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Harry Cohen (Leyton and Wanstead): I thank you for granting the debate on the funding and management of the London Underground, Mr. Stevenson. This is my third debate in six months on this important matter.
The London Underground is important not only to Londoners, but to the national economy. The current proposals still contain many unsatisfactory or unresolved aspects. I welcome the Government's commitment to £16 billion funding for the tube over the next 15 years, although I suspect that that is not enough. However, we should compare that with the lack of a similar commitment from the Opposition parties. The Tories presided over the serious decline of the network, and although they say that they could support the Mayor's solution or full privatisation, there is no doubt that if they were in power they would support the latter.
Harry Cohen : Let me finish my point. The Liberal Democrats are swept along by the prevailing winds. The London Underground would be disregarded while they committed themselves to other priorities, and their policy on it would not be coherent or consistent.
Mr. Mark Field (Cities of London and Westminster): I am not here to defend the Liberal Democrats. However, it must be said that with devolved government and the Mayor of London and Bob Kileyhis expertise brought over at great expense from the United Statesin place, the Opposition made it clear that they are firmly in favour of ensuring that local government in London means something and, more importantly, that we allow local decisions to be made for the good of all Londoners. That should unite us all across the political divide who are London politicians.
Tom Brake (Carshalton and Wallington) : It is clear that the hon. Gentleman has been got at by the Labour Whips. Far from being swept along with the wind, the Liberal Democrats have been advocating the bond issue, which Bob Kiley supports, for the past five years. The wind has therefore been blowing in the same direction for the past five years.
Harry Cohen : The hon. Gentleman makes his point, and will have other opportunities to do that. As I said, I welcome the Government's financial commitment, and I asked the Library what was in the Budget and the Red Book about the London Underground so that I could add praise. I was disturbed that there appeared to be nothing specific. It may be incorporated in other Department for Transport, Local Government and the Regions totals, but it implies that the public-private partnership is a done deal. There is no clear indication of what the Government are contributing over the next period, which gives a bad impression. The London
There is nothing intrinsically wrong with the concept of the public-private partnership. However, the partnership for the London Underground is potentially disastrous. It does not seem to give value for money, and the delivery from it is far less than was originally envisaged, or is needed. Four stations in my constituency are on the Central line: Leyton, Leytonstone, Wanstead and Snaresbrook. Transport for London's analysis of the public-private partnership shows that there will be no new or refurbished trains on the central line until 2016. The line's upgrade is due in 2005, but nothing is promised for the rest of the 30-year period. I do not know the details of the upgrade, but if it is not thorough, it will be inadequate for the following 30 to 40 years.
The PPP allows for a worsening of train frequency by three minutes compared with what is envisaged in the invitation to tender. In that invitation, Leyton station was to be modernised in 2003, Leytonstone and Snaresbrook in 2004, and Wanstead in 2003. By February this year, however, no modernisation date was offered for the first three stations, and the new date for Wanstead was 2012. That is deeply unsatisfactory for my constituents. All four stations require early modernisation, easier access and better arrangements to minimise opportunities for crime.
Linda Perham (Ilford, North): My hon. Friend and I represent the same borough of Redbridge. We have 10 stations between us, including eight for my residents and another that might be used extensively if a racecourse is built nearby. Is my hon. Friend aware of the press release by Transport for London, in which plans for upgrading and modernising those stations are shown to have been shelved under the PPP? Does he agree that our residents need these services improved as soon as possible?
Mr. Eric Pickles (Brentwood and Ongar): I told the hon. Gentleman that 217 modernisations were originally envisaged under PPP between now and 2009. That figure has now been reduced to 61; and 129 modernisations have been eliminated entirely for the whole 30-year period.
The PPP consultation process is over, but the contracts have not yet been finalised. They have been altered dramatically in the contractor's favour since the invitation to tender. Will the Minister tell us whether
Transport for London's response is important because it is the institution to be responsible for the system in due course. It has statutory responsibility for this key public sector asset and for paying PPP bills. TfL is scathing. It calls PPP "fundamentally and fatally flawed" for five reasons, which I am using as the framework for my speech.
The first is safety. There is a "wheel from steel" split of operationof the trains from the maintenance of the trackwhich is a key failing of the national rail network. The existence and involvement of four separate organisations creates more safety boundaries, which increases the risk of things going wrong at the interfaces that affect safety. Specific responsibility for tube assets has not been clearly assigned. Not even an inventory has been produced. Instead, we have a policy of "minimum ambiguity" on who is responsible for what. That is just not good enough in a safety context. As the Parsons Brinkerhoff report indicated, endless haggling over secondary safety standards is likely. Procrastination over, rather than fulfilling, those standards will be the order of the day.
Where are the published reports of the health and safety inspectorate and the railway inspectorate? The consultation process proceeded without them. Earlier, the Health and Safety Executive had pointed out 52 safety issues of outstanding concern, including inadequate technical standards to govern the work done by the private sector infrastructure companies and unclear lines of responsibility relating to many of the tube's assets. However, the Health and Safety Executive has yet to confirm whether it has matched what is claimed by the PPP safety case to what is said in the PPP contracts. When will that happen?
