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Mr. Norris: I shall ask London Transport for an answer to that question. It is in the interest of the system as a whole that we have an effective and instantaneous method of communication on the underground system.
Mr. Bernard Jenkin (Colchester, North): I may be speaking out of turn, but I understand that there is such a system, and that it is extremely simple. Along the side of the tube, two exposed wires run parallel to each other.
If any driver or member of staff wishes to stop traffic on that track, he squeezes the wires together, which creates a circuit, sends a signal and cuts out electricity to all trains on that track. It is simple technology. It does not matter who owns the wires or how they are financed--it will still work.
Mr. Norris: My hon. Friend is right, and I especially endorse his point on the ownership of the two wires, but the question posed by my hon. Friend the Member for Eltham was slightly different. He asked about how the information could be transmitted more widely and how more useful information could be transmitted, rather than merely about switching off the power to trains in the immediate vicinity of the point where the power has been disconnected. I will send a reply on that to my hon. Friend, and copy it to my hon. Friend the Member for Colchester, North (Mr. Jenkin).
The second type of PFI project we want to undertake involves ticketing and what we call the "prestige" project. It would involve the complete modernisation of London Transport's ticketing systems, based on the progressive introduction of smart card technology. The contractor would take over responsibility for providing and selling tickets for tube and bus services and for the equipment to validate them, such as the ticket gates at underground stations.
Giving the private sector responsibility for the whole system would itself provide scope for the introduction of innovative and efficient systems. As with the communications project, there may be scope to spread costs if the smart cards can be used with third parties--for instance, as an electronic purse accepted by retailers. It could be used as a means of paying for parking charges or whatever. That is the underlying basis of the need for the Bill in relation to that project.
The third scheme involves power supply. That would involve a contractor taking over LT's existing power generation plant and taking responsibility for the provision of main and emergency power supplies for the underground network. As with the schemes that I have already mentioned, the contractor would be able to spread costs by supplying power for third parties.
Finally, LT is developing plans for extensions of the east London line. Powers are being sought under the Transport and Works Act 1992 for the northern extension to the line, while LT is also considering proposals to extend its southern end. It is intended that they will be taken forward with the private sector under the PFI.
In total, those projects would involve private sector capital investment in LT of about £750 million. Competitions for two of the schemes--for power supplies and for the prestige ticketing project--are under way. London Transport is evaluating pre-qualification bids, and hopes soon to move to the full competition stage. London Transport is also about to invite pre-qualifying bids for the communications project.
In working up those competitions and schemes, LT has run into some potential or actual legal problems in taking them forward within the PFI. As I have said already,LT's powers derive from the London Regional Transport Act 1984, when schemes of that sort were simply not envisaged. The Act, quite rightly, constrains LT's powers to public transport, so as to prevent its becoming,in effect, a Government-sponsored general trading
company. However, it has now become clear that the effect of those restrictions is also to circumscribe LT's ability to enter into agreements under the PFI, whereby the private sector party to the agreement would carry out non-transport-related activities.
For example, under its present powers, LT could not enter into agreements of the sort proposed for communications, power or ticketing to the extent that they would involve the private sector partner in the provision of services to third parties to any substantial extent.Nor could LT enter into agreements that might at some stage need to be transferred to a third party: for instance, if the original contractor were to default and the financiers to the deal wished to appoint a new contractor.
Unless addressed, those restrictions will limit the scope for LT to execute successful PFI deals, and will especially reduce the opportunities for pursuing deals involving the use of assets both for LT's own services and for third parties, which promise value for money and the benefit of private sector funding.
The aim of the Bill, which, as I have said, commands the full support of London Transport, is therefore to remove those constraints, and to ensure that LT has the ability to make full use of the PFI. Given the desirability in principle of removing impedances to the PFI, and given that the problems that have been identified would prevent LT from taking forward schemes for which it has competitions under way already, it is clearly important to put the deficiencies right as quickly as possible.
Before I go on to explain the purpose of the Bill in more detail, I should like to emphasise--[Laughter.] It is an important measure. I shall emphasise to the House what the Bill does not do.
Mr. Wilson:
There must be an hour or two in that.
The Bill is not intended to widen the role or functions of LT itself, other than where that is necessary as a by-product of facilitating PFI schemes. As I said before, we are not in the game of setting up LT as a general trading company.
In response to the amendment tabled by Labour Members, I reassure the House that the Bill in no way erodes LT's powers or changes its status. It is not a privatisation Bill; thus, it does not affect the basic duty of LT--as set out in section 2 of the 1984 Act--
Nor does it affect LT's functions under section 8 of that Act in relation to the planning of fares and services.The Bill does not change the wide range of other provisions in the 1984 Act that would almost certainly need to be changed if the underground were to be privatised.
Of course, we on Conservative Benches believe in the benefits of privatisation, which have proved themselves already in so many transport industries: British Airways, the British Airports Authority, the National Bus Company, the National Freight Consortium and the ports, to give just a few examples. Those benefits are now being extended to the national rail network.
However, we have no plans to privatise London Underground, and we are not in the business of privatisation by stealth. The Bill is essentially a technical one. It has the strictly limited aim of extending--
Mr. Michael Stephen (Shoreham):
Shame.
Mr. Norris:
I hope that my hon. Friend is not suggesting that it is a shame that the Government do not act by stealth. He may be suggesting that the Government have a real enthusiasm for the benefits of privatisation, which I heartily share.
Mr. John Marshall:
Does my hon. Friend accept that London's commuters are concerned about the quality of service and the level of investment in the underground? Many of them would welcome privatisation, because, wherever it has taken place, it has led to increased investment and better-quality service. The sooner my hon. Friend gets on his bike and privatises London Underground, the better.
Mr. Norris:
My hon. Friend is correct--although I do not wish to inflict the sight of me on my bike upon more Londoners than is absolutely necessary.
Mr. Jenkin:
The Minister is seeking a transformation of London Underground, the like of which has been achieved in other nationalised industries only by privatisation and the preparations for it. I wish him well in trying to transform that business, while keeping it in the public sector. However, I fear that customers will expect a complete transformation--particularly when they see the success of rail privatisation and how services have been transformed. [Laughter.] We are now hearing hoots of derision from Labour Members--as we did with British Airways, British Telecom, and so on.
Mr. Deputy Speaker, I see that you are looking at me sternly, but I wish to make the point that, unless we actually achieve that kind of transformation in customer service, we must surely look to go to the next stage--to go the whole hog--and shift the business into the private sector, so that we get access not only to private capital but to private sector management techniques. That will lead to the transformation we seek.
Mr. Norris:
The issues of private or public ownership and capital are germane to the Bill--they are the very essence of it. I heartily endorse my hon. Friend's observations about the extraordinary success that privatisation has brought to British Airways, for example. He is entirely right to remind hon. Members that, when the privatisation of British Airways was debated in this place, Labour Members constantly decried the proposition, derided it, and said that it would never work in commercial terms.
"to provide or secure the provision of public passenger transport services for Greater London".
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