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8.30 pm

Mr. Robert Syms (Poole): In the early years of the previous century, Sidney and Beatrice Webb and the Fabians had high hopes that central planning and governmental control were the way of the future. By the end of the century, the overwhelming lesson was that that did not work and never had any chance of working. Around the world--not only in Europe, but in the far east and South America--most countries, whatever the political persuasion of their Governments, are privatising industries and looking to free enterprise to deliver the goods.

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A free enterprise system is more likely to generate wealth, innovation and enterprise. It is more likely to devolve decision making to millions of people who are consumers and who, through the market mechanism, make choices. That mechanism has proved over the past century to be the one that delivered the best economic outcomes. Even left-wing politicians have concluded that free enterprise is best and that one can control an agenda without having to own an industry.

The one party that seems to have a problem with that notion is the Liberal Democrats. I know that the past century did not treat them well, and if they continue in their current vein, this century will not treat them well either. The social democrats in Germany dropped their Marxist tag in 1959, the socialists in Spain did so in the 1970s and became the Government throughout the 1980s, and even the Labour party, one of the most conservative institutions in this country, dropped clause IV, because it did not see the relevance. [Interruption.] I hear someone mutter, "Not all of us." That is a good point--only last week an hon. Member asked the Prime Minister about renationalising the rail industry. The Labour party still has not quite adapted to the changes that its constitution has produced, but it is going in the right direction.

Free enterprise brings home the bacon and is the system most consistent with democratic government, because it devolves decision making. The Conservative party has been a defender of free enterprise for most of the past century because as a party we realise that property and a diverse economy are essential for a healthy nation. We defended free enterprise even when the Labour party tried to nationalise and control. We have always been proud of that, but not for any great dogmatic reason.

One could probably say of the private sector the same as Churchill said of democracy: he said that democracy was the worst system, except for all the alternatives. Free enterprise requires a sensible competition policy, and capitalists must be prevented from taking advantage of people, because the natural capitalist tendency is sometimes to do that. Government have a role to play in setting parameters, setting rules and ensuring that fraudsters have no place in the system.

During its 18 years in office, the Conservative party found that a shake-up of the large state sector would result in substantial gains. The burden on the state was extensive in terms of taxpayers' subsidies. As my hon. Friend the Member for Buckingham (Mr. Bercow) made clear, what has changed and what has assisted the current Chancellor's finances is that instead of the taxpayer being a contributor to many industries, many companies that were in the public sector are contributing through corporation tax and are more efficient organisations than they were.

Many industries that were privatised by the previous Government have been able to expand overseas, investing in other countries and creating great world-class companies. We are a great trading nation, and many companies have expanded and undertaken projects that they would not have considered in an earlier generation. We now have a worldwide perspective. The lessons of that Government have been learned not only in this country but abroad, where many Conservative policies have been adopted because of the benefits that have become apparent.

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The Conservative party is pragmatic in its approach and looks at each individual case on its merits. The Defence Evaluation and Research Agency was mentioned earlier. It would be surprising to find my party in the same Lobby as the Government on DERA, because there are real concerns about our relations with the Americans and our defence interests. It would be wrong to suggest that we wanted to privatise everything in sight.

With regard to National Air Traffic Services, in principle we would prefer a proper privatisation, with a listing, to create a world-class company. However, NATS is a difficult matter. If it were an easy privatisation or a popular one, I expect that Baroness Thatcher or my right hon. Friend the Member for Huntingdon (Mr. Major) would have privatised it when in office, but the issues are complex and the benefits of privatisation are a little less obvious than in some other areas, not least because most of the income derived from NATS comes from international treaties negotiated across Europe and across the world.

The ability of NATS to generate more income is dependent on the volume of air movements increasing. Unlike previous privatisations, such as that of BAA, which is a great retailing company that has expanded across the world and opened many stores, NATS cannot generate significantly more income, as the Government evidently expect it to do.

We should remind the Government that when they were in opposition, they said that our air was not for sale. They did not include their proposals for NATS in their manifesto. What the Lords have done is sensible--they have asked the Government to think again. In the case of the British Telecom flotation, we allowed the electorate to make its choice. We passed legislation and had a general election. Only after we were confirmed in office did we proceed with the flotation. It would not be unreasonable for the Government to accept the Lords amendment, put it in their manifesto, fight an election on it and, if Labour is successful in being re-elected, carry it through.

As I made clear in an intervention, I am also interested in whether the Government will reverse another amendment to protect the pensions of NATS staff. I hope that the Under-Secretary will give us more information on that.