In respect of value for money, Ernst & Young called that subjective, which is not much of an endorsement. The costs assigned to the public sector in the comparator, which compared the public sector to PPP, were, without explanation, increased by 33 per cent. over the past two years, while the amount of notional work to be paid for materially decreased over the same period. The public sector was also penalised by a social costs adjuster of £1.4 billion, although even Ernst & Young said that it had never seen such an adjuster used in value-for-money analyses.
Public Finance magazine reports that the method of analysis benefited PPP by 5 per cent. Mr. Martin Blaiklock, a project finance consultant, told the Transport Sub-Committee that using the social costs adjuster was highly unusual. He said:
The third matter is risk transfer. Tube service availability can deteriorate by up to 5 per cent. below current availability levels, and the infracos will still be paid bonuses from public funds. With the concessions made to the private sector, TfL maintains that
For the seven-and-a-half-year period, the private sector could incur up to £50 million of cost overruns, but only after it has used up the £1 billion contingency fund for the same period. There are several other wheezes to get out of liability for cost overruns too. For example, the liability for the new signalling that is being put in will remain with London Underground Ltd.
Fourthly, the scope of the work to be undertaken has been markedly reduced since the invitation to tender only two years ago. The invitation to tender promised capacity improvements of 15 to 20 per cent. in the first seven-and-a-half-year period. That seems unlikely to be achieved. Apparently, only one tube line is now required for modernisation within that time scale.
TfL says that total station modernisations between now and 2009 have been reduced from 217 to 61. That point was also made by the hon. Member for Brentwood and Ongar (Mr. Pickles) in an intervention. Train information, security monitoring and emergency help facilities have all been deferred from the first period to 2012 and well beyond. The outside date to have all assets in a reasonable state of repair has been deferred from 2017 to 2025, and 135 station modernisation programmes have been dropped completelyincluding three in my constituencyover the course of the PPP, and will not now happen in the next 30 years.
TfL also makes the point that the difference in years between what was previously promised and what is in the contracts now reveals that 318 years have been added to the much-reduced station modernisation programme. Very few capital improvements seem likely to be implemented in the first seven-and-a-half-year period. The performance that has been promised is unsatisfactory, and it is not what was previously promised.
The fifth point concerns stable and long-term funding. The concern is that no firm Treasury commitment is in place. London Transport's vice-chair, Brian Appleton, admitted to the Transport Sub-Committee on 27 February that government funding proposals presently extend only to 2010. TfL's concern is that London Underground Ltd. could be left owing a lot of money to existing PFI contractors due to the activities of the infracos, and it will not have a right to reimbursement from them. That could result in a lot of money being paid out by the public sector. There is also the risk that should the infracos exercise their right to unwind the PPP contracts at the first seven-and-a-half-year review point, TfL could be left with a financial burden in excess of £5 billion.
Otherwise, when the PPP is handed over to the Mayor and TfLI ask the Minister when that will happen; perhaps we could have some information about itit will be a fait accompli. When it unravels, no one will take responsibility but everyone will blame someone else. The Government have had many warnings about that in the consultation and in the Chamber so, if chaos ensues, the blame will actually be theirs.
I do not want that. I know that the intentions are well-meaning. I want the Government to get credit for significant improvement to the London Underground. To do that, it would be best to say goodbye to the existing PPP and require the Mayor to introduce one that will work.
Chris Grayling (Epsom and Ewell): I congratulate the hon. Member for Leyton and Wanstead (Harry Cohen) on securing the debate andunusually for me, a Conservative Memberon a very thoughtful and insightful speech. I wholeheartedly agreed with the vast majority of his speech, but differ with him on a matter of history. He looked back to the time of the previous Conservative Government and implied that they had given no support to London Underground. I simply remind him that the Conservative Government built the Jubilee line extension and introduced new trains on the Northern and Central lines. By contrast, not a single new carriage has been introduced to the underground in the past five years. Five years after the Government first started the PPP process, nothing has happened. I wait with bated breath for something to happen, but the weeks and months fly by.
Three months have passed since the Secretary of State made a statement to the House of Commons about the way forward for the underground, but nothing has happened. There is no sign of a handover to Transport for London. There is no sign that work is starting. Indeed, we are still waiting for several of the key pieces of the jigsaw puzzle to be slotted into place before the scheme can start. I wonder how long the travelling public in London will have to wait. Will it be another six months, a year, two years? We are five years into a Labour Government, and nothing has happened.
The hon. Gentleman is right to highlight the weaknesses in the schemeit has fundamental weaknesses. For a variety of reasons, it is the wrong project to meet the needs of London. We heard extensive evidence about capacity during the Select Committee inquiry. I am a member of the Transport Sub-Committee that produced the report to which the hon. Gentleman referred. The Government now admit the reality in written answers and London Underground certainly acknowledged it in evidence. The PPP proposals will just about keep pace with the capacity increases necessary for the projected growth in passenger numbers during the next 20 years. That means that people who travel to work today on a crowded tube train will carry on doing that for the next decade or more. That is very bad news for the travelling public in London.
It is clear that the PPP scheme has set out the wrong priorities. The evidence that Bob Kiley gave the Committee on that was compelling. The hon. Member for Leyton and Wanstead referred to the fact that a station modernisation programme is at the heart of the PPP project. I have every desire to see spanking new modern stations across the London underground, but Bob Kiley's evidencethat the real priority in turning round the underground is replacing the rolling stock, not tarting up the stationsis inescapable. That is what he did in New York and in Boston. The Kiley plan involves the total replacement or refurbishment of the entire London underground stock in the first seven years of the contract. The reality is that the PPP scheme will deliver a handful of new carriages in that period. Is it right to focus on giving stations a new coat of paint rather than replacing the elderly trains that so often break down and develop technical difficulties, congesting the service all the way down the line? It is not scruffy stations that make trains run late, but trains that are not working up to scratch.
