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Mr. Redwood: It is generous of the Deputy Prime Minister to let me intrude on private grief. He would agree that the Treasury would be over-generous if it offered £5 notes for £1--it might mean that there was an election coming up--but when the Government offer to pass on control of £1.5 billion of assets for £300 million, are they not offering £5 notes for £1? Those are the figures that the Government have supplied. Is not the sale of those assets, over the heads of British management and employees and probably to a foreign stakeholder or shareholder, a big slap in the face for those British managers and workers?
Mr. Prescott: If the hon. Gentleman has read our response to the Select Committee report or our letters to the Committee, he will know that that is complete nonsense. The argument about those figures concerns a judgment about debt and equity, which we have dealt with before. I shall take no lectures from the hon. Gentleman, who was a member of the Government who, as the Public Accounts Committee has pointed out, undersold most of
our assets by billions of pounds. He now has the audacity to lecture us about selling off assets. Whatever the intention of the previous Administration, those sales were hardly good for the taxpayer.
Mr. Jenkin: Will the right hon. Gentleman give way?
Mr. Prescott: No, I must make progress.
A public-private partnership, or any of the alternatives, must satisfy the Government's criteria. First, we want to separate NATS operation from CAA regulation--there seems to be agreement on that in the House--not only to maintain safety but to enhance it. I shall return to that point. We also want to maintain the national security objective, to secure the long-term investment that I have referred to, to introduce stability to the investment programme and to get better project management skills.
I have heard the talk about Rover's management skills. Considering the problems that I inherited as Secretary of State, it is no wonder that in some of our public sector industries, projects are not completed on time and are over budget by billions of pounds. It was estimated that the two centres for NATS would cost about £600 million, but they will now cost us over £1 billion and the project is five years late. I could give several examples that demonstrate that although the public sector culture is plainly good for safety, the public sector is not too good at handling projects. The taxpayer has to make up any difference--to the tune of £1.5 billion in the case of the Jubilee line extension.
A public-private partnership for London docklands light rail is on time, is as efficient as it is effective and imposes no extra cost on the taxpayer. We must take such examples into account when considering the quality of management. I have been a defender of the public sector all my life, but it costs a great deal more than the private sector, and we must ask why. Various explanations have been given, but I am faced with the practicalities.
When considering a public-private partnership, we decided on a trade sale, to which the hon. Member for North Essex referred, to a strategic partner. The hon. Gentleman did not seem to think that that was a good idea. So why did the Conservative Government sell Rover to BMW for £1? When English, Welsh and Scottish railways came along, there were three companies to be sold. The American buyer said that it would only buy the lot. Not only did the Conservative Government give it the lot, but they gave it £250 million to take it away. [Interruption.]
Mr. Deputy Speaker (Mr. Michael J. Martin): Order. There are many private conversations taking place in the Chamber. The right hon. Gentleman is addressing the House, so hon. Members should listen to what he has to say.
Mr. Prescott: I certainly believe and intend to show that a public-private partnership with a strategic partner will provide a strong framework of public accountability.
Mr. Jenkin: May I point out that if the right hon. Gentleman chose to pursue the NAV Canada proposal,
the Government would still receive a capital receipt for the sale of the business. NAV Canada raised a large sum in bonds to pay for the business, so the public sector still received a capital receipt.
Mr. Prescott: I hear that defence, but my point was that although a strategic partner was involved, the business was sold to one operator. There are several examples of that, so I find it difficult to understand why the hon. Gentleman cannot accept the idea of a strategic partner. Indeed, his proposal would not allow for that: the hon. Gentleman wants to float shares in a full privatisation. That is a straightforward position, and it is argued that that is best for the taxpayer, but I am bound to say that the record of privatisations does not bear that out.
New clause 35, which was moved by my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), makes it clear that we should take the option of state ownership. It would permit the separation of the provision of a service from its regulation, but would do little else. It would retain the service in the state sector and would therefore lead to problems in acquiring public investment. The service would have to apply for the Treasury for resources. There would also be all the difficulties of being unable to get a programme established for more than two or three years. The service would have to compete with others requiring public expenditure.
