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Viscount Goschen: My Lords, perhaps the noble Lord will forgive me. I am sure that is what I did not say. The noble Lord may be putting words into my mouth.

Lord Clinton-Davis: My Lords, I know that the Minister did not say that. He said that the Government have not lost their faith in privatisation, especially of the railways.

Viscount Goschen: Hear, hear!

Lord Clinton-Davis: My Lords, I was saying that they had not lost their faith, they had just lost their way. I shall not go further into that, because we shall be having a debate on the railways tomorrow afternoon. We shall be able to explore what has happened with greater precision.

I shall turn immediately to Clause 3, which the Minister says is a wide-ranging clause. While he says that the Government have no intention of pursuing privatisation through this route, will he concede that it could be so used? After all, what it does is to enable the Secretary of State by order to provide that certain of LRT's statutory functions may be exercisable by another person, either instead of LRT or concurrently for the purposes of carrying out agreements. Clause 2 is also extremely wide. From the Minister I should like not merely an assurance that the Government have no present intention of pursuing a course of privatisation through the Bill, but a categorical assurance that they would not be so empowered. That is a different question. It is one which caused another place to debate this issue at great length. I do not propose to ape it in that regard.

The trouble is that assurances given from the Front Bench are of little avail if the Government change their mind. They changed their mind, for example, over the Railways Bill. They intended initially to privatise British Rail first and then Railtrack some time later. Then they committed a volte face; they changed the order altogether, without any proper debate of course in either House of Parliament as to why they had chosen that particular route. Mere assurances do not suffice. That is why I put the question in the way I did.

Perhaps I may turn to the element of the PFI, which is essentially what the Bill is about in terms of empowering London Regional Transport to do certain things which the Government say it could not do without the provisions of the Bill. I accept that. Unfortunately, the PFI, as conceived by the Government, has not been all that it was cracked up to be. The claims for its success have been wildly exaggerated by the Government.

The Government's PFI scheme followed the scheme introduced initially by my honourable friend in another place, Mr. Prescott, some four years before the Government even conceived of undertaking a PFI of this kind. I shall come to our own scheme in a moment. The PFI as conceived by the Government has come under massive criticism from a good part of the private sector, not least the construction industry, which is most vitally affected by it. It was designed to provide funding

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additional to that put up by the Government. Instead, the Government seem to think that it is an alternative, very largely, to public expenditure.

The PFI was designed, or so the Government said, to enable public enterprise to diversify profit-making activities. That is what the Bill purports to do. That is fine but it appears to be wholly inconsistent with the Government's attitude towards the Post Office, in respect of which we in the Labour Party have been arguing for precisely that kind of remit. Perhaps the Minister will explain that inconsistency.

The Government have been able to expend only one-fifth of the expenditure authorised on PFI schemes. That is scarcely a resounding success. They have failed to provide guidance as to national or even regional transport objectives, without which the private sector is left in a state of utter uncertainty. They have failed to offer any, or any reasonable, idea of prioritisation, of risk allocation and of facilitating the tendering system, which is grotesquely cumbersome.

As I said previously, the Opposition have published their own public/private finance initiative based on partnership between the public and private sectors. They have done so not in response to the Government's scheme but well in advance of it, as the Minister should know. We have consulted on problems affecting this form of financing and the relationship with the public sector borrowing requirement. We shall continue to consult with the private sector on those issues. There is no doubt that these exchanges have already proved to be constructive and worth while and have been well received by the private sector.

Perhaps I may turn briefly to the challenges which I see confronting London Underground. First, London Regional Transport's underground system--indeed, its whole system--is crucial to the way in which London lives and works. It is crucial to its economy and the contribution which the capital city makes to the national economy and to the country's well being. It is crucial to the tourism industry, in which my noble friend Lord Graham takes a keen interest.

Secondly, it is clear that London Underground has not been able to perform as well as it could. That is underlined by the Bill and by the legacy of neglect inherited by London Regional Transport in terms of underinvestment, inconsistency in government policy and the ideological spasm that resulted in the abolition of a strategic transport planning authority for London.

