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The Earl of Sandwich: My Lords, the Statement mentioned the return of the non-governmental organisations. That will be widely welcomed especially if passage is made safe for humanitarian assistance. But have the Government considered the contribution that the NGOs could make to civil society on a temporary basis, particularly as the people of Kabul are not enamoured with the present authorities?

Lord Williams of Mostyn: My Lords, the noble Earl is quite right. Plans are being made at the moment for the international staff of the United Nations, the Red Cross and the NGOs to return to Afghanistan. Plainly, they will be carrying out essential work for the attempted construction of post-Taliban civil society.

Viscount Waverley: My Lords, in the past, British assistance to the office of the United Nations Special Representative in Islamabad has always been appreciated. Will the noble and learned Lord the Leader of the House be sympathetic to future manning requests?

Lord Williams of Mostyn: Yes, my Lords, in principle. Of course, one looks at the practicalities and at resources, but that is the thrust of our policy.

Lady Saltoun of Abernethy: My Lords, have our troops been provided with adequate clothing and equipment for winter conditions in Afghanistan?

Lord Williams of Mostyn: My Lords, I have attempted to deal with that point. No British government and no British commanders are going to put men in positions of danger without their being properly equipped. I shall not go into any further detail. To do so would be irresponsible.

Lord Powell of Bayswater: My Lords, will the Minister confirm that even when bin Laden and Al'Qaeda have been tracked down and brought to justice in Afghanistan, the Government's commitment to take action against other terrorist groups and other governments who protect them will not in any way slacken? Will he also confirm that, if necessary, military means would be contemplated in dealing with those situations as well?

Lord Williams of Mostyn: My Lords, the noble Lord has enormous experience of these matters. He is quite right. He has had recent experience of some regimes which have had indifferent histories in the context of terrorism. We cannot stop merely having taken action in Afghanistan. It would be a betrayal of all our

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efforts. This will be a long haul, as the United States administration has said and as the Prime Minister has repeated on so many occasions. In response to the noble Lord's second question, it seems to follow that if we are entitled lawfully to use force, that can never be an option that we can exclude.

Lord Rea: My Lords, following the trend of the question from the noble Lord, Lord Elton, will my noble and learned friend assure us that the great success of the coalition in toppling the Taliban will not deflect from the need to act on some of the contributory causes to the act of terrorism that took place in New York? I refer in particular to the situation in the Middle East and to the statement by the President and the Prime Minister that a Palestinian state should be founded and that we should accelerate negotiations towards that end.

Lord Williams of Mostyn: My Lords, a distinct section of the Statement made exactly my noble friend's point; namely, that it is critically important to continue with Middle East peace efforts. It seems to many of us in all parts of the House that there is an opportunity at the moment which, if lost, is unlikely to recur, and that the dynamic of our times is moving very quickly indeed.

London Underground

4.33 p.m.

Debate resumed.

Lord Fowler: My Lords, I begin by congratulating my noble friend Lord Peyton on initiating the debate and on his devastating analysis of the Government's plans. I followed directly behind the noble Lord as Conservative Transport Minister—albeit there was a gap of five years between us due to some "electoral leaves on the track" between 1974 and 1979.

I had one advantage over my noble friend. When I arrived, the Department of Transport was a separate department and not part of the Department of the Environment. In that, the noble Baroness, Lady Thatcher, followed the example and policy of the noble Lord, Lord Callaghan. Frankly, that is a better way of organising transport at the Whitehall level than the decision made in 1997 to include transport in the giant Department for the Environment, Transport and the Regions. I do not think that transport benefited from that decision. Transport policy is one of the most important areas of national policy, and London Underground is of crucial importance in that regard.

Perhaps I may make four brief points. First, I believe that we should recognise the fundamental importance of London Underground. The system has vast potential. We are fortunate that the Victorians had not only the foresight but also the enterprise to invest in the way they did. The urgent task now is to develop a system for the 21st century.