The scheme is over-engineered. It cannot be compared to the principles involved in creating Railtrack. When Railtrack was created, there was an expectation that several operators would provide a service for passengers travelling from point A to point B on one route. That is seen, for example, on the Gatwick Express route. However, different operators will not be running alternative trains on the Bakerloo line. In this case, the separation of track and train makes no sense whatever. All it will do is create contractual and managerial complexity.
I received a letter last week from a London Underground employee, saying that the company is already operating the new managerial systems that will exist in the future on the underground. He said that the systems are a nightmare, with more time being spent dealing with process and complexity than actually working on the lines, trying to sort out the problems that passengers and train drivers face. The scheme is far too complex, contractual and detailed. It makes no sense to try to over-engineer a solution to the problems of London's transport and our underground.
The scheme is not just the wrong project; it is the wrong structure. The hon. Member for Leyton and Wanstead made several important points on the scheme's weaknesses, and I shall pick up on some. One is risk transfer. It is extremely unclear exactly who will bear the risks for the project. If there is one lesson that we have all learned from experiences on the mainline railway in the past few years, it is that a lack of knowledge of the condition of assets leads to huge cost uncertainties when major projects are embarked on. There is no question but that there is uncertainty about the actual condition of London Underground's assets. London Underground says that it knows its assets very well, but the Select Committee took evidence that that was far from the case.
London Underground might think that it knows its assets well, but in such a major project there are bound to be hidden nasties, problems that emerge during the course of the project. I cannot think of a project of that kind that has taken place without cost overruns. Who will take the risks? Are we saying to the private companies, "Go in there, do it, and if you find something unpleasant that none of us knew about, it's your fault?" I doubt very much that they will sign up to that. The real issues about who is carrying the risk are exacerbated by the Government's desire to get their pet scheme off the shelf and into action very hurriedly, and by their willingness to issue to the bidders letters of comfort that effectively significantly reduce the risk that they will carry, as the hon. Member for Leyton and Wanstead said.
Another issue is the Treasury's involvement in the scheme and the way in which it has required the scheme's financial structure to be set out. Evidence taken in the Select Committee clearly showed that many of the improvements that are needed sooner rather than later will happen later rather than sooner because of the Treasury. The Treasury has been instrumental in encouraging London Underground to push projects out beyond the first 15 years of the contract. We took evidence from the board of London Underground to the effect that those projects will be started after 15 years, not before. We heard clear evidence from people who have been involved with several bidders that that is taking place at the Treasury's instigation.
It is reprehensible that the Treasury has consistently failed to provide proper answers about its involvement in the project. It refused to appear before the Select Committee and refuses to answer questions, batting them off to other Departments. It wants its fingers in every pie, but is not willing to be accountable for its decision making, ideas and influence on such projects. That is simply unacceptable.
Mrs. Eleanor Laing (Epping Forest): On Treasury involvement and responsibility, does my hon. Friend agree that a particular part of the London underground has been let down badlythe Epping to Ongar line? The Minister's predecessor but one, the hon. Member for Hampstead and Highgate (Glenda Jackson), promised that the land on which that line used to run would be preserved as railway land in perpetuity. Yet the contract entered into, presumably with Treasury backingthe point that my hon. Friend makesfailed to protect that land, and we are now on the verge of losing it for ever and thus being unable to resurrect a railway there. The Government say that they are committed to expanding public transport, yet in this case they have diminished it.
Chris Grayling : My hon. Friend's comments speak for themselves. Given the current expansion of demand for transport, it is foolhardy to give up existing corridors that may need to be reopened for passenger traffic. It is beholden on the Government to consider the assets that they hold and to protect them, given the enormous pressures on our transport infrastructure.
The last issue, which relates to financial structure, lies in the Ernst & Young report on the comparison between the public and private sector options available to the Government. The report is simply a whitewash for the Government's approach. That is no fault of
The value-for-money question is even more doubtful when we consider the use of the social cost adjustment, to which the hon. Member for Leyton and Wanstead referred, which effectively means that the difference in value for money between the two schemes is an accounting illusion. The private sector option presents no cash difference or saving to the Government. The cash saving is an accounting illusion based on an assessment that London Underground has chosen to use of the social cost benefit of its approach, rather than the alternative. As the hon. Member for Leyton and Wanstead said, when we took evidence in the Select Committee, we did not hear one person from outside of London Underground say, "This is a valid accounting approach, which is used sensibly elsewhere and creates a real sense of the benefits of one option versus another." In an issue as fundamentally important as this, that is not acceptable.
As always, the Government exaggerate the financial side of their approach. We hear regularly from the Secretary of State that the Government are investing £15 billion in the biggest modernisation programme that the underground has ever seen. That is not so. They have taken the annual maintenance budget for the underground, which has always existed and which is spent to replace minor equipment each year, upgrade track or put new track bed in place regularly. They have accounted for that over 15 years, added it up and come up with a big, impressive figure. In addition, they have added a rather smaller sumthe new investment going into the underground.
