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Mr. Deputy Speaker (Sir Geoffrey Lofthouse): Order. Although this is interesting, we are debating not British Airways but the London Regional Transport Bill.
Mr. Norris: I accept your ruling, Mr. Deputy Speaker, and I have no wish to stray any further down that path, except to point out that, in relation to the involvement of private capital in transport operations, Labour Members have consistently maintained that private capital would not work, and that privatisation would not work--in this respect, they were spectacularly and self-evidently wrong.
I fear that I may have to disappoint my hon. Friend so far as London Transport is concerned. I have made it clear that this is not a plan to privatise London Transport or London Underground. I have said in quite specific terms that the Government are not in the business of privatisation by stealth.
I believe that the observations that my hon. Friend made about the success that will clearly follow from the actions that we have taken in relation to the railways--as success has followed in every other area--will soon become so clear that the cloak of obfuscation, which is all that the Opposition have been able to deliver over the last few years, will become nothing. Customers will see the benefits for themselves on the ground, in services such as the London-Tilbury-Southend service, of which my hon. Friend has some considerable experience.
Mr. Norris:
I shall give way to the hon. Gentleman, who is no doubt enthusiastic to point out that he has always been a supporter of privatisation, and that he wishes to endorse it on this occasion.
Mr. Hill:
I may do that in due course, if I manage to catch the Chair's eye. In relation to the success of privatisation in public transport, will the Minister identify the success in the deregulation and privatisation of buses in this country? Since 1986, there has been an annual loss of 30 million passengers. Where is the success of privatisation in that?
Mr. Norris:
I shall tell the hon. Gentleman very directly: since 1985, costs in the industry have been reduced by one third, public subsidies have more than halved, the proportion of routes run profitably has increased from 65 per cent to 86 per cent., and one third more mileage is being run. In the past year, the decline in bus use--which is attributable to the growth in the use of the private car--has been almost entirely arrested. Bus usage is London has increased.
That significant gain would not have been brought about without the benefit of deregulation and privatisation. However, I note that the hon. Gentleman confused the two--they are very different concepts.
Mr. John Marshall:
I thank my hon. Friend for his usual courtesy in giving way this afternoon. Does my hon. Friend accept that where London Buses has put routes out to competitive tender, a process that he described earlier in his speech, substantial savings have been made? That shows that London Buses, when owned by the taxpayer, was inefficient, but when routes were put out to competitive tender, working practices improved and the cost to the community went down.
Mr. Norris:
My hon. Friend is entirely right. That has been the benefit of the franchising process and of involving private bus companies in the operation of London Buses services. My hon. Friend knows that we have recently sold the operating subsidiaries of London Buses Ltd. into the private sector, many of them, incidentally, purchased by the management, and further efficiency gains and savings to the taxpayer have been brought about thereby, while the quality of the service is manifestly improving.
My hon. Friend also knows that in all the recent surveys by bus user groups, it is the privately operated services that have tended to win the first prize within the capital city. There is absolutely no doubt that we have had some tremendous benefits from the involvement of the private sector.
As I say, the Bill is essentially a technical one. It has the strictly limited aim of extending LT's powers only in so far as that is necessary, first, to remove certain restrictions imposed by the present legislation on LT's ability to enter into agreements for the purposes of the private finance initiative, and, secondly, to deal with the possibility that LT may have to take over the functions of a PFI contractor at the end of a contract.
Clause 1 would extend the scope of section 3 of the 1984 Act by empowering LT, subject to the consent of the Secretary of State, to enter into agreements with contractors which involve the contractor carrying out activities for which LT has no powers. That is needed to provide for schemes such as those related to communications and power, where the value for money of the scheme will be enhanced if the assets being provided by the private sector can be used for commercial activities as well as for purposes directly related to LT's services. Clause 1 also allows LT to enter into agreements with persons such as financiers where that is needed for the purposes of a contract.
Clause 2 makes provision for LT to acquire land,by agreement, for purposes connected with such agreements. That would, for example, as I have said, enable land to be acquired in LT's name for an electricity sub-station not directly required for LT's own purposes, but for use by the contractor in supplying electricity to LUL. I would emphasise that that is not a compulsory purchase power; it is intended to safeguard LT's claim to essential assets at the end of a PFI contract.
The clause also provides that LT may, with the consent of the Secretary of State, carry on the commercial activities of a PFI contractor when the contractor ceases to do so. That power, I emphasise, is intended to be used only as a last resort. It is not the Government's intention that, as and when PFI contracts come to an end, LT should progressively acquire a portfolio of commercial interests.
The expectation is that when PFI contracts expire, the commercial activities associated with them will normally either cease or pass to a new private sector contractor, following a further competition. But we do need to provide for what I trust will be very rare circumstances in which a contract comes to an end prematurely, for instance through default of the contractor. In that situation, LT would clearly want, and would have the powers, to take over immediately those functions connected with the running of its own services. But it would be perverse if services being provided to third parties then had to be terminated.
