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Mr. Oliver Heald (North-East Hertfordshire): Thousands of people travel into London from Hertfordshire to work. They arrive at King's Cross and get on the Victoria line. Over the past two years, the underground trains have become more and more packed. The overcrowding is serious, so can the Minister point to a single measure that he has taken, or is going to take, that will ease overcrowding on the Victoria line for my constituents?

Dr. Reid: I will come to that issue later, but a Conservative Member saying, "Put us in charge, because we will make the underground just like Connex trains" will not bring people flocking to the banner of conservatism. Our knowledge that the essence of those problems springs directly from the almost criminal negligence of the previous Government does not in any way diminish our determination to face up to the challenges.

We do not underestimate the seriousness of the tasks that we face in respect of the London underground, and we know that, wherever the blame lies, Londoners are more interested in the problems being rectified than in the buck being passed. We will face up to those challenges,

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not only because London is a major city, an influential city or a capital city, but because it is a great city. It is pre-eminent in terms of the extent of its boundaries, the size of its population, the wealth that it generates, its importance as a global financial centre and--perhaps above all--the burden of its history and the meaning of that in the history of this country.

London is the most populous city in the European Union, something that creates challenges for the transport system. It has 7 million residents in an area covering 1,578 sq km and it is a massive centre of finance, commerce and industry. London's gross domestic product stood at £93,450 million in 1996, and it has by far the highest GDP per head in the United Kingdom. It accounts for about a quarter of all businesses in the United Kingdom with a turnover of £5 million or more.

With all that, no one could fail to take London's transport system seriously, and such a great city deserves a great transport system. Transport in London represents the arteries of commercial and economic life, social activity and tourism. Although there has been continued growth in the use of the private car in Great Britain over the past 15 years, the number of car journeys in Greater London has fallen.

On an average week day, more than 1 million people come into central London during the morning peak, and more than 80 per cent. of them use public transport. Within London in 1997-98, passenger travel totalled nearly 4.4 billion passenger kilometres on the buses and 6.5 billion passenger kilometres on the underground. That is a massive amount, which is up 5 per cent. on the previous year. Passenger traffic on the docklands light railway has more than trebled since 1992-93.

Those figures alone show that the London public transport system is vital. Within that system, the underground is central.

Mr. Simon Hughes: I do not dissent from anything that the Minister has said so far. Does he accept that, if we are to achieve an underground and a public transport system in London for the next generation, it should be owned by the people who will use it? The logic of that position is that, although the Government are right to be working on getting the system ready, agreement on the system and decisions about financing it should be left to the new London authority. If that does not happen, whoever runs London will be able to say, "It's not our fault. The Government put us in this mess."

Dr. Reid: I agree with the first part of what the hon. Gentleman said, but the second part does not follow from his premise. I believe that Londoners, as well as the Government, want a publicly owned and publicly accountable system, operated in the public interest.

I also believe that we should keep all the operations of the London underground in the public sector--something that we fully intend to do--and make the system even more accountable by putting it under the control of the newly elected mayor of London, rather than take the avenue that the Conservatives propose: a rushed, wholesale privatisation where the underground is sold off at a knockdown price--that is what they did with Railtrack--irrespective of the consequences for either Londoners or the Exchequer.

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The route that we are taking will reinforce the control and the effectiveness of the accountability system, which will result in a far better operation by London Underground in the long run.

Mr. Hughes: If I had to choose between the Minister's position and that of his Conservative opponents, I should certainly say that wholesale privatisation is not what Londoners want or what experience suggests is the right way forward.

Will the Minister reflect on the point that we are debating? If he and his colleagues do a deal that locks London Regional Transport and London Underground into a financial package, and that package is handed to the new London authority without it having the right to agree to it, alter it or take part in negotiations until their conclusion, the authority cannot be accountable. Its members will always be able to say, "This deal was done before we had control and therefore we are not to blame--nor are we are taking the blame--for anything that goes wrong."

Dr. Reid: First, waiting several more years before even making a start would let down the people of London. Secondly, we want to start at the earliest possible date, so changing the negotiating partner half way through would, in effect, put any deal off for years because no one would enter those negotiations.

We have said that we will undertake that there will be a publicly accountable, publicly owned operation on the underground, that we will enter into negotiations and that we will complete those negotiations. If a mayor is elected in the course of the negotiations, we will do everything in our power to bring him or her into the consultation process. In the world that we have inherited from the Conservatives, and following almost two decades of neglect, it would be grossly unfair on Londoners to wait any longer before working through and starting negotiations.

We will not proceed unless we can secure best value for Londoners and for people throughout the country. This is an immensely complex task. We could do what the Opposition have asked: set a final date and tell those with whom we are willing to go into partnership, "By the way, we have to finish by next May." I wish that I played poker with the hon. Member for Croydon, South; to declare one's hand at the beginning of negotiations is virtually to hand over control to the other person. That would not be in the interests of either the people of London or the people of this country.

