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6.56 pm
Mr. David Chidgey (Eastleigh): May I add my congratulations to the Minister on his speech? We all enjoyed his bravura and generosity. It seems that, as the weeks go by, the shackles of office slip ever further from his shoulders. His free spirit fills the Chamber and adds a greater dimension to it. I for one am sad at the thought of him not being with us in the next Parliament.
The subject of the debate, the London Regional Transport Bill, seems to have been shunted into a side turning somewhere along the line in the past hour or so. At first sight, the Bill seems to be an innocent, almost pedestrian affair, as the Minister suggested. It has a mere six clauses, and is designed to tidy up the London Regional Transport Act 1984. It will allow LRT to do a number of sensible things to facilitate PFI projects connected with London Underground's power supplies; the introduction of smart card technology in the ticketing system; the exploitation of London Underground's fibre-optic cable network; and the extension of the east London lines. Those are sensible, sound ideas.
Within that simple, three-page Bill, however, lies a potentially powerful weapon about which many hon. Members have already expressed concern. It is rather like a snake in the grass--the smaller the creature, the more lethal its venom. The terms of clause 3 are so vague and so widely drawn that they give Ministers potentially
all-embracing powers to direct London Underground to do whatever those Ministers may wish. The Minister gave us a firm undertaking that that was not the Bill's intention, but, as he knows, and is so aptly demonstrating, undertakings, like Ministers, have a habit of coming and going.
In that context, the House will recall that the Railways Bill made no mention of the privatisation of Railtrack.On the basis of that legislation, however, the Government have found the means to pursue what I believe to be their ill-founded plans to privatise Railtrack without any further reference to the House. It would be unacceptable for the Bill to pass through the House in a form that would enable Ministers to privatise London Underground through a statutory instrument. I shall return to that later.
I shall deal with what is purported to be the Bill's main thrust: facilitating the PFI for capital projects to enhance London's passenger transport system. There is a danger of the Government being seduced by the idea that the PFI can be used to fund any public project or service, while hiving off all risks and responsibilities to private contractors. The concept of the PFI must be one of partnership between the public and private sectors.
If the PFI is to be a success, the Government must heed the warnings of the private sector, the banking sector and experts in financial management and the management of large assets. They are not contractors trying to make an extra bob, but people with responsible views on how best to finance and run the country's major institutions and engines. They argue that they suffer high costs from the tendering process.
Every negotiation for a PFI contract is treated as a unique contract. There is a desperate need for the Government to find ways of standardising the PFI process by introducing standard specifications and conditions, making the system more efficient, transparent and easily followed, and allowing negotiations and contracting to be made easier.
There must be a sensible distribution of risk. We have to recognise that, with the extended contract periods of the PFI arrangements, which can be for 20 or 30 years, there must be increased uncertainty about the responsibilities and the risks associated with them. With major project contracts, it has always been the case that there should be a clause to deal with force majeure. Over a period as long as 20 or 30 years, is not a change of Government or policy a force majeure that no contractor can foresee or take account of when assessing the risk? We must recognise that, when question marks are put into such contracts, the price immediately increases. The price to the taxpayer increases, not the profit to the contractor.
The message from the people, firms and organisations engaged in PFI contracts is that we need, through Government, to build and retain expertise in how to operate the PFI system. There is a clear case for taking the PFI out of the hands of the Treasury, which is understandably, and rightly, primarily concerned with cost-cutting and expenditure control. That is its function. The PFI's main contribution should be to increase investment, not to decrease the public sector borrowing requirement.
The Government appear to believe that public and private partnerships are an ingenious way of removing their more onerous responsibilities, while continually trying to place the majority of the risk on the private sector. It is hardly surprising that the companies that have
become involved in the PFI understandably expect a higher return on investment to cover the higher risks. The Treasury has little understanding of the ethos of the private sector. There is a clear case--I would welcome a comment from the Minister--for considering a separate agency to deal with the PFI and build experience, expertise and confidence with the private sector.
It is worth remembering that the PFI was launched to provide additionality to public expenditure. It was to provide the means to fund projects that the public sector had difficulty in funding. In practice, it is being used more and more as a substitute for public expenditure. A good example is the channel tunnel rail link, which shows how Governments can abdicate their responsibility to provide timely financial backing for projects that are essential to the public good.
