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Mr. Keith Hill: I am deeply reluctant to labour a point that I have already made but, until the late 1960s, London Transport was under a statutory break-even requirement and, as the hon. Gentleman has conceded, its demand for central Government funding did not emerge until the late 1970s. It is bogus to draw comparisons between funding in the 1970s and in the current period as, in the 1970s, London Transport did not demand the same level of central Government subvention. I hope that the hon. Gentleman will agree that it is far more relevant to examine the decline in core investment in London Underground from £683 million in 1992-93 to--this is a revised estimate--some £380 million in 1997-98. That is a scandal and he must justify it.
Sir Sydney Chapman: I do not try to justify it because it is nowhere near the reality. I understand what the hon.
Gentleman says, but even if he were correct--which he is in technical terms--the vast increase in investment far outweighs those esoteric considerations. We could debate this all night, but most certainly will not.
In saying that investment has risen from under£50 million a year in the 1970s to more than £500 million a year in the 1990s, I exclude inflation. Allowing for inflation, but still excluding investment in the Jubilee line extension, a real comparison of those figures shows that we have quadrupled investment, but that is, perhaps, more an argument for the Committee stage of the Bill. I hesitate to say that only because I should like to assure the Government Whip on the Front Bench that that is not an invitation for me to be invited to join the Committee.
I am grateful for the House's indulgence. More and more investment is needed on the London Underground system. After the Government reached investment of £500 million a year, London Underground managers demanded that it should be £750 million a year. We would all like to wave our proverbial wands and to give more to London Underground.
That brings me back to the central point of the debate and of why we need the Bill. The taxpayer will, I hope--we cannot be certain about the future--put more and more into London Underground, year on year. Given the other priorities of public spending--pensioners at my constituency meetings do not put investment in London Underground ahead of the need to increase the state retirement pension--the only way that we can find the finance to secure the necessary investment in London Underground in the next decade is the private finance initiative. That is why I welcome the Bill.
Mr. Keith Hill (Streatham):
Despite the Minister's protests of injured innocence, my hon. Friend the Member for Cunninghame, North (Mr. Wilson) was clearly right to subject the Bill to his usual scathing analysis as it is a possible paving measure towards privatisation of London Underground.
Bitter experience has taught Labour Members that the Government are not always entirely transparent in their intentions on matters of privatisation. Like my hon. Friend, and also my hon. Friend the Member for Hampstead and Highgate (Ms Jackson), I spent many weeks on the Standing Committee that considered the Railways Bill in 1993. During that long consideration, did Ministers mention their intention to privatise Railtrack before the completion of the franchising process on British Rail? Did they mention even Railtrack's flotation?
It is not without reason, therefore, that we are suspicious of the Government's intentions--all the more so in this case. After all, there has hardly been an absence of smoke about the Government's preference for privatisation of the tube system. My hon. Friend the Member for Cunninghame, North referred to the story in early February in The Independent headlined:
According to The Independent, that is one of the pet projects of the indefatigable First Secretary of State and viceroy of Henley--that is about the only title that he has
not yet assumed, and I hope that I have not planted the idea in his mind--for inclusion in the next Tory party manifesto.
Mr. Norris:
My right hon. Friend the First Secretary of State will be reading the record of these proceedings.
Mr. Hill:
Exactly--no doubt he will read the record assiduously on the morrow and we shall receive an announcement in due course.
The interesting thing about that story was that it was not ascribed just to the First Secretary of State.The Independent was able to find a number of London Conservative Members who were ready to justify the scheme, so it is hardly news to them. There is, as they say, no smoke without fire. Judging from Tory Members' interventions, the privateers are snapping at the Minister's heels, despite his disavowals. Frankly, as a London Labour Member of Parliament I am almost tempted to welcome any proposal for privatising the tube. After the chaos of rail privatisation, for the majority of Londoners the privatisation of the tube would be the final nail in the Government's coffin.