The figure is an accounting illusion. It reflects another of the Government's habits of exaggerating hugely the sum being invested. Broadly speaking, the cash being invested in London Underground is comparable to what was spent in the early 1990s, when the Jubilee line was built. It is not some radical departure that will transform the tube. It is welcome cashthere is no doubt about thatbut the Government exaggerate the contribution that it makes to the tube.
We heard in the Select Committee that there is a tangible alternative. Bob Kiley set out in considerable detail how he would take the underground forward and how he would finance that. He set out the improvements that we could expect within the first seven years. Under the PPP scheme, it is far from clear what improvements we will get in the first seven years. As the hon. Member for Leyton and Wanstead says, the goalposts hop around all the time. The scheme is over-engineered and,
PPP is the wrong project. It ignores the fact that London should be given the right to take responsibility for its transport system according to the principle of devolution that the Labour Government set in place. We have brought in from the United States one of the world's leading experts on modernisation of underground systems, and we are ignoring his advice. I do not understand why the Government are still doing that. It is not too late for them to change their mind, although much time has been wasted shilly-shallying. I hope that the Minister will tell his Department, "Let's change our mind and just crack on with it. Let's take the Kiley option and get the tube modernised properly."
Mr. David Rendel (Newbury): I am here because I am a member of the Public Accounts Committee, and we were involved in some of the negotiations on the letters of comfort. I wish to speak on the issue of whether they are appropriate in this case. I do not pretend to speak on behalf of the PAC; I am simply a member of it who has been involved in the subject.
The issue first came to our attention when the Secretary of State wrote a letter to the Chairman of our Committee to explain that he was putting a minute before Parliament, announcing that letters of comfort would be issued to the contractors if they took up the bid. He had to do that because of the Government accounting rules, which are pretty explicit on how letters of comfort should be handled.
First, the rules say that a letter of comfort may be issued only if it is acknowledged that it may impose a moral obligation on the Government. The regulations say that a public sector body is unlikely to be able to issue a letter of comfort without effectively committing the Government to meet any obligation that arises. Secondly, they state that the total liability should be restricted by carefully specifying the amount and the length of time during which the Government are at risk of having to pay out that amount. Clearly, that was not done in the minute.
Thirdly, the rules note that Departments should approach any request for a letter of comfort with a strong predisposition to reject it. Proposals to issue a letter of comfort should therefore be exceptional. That alone should have been enough to show that the letters of comfort should never have been issued, and that the project should have been brought to a halt as soon as it became clear to the Secretary of State that he would need to issue a letter of comfort in order to get the lenders to go ahead with their lending. There was an alternative, which, as my hon. Friend the Member for Carshalton and Wallington (Tom Brake) made clear, has been on the table for a long time. Many people have been talking about it, not least my party, the Liberal Democrats. That alternative is to issue some sort of bond.
Fifthly, the rules specify that 14 days' notice, excluding weekends, must be given when the minute is laid before the House of Commons before letters of comfort can be issued. The minute was laid on Wednesday 20 March, four days before the Easter recess. The letters of comfort were due to be issued two days after we returned. The regulations say that every effort should be made to ensure that the full waiting period elapses when Parliament is in session, but there was a 13-day Easter recess four days after the minute was laid.
In cases of special urgency, the reasons for less notice being given should be explained in the minute. However, the reasons were insufficient and badly explained in the minute, especially as the minute could have been laid at any time after 7 February, when the decision to go ahead was originally announced. There is no reason for the short notice. I am delighted that, as a result of pressure by my hon. Friend the Member for Carshalton and Wallington, the Government were forced to back down on the notice period and allow a longer one after the Easter recess had finished.
The Secretary of State has ridden a coach and horses through his own financial regulations; they were agreed in 2000, so he cannot blame the previous Conservative Government for setting impossible accounting regulations.
Mr. Edward Davey (Kingston and Surbiton): My hon. Friend has made telling points about how the Government have behaved exceedingly shabbily over their accounting rules. Does he agree that such behaviour is especially inappropriate given the length of the contract, and the size of the investment and liabilities that we are considering? The financial regulations and the letters of comfort regime were designed for completely different projects. The magnitude of the project means that the device and its shabby use are especially inappropriate.
Mr. Rendel : My hon. Friend's interest in London Underground is probably even greater than my own, although I use it a great deal. He makes a powerful case. He is right to say that the letters of comfort were used entirely inappropriately.
The Secretary of State's treatment of his own regulations brings to mind another organisation that treated its accounting rules in a similar way, putting lots of funds at risk and, sadly, ended up in a real mess; Enron. When good accounting rules are established, it is very dangerous to ignore them, as the Secretary of State has done. I would have thought that, having seen what happened to Enron, he would take more notice of the dangers involved.
The contents of the letters of comfort are interesting, and include the information that if London Underground cannot meet its financial obligations under the PPP contracts, the Secretary of State regards as untenable the proposition that he would not consider either adjusting the transport grant or paying a special grant to the Greater London Assembly, that he would not take into account the sums owed to the providers of finance, and that he would stand by and do nothing. In other words, if the project goes wrong, in the end the taxpayer will bail out the company.