Thus the aim is that LT would in those exceptional circumstances be able to take over on a caretaker basis the provision of such services, pending the establishment of suitable arrangements to put them back into the private sector. The Secretary of State would expect to give consent to such arrangements only on the basis that LT would do its best to find a private sector party to take over as soon as practicable.
Clause 3 provides the facility for certain of LT's statutory operating powers, not including LT's main functions under the 1984 Act, to be transferable by order to or from another party. The aim of the provisions is to ensure that for schemes involving the provision of some aspect of passenger services involving statutory powers, those powers may be exercisable, for the duration of the contract, by a PFI contractor.
We also want to ensure that the necessary statutory powers can be exercised by LT at the end of a PFI contract. For example, a scheme for the east London line extensions might involve a PFI contractor in providing a train service, for which he would need the relevant operating powers.But again I emphasise that while in such cases a contractor might physically be providing the service, and should have as much commercial freedom as possible to respond to public demand, the service would remain within the overall control of LT under the terms of the 1984 Act.
Finally, clause 4 simply makes consequential amendments to the 1984 Act and to other legislation. Clause 5 is a standard financial provision. It does not mean that we expect the Bill to increase public expenditure. Indeed, by enabling LT to gain the maximum benefit from the private finance initiative, it should reduce LT's need for Government grant. Clause 6 contains the usual provisions in relation to short title, commencement and extent.
Summing up, therefore, the Bill is a limited but important measure which, while not affecting the fundamental role or powers of London Transport, will substantially enhance its capacity to secure maximum benefit from the Government's private finance initiative. LT has been closely involved in the preparation of the Bill and is fully supportive of it.
In particular, the Bill will enable LT to take forward and secure best value from schemes already in progress such as those relating to power supplies, ticketing and communications. In turn, developments such as those, and others in the pipeline, will deliver real benefits to passengers.
On that basis, I commend the Bill to the House.
Mr. Brian Wilson (Cunninghame, North):
I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
I thought that I should equip myself with suitable research, so the House of Commons Library kindly provided John Glover's "London Underground". If things should flag a bit, there is a slightly weightier tome entitled "A Regional History of the Railways of Great Britain". If, at about 8 o'clock tonight, things are really desperate, we might need some international perspective and I have here "Underground Railways of the World--Their History and Development" by H. C. P. Havers. However,I am sure that none of that will be necessary because many of my hon. Friends are anxious to contribute to this important debate on a much valued public institution, London Underground.
I make it clear that the Labour party will support any sensible measure which makes it easier for London Underground to get more money into the system for desperately needed investment so long as it is consistent with a public operation of an integrated system. In so far as the Bill advances that objective, we shall facilitate its progress. But the water has been muddied in a most unhelpful manner by the blatherings of the Deputy Prime Minister and lord high everything, the right hon. Member for Henley (Mr. Heseltine), who, only last month, was demanding that a commitment to privatise London Underground should be included in the next Tory manifesto.
It is unfortunate that the right hon. Gentleman is not with us today so that he could pay his debts to London, if to nobody else, by making it clear that his desire to privatise London Underground does not underlie the Bill. In his absence, we can only take the Minister's word for it, which I am happy to do.
But first let us consider what the Deputy Prime Minister has said. I quote from the London Evening Standardof 1 February in which we were advised that
It says:
That may sound like a contradiction in terms.
The London Evening Standard continued:
5.5 pm
"this House declines to give a Second Reading to the London Regional Transport Bill because although the House welcomes the higher levels of investment in transport infrastructure provided in the Bill by the development of Private Finance Initiative projects by London Regional Transport, it does not believe that the privatisation of London Underground would be in the interests of London, and fears that this Bill contains powers which will be used to that end."
I suppose that I should first express gratitude to the Government for having managed to fit such a lengthy debate into their heavy business programme. At that point, for the benefit of Hansard, I should say: he said ironically. I also congratulate the Minister on a bravura performance.
He is put up on occasions such as this because he is one of the few who has the wit to think on his feet. That is meant to be a compliment, incidentally.
"A radical new drive to sell off London Underground to the private sector is being planned by Cabinet Ministers."
"Michael Heseltine, the deputy prime minister, has told the Transport Secretary Sir George Young that he wants to include'a commitment' to privatise LU in the party manifesto for the General Election. The plan, one of a number of options being studied by Mr. Heseltine for inclusion in the manifesto, is now being actively considered by the two Ministers."
"Exactly how the sell-off . . . would be accomplished is not yet known. But, with expanding and guaranteed passenger numbers . . . LU has long been viewed by some senior Tories as 'ripe' and the next in line for privatisation following British Rail."
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