Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 440 - 448)



Mr Laws

  440. I want to ask a final question on the Wanless consultation process. In your famous interview in the Sun you mentioned that there would be a consultation process and you said—you have got a copy of this one—"I have started a big national debate and Sun readers are so important. I wanted to hear their views about our future health service. I want to hear what people say so we can consider this". You also said that you cannot speak for the Health Secretary and he may have views on earmarked tax or social insurance. If a lot of Sun readers do write in about this and they support strongly social insurance or earmarked tax, and if the Health Secretary has those sorts of views as well, would you still at the end of this consultation be willing to review your own conclusions that you have to go for this publicly funded system?
  (Mr Brown) We will listen to all the consultation during this period. You must remember that Mr Wanless is going to do regional visits around the country and, therefore, he will be hearing people at first hand, whether it is professionals in the health service or members of the general public who are patients.

  441. You might well change your mind?
  (Mr Brown) You must remember what this consultation is about. It is about how we build the best health care system for the future, how we can put the National Health Service on a sustainable financial footing. I have said that my view, having looked at the evidence, is the same as that of Mr Wanless on these issues, that social insurance carries bigger administrative costs, raises issues about equity and in any case in the systems in which it is applied has other features that are not attractive to the United Kingdom, like the charging that takes place in the French medical system. But the wider debate is also about how you match reform to resources. So, yes, we will listen to people. Yes, if people have views about how we can reform, modernise, the health service as well as improve the financial footing of the health service we will listen, and that is what the debate will also be about. Obviously we have produced evidence on the social insurance system that makes us feel as a social insurance system, which is essentially an employers' insurance system in France, it is not necessarily the best way forward for us, but we will listen to what people say.

  442. If you got hundreds of thousands of representations from Sun readers that might weigh in the balance?
  (Mr Brown) Representations from the readers of every newspaper, or any newspaper. I look forward to seeing the reasoned and detailed representation that comes from the Liberal Party about what policy you wish to pursue. By the way, the representations are being invited by 22 January and they can be by e-mail as well.

  Mr Laws: There is still time.


  443. Chancellor, the last section is on transport. The Transport Committee has formally sent to the Treasury Committee a number of memoranda relating to transport expenditure. There are two issues of concern in the context of the Pre-Budget Report. One is the funding of the administration of Railtrack plc and the other one is the arrangements for funding London Underground under PPP. Can I ask you a number of questions on this. Firstly, what estimate have you made of the likely additional burden arising to public funds in the current financial year from the placing into railway administration of Railtrack plc?
  (Mr Brown) We have advanced money through the DTLR to the Railtrack administrator. The administrator thinks that a considerable amount of additional money may be needed by the end of March. It equates to the amount that Railtrack was aiming to borrow over this period but was unable to do so. There is, however, no impact on public sector net borrowing from the short term loans to the administrator because they are loans and they score in DTLR's capital departmental expenditure limit, as do repayments which will effectively cancel them out.

  444. How much of this will be met from expenditure already allocated to transport and how much will be met from the AME margin and DEL reserves?
  (Mr Brown) Transport, of course, has a very large budget, not just for this year but over a period of many years. It is very much part of the ten year transport plan. Within that decisions will be made by the Secretary of State for Transport.

  445. When do you expect the additional cost in 2002-03 and how will this be split between funds already allocated for transport and the total reserves respectively?
  (Mr Brown) I think we have to put this in its context and this perhaps answers the detailed point. The administrator will repay the loans by borrowing himself and that is what is going to happen.

  446. Under the PPP issue, we understand that the Treasury has committed funding for London Underground for at least seven and a half years. What are the implications of this for the planning of transport expenditure?
  (Mr Brown) In our ten year transport plan, we did set aside provisionally amounts of money as the public support for the London Underground Modernisation. I think what we have to remember is this is the biggest single infrastructure investment that has taken place in London Underground. It is one of the biggest infrastructure programmes that we are seeing. It is the equivalent to six or seven times the Jubilee Line, which was itself a very large project. We have set aside large sums of money as a public subvention to this programme but obviously we want to achieve as the funder of this value for money and that is why the PPPs are being looked at.

  447. Lastly, Chancellor, what implications do the seven and a half year review of Government support have for private partners' assessment of the overall financial returns from this project?
  (Mr Brown) I think the potential private participants were relatively happy with that arrangement. This is Government looking at things over more than a one year, three year, or even five year cycle, it is looking at it over a longer period of time. I think that we have shown ourselves willing to put large sums of public money. This is essentially a huge infrastructure project. There are a billion passengers on the London Underground. We are trying to raise the capacity of the underground—which is overused at the moment for the capacity it has—to 1.3 billion. It is essentially, therefore, a huge underground infrastructure and modernisation project. We do need to work with the private sector to achieve it and that is what we are doing.

  448. Can I thank you, Chancellor, for this morning's session. We are very grateful to you and we look forward to further exchanges as time passes.
  (Mr Brown) Thank you. I will send these notes as quickly as possible with Christmas cards to the Members.

  Chairman: Thank you.

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