Perhaps I may give examples of the legacy of neglect. The pumps and drainage systems were designed in Victorian days. In 1993 London Underground said that emergency investment of £18 million a year was needed just to keep the network operational. In fact, £9 million was made available and current investment has been forced down to £5 million a year. The geriatric track leading to the doubling of speed restrictions in 1994 and 1995 also illustrates some of the problems confronted by London Regional Transport. There are problems of subsidence and land slippage; pre-war signalling systems on the Northern Line; the warning of major closures on four lines, including the Bakerloo Line; and major reductions in staffing so that many underground

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stations are unmanned at night, causing great anxiety particularly among women and disabled people in old, dilapidated and uncomfortable stations. That situation is likely to become worse with privatisation, with its record of cuts in staff numbers.

The Government's inconsistency in investment policy is illustrated by the fact that, although Ministers say that capital investment in London is at an all-time high, one must recognise that half of that is to be applied entirely to the Jubilee Line extension and £200 million is generated by London Regional Transport itself against a backcloth of the problems that I have described. In 1991 the Monopolies and Mergers Commission recommended that investment should be increased to about £700 million or £750 million a year. The then Minister, Malcolm Rifkind, responded affirmatively. Just before the 1992 election, the Government promised £2.1 billion over three years. After the election it was slashed by £700 million and in 1995 the three-year figure was cut to £1.2 billion.

The problem with all that is that London Regional Transport's hopes were first raised and then dashed, creating a situation in which it had to spend time and resources in developing projects. That was utterly wasted when funding had to cease abruptly. We are addressing the way in which we make the difference between an underground system set on a process of slow decline and one which, perhaps modestly, can continue to meet London's needs. Certainly it is important that the partnership system to which I have referred should be brought into place at the earliest opportunity.

The need for a strategic transport planning authority for London is clear and overwhelming. It is now supported by many Conservatives but still resisted by the Government. Such an authority needs to investigate in depth a number of interesting initiatives. London First has made a proposal to invite businesses to vote on whether they should contribute to a specific investment programme in existing and new railway lines in London. That proposal is worthy of consideration. I wish to know whether the Government have given it any thought and, if so, what their conclusions are. It is, after all, only asking for businesses to vote on something.

Ministers have raised concerns about the public sector borrowing requirement, which is always the obstacle. Yet the very same Government have devised ways and means of circumventing the PSBR on poll tax, council tax and grant-maintained schools. Therefore, it does not seem to be such an obstacle when the Government do not wish it to be.

London First suggested congestion charging with revenue being hypothecated to the improvement of London's transport system. Would the Minister care to comment on that and say where it falls in terms of raising funds in order to carry out so many extremely important schemes? I am saying only that the schemes are worthy of careful investigation. Our intention is to work properly and effectively with the private sector in order to ensure that the public/private partnership schemes work to the advantage of a national and London infrastructure system so that we can achieve

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affordable, efficient and safe links between the capital's transport terminals and its people. In so far as the Bill goes some way towards that, we welcome it.

7.47 p.m.

Lord Bowness: My Lords, I welcome the Bill even though it is described by my noble friend the Minister as being of a technical nature. All transport matters affecting London are of considerable importance to all those who live and work within the capital area and who visit it. It is fair to say that the success or failure of transport within the capital has the ability materially to affect London's future position in the world. I welcome the Bill, giving London Regional Transport the ability to take greater advantage of the private finance initiative without being fettered by the apparent problems with the existing legislation.

It is easy to quote figures selectively, but if we look at what has been done we know that there has been considerable investment in London transport since the Government took it over in 1984. Of course, at any one time and in any one case there will always be demands and needs for more. It is important that the private finance initiative is drawn in because those additional improvements and schemes will not come about without such private-sector finance.