If the Minister and the Government mean what they say about the Bill having nothing to do with privatisation, they will not vote against Labour's reasoned amendment. If they do vote against it, Londoners will draw the obvious conclusion, which is that a sell-off of the tube is in the Government's sights. I just hope that Ministers are braced for the consequences.
Mr. Wilson:
Does my hon. Friend agree that there is an exact parallel with rail privatisation? While Londoners, including my hon. Friend's constituents, are wholly opposed to any privatisation of the tube, they would be even more appalled by its possible fragmentation.
Mr. Hill:
I am grateful to my hon. Friend for that intervention. He is right. The frightening thing is that the Tory think tank's favourite scheme is to sell all 10 London tube lines. It is a recipe for chaos and disaster for London's travelling public. When Londoners learn that Conservative Back Benchers, at least, are contemplating fragmentation of the tube, they will be even more pronounced in their reaction to the Bill.
I shall adopt a more charitable note and take the Minister at his stated intentions. If the Bill is simply devised in part, as the Minister has assured us, to permit London Underground to diversify its profit-making activities--for example, the fibre-optic cable scheme--I, for one, certainly have no objection. On the contrary,I am all for public sector companies engaging in profitable innovation. Many of the former nationalised utilities did so very successfully, which is why the Government were able to privatise them in due course. That sort of profit-making innovation is an entirely proper activity for a public sector company in a mixed economy. It is exactly the sort of freedom that the Labour party wants for the Post Office, but which the Government are consistently resisting.
If, in addition and as the Minister declared, the Bill is designed to facilitate London Regional Transport's participation in further private finance initiatives, I am all
for that, too. We welcomed the initial embrace of the private finance initiative concept in 1991 by the right hon. Member for Kingston upon Thames (Mr. Lamont), in his previous incarnation, and the subsequent, even warmer, embrace of the concept by the Chancellor of the Exchequer. Of course, Labour Members know that the true origins of the concept lie not in Kingston upon Thames but with my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott). It is exactly the right sort of public-private partnership that we should be aiming for in British industry at the end of the 20th century.
It is also indisputably the case that the PFI has hardly been a roaring success under the Government, with only one fifth of authorised expenditure having been expended on schemes to date. That is why I have been impressed by the detailed thinking undertaken by the Labour Treasury team on this. I have read all the documents carefully. As the Member of Parliament who acted as secretary to the all-party Northern line group during the lengthy and tortuous negotiations on the Northern line PFI--which ultimately succeeded, much to the advantage of my constituents in Clapham and Balham--I appreciate Labour's new proposals on the PFI concept. For example, I appreciate the objectives of securing greater prioritisation among the PFIs, of achieving greater clarity in the terms on which the private sector should be required to submit tenders and how risk and returns are to be shared and, not least, of streamlining the decision-making process. I am also interested in Labour's newer thinking about mechanisms to insure private and public sectors against the risks involved in such projects.
The PFI offers the leverage of private sector borrowing because of the efficiency gains from private sector management of the projects, but it is important to recognise that it does not actually secure significant extra funding. PFIs can bring forward projects, but at the end of the day they still have to be paid for out of public funds--either out of enhanced revenues, as is anticipated with the Northern line PFI, or directly from the Exchequer. Nevertheless, where PFIs are possible, they are very much to be encouraged. The Bill is designed to facilitate PFIs associated with power supply on the underground and with a new ticketing system. I hope that there remains scope for further PFIs more directly concerned with infrastructure on the underground--rolling stock, track and signalling renewals and, perhaps, station development.
As the Minister has already said, PFIs will succeed only where there is a real profit incentive for the private sector. The truth is that much, if not most of the renewals still desperately needed on the underground relate to intrinsically loss-making infrastructure and services. It is obvious that investment in such areas should be the subject of direct Government expenditure; yet the blunt truth is that the Government have proved reluctant to fund more than, at most, 60 or 70 per cent. of the capital investment that London Underground has identified as necessary to create, in its words, "a decently modern metro".
"Tory plan to sell off tube".
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