The whole point of the private finance initiative is to pass the risk of things going wrong across to the private sector. If one borrows money from the private sector, a higher rate of interest is inevitably charged than if the public sector was doing the borrowing. In return for that higher rate of interest, paid by the taxpayer, one expects the risk of the project going wrong to be passed across to the private sector, so that the public sectorthe taxpayerdoes not have to bail out the company. By offering the letters of comfort, the Secretary of State effectively admits that the Government would bail out the lenders should the scheme fail. The risk remains with taxpayers, who must pay the higher rate of interest on the project as well as retaining the risk. We lose out both ways.
A huge hole has been blown in the Secretary of State's justification for the PPP. Frankly, it is no surprise that he tried to sneak through the letters of comfort without the normal 14-day consultation period, and it is good news that he was, in the end, stopped from doing so. The Secretary of Sate has shown himself, once again, to be unfit to run a bus, let alone a transport company.
Mr. John Randall (Uxbridge): I start by congratulating the hon. Member for Leyton and Wanstead (Harry Cohen) on securing a repeat performance for this debate. He does the House a service by drawing attention to the subject, because it is the most important issue of the day for many Londoners. The current state of the London underground system causes great annoyance and discomfort. The Government seem to want to keep the matter underground. However, as I know from my own constituency, the underground sometimes comes out from the dark to be brought into the light. The hon. Gentleman does us all a service by raising the issue.
I have used the underground all my life and I rather like it. It is not always bad and, on a good day, offers a good service. I congratulate the staff. They increasingly have to endure complaints from the public about the poor service that results from more frequent cancellations and so forth. Speaking as someone who has served on the front line behind a counterif there is such a thingtaking the rap for other people's decisions is not the easiest thing to do. The public, rightly, are angry about what is happening to their underground.
It would be unfair to say that the underground is all bad. Although we are sometimes disappointed about cancellations, the Metropolitan and Piccadilly lines that serve my constituency can often offer a service that is all
The PPP put forward by the Government is immensely disappointing and there is consensus that something must be done about it. My hon. Friend the Member for Epsom and Ewell (Chris Grayling), and the hon. Members for Leyton and Wanstead and for Newbury (Mr. Rendel) put forward powerful arguments about why the flaws are there and why the project should be re-examined. However, from my previous existence as a salesman, I know that, no matter what they try to do, if the product is not right, the Government will not be able to sell it to the London public. They may feel that the project is the best option available; most would disagree. It is impossible to sell, and will be a millstone around the Government's neck in perpetuity if they persist with it.
The absence of Labour Members from these debates is not a reflection of their lack of interest; they are interested, but what they want to say is not necessarily what the Government want them to say. Discretion being the better part of valour, they leave the hon. Member for Leyton and Wanstead isolated.
However, as the Minister is present, I shall make a few points, including some about the underground system in my constituency. Safety has already been mentioned, and it will always be our prime worry. However, other issues must be considered, such as access for disabled people. Two years ago, a new station was built at Hillingdon. It won all sorts of awards, which worried me. There is a lift for disabled people, although it does not always work. But what is the point of a lift to get disabled people into an underground system in which there are very few stations at which they can get out the other end? It might work on the Circle line, as someone could get on and go round in a circle and come up from the same station into which he went down. That must be considered.
I am worried about the upkeep of not only the lines but some of the property that London Transport and London Underground own. A constituent who rents arches for a business on the District line is having great problems trying to find out who will do repairs. He has constant arguments. The management of London Underground does not seem to want to take responsibility for its tenants.
The constituency of the hon. Member for Leyton and Wanstead is at one end of the Central line. The other is at West Ruislip, which just about squeaks into my constituency. A subject that is dear to my heart and which I have discussed with Ministersindeed, one of the first things that I did when I entered the House was to plead for itis an extension of the Central line to Uxbridge. Anyone who knows the area well will know that the sidings that come out of Ruislip Gardens, on the Central line, stop a few feet away from the Piccadilly line to Uxbridge. I have always been disappointed in that.
When I entered the House, I raised the matter with the Deputy Prime Minister, who had responsibility for such matters. He told me flatly that when they came to office in 1997, the Government had considered the plan and decided that it was not an option. Further questioning eventually led to a letter from the hon. Member for Streatham (Keith Hill), who was then in charge of such
Another bone of contentionI am sure that London Underground will read the debateis that, with the introduction of congestion charging in London, parking in suburban London for the underground will become even more acute. Charges in London Underground car parks are way above those for other local parking. If London Underground were to put its car park charges in line with those of the local authority, more people would be encouraged to use the underground. I ask London Underground to take note of that.
We return to the problem of what will happen if we get more people on the underground. My hon. Friend the Member for Epsom and Ewell discussed capacity. I cannot envisage how it is possible to run more trains into London at peak times. Trains come regularly. There is the odd cancellation, which makes life hugely difficult, but on a good day, Metropolitan line trains leaving Uxbridge and coming from Watford, and Jubilee line trains, which I pick up at Finchley Road to come here, come every minute or so. It is a good service. However, the trains are crowded, and we shall have to consider other methods. The Government must proceed with the Crossrail project.
With regard to capacity, I feel that we should be a little more imaginative about charges. We all know that there are off-peak tickets after 9.30 am. There is scope to introduce a cheaper early-bird fare before a certain time in the morning. That is not an entirely new idea; there used to be a workers' fare. My predecessor, the first Member of Parliament for Uxbridge, was working on a Bill on that subject in the early 1900s. Governments sometimes move slowly, but it is about time those issues were considered.
