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8.54 pm

Mr. Geraint Davies (Croydon, Central): I am pleased to return to the House after a week of paternity leave. A week ago, in the midst of a storm, my wife gave birth to a daughter. For that reason, my mood is naturally one of benevolence towards the Liberal Democrats, and I would have loved to agree with the sentiments expressed in their motion but for three reasons: the motion is opportunist, it is irresponsible, and it is financially incoherent.

The proposals that we are discussing must be seen in the context of Labour's 10-year plan for an extra £180 billion of investment in our transport infrastructure, to build a new integrated transport infrastructure for Britain. If I may put it simply, £56 billion of that will be private money that is being levered in by private-public partnership. The first question to the Liberal Democrats must be, where will that £56 billion come from? Will it come from another 2p on income tax?

While I am on the subject of financial incoherence--

Mr. Michael Moore (Tweeddale, Ettrick and Lauderdale): I am sure the hon. Gentleman is prepared to

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acknowledge that the £56 billion of private investment is not spelt out in detail anywhere in the Government's proposals. Surely it is an indicative sum, with no backing whatever.

Mr. Davies: As I proceed, I shall isolate specific amounts of private-sector investment. Perhaps the Liberals will let us know where they would get the money.

As well as the extra 2p on income tax that the investment would inflict on the public, we must bear in mind the recent Liberal U-turn on fuel tax. Only a year or so ago, the Liberal Democrats were saying that their promised extra billions of expenditure would be predicated on environmental taxation, especially fuel taxation. They now say that for five years there will be a freeze on fuel duty, irrespective of the world price of oil. If the world price of oil falls from its current level of $34 a barrel to $10, and everyone suddenly starts driving more and doing a lot of environmental damage, the Liberals will apparently retain the freeze. That is sheer opportunism, and I fear that the leader of the Liberal party is on the waiting list for a spine transplant.

Mr. Don Foster: It does the House a great disservice to misrepresent the position of any political party. I know that the hon. Gentleman missed a debate on this subject, but he will, I hope, be well aware that the Liberal Democrats have changed their policy because they have now found better ways of targeting the key issues of congestion and pollution. When a better way can be found, it is sensible to change.

Given that we have changed, it is interesting to note that all independent commentators say that only the Liberal Democrats have transport policies that are likely to solve the country's transport difficulties.

Mr. Davies: That is false. In fact I did attend the debate that the hon. Gentleman mentioned, and I ask him to set the record straight.

If, for argument's sake, the world price of oil dropped to $10 a barrel in two years' time, would the hon. Gentleman's policy enable him to increase fuel duty? I think the answer is no.

Liberal policy is based on the assumption that fuel duty will not change, irrespective of the world price of oil. As I have said, that is an incoherent and opportunist position; what is more, it shoots a big black hole in the Liberal finances, ripped even deeper by the latest proposition that private money--it seems--is dirty money in today's Britain. That is an outdated and outmoded view.

Mr. Foster: I do not wish to go into the difficulties experienced by the hon. Gentleman and his party when the Prime Minister is not even prepared to support such moves as congestion charging. I simply ask the hon. Gentleman this: if on Wednesday the Chancellor of the Exchequer announces proposals to freeze fuel duty, as is widely predicted in the newspapers, will the hon. Gentleman vote against the Chancellor?

Mr. Davies: I will not support the proposal to freeze fuel duty for five years regardless of the global price of oil, as that would be foolish. I accept that my right hon. Friend the Chancellor may, in the short term, choose to

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freeze duty or change it in any way that he sees fit. However, he will give himself the flexibility to alter our tax position in the light of world conditions, the environmental threat and problems faced by this country. People listening to our debate should be aware that while we have slightly higher fuel duty than the rest of Europe, we have much lower tax overall. Our tax position is correct, not the European one. We will find that harmonisation is moving towards the Labour way, not the running-scared Liberal Democrat way.

As for privatisation versus PPP, it has been suggested that privatisation and the Government's position are precisely the same. I am a member of the Public Accounts Committee, which, in July 1999, received a report on the privatisation of our railtrack system, which took place just before the 1996 election and which, in my view, was an appalling act of robbery. The British taxpayer saw our railtrack system sold for less than £2 billion but, by July 1999, when we received the report, it was worth £8 billion. People will not witness that sort of situation under this Government. The Tories take the same position on the tube, and believe that we should sell it off cheap so that, before anyone knows it, the private sector owner will have jacked up prices and reduced the number of people who use the tube. That would serve neither the public purse nor the passenger and would be a Tory rip-off that, like the privatisation of the railways, would lead to a fragmented and incoherent shambles.

