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17 Dec 2002 : Column 684continued
8. Simon Hughes (Southwark, North and Bermondsey): If he will make a statement on progress towards the start of the public-private partnership contracts for the London underground and the transfer of assets to Transport for London. 
The Minister for Transport (Mr. John Spellar): Commercial agreement has been reached on the public-private partnership deals, and the preferred bidders have begun to raise their finance. We expect the JNP contract to come into force at the beginning of next year, and the BCV and SSL contracts to do so in the spring.
The Mayor of London has said that he may appeal the European Commission's decision that the notified PPP arrangements do not constitute state aid. It would be inappropriate to transfer London Underground to Transport for London during the appeal period, or pending any actual appeal, of the state aid decision. The same position applies in relation to any legal challenge in the English courts.
Simon Hughes : Transport Ministers will have received the report from London Underground yesterday showing that the private sector costs have gone up by #300 million and the public sector costs have gone down by #200 million. Therefore, the estimate for the total project over the seven and a half years, which is the guaranteed price period, is in the same ballparkabout #9.5 billion for each. Given that the Government pledge was that the private option would save #4.5 billion and would go ahead only if it proved better value for money, are Transport Ministers big enough to admit that they will not save that money, that the private option will not prove better value for money, and now choose the other better and cheaper option?
Mr. Spellar: The hon. Gentleman, in his mayoral bid, wants to postpone investment in the underground for several more years. He neglects to point out that London Underground says that this still represents value for money and that the contract is over 30 years and not seven and a half years. What the travelling public in London want is an end to the wrangling and an end to the threats of litigation after two failed court cases, at considerable cost to London travelers and ratepayers. They want the companies to get in, the investment to go in, and the tube to improve. I am surprised that the hon. Gentleman does not support that.
Mr. Spellar: My hon. Friend should observe that there is the shareholder risk if companies fail to perform. The key basis of the contract is that it is driven by performance, and there will be a review at seven and a half years as well. What voters and the travelling public want is for the contract to get on and the nitpicking to stop.
Mr. Christopher Chope (Christchurch): The prices in the contract are fixed for only seven and a half years. The Minister implies that the savings will continue afterwards. For the first seven and a half years, the Government subsidy will be #1 billion a year. Yet when they first made the announcement in 1999, they said that taxpayers would pay no subsidies. Will the Minister explain that?
Mr. Spellar: I am grateful to the hon. Gentleman for pointing out that we are investing #1 billion a year in London Underground, which needs the money. As I said earlier, the contract represents value for money even with the adjustments that the hon. Member for Southwark, North and Bermondsey (Simon Hughes) mentioned. London Underground have been negotiating exactly that, and the contract would have been in place much sooner had not Transport for London brought two abortive legal cases. Without those, we would already be experiencing the benefits. The sooner that happens, the better. I hope that it will happen fairly early in the new year. I also hope that Conservative Members share that aspiration.
The Minister for Transport (Mr. John Spellar): The Government's 10-year transport plan and the Transport Act 2000 are the key elements that we have put in place for achieving improvements in bus services. We are now taking forward several other initiatives to ensure that the objective is achieved. For example, we have established the bus partnership forum, and we are currently reviewing value for money from existing bus subsidies.
Vernon Coaker: Will my right hon. Friend consider what we can do with local bus companies such as Nottingham City Transport, which has cut some of its unprofitable routes, especially to outlying estates, thus often isolating those communities? Will he ascertain whether we can increase urban bus grants in the same way as we provided rural bus grants to try to ensure that isolated estates retain the bus services on which they depend?
My hon. Friend draws attention to an important problem that occurs especially on the edge of urban areas in outlying estates where a decline in patronage causes difficulty with the sustainability of services. In some cases, the appropriate response is a subsidy from the local passenger transport executive. In others, we should consider whether we need continuing fixed routes or more demand-led transport systems. Authorities are examining those matters. I am more than happy to consider the issues that my hon. Friend raised. They are not confined to his constituency, and they are a cause for concern.