I want to allow the Front Benchers time to respond, but first I make a plea to the Government; do not stick to the dogma. They must understand that there is real opposition from both sides, and that it is not opposition for opposition's sake, but is based on sound facts. The Government will have an impossible job selling the idea to the public. There is very little support for the idea. I hope that they realise that having a good underground in London is important not just for Londoners, but for the whole country. It is a good advertisement for all those who come to visit our capital city.
Mr. Edward Davey (Kingston and Surbiton): I shall be brief, partly because I have spoken on the subject so many times in the past three or four years and have used the arguments in so many ways that it is difficult to find new ways of doing that. Hon. Members of all parties have joined the campaign to persuade the Government to think again. The Government are trying to tough it out, but I think that they will come to regret their decision. There will be many London Labour Members of Parliament who in a few years will wish that the Government had never gone down that track.
Among the arguments that have been rehearsed many times, there is a fundamental one to which we keep coming back, and to which Ministers, in their weaker moments, actually allude. The sole reason for the scheme is that the Government do not trust London Underground managementpublic sector managementto make the investments in the next few years. They believe that only private sector management has the know-how, the incentive and the ability to drive forward the investment programme to modernise the tube. One would think that they had learned their lesson from the railways.
That attitude is a real insult to London Underground, because its management have performed very well when they have been given the tools to do the job. Another option is to improve that management and bring in outsiders such as Bob Kiley to enhance its capacity and competence. However, the Government have shut their mind to that. They have simply said, "We don't trust London Underground management to do the job properly, so we're going to make sure that a private contractor does it." One of the serious flaws in the argument is that the Government have trusted London Underground management to negotiate the contract. Although they have no trust in the management, they have entrusted them to negotiate a contract lasting many years.
The logic of the Government's position is impossible. It just does not make sense. I ask them to consider the core reasoning behind their approach, and to think again about whether they could find a way of building up London Underground management, which has been enhanced by the Mayor of London. The Government should allow them to do the job, and save the London taxpayer billions of pounds in the process.
Tom Brake (Carshalton and Wallington): These debates are rather like the Circle line: we go round and round and keep going through the same stations, with hold-ups and unexplained delays along the way. I was going to start by congratulating the hon. Member for Leyton and Wanstead (Harry Cohen) on securing a 100 per cent. increase in the attendance of Labour Back Benchers here, but unfortunately, his hon. Friend the Member for Ilford, North (Linda Perham) left shortly after the beginning of the debate.
I want to focus on the issue of comfort letters, because it highlights the fact that the main purpose of PPP has been demolished. The risk transfer has simply not happened. There was much uncertainty about whether the comfort letters were going to be issued. They are called comfort letters because they provide a guaranteed protection from the Government. There was uncertainty because it is unusual for them to be issued for any amount over £100,000.
Following a parliamentary question asked by a Liberal Democrat peer, the draft letter was finally flushed outit had to be dragged out of the Secretary of State, kicking and screaming. The letter was placed in the House of Lords Library on 20 March. In his covering letter, the Secretary of State wrote:
That is very strange because everyone in the business world thinks that they do. The Secretary of State went on to saymy hon. Friend the Member for Newbury (Mr. Rendel) has referred to some of these pointsthat he has made it clear that he would intervene
He would think it untenable to not consider whether it was appropriate to give more grant money. He would think it untenable to stand by and do nothing. That directly contradicts his statement that binding obligations are not created.
The Minister will be aware that it is customary to provide a statutory period of consultation in respect of the comfort letters, under Government accounting rules. As my hon. Friend the Member for Newbury has said, the period started immediately before the Easter recess, and it looked as if the Government were going to railroad the process through, leaving that recess as the only considerable chunk of time that Members would have to consider it.
My hon. Friend the Member for Newbury has said that an explanation is required if there is a real reason why the 14-day period has to be truncated. I understand that the explanation given to the National Audit Office for rushing things through was that there were delays that could cause problems because European officials would be on holiday at an inappropriate time. That does not sound like a valid excuse or explanation to me. It was also argued that the signing of the share purchase agreements much later than 10 April would risk losing momentum on the PPP competitionsbut those had been going on for years. We are talking about a delay of several days in a process that had been going on for four years, yet the Government were seeking to truncate the period of parliamentary scrutiny.
Harry Cohen : The Government could give more grant as a follow-up to those comfort letters, were debt incurred, but could they not also say that the public sector should pick it up, which would mean Transport for London? It may not be the Treasury that picks up debt from the comfort letters, but fare payers and council tax payers.
We have heard about the exchange of correspondence between the Chairman of the Public Accounts Committee and the Secretary of State. I do not want to requote what was said in the letter, apart from the following:
Mr. Edward Davey : I congratulate my hon. Friend, who tried hard to get the Secretary of State to allow a debate in Government time on the issue. He also helped to draw up an early-day motion. What response did he have from the Government to his perfectly reasonable request?
Tom Brake : My hon. Friend will know that the Government's scrutiny of and responses on PPP have lacked content. None the less, we hope that the Minister will explain why so little time has been made available to discuss this important matter. Perhaps he will use the opportunity to say that the Secretary of State will come to the House and allow a full and open debate with a free vote at the end, so that all Members of Parliament can express their views in an open and unwhipped way. We could flush out the views of the absent Labour Back Benchers and give them an opportunity to express themselves openly in a situation in which they feel safe.