The noble Lord, Lord Clinton-Davis, tempted me about the need for a strategic transport authority for London. Perhaps that is for another time and another debate. I could pose the question: what was the nature of the investment between 1969 and 1984 when the Greater London Council ran London's transport? Indeed, what did the Greater London Council do about many aspects of transport policy? Those of us in the outer areas of the capital saw little or no activity whatever during those years. However, I should not wish to bring contention into this debate.

There is no doubt at all about the value of the private finance initiative. I do not know when it started. I am not certain whether it was conceived four years ago, as the noble Lord, Lord Clinton-Davis, suggested. I speak from personal experience as a member of the borough council of Croydon and, if it is appropriate, I declare an interest as such. The tram link scheme there, which has been at least six years in its formation, has always been based on the involvement of the private sector. We were encouraged on many occasions by the Government to take forward that matter with LRT.

That is a light rail system which will run from Wimbledon, around Croydon, through to Beckenham and New Addington. It will be a completely new east-west public transport system in that particular area of the capital. While final details have yet to be announced, the preferred bidder for the concession has been chosen. I believe that that light rail system will be built with the support of government and a substantial contribution from the private sector.

The development of the scheme and its promotion through Parliament would not have been possible without the private sector, which became involved at a very early stage with adequate arrangements for fair and open tendering when the time came.

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I welcome in particular the fact that this Bill will enable the ticketing project to go forward. There is no doubt that the success and attractiveness of public transport depends not just on its reliability and cost but on the ease with which it can be used. We can look forward to new ideas and expertise from the private sector being brought to ticketing in London. Whatever the success of London transport in recent years, anyone who has travelled abroad on the metros and bus systems cannot fail to be impressed by the pre-buying of tickets, and the smart cards which can be validated without the necessity of being checked by drivers and conductors. Those small matters, coupled with good information--where stops are positioned and indications of which direction buses and trains are going--all make the public transport system more user-friendly. Perhaps we could get away from waiting at Victoria bus station among the diesel fumes and the wet and the wind if there were such improvements.

I believe that the private sector financial initiatives can bring much to London transport. I wish to see the public transport system within the area of the capital successful and thriving. Anything that holds back that investment should be swept away. For that reason, I support the Bill.

7.52 p.m.

Lord Mountevans: My Lords, I am a person locked into public transport for reasons which most of your Lordships will know. Therefore, I am happy to support a Bill which facilitates and may even increase investment in London transport.

I supported the London Regional Transport Act 1984 which I shall call the nationalisation Act. This Bill, which brings the private finance initiative into play, seems to me to update that Act in ways which enable London transport to take full advantage--and I say so as a taxpayer, council tax payer and fare payer--of the concept of PFI.

On transport subjects, the noble Lord, Lord Clinton-Davis, is a noble friend rather than a noble Lord. Over the years, he and I have both sought to find additional finance for LRT. I am still exploring the tax exempt bond and other ideas which were evolved by the noble Lord and the right honourable Member for Kingston upon Hull, East. I hope that that continues.

The preamble to the Bill tells us that it has no effect on public expenditure but may well accelerate major investment projects to the extent that PFI may be more cost effective than the practices envisaged when we renationalised LRT in 1984. However, I have some caveats. First, the PFI is not painless. It seeks to be a blend of Treasury finance and Treasury practice trying to congeal with the private sector's willingness to accept risk, balanced by return. Those of us who were involved in either the Jubilee Line extension or the GEC Northern Line replacement deal remember bitterly that the Treasury and the private sector are not easy bedfellows in those contexts. Therefore, my first reservation is that if we are to make PFI more accessible to London transport, we must expect the Treasury to go further towards understanding private sector concepts. If we fail to do so, I fear that both this Bill and PFI as applied to London transport will fail.

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My second reservation is about the department's document, co-published with the Government Office for London, entitled A Transport Strategy for London. I am disappointed by the Government's intention to maintain investment at broadly the same level--some £500 million per annum--in London Underground. I am disappointed by the lack of any commitment to a medium-term total planning funding level for London transport as a whole which is, after all, in pursuit of projects which are most needed. I am thinking in particular of traffic congestion and its consequences for bus operation.