The Government are so anxious to grasp the short-term advantage of the PFI that they are failing to recognise and support the genuine opportunities to develop public and private sector partnerships to invest in London's transport system. Hon. Members have drawn the House's attention to the London First initiative, and there was some debate about the benefits of its proposals. It is important to bear it in mind that that is an initiative from the people of London to provide and develop an imaginative transport programme to take us to the year 2010, by combining public and private funding to develop a partnership and proposals for a transport infrastructure fund.
There was much debate about the assumed unfairness of big business imposing on small business a requirement for what some regard as a tax and what others might call a contribution to improving London's transport system.It is important to remember that London First's initiative talks about the business community being asked to decide whether it would support such a scheme through a surcharge on the non-domestic rate. That means the whole business community, not only the chambers of commerce or the CBI. That is a democratic process--something that we should recognise and encourage.
London First has proposed another initiative that the House and the Government should examine as a worthy way of helping to fund London's transport. It has proposals for raising revenue through congestion charging, with revenue being directed solely to improving London's transport system. Before hon. Members get into a state and say, "This is more taxation, more burdens on the taxpayer," both surcharges--or additional contributions through the business rate--and congestion charging are not merely ideas but in place and working very well.
Mr. Peter Bottomley:
I am sorry that I will not be able to stay for the whole of the hon. Gentleman's speech. Will he reflect on what level of congestion charging would have achieved what the changed traffic arrangements in the City did, or would have left Oxford street as it is now, with private cars banned and pedestrians still able to walk faster than taxis or buses? Are they to be charged?
Mr. Chidgey:
I am grateful to the hon. Gentleman for taking me back 25 years to when I was involved in the pedestrianisation of Oxford street. The reaction from businesses and major hotels to the horrendous effect that stopping cars from driving by and parking outside their front doors would have on their businesses was amazing.A quarter of a century later, we have found that freeing major London streets from cars improves both business and the quality of life.
The level of charging for congestion or for using valuable road space in city centres has been established in cities throughout the world, from Singapore to Oslo. Throughout the western world, there are examples of how we could regulate access charges to valuable and much sought after road space in city centres.
Those ideas are not new; they are in place. They have been tried and tested and found to work. As usual, we hide and cringe from any innovation and let the Treasury damp down any enthusiasm by claiming that any such expenditure or fund raising would count as part of the PSBR.
To return to the PFI, which is the skeleton of the Bill, the PFI's main contribution should be to increase investment, not to decrease the PSBR. We must generate public and private partnerships that are mutually beneficial. I put it to the Minister that the Government should try to use the PFI as a source of front-end expenditure. The Government should try to lever in private capital, at the same time recognising that they should assume many of the risks that are primarily their responsibility. Long-term investment in transport and other essential services is too important to be left to the vagaries of the electoral cycle. The PFI offers an opportunity to escape from short-termism, and, through its devolution, to afford people more control over the development of their communities.
The Bill offers an opportunity to address London's key transport issues. By definition, London is the hub of much of Britain's transport system. London's transport policy is a concern not just for Londoners, but for those who live in the south-east of England and across the United Kingdom. The powers in the Bill could be used to pursue the essential aims not only of transport in London but of the transport system as a whole. The essential aims of London transport should be to improve the transport services, to maximise co-ordination and integration of existing services, and to improve accessibility to transport services for all those who live or work in London or who travel through the city.
We must ensure that there are safe, affordable and efficient links within and between all London's communities and transport terminals. We must protect London's environment and avoid the imposition of further environmental burdens on the south-east. Improvements in London transport will contribute to securing a more dynamic, efficient and sustainable economy.
I believe that the most effective means of implementing an integrated transport policy for London--such as I am outlining--would be through the establishment of a strategic transport authority for London. It would have the power to co-ordinate transport needs, encourage and support integration of services across the region, and provide Londoners with an effective voice on transport and land-use planning. Does the Minister recognise those key aims and objectives for London's transport? What role does he envisage for London Regional Transport in achieving those aims and objectives, with the benefit of the powers that it will acquire under the Bill?
In addressing the future of London's underground and rail networks, it is clear that a key aim must be the development of a co-ordinated and integrated system.We should not see piecemeal development that is dictated by the drive to maximise profits for a particular operator
in a particular area: rail and underground services must operate and be available to passengers as a complete network. Investment must be available in order to raise standards across the network and improve the reliability and frequency of services. Passengers' interests must be the prime consideration, and the underground, bus and rail networks must be marketed as a total service underpinned by the travelcard system.
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