue on which it is necessary to have a clear grasp of the facts and figures. The unit can have most impact in exactly that kind of area. On the basis of the extraordinary figures produced in this context by the CBI and the Conservative Party, I would have thought that the strategy unit would be very useful.

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Lord Jones: My Lords, does my noble friend know whether the strategy unit ever considers the prospects for Britain's hard-pressed manufacturing industries? Does it ever consider the prospects for the hard-pressed steel industry, particularly in Wales? Is the unit considering any such problems?

Lord Sainsbury of Turville: My Lords, we recently introduced a manufacturing strategy document that considers the impact that the policy areas under the control of the DTI have on manufacturing strategy. We have produced policy proposals for that.


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