Mr. John Wilkinson (Ruislip-Northwood): I am most grateful to the Minister, who is extremely courteous in giving way.

The Minister travels hopefully towards the destination of a successful outcome to the tenders for the operation of the infrastructure, but there is a likelihood that he may not arrive at such a successful deal. Can he assure that House that, in that eventuality, he will not close his mind to outright privatisation, which happened with the express train link to Heathrow? That is an extremely good example to follow.

Dr. Reid: No. We have made it plain that we will retain the operations of London Underground in the public

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sector. It will be publicly accountable to the new mayor of London and to the people of London. That is what Londoners want, and what they are proud of, and it is certainly what the Government want. The Opposition's constant allusions to the happy experience of the privatised railways will not draw people to their cause, whatever frustrations are caused by the present difficulties on the tube.

The hon. Gentleman would do better to admit that the privatised railway system has not been without its difficulties, particularly fragmentation. It is for precisely that reason that my right hon. Friend the Deputy Prime Minister and I have engaged with the privatised companies in an attempt to provide a networkwide and strategic dimension. Those are some of the benefits of a publicly controlled operation, and London Underground will remain in that state for as long as we are the Government.

Mr. Geraint Davies: Will my right hon. Friend give way?

Dr. Reid: I must make some progress first.

Although hon. Members may be familiar with the underground system, I want to give them some idea of the sheer immensity of the project. Most of us think merely in terms of the central area, but the full network stretches far beyond that, serving commuters and communities from Amersham, 27 miles from central London, to Upminster, and from Morden to Epping, 18 miles from the centre. It is a massive complex: 243 miles of railway line, 106 miles of which is in tunnels. It serves 269 stations, the busiest of which--Oxford Circus--handles 90 million passengers a year. The underground has 12 lines, and last year its 4,000 carriages carried 832 million passengers. The commuters and communities served by that network need, indeed demand, an underground system that is modern, frequent and reliable.

I am sorry to say that, in facing the challenges, we start with a system that is not modern, frequent and reliable. That, unfortunately, is the inheritance passed to us by the previous Government. Spurred by their antipathy to public expenditure, their distaste for public ownership and their cavalier attitude to public transport--which they have exhibited this evening--the Tories ran the network into the ground. Owing to those years of chronic underfunding, the hard work of London Transport's staff is constantly undermined and passengers are persistently frustrated as worn-out, unreliable kit fails day after day, rush hour after rush hour.

The Conservatives' reaction was actually to cut the grand plan for London Transport. They made sharp cuts in funding, and, partly owing to the overspend on the Jubilee line extension--which, apparently, was not noticed by the hon. Member for Croydon, South in the four years before the general election, but now is--effectively cut London Underground's budget by nearly 50 per cent. There was a decade of Tory neglect.

The hon. Gentleman seems to think that Tory government started in 1987. Every reference that he made to investment related to that year. A decade of Tory neglect, however--from 1979 to 1989--could not be compensated for by a halting and inconsistent investment plan in the 1990s, which helped to create the mountain of difficulties that we must now overcome.

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By their last year in government, the Tories had abandoned any hope, let alone intention, of investing in the network. They left us with an investment backlog of no less than £1,200 million. That was the legacy of those who have the gall tonight to criticise a 20-month-old Government.

I must tell Opposition Members that it is no surprise that the people of London, faced with such an abdication of responsibility, rightly told the Tories to go away, leaving them with only 11 MPs in the capital. I must also tell them that, if their current approach to London's transport problems continues, there will soon be as many Tory MPs in London as there are reasons for voting for them: none at all.

Unlike the previous Government, this Government have made a start--I claim no more than that--by tackling some of the problems. Lest anyone imagine that there is an ounce of complacency, let me say immediately that my colleagues in the Department and I realise that we have only begun to scale the foothills of the mountain of problems that we inherited from the previous Government. Indeed, in the short term, some of the remedies that we are applying--for instance, updating signals and escalators--may add another frustrating but necessary impediment to the smooth running of the system: necessary because the scale of the problem cannot be tackled without some disruption, and frustrating because the same problems were apparent during the 18 years in which the Tories were in power but did nothing about them.

I know that it is difficult to ask passengers to continue to be patient while stations and escalators are being refurbished and new trains are being brought into service. I recognise that that causes disruption and generates frustrations, especially when there are teething troubles, but at least the problems arising from progress and investment, in contrast to those arising from the neglect of the previous Government, hold out the prospect of a light at the end of the underground tunnel.

