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Mr. Simon Hughes: I have one more point to add to my hon. Friend's case. If the new London authority inherits something that it has had no opportunity to influence, the problem will go deeper than the authority being able to wash its hands of the issue; the new authority will be undermined. If the people of London think that their authority cannot influence affairs and has no power over one of the most important public services in London, its credibility will be undermined from the start. That will not be good for the government of London on any issue.

Mr. Brake: I entirely agree with my hon. Friend. Unfortunately, the situation is even worse, because there are severe doubts about the extent to which the mayor and assembly will be able to influence rail commuter services in London.

In the meantime, the backlog of repairs will grow. The Minister has had the honesty to admit that things are getting worse before they get better. There has been a 20 per cent. increase in signal point failures and rolling stock failures in 1997-98. London Underground is on track for further increases in rolling stock failures this year.

How do we get out of the quagmire? We need to establish a public interest company or trust, with objectives set by the Greater London authority,

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which would be outside the public sector borrowing requirement. The hon. Member for Croydon, South referred to bonds. This is not an untested model. It is similar to arrangements that work acceptably in New York and San Francisco. The Liberal Democrats would will the means to provide the funds that are needed for the investment programme.

The Government are considering--and probably support--the measures that we propose, although the Conservatives do not. We advocate a levy on non-residential car parking spaces. A rough estimate suggests that £150 million a year could be raised from that. We support road congestion charges, provided that a viable public transport alternative is put in place. The London congestion charging research programme suggested in 1995 than between £95 million and £795 million could be raised through road congestion charges. We have also talked about a small increase in business rates for London's largest businesses, which could raise £150 million per annum.

In return, Londoners would get a transport system that was reliable, safe and affordable. They would get cleaner air, fewer cars on the road and a reduction in pollution-related illnesses such as asthma. The Tory Opposition have no solution other than privatisation. The Liberal Democrats--and Londoners--will not back that. Nor will we support the Government's proposals. I do not believe that the Government can demonstrate, as they suggest in the amendment, that their proposals will deliver best value.

The Liberal Democrat proposal--a public interest company backed by ear-marked revenues--would take the tube into the 21st century and, with the Liberal Democrats, Londoners are guaranteed a smooth and safe ride, in comfort and at an affordable cost.

8.39 pm

Mr. Ken Livingstone (Brent, East): It is absolutely monstrous to be lectured by the Conservative party about neglect of the tube. Let us look at the figures that I jotted down while we were being lectured. Back in 1991, after the Conservative Government had been running London Transport since 1984, the Monopolies and Mergers Commission condemned them in a report that said that there was a backlog of maintenance and repair on the tube that would require an investment of £700 million to £750 million a year for 10 years to be cleared.

Initially, under the embarrassment of that report, the Conservative Government came up with £632 million for 1992-93, but, by the time that we got to the last full year of Conservative rule, the figure had been halved, with an investment of only £371 million to clear the backlog. There was additional funding for the Jubilee line, but that was not part or parcel of the MMC report.

It was absolutely monstrous of the Conservatives then to complain when one of the first acts of the Deputy Prime Minister was to put in another £365 million to revive the programme. I welcome that investment, just as I welcome his replacement of Mr. Ford, who had an agenda that was not in the interests of Londoners.

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Having said that, I am not yet convinced of the Government's case on the funding arrangements, for all the reasons that we have heard.

Mr. Jenkin: I once went to the Library to try to find out what the capital investment in the London underground was under the Greater London council when the hon. Gentleman was its leader. The Library told me that the GLC accounts were so opaque that it was impossible to tell.

Mr. Livingstone: The accounts were subject to the approval of the district auditor and we never had any complaints about them.

One of the first acts of the Conservative Government when they came to power in 1979 was to pass legislation removing from local authorities any power to determine their own capital programmes. In the early days of Mrs. Thatcher's Administration, we lost the power to buy a bus or a train or to build a council house without the prior approval of the Department of the Environment.

