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Mr. Redwood indicated assent.

Mr. Prescott: Good. They would deny the English regions all the advantages that development agencies have given Scotland and Wales, which have enabled them to reduce the disparity between them and the English regions. The right hon. Gentleman would deny that opportunity to the English regions. I hope that he will make that very clear come the election.

The right hon. Gentleman made the point that more money should be available for London. Let us look at the Tory record on London. After 18 years, the Tories left London Underground with massive under-investment, a £1.2 billion backlog and a hopeless contract for the

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Jubilee line extension which starved the rest of the system of investment. The crazy contract for the Jubilee line which was negotiated by the previous Administration means that the project is now two years overdue and £1.23 billion over budget. We had to correct that crazy judgment.

In 1989, the Tories produced the central London rail study. I thought that it was quite a good study and would lead to something. Eight years later, when they left office, what did we have? The Chelsea-Hackney line was just a line on the map, and the right hon. Member for Wokingham is asking me why I have not finished it in two and a half years. Crossrail is in the long grass. The Jubilee line extension is a shambles, and Thameslink 2000 is going nowhere.

After two years, Labour has established the Strategic Rail Authority, which is already beginning to have an effect and getting a firm grip on all the complexities of integrating the national rail system and the underground system. We have rescued the Jubilee line and the collapsing channel tunnel rail link. When I took office, I was told, "You will have to pay £1 billion more as we are giving in the keys." I said, "Leave them on the table. I will not be exploited and I will not ask for £1 billion more." I renegotiated the contract and we did not pay the extra £1 billion. The scheme is now on budget, on time and with Railtrack. I am grateful for any good job that is done. When in government, the right hon. Member for Wokingham did not make a proper decision and put a lousy contract together. Labour has rescued the project in two and a half years.

I shall announce tomorrow that the Thameslink 2000 project, which was delayed for many years by the Tories, is ready to go before a public inquiry. We can now get on with that. We have launched the process of public-private partnership to modernise the tube. That is the legacy that we shall leave for London in the coming elections. We have invested more than £5.5 billion, which the London mayor will inherit. We are proud to pass that legacy to the people of London. We are to be contrasted with a Government who stole control of their transport system. [Interruption.] What we are doing is better than giving the money to shareholders, and it reflects good judgment as regards public accountability.

The Conservative Government chopped and changed London Underground investment grant year by year. Each year, they announced funding plans for the next three years, but London Transport hardly ever received what the Tories promised. The result was predictable: the massive £1.2 billion backlog in tube investment that we face today. The Monopolies and Mergers Commission--

Mr. Gray: Will the right hon. Gentleman give way?

Mr. Prescott: Let me deal with the point.

The MMC, which was set up by the Conservative Government in 1991, examined London Underground financing, recognised the decline in services and ordered an inquiry. It said that £7 billion was needed over the next 10 years and at least £700 million a year in core investment. That is not for the Jubilee line but for core investment. What did the Tories do? After one year of

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increased spending during 1993-94, they cut support to £200 million and continued the disinvestment. The previous chairman of London Transport, who was appointed by the Conservative Government, said:

    "Vital investment in the Underground will have to be put on hold because of a one third cut in Government grant . . . The cuts mean that hundreds of modernisation schemes have been placed in jeopardy."

That is precisely what I inherited and the difficulties that have to be dealt with now stem from that.

Mr. Townend rose--

Mr. Richard Ottaway (Croydon, South): I am grateful to the right hon. Gentleman for giving way.

Mr. Prescott: I have not.

Mr. Townend: Will my hon. Friend give way to me?

Mr. Ottaway: No. Sit down. When the right hon. Gentleman's public-private partnership--

Mr. Townend: The right hon. Gentleman is frightened.

Mr. Ottaway: Just shut up, will you?

Madam Speaker: Order. That is my job.

Mr. Ottaway: I apologise.

When the right hon. Gentleman has his public-private partnership in place, will he still need Government subsidy or will the operating profit cover the cost of the investment of the PPP?

Mr. Prescott: That is a reasonable question. I shall make an announcement about a report in a moment or two. The hon. Gentleman will be able to see the Price Waterhouse report. This is an important matter and we want more information about the public debate. I intend to provide that information today. The hon. Gentleman was the Opposition's spokesman when the Greater London Authority Bill was being considered in Committee. He had the honesty to admit that insufficient resources were going into London Underground and that something had to be done. That is a reflection of the previous Administration's record. However, the hon. Gentleman is not on his own in that respect. Even the hon. Member for North Essex was moved to confess:

[Interruption.] We can argue about what we are doing now, but not enough was done by the previous Administration.

Mr. Jenkin: Our plan is to release capital into the tube by putting it into the private sector. In the last three years of the Conservative Government, we invested £3 billion in the tube. In the right hon. Gentleman's first three years, he will have invested slightly more than half that sum.

Mr. Prescott: That is not true. The hon. Gentleman is using a calculation of public and private investment. He seeks to differ from me on public and private and then

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amalgamates the figures. He admitted in January that the previous Administration did not do enough. The point about disinvestment is right, and that is what I have to deal with. We can argue about the best way of raising the money and whether to privatise the tube. Looking back at the privatisation of rail, the sale of rolling stock companies--ROSCOs--and the sale of our assets at a loss of billions of pounds to the taxpayer, I do not have great hopes of anything that the Conservatives would sell if they came to power.

We know exactly what the Conservatives were planning from their Red Book--a cut to £161 million this year.

Mrs. Eleanor Laing (Epping Forest): Will the right hon. Gentleman give way?

Mr. Prescott: No. The previous Administration proposed £161 million this year for tube investment. We are providing £760 million--four times as much--in investment in the tube for the year of comparison.

Mr. Gray rose--

Mr. Prescott: I must move on--my time is almost up.

Just as important, we have levered in an extra £170 million investment through the private finance initiative this year, bringing the committed total to more than £1 billion. We need a stable long-term investment programme, which our public-private partnership will provide.

I hope that both sides of the House will agree with one point: the Treasury rules that apply to the funding of our public sector industry do not guarantee long-term financing. That is one of the major critiques of financing by the state. At times, public sector industry competes with schools and hospitals for funding, and I believe that education and health should take priority. It is a public expenditure priority problem. A contract for investment, rather than a decision taken by politicians, will ensure investment over a longer period. To avoid disastrous consequences for the long-term development of the underground, I want it to cease to be a political football.

There are various choices for funding the underground. We can leave it as it is, with public sector financing. That creates serious difficulties. There is the public bond option, which is currently the subject of debate and unites several candidates for mayor.

There is no magic in bonds. I have used them in certain cases. Private bonds were used in the case of the channel tunnel, and on the London docklands. A judgment must be made as to whether bond financing would suit the circumstances of the underground. It is a matter of how much can be earned on the income stream and how much investment can be obtained. To assist the House, the PricewaterhouseCoopers report, which has just been published, is available in the Library, so hon. Members can study the arguments.

According to PricewaterhouseCoopers, if bonds had been used to fund the Jubilee line extension, we would have been faced with a bill of £1.5 billion to meet the cost overrun. The report makes interesting reading, and I invite hon. Members to read it carefully.

Ultimately, as the House knows, the judgment must be made against the public sector comparator. That is what we are required to do. The PricewaterhouseCoopers

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document informs the debate and gives a clear steer that the PPP is the right choice. It would save £4.5 billion, which could be spent on education, health and other priority needs. That is the public expenditure priority problem.

What PPP really stands for is: publicly owned, in which I have always believed, publicly run and properly financed. Once the assets have been modernised by the private sector, they will be returned to the public sector as a fully publicly owned and operated facility.

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