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The Minister for Transport (Mr. John Spellar): Is the hon. Gentleman therefore saying that the previous Conservative Government got it completely wrong, and if so will he put on the record his denunciation of that decision?
Richard Ottaway: The Minister is asking me to exaggerate in a way that I am not prepared to do. I am the first to admit that—for the reasons that I have just explained—things have not gone right, and I thought that that point had indeed been put on the record. I make no apologies for privatisations, 99 per cent. of which have worked. Privatisation of the airlines and the public utilities has been a tremendous success. [Interruption.] I make no apology for going ahead with the privatisation of Railtrack, but the manner in which it was done was wrong. It should have been split into the Great Western railway, the Great North Eastern Railway, and so on.
Chris Grayling: My hon. Friend will be aware that, in restructuring the industry, the Government have chosen to pursue exactly the same model—an infrastructure provider and train operating companies—as that employed under privatisation. That is presumably a vote of confidence from the Government in the making of such a division.
Richard Ottaway: My hon. Friend makes my next point. The Government ought to be learning from Railtrack's difficulties and adopting vertical, rather than horizontal, integration. We should have an integrated management system that hires private contractors who are paid on delivery of a service. The nub of the difficulties with the PPP is that London Underground is going to pay the infracos on the basis not of what they are actually doing, but of how they are performing. To that extent, TfL's hands are completely tied. The principle is okay in theory, but the formula is unbelievably complex. It is a completely untested mathematical model, containing thousands of minute elements, to which TfL will be bound for the next 30 years. Its complexity is outrageous. For example, Madam Deputy Speaker, if you look—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I am beginning to get a complex.
Richard Ottaway: I do apologise, Mr. Deputy Speaker; I was concentrating so hard that I had not realised that the occupant of the Chair had changed.
The formula for abatement service points for defects and failures is: ASP to the power of AS, which equals epsilon i <ASP to the power of AS, times (1 plus UT to the power of 1)> minus ASP to the power of AS over THD. That formula applies only if ASP to the power of
AS over THD is less than epsilon i—and so on. The system will be unbelievably complex, and will provide ample opportunities for the infracos to play the system and find loopholes. Entire careers will be made out of working a way through those formulae. The situation would be comical if it were not so serious.
Mr. Mark Field: Is not the nub of the problem that this form of PPP—consisting of a very complicated mathematical formula that my hon. Friend described far more fluently than I possibly could—above all lacks political viability? Many of us who did not support the creation of a London government are not in favour of this form of PPP, and it is clear that many London Labour MPs—other than those who are crazed by ambition to get a Front-Bench position—the Mayor of London and TfL are not in favour of it either. How on earth can this form of PPP be supported by a Government who supposedly support devolution?
Richard Ottaway: My hon. Friend is absolutely right. The 1997 Labour manifesto makes it clear that Labour wanted the Mayor of London to run a top-quality transport system. That is a broken pledge. The entire system will be maintained by people over whom TfL will have no control or direction. If TfL identifies a problem, it will be unable to do anything about it, provided that the infracos can show that the trains are running back and forth in accordance with a mathematical formula. The system is unviable, untested and cannot be taken seriously. That is why Ernst and Young described the idea that the system would prove beneficial as a subjective view, and I agree with the Select Committee that this is not the basis on which such decisions should be taken.
I ask the Government to think again, otherwise the people of London will be the losers. It is they who will have the ball and chain of the associated debt and problems clasped to their ankles for the next 30 years, and it is the Minister's party that will have to deal with the political consequences.
3.45 pm
Ms Karen Buck (Regent's Park and Kensington, North): If there is one person who is guaranteed to send me scurrying to the warm bosom of my own Government, it is the hon. Member for Croydon, South (Richard Ottaway). In saying that, I intend no slur on my right hon. Friend the Minister. The hon. Gentleman's description of the tube as a third-world system was completely unrecognisable. For the most part, my comments on the PPP will be rather critical of the position that we have got ourselves into, but as someone who has used the underground every day for the past 20 years, I can say that it does London no favours—and nor is it true—to describe the underground in the terms used by the hon. Gentleman. It is important that we place on the record a true reflection of the system as it is.
Hon. Members probably agree with the Select Committee in several respects. We know that the tube desperately needs investment for maintenance and upgrade, that there has been underinvestment for most of the past two decades, and that the last thing that the underground now needs is further delay. It is critical that we start investing money as soon as possible. Even if the
PPP delivers a significant increase in transport capacity—a moot point, and nor am I entirely convinced by the figures given by my hon. Friend the Member for Coventry, North-West (Mr. Robinson) on the scale of the increased capacity that the PPP will deliver—it will constitute only a small contribution to the additional capacity necessary to make London work. Concerned as it is with maintenance and upgrade, the PPP is not the same thing as the investment that is necessary for a first-class transport service for London in the 21st century. That is why I want to concentrate on the absolute and overriding importance of in no way allowing Transport for London's contribution to the running of the PPP—assuming that it goes ahead—to undermine other transport projects in the capital.The other point on which we probably all agree is that, whatever model we proceed with, the private sector—be it private finance or private companies—will have a major role to play. The Mayor of London spelled that out last week, as has Bob Kiley on several occasions. Sometimes, we descend into a crude debate on private versus public management models, but such debates completely miss the point. The question is whether the PPP before us is the right model for procuring services that will deliver improvements to our underground, and in that regard I congratulate the Select Committee on the rigorous work that it has undertaken.
There are two areas of concern: safety and value for money. I should point out that I am not one of those who are convinced that the PPP is a major compromiser of safety on the London underground. I deplore the shroud-waving tactics that are sometimes employed in this debate. It is much too easy and glib to reduce very complex questions about resource investment, management, lines of accountability and the supervision of subcontractors to a simple formula that states that privatisation equals death, and the public sector necessarily equals top quality, guaranteed service delivery. However, the fantastic complexity of the PPP contract system does raise legitimate questions about how safety will be guaranteed and assured.
When these issues have been discussed in the House—not least thanks to my hon. Friend the Member for Leyton and Wanstead (Harry Cohen), whose forensic analysis of them in Westminster Hall could be usefully studied by the world's leading accountancy firms, especially at the moment—the other models of PFIs that have been used to provide transport in London have been cited to demonstrate that the private sector can deliver where the public sector cannot. The Croydon tram is one example. My hon. Friend the Member for Croydon, Central (Geraint Davies) is in his place, and I acknowledge that it is a model of good practice; the Docklands light railway is another. However, those PFIs are dwarfed by the PPP contract process, and that is an important point.
Nobody is claiming that it is impossible to put together a public-private partnership or a PFI to run transport projects. Of course that can and has been done. It is almost certainly the way forward. However, does a PPP of such epic scale and complexity offer the same scope for ensuring accountability, value for money and safety? I do not think so. The walls of the underground carry an advertising slogan for a film that claims that its plot has more twists than a bowl of fusilli, and that could also describe the contracts.
We all hope that the Government are right. If the PPP goes ahead, as I think it will, who cannot hope and trust that the safety case will be guaranteed? I have confidence in the Health and Safety Executive and no doubt that the Government are as committed to the maintenance of safety as anybody. However, the question of blurred accountability remains within the complex contracting system. That means that those who are charged with the operation of the service—Transport for London—have to pick their way through the contracts to ensure that the travelling public are protected every day.
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