The Government's solution for NATS is bizarre. They began with a proposal for 49 per cent. Government ownership, 46 per cent. private ownership and 5 per cent. of shares for NATS staff. That was to be done not through a listing but by negotiating with a private strategic partner. The Government have no clear idea about how employees can benefit. There has been talk of setting up a trust to enable the 5 per cent. shares that the staff own to be internally traded. I hope that the Under-Secretary can give us more information about the way in which staff could benefit from such trading.

We are also worried about the identity of the strategic partner, and especially about foreign ownership. There is a defence element to the topic that we are discussing. Anxiety therefore exists about foreign ownership, especially by a company that has substantial state ownership. Now that the Government have received some

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expressions of interest, I hope that they can reassure hon. Members that the strategic partner is not likely to be a foreign company with heavy state ownership.

Mr. Geraint Davies (Croydon, Central): How does the hon. Gentleman reconcile his worries about foreign ownership with his desire for wholesale privatisation?

Mr. Syms: We should do our best to protect an independent British company. A strategic partnership, possibly with a foreign-controlled company, which provides air traffic services, might skew policy. I would require substantial reassurance before entering into a relationship with a foreign-owned company, especially if it was owned by a foreign Government. There was talk about the French company Thomson CSF being one of the strategic partners. I should therefore like the Minister to tell us more about the number of organisations that have expressed an interest and with which the Government are currently negotiating. There is currently great uncertainty.

The Government believe in spending money on consultants and have spent £2.2 million on them. We had a short debate in Committee about the money that would be generated from NATS. There was some confusion about it. Perhaps the Under-Secretary can give us more information about the income that will be generated. He gave us an assurance in Committee that the money would be used by the Department of the Environment, Transport and the Regions, not the Treasury. On what will it be spent? If those questions are answered, we shall have a clearer idea of the Government's thinking.

Mr. Clifton-Brown: My hon. Friend knows that NATS has outstanding loans of approximately £300 million. That money is urgently needed to pay for the new facility at Prestwick. Will my hon. Friend press the Under- Secretary to say when the proceeds from the public-private partnership are likely to be received? If there is a delay, safety could be jeopardised because the facility at Prestwick will not be built on time.

Mr. Syms: I shall not answer my hon. Friend directly because the Under-Secretary heard the question and will doubtless take it into account. Time is limited, and several hon. Members want to speak.

The Government presented an optimistic scenario about the results of their policy. They stated in Committee that they and many people believed that the number of air traffic control centres in Europe would be reduced to two and that one of the benefits of privatisation--or PPP as the Government call it--is that Britain would be in a strong position to provide them. I cannot envisage other nations allowing their aerospace to be controlled from Britain. There is a danger that we might be the loser in that competition, especially if there is some foreign ownership, control or influence over what happens in our aerospace. Our solution is better; the Government's is over complicated, but at least they will have an opportunity to reconsider when the Lords amendments are presented.

The target date for the strategic partner has been given as March 2001. I hope that the Under-Secretary will be able to tell hon. Members whether the date remains relevant.

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Hon. Members have raised the issue of safety. There is a strong culture of safety in aerospace and in NATS, and I do not subscribe to the idea that following the route that we are considering is likely to be detrimental to safety. The Minister clearly set out some of the reasons for that. Nevertheless, there are anxieties, and reassurances should be given. The Select Committee has criticised the proposal, but I shall not go into that.

We have heard that the Government intend to overturn the Lords amendment that relates to delay. We hope that the Minister will give us more information about what the Government intend to do about including protection for pensioners in the Bill.

We have a general concern about aerospace policy, and particularly the role of Eurocontrol, which we spent many happy and productive hours debating in Committee. We have concerns also about the European Community's single sky policy and how that will impact on Britain's aerospace policy.

We privatised the railways, and not for any great political benefit to the Conservative party. I do not believe that there was any such benefit to be gained by doing so. We privatised them because we felt that there would be a benefit to the nation. Mainly, we wanted to attract substantially more private money and investment into the industry. During the 40 years from 1952, the share of journeys made by rail fell from 17 per cent. to only 5 per cent. The amount of goods moved by rail dipped dramatically from 42 per cent. to 7 per cent. British Rail had been allowing our railways to go into genteel decline over many decades. If we are to have a world-class economy--ours is the fourth largest economy in the world--we must have a transport infrastructure that delivers the goods. I believe that the Conservative Government were right to privatise the railways. The benefits of privatisation will be seen only over a number of decades because of the backlog of under-investment of a nationalised industry.

I say that we did the right thing, but that does not mean that we got everything absolutely right. There are many areas where there can be improvement and systems need to be worked better. As we have heard in the debate, in various interventions, there is some division about whether the current system is safer than the previous system. The figures show that the current system is safer. However, we must all be concerned that our railways are not as safe as those in continental Europe. We should try to prevent any accidents. We must do far more in terms of safety.