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No one can conceivably doubt that need. London's roads are already clogged up. New houses and flats are being built in the centre of London, which will make some roads near to impassable. We are told—and I agree—that good public transport is the answer. But we all know the reality. Trains are often overcrowded and dirty and rolling stock is often out of date. Stations are often inadequate to serve the public. The new Underground station at Westminster is an example of what can be achieved, but regrettably there are not many examples of that kind. And services are frequently unreliable, even on new lines. The point was made from the Liberal Democrat Benches that on October 23rd there were 15-hour delays across all 10 Underground lines. That is the worst-ever figure ever on record in the history of London Transport. It included three and a half hours of delay on the new Jubilee Line extension. One can only imagine the impact that that had on hundreds and thousands of travellers in London. In short, I do not believe that anyone can be remotely satisfied with the service as it stands.

My second point relates to the need for new investment. There is no conceivable doubt about that. Investment under both governments has been inadequate. Ministers speak of the previous Conservative government as though something happened that was peculiar to that period; but I remember taking over as Transport Minister after a period of capital cuts under the preceding Labour government. Looking back makes for an arid debate. We should concern ourselves with going forward; and we should note where the debate has now taken us. Next to no one now believes that we should leave this matter to the Treasury. As my noble friend Lord Peyton said, it is the belief of almost everyone that some new means of funding is urgently required. That is why the previous Conservative government pursued privatisation options—which in my view had significant advantages. That is why Mr Livingstone and Mr Kiley have proposed the bond option, based on the United States' experience. I can see some advantage in that.

But the Government have embraced neither of these options. They have set out on a course of their own— namely, contracting out. They do not call it "contracting out"; they call it "public-private partnership", but contracting out is exactly what it is. They intend to ask the private sector to take responsibility for the maintenance of both the infrastructure and the trains. Their argument is that,

    "London Underground is a transport operator, not a construction and maintenance specialist".

That is precisely the argument that I used in the 1980s, when contracting out ancillary services inside the health service such as cleaning and catering. But I have to pose the question: are construction and maintenance on a par with ancillary services in the National Health Service?

The Government have even gone a stage further in their argument on the benefits of their position. According to one of their Ministers, Mr Keith Hill, who was then Parliamentary Under-Secretary of State at the DETR, the Government were providing,

    "a much more unified system".

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I have to say that this is not the universal view about what the Government are providing. Indeed, I cannot think of anyone outside the ranks of government Ministers who has even advanced that case.

That brings me directly to my third point, and to my most fundamental criticism of the Government's proposals. Putting operations in one set of hands, and all the other functions in another, seriously weakens the management of the whole system. Who is in charge? Who takes responsibility? Where does the buck stop? All those are questions one should ask about any management organisation. We all know what will happen if there are difficulties; the operating side will blame the track side and vice versa. The position will be made no easier by the fact that one part is in the private sector and another part is in the public sector. My central fear about the Government's plans is that that is a recipe for internal conflict. That division of responsibility seems to me to be the fatal flaw in the whole plan. To divide in the way the Government are dividing is, frankly, a curious way of running a railroad. That applies to a railroad whether it is above the ground or below it.

The Government say that this is not a repeat of what happened with Railtrack. I am glad to hear that because although I am a confirmed privatiser I was never in favour of the division I mentioned. I notice that the Minister smiles wryly at that. However, before he smiles too broadly, I think he will agree that you can be in favour of reform although not all the detail, as that is precisely the position of the parliamentary Labour Party in the other place with regard to the Government's proposals on the reform of the House of Lords.

I remember putting my criticism about the division between the operating side and Railtrack before a very senior civil servant who replied that my solution—which was a different solution—was romantic. Doubtless those same civil servants are now writing briefs showing how their plans could never have worked in the first place.

Finally, as a frequent user of the Tube, I observe that the Government have said little, virtually nothing, about the culture of management of London Underground. Perhaps we are so content with the management of London Underground that we believe no improvement is possible. Perhaps we are so content with the industrial relations position that we believe that no improvement is possible. If that is the case, it does not entirely co-incide with my view as a customer—if that is how I am seen and I sometimes doubt it—at the local level faced with too frequent threats of industrial action. Figures on that are difficult to come by. The same Mr Hill, who was Parliamentary Under-Secretary of State at the time of the creation of this unique, unified system, stated in a Written Answer on 9th April:

    "Information on the number of staff days lost due to industrial action could be provided only at disproportionate cost".—[Official Report, Commons, 9/4/01; col. WA 384W.]