Mr. Desmond Swayne (New Forest, West): The 10-year transport plan foresees an increase of 10 per cent. in bus journeys by 2010. That includes an expected 50 per cent. increase in such journeys in London. The inescapable mathematical consequence is that rural bus travel will continue to decline. Is the Minister resigned to that?
Mr. Spellar: The hon. Gentleman should observe not only increasing car ownership but the increase in the number of driving licence holders, notably women, from 50 per cent. to 60 per cent. of the population. That has an impact on demand in rural areas. He is right that we will hit the 10 per cent. target. Even on the current figures, which we hope to improve, there was a 1 per cent. increase last year. Given his constituency, he will be well aware of increasing car ownership and usage in rural areas, and the consequent need for us to consider more demand-responsive services rather than the traditional bus routes, which are under much pressure through changing patterns of demand.
Angela Eagle (Wallasey): Does my right hon. Friend accept that some of the problems are caused by the Conservative Government's decision in the 1980s to deregulate bus services outside London? The extra money that the Government are laudably investing in bus transport is being eaten up by the profits of large companies, which do not increase coverage but place even more pressure on passenger transport authorities for more subsidies. Will he consider reregulating bus services outside London to solve the problem?
Mr. Spellar: There is a variable picture across the country. In some areas, local authorities and the bus companies are working extremely well together to the benefit of the travelling public, but my hon. Friend is absolutely rightthat picture is not universal, which is why we set up the bus partnership forum. I had the local authorities coming in with a litany of complaints about the bus companies. Equally, the bus companies were coming in with complaints about the local authorities, so we have got them together round the table. We have set up time-limited working parties to iron out a lot of those difficulties and to enable the companies and local authorities to come together and start spreading best practice across the country. We are starting to see some outcomes, but there is still a long way to go to achieve the service that her constituents deserve.
The Parliamentary Under-Secretary of State for Transport (Mr. David Jamieson): The Strategic Rail Authority's draft strategy for the west coast route modernisation project envisages that journey times will be reduced substantially by winter 2004. Journey times will be further reduced by 2006, when the vast majority of the upgrade will be complete.
Tony Cunningham : While I welcome that, we all know that the only real improvement in journey times will come with new trains and track improvements. We will get the new pendolino trains, which are to run from London to Manchester and from London to Birmingham. Much, much later, they will run further north. We will also get west coast main line upgrades as far as Crewe, and perhaps further north later on. When the Minister is in discussions with Network Rail, the SRA and Virgin, will he remind them that there are people who live north of Preston? My constituents have to travel by train because the nearest airport is more than 100 miles away.
Mr. Jamieson: I thank my hon. Friend for that. He is aware that the west coast main line serves people well beyond Preston. In fact, some in Scotland might think that they have an interest in it as well. In the thrust of his question, he rightly underlined the west coast main line's strategic importance and rightly said that new rolling stock, which was referred to by my hon. Friend the Member for Pendle (Mr. Prentice), has been introduced to the line. However, as my hon. Friend also pointed out, we will not be able to provide that service unless the track is complete and up to standard. We are now convinced that Network Rail has a grip on the issue and a realistic timetable for improvements. We want that to be delivered so that the line is fully operational by 2006.
Mr. Eric Martlew (Carlisle): Following on from that, does my hon. Friend agree that the reality is that, although the SRA has put a plan out to consultation, there are great worries that the money and the resources will not be there due to the speculation over the weekend? Can he confirm that the moneys will be there?
Mr. Jamieson: My hon. Friend knows that a huge investment is being made in that linea total of #10 billion. He refers to stories that were in the newspapers over the weekend. Those who have been invited to bid for the new franchises have been asked what they can provide at a lower rate of public subsidy. They have also been asked what they can provide at the same and at a greater rate. Unfortunately, the only story we saw in the newspapers was about cutting those subsidies.