Those problems have undermined the public sector in this country. Inadequate finance for the quality of service required is a reason why the quality of public services has got worse. We are desperately seeking to change that. The public sector suffers from stop-go investment, as I suggested, and that has dogged most of the transport industry for a long time.
Swanwick is a classic example of a project that is over budget, over time and, frankly, will not even produce the facility that we want. Indeed, it is dogged by concerns of one form or another. My hon. Friend the Member for Ayr (Ms Osborne) told us about the two-centre operation, pointing out that a privatised service might not retain two centres.
I listened carefully to what my hon. Friend had to say, and she made a powerful case tonight for what she has been advocating for a long time. There is no disagreement between us on the matter. In fact, the Prime Minister made it clear at the Dispatch Box that he accepted the spirit of her amendment and that her proposals would be written into the strategic agreement. The strategic partner would be required by the Government to build the second centre. The proposal would involve a golden share, directors and articles of association, as we pointed out to the Select Committee. I understand the fears expressed by my hon. Friend, and the concern about the matter in Scotland. On behalf of the Government, I accept her amendment.
Ms Osborne: I just want to be absolutely sure about this. Is my right hon. Friend saying that he unequivocally accepts my amendment and that it will be added to the Bill?
Mr. Prescott: Yes, my hon. Friend has re-emphasised my point. Her amendment will become a Government amendment, so I hope that that does not cause her embarrassment.
My right hon. Friend the Member for Edinburgh, East and Musselburgh spoke to new clause 36. The new clause and the amendments associated with it seek to achieve a
different end from the Government's. They would involve the separation to which I referred, and would establish a strategic partner, but restrict it to being a not-for-profit company. That is a bit like Virgin saying that it would run the lottery on a not-for-profit basis--I shall leave aside the fact that my right hon. Friend would want a bit of profit for investment and equity.My right hon. Friend cited NAV Canada as a working example of that model. That suffers most of the drawbacks of a state-owned option. A letter sent to us makes it clear that the assets were sold by the state, and there is no accountability. Although the agreements and safety regulations do not say so, NAV Canada is privatised. All the assets that were owned by the state, and which in all other countries are still owned by the state, have been sold to a trust company. People have been appointed from the unions and other companies to sit on its board, but the trust company runs the service. There is no accountability to the Government, or Government ownership. Agreements have to be struck about defence--an issue that I should have thought would be of some concern to the House. Such an arrangement does not provide the proper degree of accountability; I believe that there must be accountability, which is why we are writing it into the process.
7.30 pm
Dr. Strang: At a meeting a week or so ago, we heard an address by the trade union director of NAV Canada, who explicitly stated that NAV Canada was answerable to the relevant Minister.
Mr. Prescott: That Minister can issue directions along the lines of, "On safety, you must do this." However, NAV Canada does not raise money from the Government; it raises it from the private sector and is free to do so. In addition, it can do whatever it likes in respect of prices and profits--the Government have no control over those aspects. My point is that the arrangement brings all the problems that are associated with many trusts.
I remember that when I first entered Parliament in the 1970s, there were problems with the Merseyside docks, then controlled by a trust. People got hold of it, forced down the prices and the brave Selsdon men would not allow it to be rescued. Eventually, they were forced to mount a rescue. That trust arrangement had failed to provide adequate investment or proper accountability to Government. That would not be a satisfactory way to deal with air traffic control, with all its defence implications and investment requirements; nor would such an arrangement allow the business to invest abroad.
I always take the cost-plus approach to public investment. An arrangement such as the one proposed could not be controlled; it could set its own prices and exploit its monopoly position--unaccountable to anyone, it would simply pass on all the costs. That is not the sort of culture that will produce the efficiency and investment that the modern aviation industry needs.
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