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Sir George Young: My hon. Friend is right. The House will remember that the right hon. Member for Glasgow, Garscadden (Mr. Dewar), who is now the Opposition Chief Whip, said that British Airways
- "will be the pantomime horse of capitalism if it is anything at all."--[Official Report, 19 November 1979; Vol. 974, c. 125.]
Ms Margaret Hodge (Barking): How much money has the Secretary of State set aside for financial and technical advice? Advice on privatising British Rail cost the British taxpayer £450 million. How much will it cost to privatise London Underground? What expenditure has been cut? The Secretary of State, both in this job and in his former job, was a keen advocate of the private finance initiative.
On the privatisation that he announced today, is he saying that his Government have failed to bring forward constructive private finance initiatives that would ensure proper investment in London's underground services?
Sir George Young: No expenditure has been cut to take forward the policies that I have just outlined. Any expenditure on advisers is a good investment if it secures an industry, if it drives up the quality of services, and if it improves its investment record and eliminates the investment backlog.
No Administration has taken the PFI forward with greater enthusiasm than this one. There are a number of private finance initiatives being advanced within London Underground, but as the chairman of London Underground made clear last week to the Transport Select Committee, the PFI cannot reach all the investment backlog. Some of the work cannot be completed under a PFI deal. Whatever progress is made with the PFI, we are still left with an industry in the public sector that is subject to all the public expenditure constraints of any other nationalised industry. Privatisation addresses both those problems.
Mr. David Lidington (Aylesbury):
Does my right hon. Friend agree that my constituents will judge his proposals by whether they work in practice: for example, by bringing forward the much-needed upgrade of Metropolitan line infrastructure; by assisting the cross-rail project to go ahead; and by ensuring that, when my constituents get to Baker street or Marylebone, the escalators work? Will he confirm that the purpose of his proposals is to allow capital investment to take place to provide the improvement in service that my constituents seek?
Sir George Young:
On the latter point, the answer is, of course, yes. I hope that everybody will judge the proposals on their merits. It is not some dogmatic proposal. We have looked at London Underground. We have asked ourselves what its needs are. We have come up with a tailor-made package that addresses the problems of London Underground. That is not dogma, but common sense.
Mr. Harry Cohen (Leyton):
Have not the Government run down the London underground in the years leading up to this statement? The Minister's so-called commitments would not be worth the paper they are written on if the Tories got a dreaded fifth term. When the election was out of the way, the Chancellor would get his hands on the money and the Secretary of State would move on. The proposals would cost London passengers and taxpayers dearly. Have not the Tories shown by this privatisation proposal that they have given up on London commuters altogether?
Sir George Young:
The people who have given up are those who have failed to produce an alternative scenario that provides the benefits to Londoners that I have outlined. We have not neglected investment in London Underground. I shall not repeat the figures, because I have already quoted them twice, but they show a dramatic increase in investment in the core network between the 1970s and 1980s and now.
Mr. John Marshall (Hendon, South):
My right hon. Friend will be well aware that I have instigated more
Sir George Young:
My hon. Friend has always been a staunch advocate of London Transport, and I am delighted to have his support. He may have secured more Adjournment debates on London transport than anyone else, but I have answered more Adjournment debates than anyone else.
Mr. Gordon Prentice (Pendle):
Is it true that last year £1,229 million of debt was written off when British Rail assets were transferred to Railtrack? Why did the Secretary of State's list of 10 points not include debt write-off? In all the other privatisations, billions of pounds of debt was written off so that the privatised companies could start work with a clean sheet of paper.
Sir George Young:
London Underground has no debt.
Lady Olga Maitland (Sutton and Cheam):
Having travelled on the London underground all my life, I congratulate my right hon. Friend on taking this important step in privatising the service. Will he confirm that it will provide an excellent opportunity to recycle receipts into new services, such as the extension of the Northern line from Morden to Sutton? Does he agree that only with such new investment and privatisation can we pave the way for new services and provide badly needed resources, which the Labour party would deny London Underground?
Sir George Young:
My hon. Friend draws attention to an aspect of the announcement that has not featured much in this question and answer session. The first call on the privatisation receipts will be the backlog that needs to be tackled. After that, we anticipate a surplus, the majority of which will be put back into transport in London and outside. People will be able to bid for projects, such as the one to which my hon. Friend referred. I hope that that additional feature of privatisation will be widely welcomed.
Mr. Paul Flynn (Newport, West):
Did I understand the Secretary of State to promise that a privatised underground will be a financial triumph, just as the channel tunnel was? Will he make it clear what he is saying about services, because he keeps using the word "broadly"? Will the level of service be guaranteed? Will it at least be at the present level?
Sir George Young:
The answer is yes, broadly. We shall ensure that the private sector will be required to provide a guaranteed level of service that broadly safeguards the existing level of provision. There must be an element of flexibility, but the regulatory authority that will supervise the underground, which will be
Mr. David Winnick (Walsall, North):
Given that there are, at the most, nine weeks to go until the general election and six until the election campaign, does the Secretary of State realise how irresponsible it would be to spend public money on advisers, when there is every indication that the scheme will never go ahead? Will the right hon. Gentleman think again, and--as my hon. Friend the Member for Vauxhall (Miss Hoey) rightly suggested--let the people of London decide at the election? To use public money in the way that he intends would be totally irresponsible, and could not be justified.
Sir George Young:
The people of London will, of course, decide, and I hope that their decision will be influenced by our plans for London Underground. I hope that they will contrast what I have outlined this afternoon with the complete absence of any comparable strategy from any other party. As for making progress with the policy, I see no reason to delay the progress that I want to make. I believe that it will have real benefits for Londoners, and I want to get on with it as fast as I can.
Mr. Simon Hughes (Southwark and Bermondsey):
What is London Underground's current asset value? Will it be possible to sell it at less than its asset value? Will there be a limit to the profit that can be made on the on-sale of any of the assets? Why does the Secretary of State not contemplate, as one option, retaining public ownership while allowing London Underground to borrow entirely as it would wish in the private markets? I understand that London Transport would be perfectly happy for it to do that.
Sir George Young:
If we did that, it would simply score as public borrowing or public expenditure. There is no way of using creative accounting to solve the problem. As for the proceeds from this privatisation, as with other privatisations, the Government are not making an estimate of those in advance.
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