A Transport Strategy for London proposes completion of a bus priority network by the year 2003, as it promises modernisation of the Underground system by the year 2008. As a user of both, I should like both those dates brought forward. I speak for many users in that respect.

Capital projects on the Underground require self-generating funds. I pay tribute to London transport and its increasing ability to generate those funds. They require Treasury support and Treasury understanding of the private finance initiative, which goes back to a point I have already made.

Buses are something else. I welcome the Government's support for bus priority measures but I want to move much more quickly. Quite simply, if one overlooks the Thames--and I am not aware of London Regional Transport having any responsibility for the Thames--the London bus is London transport's most under-utilised asset. I gather that in central London, the occupancy of buses is only 25 per cent. which means that 75 per cent. of the bus capacity on offer is wasted. If one goes wider into what was the Greater London Council area and looks at LRT as a whole, the occupancy rate is only 12 per cent. So 88 per cent. of the product on offer is wasted.

No commercial company could survive with wastage of 75 per cent. or 88 per cent. Therefore, I ask my noble friend to address two issues. The first is an acceleration of bus priority measures. I see no reason why the PFI should not be involved. It is for the Department of Transport to work out how, but that is what it is there for. I hope that that will be bracketed with a more vicious attitude towards the private motorist.

I ask my noble friend to remind the bus operators of London--now all commercial companies under subsidy--that they have been given competitive freedom. My noble friend Lord Bowness mentioned what happens in Europe; I should like to explore that further. Will the Government accept that the greatest reason for under-usage of buses is not convenience or congestion, but cost? If we can sort out congestion by going for bus priority, we must encourage the bus operators to attract greater usage by producing the single-journey ticket, covering two or three bus companies. As my noble friend well knows, that is universal practice in Europe. Why can we not do it here? It is not a matter of "not invented here". If it can be done abroad, why can it not be done here? If we did it here we would take pressure off the Underground. We would encourage use of public transport in a wider

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sense; we would be green, environmentally speaking, and, of course, we would make ourselves more readily accessible and more user-friendly to the tourists which the noble Lord, Lord Clinton-Davis, mentioned when quoting his noble friend Lord Graham of Edmonton.

Finally, perhaps I may come closer to home. PFI is one thing: enabling it is another. However, deep down inside we need a strategy for transport in London. Noble Lords will know that Westminster Bridge has been 50 per cent. closed for the past 18 months while the side on which traffic runs from here towards Waterloo is rebuilt. Moreover, it will be 50 per cent. closed on the other side--the side that takes traffic from Waterloo to here--until at least June of next year. Indeed, that is what the signs say.

The Bakerloo line is closing between Waterloo and Piccadilly from October for at least six months. Is that really the way to run transport and to make it appealing? Is it really the way to run a city the size of London? Major rail programmes are scheduled in the following order: the Heathrow Express, the Channel Tunnel Rail Link--thank God!--Thameslink and eventually CrossRail. Can we have similar planning in the immediate vicinity?

8.1 p.m.

Viscount Goschen: My Lords, I should like, first, to thank all noble Lords who have taken part in this short but interesting Second Reading debate on the Bill. My noble friend Lord Bowness slightly chided me for describing the Bill as technical. Of course, it is technical but, nevertheless, it also has an important real effect which goes way beyond its somewhat technical provisions.

However, by my own admission I did say that my initial explanation of the Bill was somewhat dry, but at least it stuck to the basic provisions and contained something of an explanation in that respect. I believe that other contributions, notably that of the noble Lord, Lord Clinton-Davis, ranged somewhat wider. However, the noble Lord had one particularly substantive point which I shall address now for the convenience of the House.

The noble Lord mentioned a point that was made, and, indeed, pursued at great length, in another place; namely, the possibility of a hidden agenda. He asked me to give him an assurance that that was not the case. I believe that I can do so. A careful reading of the relevant clauses of the Bill makes it clear that the legislation has a very specific purpose. I give way to the noble Lord.

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