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On the specific point raised by the hon. Member for North Essex about the response to the Industrial Society's recommendation that the Health and Safety Executive invite all parties to submit concerns about PPP safety, let me reassure him that the HSE is in discussion with London Underground about the best manner in which third parties' views can be sought.
Ms Abbott: I am grateful to my hon. Friend. He said, quite correctly, that the statutory duty in relation to safety would remain with London Underground, but is he confident that London Underground will in practice have sufficient means to enforce sanctions in relation to safety? The ultimate sanction would be the removal of a contract. Does he think that it would ever be realistic for London Underground to do that?
Mr. Hill: Of course, my hon. Friend is right that that constitutes the ultimate sanction. However, the guiding hand on safety on the system at all times will remain that of London Underground, which will monitor safety and maintain close scrutiny of the activities of the infrastructure companies, or infracos. It will be perfectly possible for London Underground to step in and ensure that any necessary action to improve safety is carried out on the spot. As I shall go on to explain, there are clear incentives in the PPP contracts that we are establishing which will encourage not only active moves to improve safety on the part of the infracos, but proactive action on safety issues as part and parcel of the PPP structure.
Mr. Brake: I thank the Minister for giving way. It may be useful for him to know that on Friday I had a telephone conversation with Will Hutton of the Industrial Society, who confirmed that the PPP could jeopardise safety.
Mr. Hill: That is an interesting observation, which I take seriously, but it is not what appears in Mr. Will Hutton's Industrial Society report. Obviously, we must go with the expert judgment of the specialists whom he brought in to write the report. Although they demonstrated no complacency, they were certainly not as alarmist as the reported exchange that the hon. Gentleman presents to the House.
Mr. Hill: We are looking carefully at the contents of the Industrial Society report, as I shall go on to explain, and we co-operated fully with the society in its preparation. Officials in the Department have subsequently held discussions with the specialists who produced it, and we are responsive to all the many positive suggestions that it contains. It is a good report and I recommend that hon. Members read it--especially the hon. Member for North Essex, who palpably has not done so.
Mr. Hill: Let me set out the views of the Health and Safety Executive on safety; after all, it is the authoritative and independent body for such matters. The hon. Member for North Essex spoke about management. Essentially, the infrastructure companies are responsible for carrying out long-term contracts for the maintenance and modernisation of the underground. To that extent, they are not responsible in any direct sense for the operation of the system, all of whose moving aspects lie in the hands of the public-sector London Underground under the PPP system. I do not know how often or in how many different ways I must explain that to the hon. Gentleman before it sinks in.
The transition to the PPP requires the submission and acceptance of that third set of changes to the safety case. The Health and Safety Executive has been closely involved throughout the process. It stated:
Mrs. Dunwoody: As the Government have been considering the effect of an independent safety authority for overland railways, why are not they prepared to provide exactly such a division for underground railways? My hon. Friend will be aware that the whole population has genuine worries about the way in which the overground railways are run, precisely because their safety is not in the hands of an independent authority.
Mr. Hill: My hon. Friend makes an important and interesting point and I dare say that it will be taken into account as we examine the matter in more detail. She is aware that we are considering these matters all the time, for the future structure. I think that the public are looking for the reassurance that the guiding hand--the overwhelming responsibility for safety in the proposed PPP structure--lies in the public sector with the public sector London Underground.
London Underground is preparing to satisfy the Health and Safety Executive that its practical arrangements meet the necessary standards before the PPP can go ahead. We have said several times that the PPP will not proceed unless and until the HSE has taken an independent view and has stated that it is satisfied with the revised safety case. We insist that the PPP must make a substantial contribution to improved safety. I see no harm in saying that again.
The second key test for the PPP is value for money. As the House will be aware, London Transport and its advisers have developed a public sector comparator against which the value for money of the PPP will be judged.
Usually, such comparators measure the value of bids against traditional, annualised public sector funding. In the case of the PPP, however, we are aware that some people think that there is a better way. They want to issue bonds. They conveniently forget that bonds are just another way of raising debt, and that he who raises the debt carries the risk. In other words, it will be the taxpayer who shoulders the financial risk of cost overruns.
Those who support the issuing of bonds ignore the fact that bonds would do nothing to bring management efficiencies to the system; that they would introduce a further delay in getting a financing regime in place--perhaps as much as two years--and, as the Industrial Society points out in its report, bonds would not be a realistic prospect without new powers to raise local taxes.
Mr. Wilkinson: I am perplexed. Were the electors of London naive to believe that the Labour party was putting a costed and fully evaluated proposal to the electorate of London in its manifesto--that proposal being that "we would move very soon to a public-private partnership?" It now seems clear that the Government have doubts about the safety of the system and that they are also doubtful about cost-effectiveness.
Mr. Hill: I am used to bizarre interpretations and utterances from the hon. Gentleman as I stand at the Government Dispatch Box, but on this occasion I am bewildered. He has it absolutely wrong. I am attempting--obviously with no success when it comes to the hon. Gentleman--to demonstrate that we are proposing to submit both the proposed safety regime and the proposed best-value aspects of the PPP to independent arbiters. That is exactly what we are doing, and it is exactly what a responsible Government should be doing in all the circumstances.
We are not dogmatically opposed to bonds, and we would not want to ignore the views of advocates of bonds. So, in addition to testing for value against the usual public sector comparator, we shall also check the bids against raising debt through public sector bonds. We have published the methodology for this comparator, which is being independently audited.
Most importantly, in August, the National Audit Office--Parliament's own financial watchdog--announced that it would bring forward its scrutiny of the comparator so that it could report on it before contracts are signed. We welcome this step because it will help to ensure that the comparator represents a fair and rigorous test of the value for money of the PPP bids.
The hurdles that the PPP will have to cross--safety and value for money--are high ones, but ones which we are confident the PPP will overcome. It is those tests, and not political considerations, that will determine whether the PPP goes ahead. Make no mistake--the Government are committed to proceeding with the PPP, as long as the bidders come up with the goods. There is a safety test for the PPP, just as there is a value-for-money test, but there is no Mayor test.
As I have said, the PPP is a manifesto commitment. The legislation stated that central Government would remain in charge of the tube until the PPP was completed. The best thing that we can do for Londoners is to pass the tube on to the Mayor with a robust financing package already in place. In that legislation, we also included duties of consultation and co-operation so that the transition would be as smooth as possible. London Transport has followed those duties. It has provided the Mayor with copies of the contract, and has consulted him on changes to them. Above and beyond those duties, we and London Transport have supplied information to the Industrial Society for its review of the PPP.
Contrary to press reports, Mr. Kiley has been provided with material on the PPP, subject to a confidentiality agreement. He has copies of the invitations to tender, the up-to-date contracts and the share purchase agreements,
We have always made it clear that we must be careful about making available commercially confidential information relating to the bids themselves, which could risk damaging the public sector's position and prevent us from us achieving best value. Anyone who has ever taken part in commercial negotiations knows that one never shows one's hand to the other players while the game is in progress.