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Order read for resuming adjourned debate on Question [2 November], That the Bill be now read a Second time.

2.29 pm

Mr. David Wilshire (Spelthorne): A few moments ago, a piece of paper was shoved in my face and I was told that I appeared to be the Member on the Front Bench responsible for saying something about the Bill. That was not something that I had expected. In 14 years, no one has let me anywhere near the Dispatch Box. The circumstances in which I suddenly find myself are fascinating. If I had the time, there is a great deal that I could usefully say about the Bill, but the difficulty in which I find myself—

It being half-past Two o'clock, the debate stood adjourned.

Debate to be resumed on Friday 12 April.


Order for Second Reading read.

Hon. Members: Object.

To be read a Second time on Friday 21 June.


Order for Second Reading read.

To be read a Second time on Friday 2l June.


Order for Second Reading read.

To be read a Second time on Friday 21 June.

15 Mar 2002 : Column 1204

London Underground

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Stringer.]

2.31 pm

Mr. Edward Davey (Kingston and Surbiton): In this short debate I want to review the current consultation on the public-private partnership for London Underground. I want to show that that consultation is inadequate and that that inadequacy will mean that London Underground will have to allow a second consultation period in due course.

Moreover, I want to show that it was the incompetence of the Secretary of State for Transport, Local Government and the Regions that led to that bungling. I believe that this latest example of the Minister's incompetence is yet another reason for him to resign. If a Transport Secretary cannot even organise a consultation process competently, what faith can the House have in his competence to turn round Britain's failing transport system?

If time allows, I also want to bring new evidence to the House that, contrary to statements by the Secretary of State for Transport that this deal does not represent the privatisation of London Underground, it is now clear from detailed analysis of the legal documents linked to PPP that London Underground's key assets are indeed being transferred to the private sector in all meaningful senses. Therefore, on a key policy objective the Government have gone back on their commitments to the House.

We are only just beginning to learn the full horror of the tube deal with which the Government wish to saddle Londoners; a deal that will not bring the transport improvements that we all so desperately want, and a deal that is so self-evidently such bad value for money for the taxpayer that the Government are afraid of publishing information to enable everyone to become aware of that fact.

I am grateful to you, Madam Deputy Speaker, and to your colleagues, for the opportunity to debate this key issue for Londoners and for the country. The Government have sought to deny Parliament the debate. The Transport Committee, in its recent report published on 7 March, concluded:

However, the Government have refused such a debate. The all-party early-day motion 914 also calls for a debate on the consultation on PPP, yet the Government still refuse. What are they afraid of? I am particularly grateful to the Chair for allowing this debate, and only sad that it is merely an Adjournment debate on a Friday afternoon.

What is happening in the consultation process? Under the Greater London Authority Act 1999, London Underground Ltd. has a legal duty to consult the Mayor and Transport for London, apparently for 20 days. The Secretary of State for Transport said that that consultation period began on 7 February when he made his statement to the House. What has happened since then?

Lawyers from Transport for London, the legal team of Ken Livingstone and Bob Kiley, have since then been encamped in the so-called bid room based on the 11th floor of the Albany house offices of London Underground. Under the strictest rules of confidentiality,

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that team has crawled all over the legal agreements so far negotiated between London Underground and the Government and the three final bidders, the private sector infracos.

My hon. Friend the Member for Carshalton and Wallington (Tom Brake) and I paid a visit to that bid room yesterday. We were prevented from reading most of the documentation, but we were able to take a look at the key agreement, schedule 1.9, more of which later. We were also able to talk to a key London Underground negotiator, Martin Callaghan, and the head of TFL's legal team, Stephen Powell. It is on the basis of information so gleaned, plus the excellent reports by the Transport Committee that I can make my case today.

The first part of my case is that the current consultation process does not meet the legal obligations of London Underground to consult Transport for London. Why? The documents that TFL is being shown are incomplete; some of them contain serious omissions. Moreover, TFL's legal team is still waiting for documents that it has requested but which London Underground has so far failed to provide. The original consultation period was due to have been completed by 8 March, but when TFL threatened London Underground with legal action because it had failed to meet so many of its requests for documents, London Underground was forced to extend the consultation period to 22 March.

Yet even now, only five business days away from the end of consultation, TFL is still awaiting documents. Are they crucial documents? Is TFL asking for unnecessary things? Who knows? However, as TFL is the body that this House has charged with the job of oversight of the final documents, surely it should be given the benefit of the doubt and receive enough time to look at them. That is the interpretation that I would expect a court to make. Unless and until TFL has completed full oversight of final documents, the statutory consultation process cannot be considered finished.

If the Minister questions my interpretation, he should contact London Underground. I understand that it has already accepted in principle that a further round of consultation will have to take place, for the very reason that I allege: the documents currently being scrutinised by TFL are not complete. That begs a key question for this debate: why did the Transport Secretary trigger consultation on 7 February when the documents were clearly not ready for statutory consultation? Did he effectively mislead Parliament by triggering the consultation, or was it incompetence on his part?

There is another piece of crucial evidence to consider: the letter from Sir Malcolm Bates, chairman of London Underground, to the Secretary of State, dated 6 February—the day before consultation was triggered. Yesterday, I saw for myself a copy of the letter in the bid room. I was not allowed to bring the letter out of the bid room, but I did manage to transcribe it word for word. I will shortly read the House relevant extracts from my notes. However, the key message of the Bates letter to the Secretary of State is this: "You are acting too hastily; wait—we are not ready." Yet the Secretary of State, who had already started spinning his intention to make a statement to the press, decided to go ahead, against the advice of the boss of London Underground, who was responsible for the negotiations.

