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Mrs. Gwyneth Dunwoody (Crewe and Nantwich): Does the Secretary of State agree that the unhappy, packed travellers who are increasingly jammed in on an unsafe and ancient system will understand that his proposal is not a means of acquiring new investment, or of changing the savage cuts that he has imposed this year, which have put back safety measures like the replacement of escalators for at least two years, but a simple commitment to a brutal transference of taxpayers' assets at well below their worth? As with rail privatisation, large sums of money will go to accountants, estate agents and lawyers, without a penny going into a new rail system.
Sir George Young: What we have not heard so far from the Opposition is an alternative strategy for getting the necessary resources to drive up the quality and quantity of investment in the London underground. The Opposition are unable to match the offer that I have put before the House. On the hon. Lady's specific points, there has been no reduction in next year's resources from this Government for London Underground. So, far from being a "brutal" privatisation, it is a user-friendly privatisation with a transparency that we have not had before, with receipts being recycled back into the underground for the benefit of passengers. The hon. Lady's description of that as "brutal" defies belief.
Mr. John MacGregor (South Norfolk): Does my right hon. Friend agree that the Opposition's reaction was reminiscent of what they said when rail privatisation was first announced and that, in practice, all their threats and fears have been proved to be wrong? Will it not be the same in this case? Will not they quickly forget the words that they have used today? I agree with my right hon. Friend about capital investment. Given the shadow Chancellor's position and the many demands which Labour Back Benchers would make for other public expenditure if the Labour party ever came to power, is it not clear that there would be no hope of capital investment in London Underground under a Labour Government?
Sir George Young: I am grateful to my right hon. Friend. He has been around the course before me in respect of British Rail, and I am inspired by his example. Last week we heard Railtrack's statement on its network management strategy for spending sums that would simply have been beyond our reach had the railways remained in the public sector. That is the goal that we want to secure for London Underground. My right hon. Friend is also right to contrast the posturing that we are seeing now with the reaction that we shall see in a few years' time, once we have successfully privatised London Underground. Labour Members will have to eat their words and recognise once again that our privatisation policy was the right approach.
Mr. Tony Banks (Newham, North-West): Is the Secretary of State really suggesting that London Underground will be sold off and that the receipts from privatisation will go back into London Underground, thus enhancing the value of the undertaking to the private owner? Is it not rather like me selling my house to the Secretary of State and then giving him the receipts of the sale to improve the house? It is like a burglar breaking in and then being given the compensation that the victim receives from the insurance company. Where is the economic model and sense in such a proposal?
When the Secretary of State sets his mind to getting the value of London Underground, will he take into account the enormous redevelopment value of the underground stations throughout the capital city? Lastly, will he tell us which other capital city with a metro system like ours has put it into private ownership?
Sir George Young:
This Government are happy to lead the world in their policy on privatisation, and I am confident that others will follow us in our privatisation of London Underground, as they have followed us in privatisation of other state-owned industries. I did not follow the logic of the hon. Gentleman's questions.
Mr. Tony Banks:
No, because there is none.
Sir George Young:
Let me try to explain to him that the London Underground has value as a business, from two sources, and privatisation will crystallise that value. First, London Underground is already making an operating surplus, which covers part of the investment programme. London Transport expects the operating surplus to grow substantially. Secondly, a privatised underground will be much more efficient, which will result in better operating efficiency, better marketing and the more commercial use of property assets. Privatisation will, therefore, accelerate the Underground's progress towards self-sufficiency and help to unlock the value of the undertaking, thereby generating the receipts to attack the backlog.
Mr. Steve Norris (Epping Forest):
Having had a direct responsibility for London Underground for nearly five years, may I place on record my warm appreciation of the work of the management of the Underground, who have done a huge amount to increase the efficiency of the system? I assure my right hon. Friend that they are the first to point out that, even with those efforts, it has not been enough. There is a backlog, despite levels of Government investment of the order of six or seven times those under Labour.
If my right hon. Friend accepts that fare payers cannot be asked for limitless additional revenue and that taxpayers are already paying a record amount, does he agree that it would appear utterly perverse for purely ideological reasons to deny the Underground the substantial billions of extra investment that a privatisation could unlock? Is it not clear that the position in which the Labour party has put itself is laughable and perverse, and that the only losers by the adoption of such a policy would be the people of London, who will see through the sterility of Labour's argument?
Sir George Young:
I am grateful to my hon. Friend. The dogma comes entirely from Opposition Members. I draw their attention to a leader in The Independent on 29 January 1997, headed "Privatisation should be pragmatic, not dogmatic". That leader advocates the privatisation of London Underground.
My hon. Friend is right to pay tribute to the work of Peter Ford and his team, which I recognised in my statement, as I do now. I hope that, depending on which structure we choose, there will be opportunities for employee investment in a new structure. My hon. Friend again reminds the House to mind the gap--the gap between what we have put on the table for London Underground and what the Opposition have failed to provide to match it.
Mr. Ken Livingstone (Brent, East):
Can the Minister explain the gap between his predecessor's promise to the House of Commons in 1984, when the Conservative Government passed legislation to take London Transport out of the hands of the Greater London council, that that was being done to tackle the gap in investment and end under-investment in the tube, and what he says 13 years later--that there is still under-investment in the tube?
Does the Minister recall that, in each of the three years of the Labour administration from 1981 to 1984, when London Transport was taken over by the Government, we made proposals for a major programme of investment in the London tube, and that each year the Conservative
Government vetoed them? Those proposals included the proposal to build the Jubilee line, which would have been working for the past eight years if the Conservative Government had not vetoed it. Why should Londoners believe the Conservatives now when they were lied to in 1984?
Will the Secretary of State get in touch with Sir Horace Cutler, the leader of the Tory group on the GLC in the mid-1970s, who commissioned an internal report for the Tory group on the potential for privatising the tube, and decided not to proceed with the proposal when that report pointed out that the only way in which the tube could be privatised would be to decimate off-peak services and reduce them to no more than two trains an hour?
Sir George Young:
I hope that the hon. Gentleman heard the commitment that I gave about services. That deals with the scare story at the end of his remarks. Let me give some figures, not from my Government but from his Government, to contrast our commitment to investment in London Underground. Core investment last year, excluding private finance, was more than three times as high in real terms as in 1979. At today's prices, core investment in 1979 was £172 million, compared with £576 million in 1995-96. Those statistics give the true story about commitment to London Underground.
Mr. Peter Bottomley (Eltham):
On the history of the matter, is it not true that, when the GLC controlled London Underground, it put political placemen on the board, held board meetings that went on hour after hour, and had virtually no capital programmes? I welcome my right hon. Friend's announcement. It is good for passengers, and makes economic, financial and political sense. The only people for whom it is bad are the Labour Opposition, who will have to explain to transport correspondents, political correspondents and passengers how they will achieve the levels of capital investment now promised to create a modern underground system.
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