I do not hesitate to acknowledge, for instance, that the service on the Central and Northern lines is not up to the standard that passengers rightly expect. Passengers on the Central line are already travelling on new, larger and better trains, but the service is not yet as reliable as it should be. I accept that London Underground is working hard to resolve problems with a signalling technology that is causing some difficulties. It is new technology, which, when it is fully operational, will enhance train frequency and shorten journey times. The priority is to work towards achieving a reliable service.

That problem is typical of problems associated with new investment, rather than investment neglect. On the Northern line, existing rolling stock is being replaced by a fleet of 106 new trains. That brings its own problems: they are the first new trains on the line since 1972. All too often, old trains have broken down; if there are also teething troubles with new trains, that is no less frustrating for passengers because it is associated with renewal--but at least it heralds the prospect of an enhanced service once we come through the current period. Already, 20 new trains are in service. I have met the contractors to discuss a range of issues, and have raised that specific point with them. I know that they intend to introduce more new

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trains as quickly as possible. Passengers should be able to enjoy a full service, run entirely with new trains, by autumn this year.

There is a difference between problems that will lead to service enhancements and the problems that resulted from the previous Government's neglect and abandonment of responsibility. The current position is a sign that the Government have made addressing London Underground's problems one of our highest priorities. We are tackling the problems head on. We have restructured and strengthened senior management. Last week, we were delighted to announce the appointment of a new chairman of the London Transport board. Sir Malcolm Bates, who has already worked with us on matters connected with the private finance initiative, will take the helm on 11 February. Derek Smith is due to take over as the new managing director of London Underground on 1 February. Both have proven track records, and I am confident that, with the right senior management team, London Transport will be able to meet the challenges that it faces.

We have secured new private investment in new ticketing technology and the power supply of the underground. In August last year, two private finance initiative deals, "power" and "prestige", were signed. They will bring real improvements for passengers. "Power" is worth more than £1 billion. Under that deal, the private-sector contractor will renew the underground's power distribution network, which will make the system more reliable and improve the underground's already impressive safety record. The "prestige" deal is a major ticketing project worth £1 billion, at the heart of which will be the introduction of smart-card ticketing for the first time on the underground and on London buses. Therefore, we have improved management and secured new deals with the private sector.

Above all, we are putting our money where our mouth is. We are providing London Transport with an extra £365 million over the next two years. That will mean that, including PFI, around £1 billion will be invested in the core network over the two years. That means that projects that include investment in track, escalators, embankments, signalling, rolling stock and stations throughout the network will benefit. Investment in projects such as the JLE and the Croydon tramlink will be in addition to that £1 billion. Our approach is in stark contrast with that of the previous Government, who cut planned expenditure to London Transport by some £380 million over the period that we are investing that £1 billion.

That extra funding is not all. It is only the tip of the iceberg in terms of necessary investment. Our proposals for a public-private partnership for the tube will bring a further £7,000 million over the next decade and a half. That partnership will provide the underground with the investment that it needs to meet our aim of a safe, reliable, affordable and modern network. It will mean what matters: faster journey times, increased train service levels as new signalling is introduced, and refurbished and modernised stations. All those have to be judged by the real litmus test: whether passengers perceive that there has been improvement.

I freely admit that, unlike the previous Administration, we did not want full-scale privatisation. Like passengers, staff and taxpayers, we wanted to keep the underground publicly owned and publicly accountable. However, we realised that both the public and private sectors had much

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to offer. Our radical approach--a partnership between the two sectors--will secure the investment from the private sector that is necessary to meet our aim of a safe, reliable, affordable and modern network, but keep the underground under the control of the public sector.

Our partnership proposals mean that the infrastructure will transfer to the private sector on the equivalent of a 30-year mortgage, with the public sector taking over the assets again in an improved condition at the end of that period. I stress: the freehold of the network will remain in the public sector throughout the contract.

There has been some criticism by the Opposition over the fact that we are giving that £7 billion project detailed scrutiny. They apparently wish us to declare a deadline. Perhaps they would like us to post the deadline to all possible negotiating partners. If the hon. Member for Croydon, South were asked to form a firing squad, he would have people stand in a circle. I cannot think of anything that is more self-defeating than laying one's hand on the table at a negotiating session and saying to the opposite negotiator, "No matter how hard you bargain, no matter how much I dislike it, I have to tell you that, by next Friday, I will give in." That would unilaterally hand over London Underground infrastructure contracts at a massive loss to the public sector, in exactly the same fashion that the previous Government rushed to judgment on Railtrack, handing assets worth billions of pounds more than they got for them to the private sector. That may be an ideological ideal for the Conservative party. It does not make sense to the people of London or to the taxpayer.

I have made it clear that, in the private-public partnership, the value-for-money proposal will be the criterion against which all our proposals are tested. The Government will not implement a public-private partnership unless we are entirely satisfied that it will secure best value for the taxpayer.

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