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12.4 pm
Mr. Bernard Jenkin (North Essex): I congratulate the hon. Member for Poplar and Canning Town (Mr. Fitzpatrick) on obtaining today's debate and on its timing. His prescience must be valued by his constituents, as the debate comes just one day after the Government's major statement on the subject. I would not dream of suggesting that his success was due to anything other than heavenly inspiration.
I share the hon. Gentleman's enthusiasm for national bike week, and I was at the front of the queue with him at this morning's successful event. Some of those who
attended are more regular bikers than others who turned up for the photo opportunity. I do not include the hon. Gentleman in that remark. I got there on my own bike and so did he, but one or two hon. Members were there just for today, and were looking forward to slipping back into their ministerial cars.
I enjoyed the hon. Gentleman's tour d'horizon around the integration projects that are expected to flow from the ideas currently in play. He was enthusiastic about spending the proceeds of new taxes that will be imposed on Londoners with cars and businesses that have car parks. That did not sound very new Labour. He dreamt of spending revenues before a single penny has been collected. We remain opposed to those taxes because it is unfair to withdraw Government grants from local authorities for public transport in London while making Londoners pay extra.
Ms Glenda Jackson:
Is that another U-turn in Conservative policy? The hon. Gentleman knows that road charging and a workplace levy would be an empowerment for local authorities that chose to use them rather than a statutory requirement. During the Committee stage of the Greater London Authority Bill, the hon. Member for Croydon, South (Mr. Ottaway) said that the Conservative party supported congestion charging in principle and supported a private non-parking levy for everywhere in the United Kingdom except London.
Mr. Jenkin:
Once again, the Minister has misunderstood Conservative policy, but we are not discussing that point this morning. The Government are fond of claiming that the taxes raised would be hypothecated, but hypothecation means nothing unless it provides additional money. If the Government are withdrawing grant and replacing the shortfall with the taxes--
Mr. Jenkin:
The Minister is doing that.
We have heard valuable speeches from the hon. Members for Lewes (Mr. Baker), for Battersea (Mr. Linton), for Hackney, South and Shoreditch (Mr. Sedgemore), for Lewisham, Deptford (Joan Ruddock) and for Regent's Park and Kensington, North (Ms Buck). We all want more investment in infrastructure, and we share the dream of integration. The previous Conservative Government did not have a bad record on either. We oversaw completion of the Victoria line, began the Jubilee line extension, and opened Thameslink and the docklands light railway. I sat on the Committee that dealt with the Croydon tramlink, another Conservative project. The much acclaimed Heathrow Express was opened by the Prime Minister with a great fanfare, and the Minister herself gave it a prize at the Railway Forum dinner earlier this year.
Ms Jackson:
The Railway Forum gave the prize.
Mr. Jenkin:
I saw the hon. Lady there, and I saw her present the prize.
Ms Jackson:
The Railway Forum gave the prize.
Mr. Jenkin:
If the hon. Lady is suggesting that she did not believe in the prize that she handed over, far be it from me to allow any unparliamentary expression to cross my lips.
Where will the money come from for the further integration that we all want?
The black cloud that looms over London Underground is the dreadful public-private partnership, with which the Government have replaced the investment plans that they inherited from the Conservatives. The Government cancelled those plans as soon as they came into office, in the name of a publicly owned and publicly accountable service. That has been followed by two years of absolute stalemate. The morale of the tube's staff and management has plummeted. It is a bit rich for the hon. Member for Deptford to say that old Labour's promises are being fulfilled, the day after the Government announced that the privatised Railtrack will provide the capital and investment for which the tube has been crying out.
According to the Labour party, Railtrack was public enemy No. 1 because it made profits and doubled annual investment in the railways. It has been transformed into the rescuer of the public-private partnership for the tube. We must welcome the fact that the Government are at last talking sense, but there are many questions to be answered about the PPP.
It is envisaged that three infrastructure companies will be involved in the PPP. Why is one of those companies, the sub-surface tube, being let to one bidder on a privileged basis, with no competition? How are we to know whether Railtrack is being forced to strike a good deal for the taxpayer? We shall never know, because there will be no competition. A deal has been sewn up between the Government and Railtrack.
There will be proper competition for the deep tube, and we welcome that. We understand why the Government made that decision; their original plans for the PPP were paralysed by the fact that Railtrack was by far the most credible bidder for all the tube, so it was difficult to get any competition in bids for any of the infrastructure companies. By giving Railtrack privileged access to the strategic part of the tube in which it is interested, the Government will ensure that there is better competition for the other parts of the tube.
That prompts the question of when the proposals will be implemented. The Government originally promised that the contracts would be tendered last autumn, but yesterday's statement was little more than a declaration of intent; there is no agreement between any of the parties and the Government say that only pre-qualification will be completed by this autumn.
The greatest irony is that we are expected to take the Government seriously when they have been complaining for two years that Railtrack is not investing enough, but they are now placing the future investment in the sub-surface tube in Railtrack's hands. How are we to have any confidence that Railtrack will invest enough if the Government do not have confidence that Railtrack has invested enough in its existing responsibilities? How will the Government ensure that Railtrack will invest in the tube? The lesson is that two years of paralysis, no decisions and no policy have left the Government in urgent need of taking the best available opportunity as the clock ticks on.
The Government need to learn that there is no point in briefing against Railtrack, damaging its credibility in the City and undermining its share price and its ability to raise the funds that the Minister wants it to invest. She needs to understand and explain to people that Railtrack profits
are good for investment because they will strengthen its balance sheet and enable it to borrow and to finance the investment that the Government want it to make in the surface railway as well as in the tube.
What rates of return will Railtrack be allowed to earn? Will there be track access charges for tube trains running on Railtrack-maintained track or will there be a simple rate of return contract? What would be a fair rate of return? What profit will Railtrack make on this deal? Who will provide the ultimate financial guarantees? Will there be a repeat of the channel tunnel rail link financing, in which Railtrack rode to the rescue of the deal, backed by £3.5 billion of Treasury guarantees? Much to the satisfaction of the Minister and her colleagues, Railtrack's profits on the channel tunnel rail link will be made on the back of those Treasury guarantees. Is that what is meant by a public-private partnership? At least our privatisation proposals for the tube would have put the risk entirely on the private sector so that it earned its profits rather than having them backed by the Government and the taxpayer.
The fundamental problem is the financial illiteracy of the PPP. A report published by Professor Stephen Glaister and others said:
There are two underlying factors. First, the £7 billion that has been promised for investment in the tube does not compare favourably with the £7 billion invested in the tube during the last 10 years of Conservative Government. The proposals will not transform management attitudes or increase the efficiency of the operation of the tube, as privatisation is doing in the railways and other industries. The situation will stay the same, without a great bonanza of new finance.
The second factor is the deadline. In response to a parliamentary question on the comprehensive spending review, the Government made it clear that the Treasury will completely stop financing the tube in 2000-01. The deadline is therefore next April. The Minister and her colleagues say that they are not negotiating the PPP against a deadline, but I say to them, "Pull the other one." The Treasury is holding a gun to her head because the Government know that if they end up having to finance the tube out of her Department's expenditure, cuts will have to be made elsewhere to make up that shortfall, as the Government had to do as a result of cancelling our privatisation proposals.
"The PPP threatens to impose burdensome long term pressures on Underground operating revenues, including the prospect of continually rising fairs, in order to pay back up front investment by private contractors."
In a public-private partnership, private sector investment does not come free; it has to be paid for. If one increases the capital in the business, one must increase the revenue to service the capital to provide the return. Where will that revenue come from? Will it come from higher fares, or from further subsidy to which the Treasury has yet to agree?
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