Examination of Witnesses (Questions 760
WEDNESDAY 16 JANUARY 2002
MP AND SIR
760. We remember the details.
(Sir Richard Mottram) Therefore, it is perfectly proper
for that company to come to all of its shareholders, including
the Government, and to discuss with them its situation.
761. Can I come back specifically to the building
of the new centre in Scotland. You are talking about a delay of
some two years. Is that the figure that you accept, or is it the
case that it can slip even further beyond that? If you were to
be cynical, is it possible that the centre at Prestwick will never
be built, or is that impossible?
(Mr Byers) All we have agreed to is a deferral. We
have not agreed to a deferral for a particular time. The reason
why we agreed to a deferral was to allow us to sort out the situation
that we are facing at the moment.
762. When do you see yourself, Secretary of
State, in a position that you will be able to go to NATS and say
"You have to start this building programme"? The basis
of this is extremely worrying, and it takes it out from what is,
on the face of the Act, a commitment by the Government that was
given at the time of the Act passing through the House, which
was a two-centre strategy, which was within the United Kingdom.
Is that still the case? Is it still a two-centre strategy, as
far as the Government is concerned, within the United Kingdom?
(Mr Byers) I will repeat what I said earlier. All
that we have agreed so far is a deferral to the Scottish centre
being constructed. No more than that. There is a wide set of discussions
going on about the financial situation of NATS in the light of
the downturn, particularly since September 11, and it is part
of those discussions, but no conclusions have yet been arrived
at and when we reach an outcome to those discussions it will need
to reflect the commitments that have been given during the passage
of the legislation.
763. What do you believe to be the time-scale?
(Mr Byers) We will need to reach an agreement with
the airline group and with other shareholders in NATS as soon
as we can. I am not going to give away some of my negotiating
strength by putting down a timetable in front of the Select Committee
764. Do you agree with the Heathrow Terminal
5 Inquiry that there is no case for widening the M4?
(Mr Byers) I announced to Parliament the agreement
that we had, the details of which are contained in the decision
765. Do you think the bus lane is on the wrong
side of the road and, perhaps, it should go?
(Mr Byers) I think we keep under review the way in
which we manage the motorways.
766. What is your thinking on whether the PPP
for the London Underground is value for money?
(Mr Byers) We will know in a few weeks' time. The
final bids came in on 4 January, they are now being clarified
and evaluated, the London Transport Board will meet round about
the second week in February to make an in-principle decision on
whether value-for-money is achieved. I think when I last came
before the Select Committee they had not agreed this but they
have now agreed with me that they should publish very quickly
after that board meeting the details and also the advice that
they have received, and there should then be consultation, primarily
with the Mayor and Transport for London but it will be a wider
consultation as well, because these will be made publicly so people
can see the comparator between what the PPP offers and, also,
what the public sector comparison would offer as well. I would
also make available the Ernst & Young report which is being
made available to mean independent report. I know this
is a big issue which has caused a lot of debate, and there was
an alternative means of funding identified by the Mayor which
is through a bond issue. I think it would not have been a right
consultation, or an effective consultation, if all that we had
been comparing with the PPP had been the traditional form of public
service comparator. So what I have done, and this will be made
public as well, is make sure there will also be a comparison on
value-for-money terms between the PPP and the bond issue as outlined
by the Mayor and the Commissioner. So people will have a range
of options around which they can consider. Then there will be
a consultation period and then, probably round about the middle
of March, a final decision will need to be taken on whether the
value-of-money of the PPP has been achieved. It will be very open
and it will be an opportunity for people to engage in the debate.
I have ensured that there will not just be a comparison between
the PPP and the public sector comparator, they will also be able
to look between the PPP and the value-for-money of a bond issue.
767. How long will the actual evaluation period
(Mr Byers) It will be about three weeks.
768. The Treasury has guaranteed funding for
at least seven-and-a-half years. Would that still be there if
the PPP did not go ahead?
(Mr Byers) We will announce what Plan B is at the
time of the final process.
769. Is the Treasury trying to influence the
(Mr Byers) No.
770. There is no pressure from the Treasury?
(Mr Byers) No.
771. Are you quite sure about that?
(Mr Byers) Yes.
772. What about the London Underground Property
Partnership deal? If that does not go ahead as envisaged, would
that mean that the PPP will cost more?
(Mr Byers) No, I think the important thing on the
partnership project is that we get real value-for-money. I was
not prepared to say that it should go ahead immediately because
I was not convinced it was actually going to achieve real value-for-money.