The Opposition have raised several concerns, especially about the interaction of the Rail Regulator and Railtrack and the fining network. That is one area where we should examine carefully whether the post-privatisation system is working as it should. It seems somewhat perverse that Railtrack is fined if it tries to repair certain stretches of railway, and the fine level suggested by the Rail Regulator has increased quite substantially. We have concerns about that, and that is why the other day we called for the new deal that the Rail Regulator announced to be risk assessed. The regulator has no direct role in terms of safety. That was our major concern.

Overall, I think that privatisation has been successful. There was a 5 per cent. increase in passenger journeys between May 1997 and September 1999, with rail patronage now the highest in 40 years. Domestic rail

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freight increased by 15 per cent. in two years. More than 1,300 more trains are being run daily to meet increased demands. Since 1997, 13 new stations and more than 50 new freight terminals have opened. Rolling stock worth £1.95 billion has been ordered for delivery by 2002. There were 480 safe station car parks on the national rail network with CCTV or video surveillance by the end of January 2000. Much progress has been made, but much more still needs to be done.

London Underground caters for 3 million trips per week day, including journey-to-work trips made by 35 per cent. of those in central London. About 90 per cent. of tourists use the tube during their stay in London. It generates more than £1.1 billion in fare revenue annually. With 3,954 railway cars travelling on more than 1,140 km of track, the underground now carries more passengers than the entire rail network in the UK. It is undoubtedly the only real method of rapidly transporting large numbers of people round London.

It is important to get things right. That is desperately important for our capital. My hon. Friend the Member for Buckingham (Mr. Bercow) made it clear that when the previous Conservative Government left office, investment in the underground was substantially more than it is now. This year, the tube will receive £753 billion, which is a substantial reduction on the £1,035 billion that the Conservative Government were investing in 1996-97. Part of the problem is that the tube needs a great deal more investment. The delays and the Government's decision to go for such a convoluted public-private partnership have contributed to the rundown of the network.

In the Labour party 1997 election manifesto, the Prime Minister promised London:

However, the Government are unlikely to deliver on that with the plans they have set out. Labour's PPP has been described as

by The Economist; a "convoluted compromise" by the Select Committee on the Environment, Transport and Regional Affairs; and

by Peter Ford, a former chairman of London Transport. It has not had the rave reviews that the Government would have wanted. The privatisation will be botched. My concern is that they will give privatisation a bad name, as they have with NATS.

Proposals for the tube include a one-off finance deal for a 30-year period to fund the investment and maintenance backlog. That cannot finance route extensions and new lines, which a privatised underground would be able to do. London Underground will still be run by a single state-owned company, and investment decisions will be dictated by politics. The nationalised industry culture will remain and there will be few incentives for higher standards and innovation. Furthermore, Maurice Fitzpatrick, head of economics at Chantrey Vellacott DFK, has estimated that fares will have to rise by 30 per cent. under Labour's botched privatisation. That is hardly value for money. At the start of the year, fares for a single journey in zone 1 increased by 7 per cent., but people have not seen much improvement in the service.

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We want fully to privatise the underground, and we want to issue shares to generate badly needed funds for investment. We are also keen to give shares to Londoners, members of staff and season ticket holders, so that we give the tube back to Londoners. It is important that we get the policy right. Privatisation is one way in which we could improve the tube. It would certainly reduce traffic congestion in our capital. The Jubilee line--a fine Conservative project--has air conditioning, and it has shown how important it is that whoever takes over the tube spends money on air conditioning for the system and on building new underground lines. We do not want to stick where we are; we want to improve the network substantially.

The Conservative party is pragmatic. Conservatives believe in free enterprise. We are not ashamed of anything that we have done because we have delivered a more efficient economy. Its growth over the past few years--even under this Government--has, to a large extent, been due to the fact that it is more flexible and efficient, which is a result of many of the reforms introduced by the noble Baroness Thatcher and my right hon. Friend the Member for Huntingdon. Although we are concerned about the direction of the Government's policy on NATS, we are more concerned about their plans for the underground.

We are not complacent about the railways. We appreciate that there is a long way to go to improve the network, but we still believe that the direction that we took was right. If the Government believed that we were wrong, they would have tried to change the structure that they inherited when we spent six happy months together debating all the clauses--all the bits and pieces--of the Transport Bill. Apart from the Strategic Rail Authority and the regulator, the Government have, on the whole, run the system as they inherited it because they have accepted that they can work with the system that the previous Government left them. The Conservative party will be constructive. We certainly want to improve the safety record and, if the Government do what is right, we will back them.

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