15 Mar 2002 : Column 1206

Sir Malcolm Bates's letter is entitled "Value for Money Assessment of the PPP". He writes that

and goes on to state:

Anyone who knows anything about the agreement knows that the periodic review is crucial. The letter continues:

The letter also states:

The letter says that it is felt that there is little alternative but to publish alongside the Ernst and Young report a full version of London Underground's report. Sir Malcolm says that he wanted the Secretary of State to be aware of the risks that follow. He concludes by saying:

Why did the Secretary of State jeopardise the negotiating position of the public sector? Why did he ignore those "strong representations"?

We have on record some explanation given by the Secretary of State himself when he was questioned in the Select Committee on 6 March. I refer to the uncorrected evidence of the hearing, which is available on the internet. He said:

We should note that that is in direct and complete contrast to what Sir Malcolm wrote. The Secretary of State then tried to suggest that the lack of finality in the contracts was due to the consultation process. That is a tempting argument, but of course he would say that because the documents were being consulted on. In any case, it is again in direct contrast to what Sir Malcolm wrote. His letter makes it clear that there were several issues in the contracts yet to be determined and completely unconnected with the consultation process.

The Secretary of State's final defence in the Committee was that he had a duty to the House to report the Ernst and Young analysis. But in so doing, did he have to prejudice the competition in the PPP, which is designed to get better value for money? Did he have to trigger consultation on incomplete documents, so rendering it inadequate and incomplete, and thereby falling short of the statutory requirement?

I contend that the Secretary of State's judgment was seriously flawed. Far from speeding up the process of the PPP and pushing ahead with the Government's plans for London Underground, he has, by his inactions, caused even

15 Mar 2002 : Column 1207

more delays and confusion. The whole consultation process will have to be undertaken again. I have no confidence in a Minister who cannot even get such simple, basic judgments right. In my opinion he should go.

Before I conclude on the consultation process, I want to share with the House and the public at large some of the more disturbing findings that have emerged from the work of the TFL legal team, especially in a document called schedule 1.9, which is part of a whole mountain of documents dealing with the PPP arbitrator—the regulator, as it were, for the PPP deal. In 1999, when the then Minister responsible, the hon. Member for Hampstead and Highgate (Glenda Jackson), introduced in Standing Committee the concept of the PPP arbitrator, I told her that it would cause trouble, and it has. The negotiators have put into schedule 1.9 all the difficult issues that they could not resolve in the rest of the documentation, including equity rates of return, the extent of risk transfer and the process for terminating the contracts.

Most significantly, much of schedule 1.9 has yet to be agreed. In other words, key parameters of the whole deal have yet to be finalised. How can Ernst and Young, London Underground or the Secretary of State have made any assessment of value for money when such key issues have not been finalised? It beggars belief. Worse still, what has been negotiated of the half-negotiated schedule 1.9 is extremely disturbing. We find that the risks of cost overruns have not been properly transferred to the infracos—they have been capped—so the public sector is not properly protected from them. Furthermore, the ability of the public sector to terminate contracts at a reasonable price is extremely limited. In normal circumstances, they will be almost impossible for TFL to get out of.

The Select Committee picked up on that in paragraph 10 of its report, which bears rereading. It states:

The Committee concludes:

That is a damning indictment. The contracts will tie the hands of future democratically elected Governments; they will not be able to say, "This deal is bad value for money. It is not delivering what we want, and we want to end it in the public interest." That goes completely against the lessons learned from PPP and PFI elsewhere. It hands all the negotiating power to the infracos.

I want to issue a challenge to the Minister. As London Underground yesterday felt able to allow my hon. Friend the Member for Carshalton and Wallington and me to read schedule 1.9 without signing a confidentiality agreement, will he publish the document to allow for public scrutiny, and if not, why not?

15 Mar 2002 : Column 1208

There are even more serious reasons why the Government should do that. If the Minister will not publish the documents, I shall ask London Underground to let me enter that room and transcribe them, and we shall see how the public react to that.

The Government are trying to avoid debate on this issue and to avoid publishing the documents because the PPP does not meet one of their key political objectives: not to privatise London Underground. The PPP as currently negotiated and under consultation—albeit inadequate consultation—amounts to the privatisation of London Underground's major assets. Despite Ministers' claims and protestations, which we shall no doubt hear repeated today, London's tube is being flogged off. One need only consider the definition of privatisation used by PricewaterhouseCoopers, the company retained by London Underground as its principal adviser on PPP:

This is how the Health and Safety Executive, an independent body, describes version 3.1 of the PPP on its website:

Those were not my words or those of the Select Committee.

We find a further definition in the contract details. In the April 2000 asset transfer scheme, a legal agreement that sets out how the assets of the tube will go to the infracos, there is an important definition:

Other parts of the contract show clearly that the private infracos will have ownership of all the assets for 30 years. Details of any handback to public sector ownership are sketchy, to say the least. The public sector's right to reacquire those assets is as yet theoretical. It is another Government objective gone wrong.

This whole sorry saga is the most depressing I have had to watch unfold since I was first elected. It reminds me of the poll tax, in that political decisions at the very top of Government are being kept to in spite of all the evidence that they are wrong and all the experts demanding a total rethink, and despite analysis after analysis warning that this will be bad value for money and will create huge problems for London's underground system in the future.

The current consultation period will in law have to be restarted before any final decision can be taken. I therefore implore the Government to stop this madness before they consign London to 30 years of an expensive, painful and crazy experiment.

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