My approach to the whole of the London Underground modernisation
has been very pragmatic; I am not coming at this from a dogmatic
position; I want to deliver what is going to be best for passengers
in London. If that means that we do not go ahead with the property
partnership but we actually hand that over to the Mayor without
making a decisionif that is the best thing to do on value-for-money
termsthat is what I will do. It is the same with the three
PPP contracts. If they do not achieve-value-for-money we will
not go ahead with them.
773. Will you be taking that decision on your
own or are you being leaned on by others?
(Mr Byers) I will take the decision on value-for-money
on behalf of the Government, but it will be my decision.
774. Does the Treasury have any role in looking
(Mr Byers) The Treasury has been involved in how the
public sector comparator has been compiled, as one would expect.
775. The date of the board meeting, you said,
(Mr Byers) It is the first or second week in February,
but the London Transport Board will no doubt let the Committee
know exactly what date it is. I have got a provisional date, but
it would probably be wrong.
(Sir Richard Mottram) I will send you a letter that
includes the date.
Chairman: Thank you very much.
776. The question I wanted to raise in relation
to the underground is that there is a rumour circulating at the
moment, which I am sure is completely scurrilousbut you
might take the opportunity today to lay those rumours to restthat
Plan B involves handing the underground to the Mayor, carrying
with it debts of some £1 billion to encompass the hangover
from the Jubilee Line spend and the cost of managing the PPP process.
Can you rule that out?
(Mr Byers) It is an interesting rumour, and rumours
are even more interesting if they are scurrilous. I have never
known a rumour that was not scurrilous. I can rule it out. No
decisions have been taken on what Plan B might be or the terms
under which Plan B would operate.
777. The decision to introduce Renewco should
have been taken by 1 October, and Sir Alastair Morton wrote to
Sir Richard just to get confirmationwhich he got from Sir
Richardthat the fact that it had not come into effect on
1 October was no fault of the SRA. I understand it was not until
5 November that the independent Office for National Statistics
ruled that the amount of money in question£162 millionthat
would have passed to Railtrack had Renewco come into effect under
the April agreement, would have been treated and classified as
being in the public sector. My first question is why was the ONS
decision so made and why were you not in a position to introduce
Renewco on 1 October?
(Mr Byers) The dates are correct because they have
been disclosed in parliamentary replies before Christmas, so,
yes, those dates are correct. The ONS is an independent body and
it will obviously take its time in reaching any decisions on classification.
778. Can you help the Committee, Secretary of
State, because I have some difficulty understanding why the ONS
has described that the £162 million which was due to Railtrack
on 1 October would have been classified as being in the public
sector, whereas we heard from Mr Spellar, who told the Transport
Sub-Committee, that £1.2 billion of loans was being passed
to Railtrack's administrator, and I understand that the Chancellor
told the Treasury Select Committee that there would be no impact
on public sector net borrowing from such short-term loans. Why
does one count as public spending, in the case of Renewco, the
£162 million, but not the short-term loan?
(Mr Byers) Just to say that the £162 million
was not legally due to be paid on October 1; the April agreement
was to use best endeavours, and it was a clear condition of that
that it would not count against public spending. Why the ONS classifies
one thing against public spending and other things as not is,
really, an issue for the ONS. They are an independent body, they
are not influenced by politicians and they make these decisions.
And we have to abide by them.
(Sir Richard Mottram) If I can just add one small
thing. It was not a question about the money it was: could we
have a vehicle which was 50 per cent private sector, 50 per cent
government and how would such a vehicle be classified. That was
the question that ONS were being asked, and the conclusion they
came to was it could not be off the Government's balance sheet
and off all private sector balance sheets as well.
779. Would it not have been advisable to have
got that advice before the April agreement was signed?
(Sir Richard Mottram) No, because when we were involved
in negotiating the April agreement (and that was, obviously, before
the Secretary of State took office) the April agreement was negotiated
with Railtrack and they were quite comfortable that what we were
doing was we were going to use our best endeavours to create this
vehicle. We set out to use our best endeavours to create that
vehicle. The correspondence that I had with Sir Alastair Morton
was designed to ensureon my part, anywayif there
was a subsequent inquiry by Parliament, in particular by the Public
Accounts Committee, I was giving an assurance that no one would
argue that the SRA had been at fault in the way in which they
had gone about the technical issue of seeing if Renewco could
be established on this basis. That is what that correspondence
was about. Railtrack were perfectly happy at the beginning of
April on the basis on which we proposed to proceed in relation
to Renewco. I was personally involved in the discussions with