We have had a considerable amount of debate about comfort letters, so I shall move on to accountability. The way in which Members of Parliament and Transport for London have been treated over the comfort letters is symptomatic of the way in which the PPP has been handled. Unfortunately, MPs have been treated with a degree of contempt. Before Christmas the Secretary of State told the Transport Committee that he would hold a full consultation with all interested partiesI would suggest that MPs are interested partiesbut that came to nothing. His initial statement to Parliament that he intended to go ahead with PPP did not give MPs time to examine the relevant report. As my hon. Friend the Member for Kingston and Surbiton said, hon. Members, including me, have subsequently called for an open debate, but again, those calls have been ignored. It has been left to individual MPs to facilitate the debate on this important subjectbut now a proper statement must be made to Parliament.
We have heard about the delays that TfL experienced in obtaining the necessary documents. Unfortunately, it had to contact me to obtain a copy of the draft comfort letter. I am pleased that it did, but it seems strange that it should be down to Opposition Members to provide information to TfL, an organisation that is clearly engaged and interested in the issue. The information should have been made available to TfLif not before, at least at the same time as it was made available to MPs.
TfL raised strenuous objections to the scheme, and many serious points that require detailed scrutiny, which has not been available. It argues that PPP will fail to deliver value for money and will fail to transfer risk from the public sector. Many hon. Members have clearly demonstrated that that will be the case. PPP will separate maintenance from operations. The Government argue that it is not privatisation, but because of the way in which assets will be handed over using various long-term lease arrangements, one could argue that it is partial privatisation. Those are serious accusations that deserve scrutiny, but they will not be getting any. They cannot be addressed through Westminster Hall debates with a Minister who may be well practised in responding to Adjournment debates, but who is not at the heart of the matter.
If I had time, I would focus on the management of London Underground, which was the subject of the second half of today's debate. There is no time to go into my worries in detail, but I can tell the Minister that from discussion with those who work for London Underground, I know that they are alarmed about the fact that breaking up the infrastructure has meant that four people do a job that one used to do: one person does it at London Underground, and three do it in the different infracos. The number of people who work in different posts is mushrooming, which is not a cost-effective way to manage limited resources. I wonder whether the Minister has considered that. Something else that I do not have enough time to consider today is the lack of ambition in the Government's planswith regard to the extension from Morden to Sutton, for example, which has long been campaigned for, or the Hackney to Chelsea line, for which I actively campaigned in 1984.
If the Government genuinely believe that their case for PPP is watertight, they have nothing to fear from a full debate and vote, and the Secretary of State has nothing to fear from questions in the House. If the Minister answers only one question from today's debate, I hope that it will be to tell us when the full debate will happen.
Mr. Eric Pickles (Brentwood and Ongar): I hope that the hon. Member for Carshalton and Wallington (Tom Brake) forgives me for not mentioning his speech, but as he overran, I have no time to say all the nice things that I had planned. However, I congratulate the hon. Member for Leyton and Wanstead (Harry Cohen).
Many hon. Members have had their own monuments. Mr. Belisha has his beacons and Mr. Kenneth Baker has his days. Now we have the Harry days for the London underground. He is to be congratulated on his persistence, although he spoilt it slightly by being unpleasant about the Conservative party and the Liberal Democrats. He then moved on to the real enemy: the Minister. I shall long remember him asking the Minister to show good faith, as though it were exceptional behaviour.
My hon. Friend the Member for Epsom and Ewell (Chris Grayling) rightly said that to bring Bob Kiley all this way and ignore him is ridiculous. He is a noted expert who has forgotten more things about running an underground than the rest of us know.
My hon. Friend the Member for Epping Forest (Mrs. Laing) referred to the Epping to Ongar railway, in which I have an interest because the Ongar railway lands in my patch. Were she still in the Chamber, she would press the Minister for a meeting, along with the hon. Member for Harlow (Mr. Rammell), to discuss the problem.
We have the largest single PPP, and the largest single letter of comfort issued in the history of this fine nation. So, what do we know about the situation? We know that in the lifetime of the contract for an initial investment by the infracos of £530 million, Metronet and Tubelines will make a cool £2.7 billion in profit. We know that banks are demanding huge margins because of Railtrack, and that the Government are about to sign a
The hon. Member for Leyton and Wanstead read out several examples. He talked about the number of cancellations of station modernisation and the fact that the trains to replace the ageing fleet will not be ready before 2011. Perhaps the worst thing is that of the 13 capability upgrades projected by the PPP over the next 18 years, only four are due before 2011. There is no agreed pricing or firm commitment of finance for any of the other nine upgrades due to be completed in the 30-year period.
Since those words were put down in the final assessment report, many things have happened. We now know that a number of concessions were made to the infracos since the report was published, and that there is no more risk than that in a standard construction contract. It is fair comment to say that the PPP is little more than a glorified cost plus maintenance contract. Either the Government or London Underground will pick up the risk. There is no commitment from the Treasury for state funding beyond 2010, which is, of course, when the majority of the problems are to be dealt with.