We inherited such a position, which is why we introduced the Strategic Rail Authority, which has a co-ordinating role. We shall invest an extra £60 billion through our 10-year-plan, much of which will be private money. On the issue of PPP and Railtrack, hon. Members may not know that the SRA has 1 million shares in Railtrack. If there is increasing subsidy from the public sector, one wonders whether the public think that we should take a greater equity share in getting feedback and having a proper PPP. That should be part of the future debate about the restructuring of Railtrack, not least because a greater Government stake would enable Railtrack to borrow more money for investment from the City. A greater stake would mean less public investment and more investment from the private sector.

Our debate is about how we maximise the leverage of private sector money in our transport infrastructure. That is a precondition for safety, as investment is the first thing that safety needs. The Liberal Democrat motion does not allow for the approach of trying to maximise partnership, investment and value for money for the taxpayer. The Public Accounts Committee will examine that matter when it looks at its options.

Before coming to this grand place, I was the leader of the largest local authority in London and oversaw the introduction of Tramlink. I very much hope that you, Mr. Deputy Speaker, will come and visit Tramlink, which, in six months of operation, is already the most successful tram system in Britain. It is more successful than the system in Manchester and has levered in £100 million of private money, as well as £125 million of public money. Unlike the Jubilee line, which was heralded by the Tories as a great Tory success, Tramlink was not delayed for a year and billions of pounds over-budget because we managed the contract correctly. In fact, Tramlink was delayed, which shows that the public sector does not have a monopoly in delays. However, the cost of that delay--or the risk--was transferred to the private sector.

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The issue is therefore about finding value for money and transferring risk. It is all very well for the hon. Member for Bath (Mr. Foster) to say that it is cheaper for the Treasury to borrow money, but is that so? One must look at cost and time overruns and consider their price. The matter is not just about the cost of capital, so the Liberal Democrat position is rather naive. There is a choice between Liberal Democrat dogma, Tory failure and the success of this Government.

The first question that has to be asked is--I have been asking it throughout--do the Liberal Democrats rule out a public-private partnership? If they do not, what sort of PPP do they rule in? Then we are in a different debate.

Someone asked me specifically for examples of extra cash. The channel tunnel is levering in an extra £3.3 billion, the tube £8 billion and National Air Traffic Services £1.3 billion. That is £12.6 billion. Where is that coming from? "Another few pence on income tax," is the normal response from the irresponsible Liberal Democrats.

Then we get into, "We will not do that. We will take the Canadian trust model, we will do tube bonds or whatever." The Minister has made it clear that the Public Accounts Committee will analyse the value-for-money options objectively. As a member of that Committee, I am open-minded about the different vehicles. The issue is how to get the best value for money in the right amount of time to deliver the standards that the public demand after years of neglect from the Tories. It is about independent regulation, risk transfer and investment in safety.

The next question that was posed is: can the private sector deliver safety? The dogmatic presumption of the Liberal Democrats was that private means unsafe because of profit-grabbing capitalists. We only have to compare British Airways with Aeroflot. What are the issues? They are investment and regulation, not simply ownership.

After all, let us face it: one of the reasons why there is underinvestment in NATS is because the Tory Government had other priorities for expenditure. If they wanted to spend more on tax cuts, the national health service or whatever, they could squeeze NATS. PPP gives a guaranteed cash flow and certainty for investment. It enables NATS to invest in innovation in safety, rather than leaving the situation static.

Air traffic is growing year on year at 6 per cent. To a great extent, the challenge in terms of safety is an information technology challenge: how do we get the computer systems, the IT technology, to manage the system? The question is: where are the skills in the marketplace? As a member of the PAC, I have seen many reports on public sector management of computer systems for national insurance, immigration or whatever. It is not a very good record. The skills are in the private sector. That is another reason why we need a PPP--to ensure investment, smart purchasing, smart operation and safety.

Safety is a cost--it is true--but it is also a product for sale. It needs innovation. People who give me lectures but who have never been in a business in their life might not understand that.

Again, it is about skills and technology. Who knows about that? What is the right structure? "How much public, how much private?" is not an a priori dogmatic question. It is an empirical question about what is right--what is the right mix in a certain situation. What can be tried and tested, rather than rejected through dogma from

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the Tories, who say simply that private is right, public is wrong, or the Liberal Democrats, who also seem to have a dogmatic approach?

This country is moving from years of neglect into a new era--£180 billion, a 22 per cent. real terms increase, of investment in rail, road and all our transport to deliver a modern, safe and integrated transport system for the new millennium. I support the Government's bid to do that.

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