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Mr. Bercow: Will the Minister give way?

Mr. Hill: I know that the hon. Gentleman has not yet intervened, but I hope that he will forgive me for not giving way because I need to make progress. If I feel that I have made satisfactory progress, I will of course yield to him in due course. After all, he used to represent me on Lambeth council--albeit not, I hasten to add, with the benefit of my vote.

The Liberal Democrats' alternative to the PPP is a bond option. Fair enough--we are not dogmatically opposed to bonds, but we do not believe they are the right solution for the underground. They would do nothing to bring management efficiencies to the system; they would

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introduce a further delay in getting a financing regime in place; and, as the Industrial Society itself concedes, they would not be a realistic prospect without new powers to raise local taxes. We do not believe Londoners want more delay--perhaps of up to two years--in modernising the tube, nor do we think that they want to pay more taxes, or to confer tax-raising powers on the Mayor and the Greater London Assembly.

We are convinced that the PPP is the best option for NATS; let me explain why. NATS provides a world-class service, but air traffic is growing by more than 5 per cent. each year and increasing delays are inevitable unless significant improvements are made to the system. We are already addressing these needs: the £700 million Swanwick centre will open in the winter of 2001-02. However, NATS managers say that they also need more than £1 billion over the next 10 years to invest in safety. In particular, major investment is needed to bring the new Scottish centre at Prestwick on stream when it is needed, probably by 2007-08.

Under the PPP, we will bring in a long-term strategic partner from the private sector that will fund and deliver the next generation air traffic control system. Under the PPP, NATS will be freed from Government financial constraints. With stable and long-term funding provided by the strategic partner, NATS will be able to plan its investment to provide significant benefits to the United Kingdom, airlines and their passengers as soon as possible. Freedom from Government financial constraints will also put NATS in a good position to export its expertise at a time when there is an increasing realisation that international air traffic control systems must be consolidated if they are to be able to cope with continuing increases in air traffic.

We have rejected the privatisation of NATS precisely because we do not believe that it would provide the necessary safeguards that the travelling public deserves. Crucially, under the PPP, we are able to build in specific safeguards that would not be possible under a privatisation. For example, as I have already said, by retaining a significant shareholding, the Government will retain the right to appoint directors to the board of the company. Under the PPP, the main strategic decisions of the NATS board will require a unanimous vote of all directors, including those who will be appointed by the Government. Under that structure, the Government and the taxpayer will also be able to share in the future success of the PPP and to have a say in key decisions affecting the company. None of that would be possible with a 100 per cent. sell-off.

Air traffic control is all about safety. That will continue to be the overriding priority under the PPP. That is why we have amended the Transport Bill in another place to make it clear that maintaining a high level of safety in the provision of air traffic services must have priority over every other consideration when functions are exercised under the legislation.

Of course, setting up the PPP is also crucial in delivering the final and complete separation between safety regulation by the Civil Aviation Authority and the provision of air traffic control services by NATS. The mid to late 1990s saw a 35 per cent. increase in the number of risk-bearing air proxes involving commercial air transport. That is why we are determined to strengthen

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aviation safety by separating air traffic services from safety regulations, which is something that the industry, the Select Committee on the Environment, Transport and Regional Affairs and other aviation interests have sought for some years now.

It goes without saying that our proposals for a NATS PPP have proved contentious, but everyone, including the Select Committee and the unions, accepts that doing nothing is not an option. We have considered various other funding mechanisms, including trusts, bonds, and publicly owned companies, but we are convinced that none of those will deliver all the benefits that a PPP will provide.

The Liberal Democrats want a not-for-profit company to take over NATS. The reasoning behind this is, I assume, to establish that profit is not put before safety. Let me reassure the House that the PPP will not jeopardise safety: rather, it is designed to enhance the safety regime for air traffic control. Safety regulation will remain firmly in the public sector in a reformed CAA and, as I have just said, we have amended the Transport Bill to reiterate our commitment to safety. In short, I do not accept the profit-before-safety argument, and nor should the House.

I should stress that there is nothing in the PPP structure or in the Transport Bill that would prevent a viable not-for-profit company from becoming our strategic partner, but for us to take a view on what offers the best future for NATS, there needs to be a competitive process which allows rational assessment of the bids we receive. Any not-for-profit bid needs to stand up and be assessed alongside the others. Limiting the selection criteria in the way the Liberal Democrats propose would knock out potential candidates who might, at the end of the day, be a better partner.

Other funding mechanisms for NATS have also been mentioned in the past, including trusts, bonds and publicly owned companies. We have considered those options, but we are convinced that none of them will deliver all the benefits that a PPP will provide. Last week, we announced that we have three robust potential strategic partners for NATS. We shall now work with those world-class consortiums to find the best option for the future of the company and of air traffic control in the UK.

I have gone out of my way to set out the grounds for rejecting the alternatives for the future of NATS and the London Underground propounded by the Liberal Democrats. Given the deplorable terms of their motion, there are those who might take the view that I have been too generous and reasonable in my response. However, let us not lose sight of the real villains of the piece: the gung-ho privatisers of the official Opposition, who, despite all the evidence, still advocate the wholesale privatisation of the underground and air traffic services. Will they never learn?

The Conservatives privatised and deregulated the bus industry, with the result that bus passenger journeys went down by a third and bus services in the countryside were decimated. The Labour Government have stemmed the decline in bus passenger numbers: through our rural bus grant, last year, 16 million new passenger journeys were enjoyed by country people benefiting from new and enhanced rural bus services.

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The Conservatives privatised the railway, broke it up into 100 parts and got an appalling deal for the taxpayer into the bargain.

Mr. Bercow: I am grateful to the Minister for giving way, even though he has never allowed the facts to intrude on his private prejudices. Given that, this year, London Underground will receive an investment that is precisely £282 million less than was provided in the last year of Conservative Government, how does he justify the expenditure by his Administration of more than £60 million on consultancy fees in connection with a botched privatisation?

Mr. Hill: That is rich coming from a member of the Conservative party, which spent £450 million on a rail sell-off that will deliver less to the travelling passenger and the taxpayer than the London Underground PPP will achieve. Let me allow the facts to intrude on the debate: were the hon. Gentleman to take the trouble to look at the forward projections of the public expenditure figures produced by the last Conservative Government in 1996, he would find that projected investment by central Government in London Underground this year was zero. He is on pretty thin ice when he condemns the Labour Government, who have invested £1.6 billion in London's underground system in our three years in office.

When the Tories left office, Railtrack was £700 million behind in its investment programme. With Labour, rail investment is now 33 per cent. higher than in 1997, and we have announced plans for a massive injection of £49 billion into the rail system over the next 10 years. The Conservatives left a £1.2 billion investment backlog in the tube; they made a £400 million cut in tube investment in their last Budget; and, if they had stayed in office, they would by now have cut Government funding to London Underground to zero. Yet now the Conservatives have the effrontery to propose the full-scale privatisation of London Underground, breaking it up into five companies competing with each other, and they still want to sell off NATS lock, stock and barrel. If we are talking about dogma, they are the dogmatists. Like the Bourbons, they have learned nothing and forgotten nothing.

We have learned from the mistakes of the dogma- driven programme of the previous Administration. We are working hard to put right the mistakes made on the railways, and we have developed innovative, custom-built solutions for the underground and NATS. That is the right way forward, and that is why the House should reject the disreputable and opportunistic motion tabled by the Liberal Democrats and support the Government's sensible and forward-looking amendment.

I commend the amendment to the House.


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