Every year, under both Labour and Conservative leaderships, GLC leaders and their transport chairs had to trek across to beg the Department of the Environment to allow us to invest more in the tube, and every year we were sent away without our requirements being met. Investment in London Transport was determined by the Conservative Government in every year from 1980. They effectively had control of the capital investment programme for the best part of two decades, and they can blame no one but themselves for the chaos that they have left us to sort out.

I have been deeply impressed over the years by the Chancellor's commitment to prudence and to getting value for money. It seems to me that the entire public-private partnership will hinge on a simple bottom-line calculation of what is the cheapest way for Londoners to pay for the modernisation of their tube system.

If the public-private partnership comes up trumps and turns out to be cheaper than the other options that we have heard about from the Liberal Democrats, that would be fine, but it is likely--although I have to confess that this is a wicked calculation by the trade union concerned, the RMT--that the rate of return that the private sector will require for such investment may be between 20 and 25 per cent. Who in his right mind would take out a 30-year mortgage on a house at a rate of interest of 20 to 25 per cent? It is an absolute nightmare.

I strongly suspect that we will have to take a difficult decision at the end of this great exercise and consider how much cheaper it would be if we were allowed to have a bond issue to fund the investment. That works perfectly well in New York. In a sense, the Government have moved a good step in that direction. My dear and right hon. Friend the Member for Hartlepool (Mr. Mandelson), before his demise, made the breathtaking, bold and radical left-wing gesture of allowing the Post Office finally to slough off the shackles of the Treasury and start raising funds in the market for a programme of expansion.

If we can do that for the Post Office, why not for London transport? One could even consider a tax increase, although I know that that is horrendously off message. I find remarkable acceptance among major City institutions for an increase in their business rate or a new

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tax on business in London, provided that it was ring-fenced for the modernisation of the tube. That is a sea change in the attitude of City institutions to taxation. I strongly suspect that, if Londoners were told honestly that an additional sum would be put on the council tax so that the domestic sector could make a contribution--although one that, perhaps, would not match that of the private sector--the money could be raised through taxation.

It would be jarring for Londoners to be told by a Government so dominated by people from other regions of the country what they should and should not be doing with their own money, when there is a willingness among Londoners to pay for the investment. There are many problems to solve before the Government will be able to persuade Londoners. The opinion polls show that Londoners overwhelmingly reject the public-private partnership, and remain committed to the tube remaining completely and utterly within the public sector.

Mr. Brake: Is the hon. Gentleman aware of a report in The Guardian on the public-private partnership in relation to National Air Traffic Services, in which the Civil Aviation Authority expressed concern about the safety implications of the public-private partnership? Does he agree that the Government should reconsider their position on the matter?

Mr. Livingstone: The evidence from the RMT on the old British Rail service--which suggested that probably illegal immigrants from Croatia who did not speak English were responsible for looking after safety equipment on the railways, and were unable to read the instructions on safety equipment--was very worrying. Directly employed people, accountable to the public sector, are much safer than fly-by-night operators, who are often picking people off the corner at busy London junctions and driving them to do cash-in-hand work in vital areas of public safety.

There is one danger that the Government may not have fully anticipated. As the programme has slipped back, we have got to the point where no final decision will be made before the mayor and the assembly are elected. I am a responsible person and, if selected, I shall run on the Labour party policy--heaven forfend that I should do anything else. However, suppose a candidate turned the election into a referendum on the issue of the public-private partnership and called on Londoners to reject it at the ballot box?

What could the Government do if a mayoral candidate were elected on a specific, primary commitment--above everything else in the election--to oppose the introduction of public-private partnership and to put forward other options, such as the bond issue or taxation? Would the Labour Government reject the clearly expressed will of Londoners at the ballot box? I hope that, in the Minister's reply tonight, we will be given some idea about that. As the operation has slipped back, it has offered Londoners the option at the ballot box of expressing an opinion on the issue. The Government need to work out what they will do in those circumstances beforehand, rather than in a panic afterwards.

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