Examination of Witness (Questions 40 -
52)
WEDNESDAY 5 APRIL 2000
MR KEN
LIVINGSTONE MP
40. But you have made your choice about the
figures.
(Mr Livingstone) I said I am not ideological. If it
can be shown to be better that will be fine. But I see no evidence
that the PFI route, it has not been better for hospitals. A lot
of those hospitals that have been built under the Private Finance
Initiative have had to reduce the number of beds and nurses in
order to pay the profits of the firm. In this factor you have
to do two things. First, you have to pay profit to the shareholders.
Then you have to pay the extra costs of borrowing. As I said,
you can get Government bonds at about 5 per cent. This is at least
10 per cent. Only once have you allowed for that, then you start
to get into a position where the bonds issue might have a problem.
41. So if the comparator is convincing, you
will back the PPP?
(Mr Livingstone) Of course. If it is fairly done.
I would like the National Audit Office to have a look at this
before rather than after the event. Yes, one would have to accept,
if the facts are demonstrated, you would be a fool to ignore it.
You are talking about £7 billion and a working relationship
between the Mayor and the Government. All I am saying is—and
I think many members of this Committee most probably share this
view—if this is a fair and honest comparator, but we are
going to find that is not the case.
Chairman
42. Do you not accept that the Government have
said that the NAO will check the comparator?
(Mr Livingstone) Yes. Let us make sure they do it
before the decision though and not afterwards.
43. So you are not questioning their accuracy
or their straightforwardness? You are simply saying that the timing
is wrong?
(Mr Livingstone) I might very well question the accuracy
and the straightforwardness when I get to see the figures. I have
never given anyone a blank cheque in my life.
44. So you do not accept the fact that the National
Audit Office would be an independent source of check?
(Mr Livingstone) It would be independent. It could
make an error. I suspect the reality is that as soon as these
contracts become available, virtually every major academic institution
and financial institution will pour over them and make their own
assessment about their accuracy. We will see a huge public debate.
45. That, you would say, is a sufficient check?
(Mr Livingstone) I will do my best.
Mr Forsyth
46. Under your proposals, what proportion of
funding for the Underground would be in the form of a Government
grant?
(Mr Livingstone) This is why we are in this problem.
When the GLC was abolished, we were in a position where half the
revenue cost was met by grant from the Council, and also the whole
cost of investment was met from public sector. Commitments were
given that this sort of pattern would be maintained. The last
Government actually started to move away from that, basically.
You are in a position now where there is effectively no revenue
subsidy at all. We are in a position where no other underground
system in the world works on that basis. In Paris it is about
or over 60 per cent, which comes from the public sector on revenue
support, on the revenue costs, and in New York it is about 50/50.
Here we have a system where basically the Treasury is withdrawing
from any form of subsidy for public transport in London. I find
that unacceptable. This is a city that puts £19 billion more
into the national Exchequer than we get back. We have seen that
national Treasury undermining our Underground by not putting forward
the package of investment required annually for several years.
We have now got a backlog. Now we are dumping the cost of that
on to Londoners either by the assumption that there will be a
40 per cent increase in tube revenues—but you cannot get
40 per cent more people on the tube so you are going to have to
have a substantial real increase in tube revenues—or the
Mayor will be forced to introduce a congestion charge: not to
create new funds for transport but to let the Treasury off the
hook.
47. If there is still going to be a dependence
on a Government grant of some description, would it not then leave
the Underground investment vulnerable and at the mercy of the
Treasury again?
(Mr Livingstone) We are all at the mercy of the Treasury.
I am quite happy to do a deal. If the Government wants to say,
"We will give London independence, you can keep the wealth
to create and you will not get any subsidy from Government,"
I will jump at that deal.
Chairman
48. Do you have any reason to believe that would
be in the interests of the Government?
(Mr Livingstone) No, no. A £19 billion subsidy
from London to the national Exchequer is gratefully received every
year.
49. You have a minute. Tell me, do you believe
that the Government has taken sufficient action to ensure safety
standards do not fall, as a consequence of the restructuring of
the Underground proposed under the PPP?
(Mr Livingstone) I really will not know until I see
the final details of the contracts. I cannot believe they will
not try to do that. I accept the assurances the Deputy Prime Minister
has given. But making those assurances, and then ensuring that
private sector firms several years down the road are still honouring
them, are two very different things.
50. And how would you monitor that?
(Mr Livingstone) As Mayor, I would crawl all over
them all the time. I would watch everything they did. I would
have lawyers checking the contracts. I would have independent
assessments of what is going on in the day-to-day management of
the tube. I will have an internet so people who experience the
daily trauma of travelling on the tube are keeping the Mayor posted
as to what it is like.
51. Is it in the interests of any transport
system to have a political person crawling all over them all the
time?
(Mr Livingstone) We have just had for 14 years, since
the GLC was abolished, that lack of political accountability and
the system has declined disastrously. If you have someone who
is politically responsible, so that Londoners sack them if they
get it wrong, they make sure the system works. I have no doubt
whatsoever that any Mayor who does not sort this mess out is not
going to get a second turn.
52. Thank you for giving evidence to us.
(Mr Livingstone) Thank you.
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