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Mr. Geraint Davies (Croydon, Central): The previous Government cut investment in London Underground by

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£378 million, whereas this Government have reinstated some £365 million. How does the hon. Gentleman square the financial circle without investment and without increasing fares? How would he do it, or is he financially illiterate?

Mr. Ottaway: Before the hon. Gentleman makes an intervention like that, he should take a closer look at the facts. In their last 10 years in office, the Conservative Government invested a total of £7 billion, or £700 million a year, in London Underground, compared with this Government's £500 million a year. Also, I suspect that the hon. Gentleman is looking at the figures in the spending review for 1998-99, which show that the total level of expenditure would be down to £250 million. That earlier investment was state investment; on top of that would have been the money from the privatisation that our party would have got on with by now, recycling funds and adding investment, thus taking it to levels that Labour could never have dreamed of.

Mr. Davies rose--

Mr. Ottaway: The hon. Gentleman is coming back for more.

Mr. Davies: Does the hon. Gentleman have any idea what the projected investment would have been under privatisation, or was the project just pie in the sky and not thought out? What really happened was that the previous Government slashed expenditure in the run-up to the election. Also, there was no private finance initiative or any real partnership with the private sector under the previous Administration, only hot air.

Mr. Ottaway: The hon. Gentleman can be excused because he was not in the House in February 1997, but we made it absolutely clear in a statement on 25 February 1997 that investment would be in the region of three quarters of a billion pounds a year--again topping anything that Labour has tried to do. It is here in the record, in black and white, for everyone to see. Does the hon. Gentleman want to come back for another go?

Mr. Clive Efford (Eltham): The hon. Gentleman says that privatisation would have improved the underground. Does he believe that his constituents get a good service from the railway network that his Government privatised at a bargain basement price?

Mr. Ottaway: I should have thought that, as an ex-London cabbie, the hon. Gentleman would know that the London underground does not go to Croydon. [Interruption.]

Mr. Efford: I was talking about privatisation of the rail network, as the hon. Gentleman well knows. His hon. Friends are shouting loudly because they do not want to hear the facts. If he can get them to be quiet, perhaps he could answer my question. Does the hon. Gentleman believe that his constituents get a decent service from the rail network that his Government privatised at a bargain basement price?

Mr. Ottaway: I can do no more than quote the Deputy Prime Minister, who said that he did not honestly think

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that people really cared whether the railway was privately or publicly owned, and that they just wanted a good system.

Sir Teddy Taylor (Rochford and Southend, East): Will my hon. Friend invite the hon. Member for Eltham (Mr. Efford) and all the other Labour Members to Southend-on-Sea where the rail line used to be referred to as the misery line? As a regular traveller, I found that trains were constantly an hour late; the conditions were terrible, the trains were deplorable and there was no investment. Since the service was privatised, the service is vastly improved, and we are getting new rolling stock. If anyone doubts the improvements, let them come to Southend, where they will see that the line is much changed for the better since privatisation.

Mr. Deputy Speaker: Order. We seem to have been led into a siding. We should get back to the London underground.

Mr. Ottaway: I should hate to be diverted, Mr. Deputy Speaker. My hon. Friend the Member for Rochford and Southend, East (Sir T. Taylor) makes a powerful point, as always.

We welcome the Government's decision to involve the private sector in London Underground. There are many forms of private finance initiative. The Government's preferred option is to award long-term contracts for the maintenance of the infrastructure and to leave the operations in the public sector. We do not agree with that format, but we must live with it.

In his statement, the Deputy Prime Minister proudly said that his plans for the private sector were a £7 billion investment programme over the next 15 years. That sounds all very well until one starts to probe the statement. First, the proposed investment compares badly with the £7 billion invested by the previous Government in the 10 years from 1987 to 1997.

Secondly, the present level of investment is about £500 million a year. One does not have to be a genius to work out that, over 15 years, that would come to £7.5 billion, so there will be nothing new or significantly different from the level of cash that is already going into London Underground, except for one highly relevant factor.

Under the Deputy Prime Minister's plans, that money is not a Government grant; it is a private sector investment and the private sector will want it back. Out of London Underground's proceeds, we shall have to pay back the £7 billion, plus interest. A pay-back period of up to 30 years is planned, but that exacerbates the situation. In my judgment, it is virtually impossible to write a 30-year infrastructure contract in an era when technical changes move so rapidly.

Not surprisingly, many of the private companies involved are having serious doubts about the viability of the entire project. It came as no surprise that the much-respected Construction News stated:

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    Contractors are concerned that the scheme in its present form fails to stack up financially.

    The level of scepticism among firms is highlighted in a Construction News survey of the 20 bidders. One angry contracting boss said: 'It's a dog's breakfast.' Another frustrated bidder said: 'It concerns me that there is actually any will for this to go ahead.'

    Even London Underground's former director of civil engineering, David Hornby, admitted: 'The timetables were always very optimistic.'

    Construction News quizzed senior sources with these firms and only 10 thought the project would definitely go ahead in its current form. None thought the original timetable was realistic. One said: 'They don't know what they want out of it apart from a lot of private cash without ceding any control. Nobody knows what the real risks are.'"

That quotation goes to the root of the problem. The private sector is making it clear that it is not prepared to carry the unknown risk. If the Government want to keep control, they will have to underwrite the investment. The snag is that, such is the high-risk nature of the project, such a guarantee would inevitably go on to the public sector borrowing requirement. Having just got shot of the subsidy to London Underground, the Treasury is hardly likely to take that on.

The truth of the matter is that the Government's plans are in deep trouble. We have the severest doubts whether the public-private partnership will ever get off the ground. In our view, the concept as currently proposed is doomed, and the only loser will be London's public.

Equally serious is the issue of the transfer of London Underground to the Greater London Authority. Grant will stop next year; a partnership will be put in place in a couple of years; and the whole lot will be handed to the mayor, who will be told, "This is your problem now."

The present state of affairs is unacceptable. We all know that the Deputy Prime Minister is making a pig's ear of the policy, but it is adding insult to injury to expect Londoners to pick up the pieces.

A central feature of the mayoral election will be the candidates' proposals for sorting out London's transport problems. It is unacceptable that the mayoral candidates will have no idea of the nature of the contracts being negotiated. [Interruption.] Perhaps they may have a quiet word with the hon. Member for Brent, East. Perhaps such a facility will be made available to other candidates.

The Government should conclude their negotiations by this autumn, so that all is clear to the candidates involved, or the final negotiations should be concluded by the new mayor, and he should--[Hon. Members: "Or she."]--he or she should have the final say.

The new authority will have to pay back the private contractors their £7 billion, plus interest. To do that will require at least £750 million a year. London Underground can raise £300 million. The mayor will have to make up the difference. The only tool that the Government are giving him is road user charging.

Notwithstanding the fact that London is almost certainly the worst place in the whole of Great Britain to start the first road-pricing scheme, it is provisionally estimated that road pricing will bring in about

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£300 million a year, with motorists passing 130 pricing points. That is a shortfall of £150 million for the mayor.

Already 83 per cent. of Londoners travel by public transport, and only 17 per cent. use the private motor car. Of those, many are obliged to do so because they work unsociable hours--for example, nurses, or mothers driving their children to school, or the disabled who rely on their own transport. Why on earth should those people be expected to pay for the Government's dog's breakfast of a public-private partnership?

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