In the minute that remains, let me outline a couple of problems that we need the Minister to address. I raised with the hon. Member for Newbury the question of whether the PPP is covered in the EU treaty. Articles 87 and 88 clearly prohibit the state lending state money to a business where there has been no transparent contract, and articles 81 and 82 prohibit unfair competition. I am worried that we do not know whether the services provided by the infracos will be open to transparent competition. We already know that they have decided to sell off several of their maintenance contracts to some of their junior companies within the consortium. That seems to fall foul of the European rules. When the Minister replies to the debate, the fundamental question that we want answered is, where does the risk lie and has it been transferred? Moreover, does the letter of comfort comply with our obligations under the European Union treaty?
The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Mr. David Jamieson) : I congratulate my hon. Friend the Member for Leyton and Wanstead (Harry Cohen) on securing the debate. Perhaps in later life he will help and instruct other Members on how one secures debates so regularly. He must have a good line of contact with the Speaker. The hon. Member for Brentwood and Ongar (Mr. Pickles) talked about Mr. Belisha's beacon. Hore-Belisha was a very distinguished predecessor of mine in my constituency of Plymouth, Devonport, although he was a National Liberal. Perhaps at some point in the future we shall call the debates "the Cohen memorial debates". I congratulate him on the way in which he has approached the debate today.
My hon. Friend the Member for Leyton and Wanstead approached the debate in his usual forensic manner. I like the fact that he always speaks sincerely on behalf of his constituents. I am pleased to say that there are two matters on which he and I would be in total agreement. First, we want good value for money for taxpayers and passengers. Secondly, in his early remarks, he said that the tube is important to the country and the economy. I reinforce that most strongly.
To follow a point made by the hon. Member for Uxbridge (Mr. Randall), who took a measured approach to the debate, there is a lot that is good about our tube. I say that as someone who travels regularly on the tube. It is not perfect, but much is good about it. When I have used it frequently, I have found the service good and the people on it helpful and friendly. That needs to be said because sometimes people who work for the underground must think that we in this House have nothing but criticism for the work that they do. I think that the contrary is the case.
Let me pick up a couple of points mentioned by the hon. Member for Leyton and Wanstead about trains and station improvements. Transport for London has criticised plans for station improvement schemes, despite the fact that it argued that less priority should be given to stations. It is true that fewer stations will be modernised in the early years, but the fact remains that the PPP offers greater improvements than any previous alternative. All stations would benefit from a number of considerable improvements during the seven-year period of the contract.
The hon. Member for Epsom and Ewell (Chris Grayling) spoke about improvements to stations, which are important. He seemed to think that the issue was all about rolling stock. It is not; the quality of the stations and the line is very important in running a successful rail system. I very much agree with my hon. Friend the Member for Leyton and Wanstead on that point.
The Central line already has good, modern trains and there will be no need to replace those in the immediate future. The PPP is designed to ensure that better maintenance of track, trains and signals will reduce delays. I know that the people travelling from my hon. Friend's area want that reduction. The Socialist Campaign Group News is not on my regular reading list, although it seemed at one stage to be bedside reading for some Conservative Members. I can, however, assure my hon. Friend that the figures mentioned for the return for shareholders are hugely exaggerated. The whole point of the contract is that if the infracos meet the terms of their contract, there will be a return for shareholders, but if they do not, the returns will diminish substantially.
The hon. Gentleman said that one great success of the Conservative Government was the Jubilee line extension. I think that I understood that correctly. Was he talking about the same Jubilee line extension that went 67 per cent. over budget and was not months but years overdue? If the hon. Gentleman is holding that up as a shining example of the way in which the Tories would run the tube system, Conservative Members need to have a rethink; it is hardly a good prospectus for the tube. He went on to say that there should be no separation of track and train. That will not happen under our proposals, so the hon. Gentleman only made a swathing criticism of the Tory privatisation of the railways.
I shall outline the progress that we have made since the last debate on this matter and then respond to some of the important points made by my hon. Friend the Member for Leyton and Wanstead. As some hon. Members will be aware, the board of London Transport announced on 7 February that, following a thorough re-evaluation, it was minded to proceed with the modernisation plans. There has since been extensive consultation between London Transport, the Mayor and Transport for London. A considerable amount of noise has surrounded that process, with suggestions that TfL was denied access to documents that it had the right to see. Indeed, the hon. Member for Epsom and Ewell made similar comments last time. However, although that noise was loud, it did not ring true.
A number of hon. Members spoke about fragmentation and privatisation, and now we come to some of the wildest allegations about the modernisation plans: claims that the tube will be privatised and that the plans will create the sort of fragmentation that took place when the Conservatives privatised the national rail system. [Interruption.] I do not know whether renationalisation is Conservative policy, but perhaps the hon. Member for Brentwood and Ongar can tell us on another occasion.
I simply do not understand how anyone can claim that a structure in which there will be a single body, publicly owned and publicly run, operating all the trains, signals and stations in a unified network amounts to privatisation or fragmentation. Manifestly, it does not. There is no comparison between our plans for the tube, and the privatisation of the rail system.
Mr. Jamieson : That will be a matter for London Underground, Transport for London and the others involved. I hope that it will not be much longer before the decision is made, but my hon. Friend will appreciate that other issues have to be addressed in the meantime.
In the brief time remaining let me turn to the comfort letters. If I do not cover all the points that were made, I shall write to my hon. Friend about this. The Government propose to support the PPP through a long-term commitment of grant funding for Transport for London. That is set out in the so-called "comfort letter", which also describes the Secretary of State's intended approach if London Underground were confronted by large liabilities under the PPP contracts