Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence


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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