Most of us who have had any experience of government recognise only too well the defensiveness of that Answer.

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My overwhelming feeling about the Government's proposals is that they constitute a lost opportunity. Perhaps it is inevitable that they will not accept any privatisation scheme, even the kind I favour such as the one I introduced with the National Freight Corporation in which staff were given a stake in the business or even, for example, the successful Docklands Light Railway scheme. However, if that is not to be adopted, I believe that there are advantages in the bond proposal. At the very least it gives the opportunity not only to generate new finance but also strong management and it is strong management that this system needs. I suggest that what will not work is the kind of divided management responsibility which the Government support. It is a system which provides inbuilt conflict and, frankly, that is the last thing we want. My fear is that if the Government continue down that track, in spite of all the advice to the contrary—goodness knows, there has been a whole deluge of advice to the contrary—we shall be back here in a few years debating yet again the future of the London Underground. That would be a tragedy and would constitute a missed opportunity for reform.

4.45 p.m.

Lord Brooke of Alverthorpe: My Lords, I am grateful to the noble Lord, Lord Peyton of Yeovil, for providing us with the opportunity to debate this matter. The debate is fundamentally about underfunding which applies to so many of our public services, not solely the London Underground.

Of course there have been a whole variety of delays in injecting the additional investment that is required in our public services. We on our side of the House acknowledge that. However, I think everyone must accept that we at last have a government who endeavour in a variety of ways to put right—to use the words of the noble Lord, Lord Peyton—the wrongdoings of the past. The Government are injecting long overdue investment into education and health. They have also raised transport investment in the order of national priorities and have given it a significance which, frankly, even when the noble Lord, Lord Fowler, was in office, it did not enjoy. Both the Prime Minister and the Chancellor—I emphasise that point—are to be not so much criticised but congratulated on the strong leadership which they have given in this area, in particular in the run-up to the general election in June where we set out our policies very clearly indeed. The choices between the different parties were made available for the public to see. Of course, those were fully endorsed in a most resounding way in the general election result.

First, investment in our public services has to come from a variety of sources, not solely taxation. I do not believe that anyone, even our friends the Liberal Democrats, would argue that it should come solely from taxation. It is important that the Government and all of us continue to explore all the avenues open to us to secure the maximum return for that purpose. I am one of the limited group—to use the phrase of the noble Lord, Lord Peyton—who are prepared to speak up for public-private partnerships, unpopular though

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that may be in some quarters. I say that because I believe that PPPs exist in a variety of different forms. I do not think that one size fits all. The IPPR report, to which the noble Lord, Lord Peyton, referred, concluded—if it is read carefully—that broadly it was in favour of PPPs, but strongly made the point that each needs to be structured to address the particular problems which it is trying to resolve. That is what I urge the Government to do.

I speak on this topic with a little unique experience. I declare an interest as I am now a government appointed non-executive director of the recently established PPP for National Air Traffic Services Limited. That matter was subject to a good deal of debate in both Houses and, unlike the proposed PPP for the Underground, was attacked as a privatisation. From my experience, having now seen that PPP established since 28th July, I can say that in no way is that new organisation a privatised corporate entity and neither will the PPP which is envisaged for the London Underground be such a body. NATS has seen a substantial injection of private capital which was badly needed and investment on a scale that has not been seen for too many years. Most European air traffic management systems are similarly underfunded and gravely short of capital investment. That is a cause for concern for all of us. Here at last we now have a system which at least guarantees investment flows in the coming years.

Secondly, some private sector skills have been brought to bear. In light of my previous experience in the public sector, I know that that has started to produce changes that have long been needed. People from the former NATS—it is now NATS Ltd—say that they have wanted for several years to address those changes but have been unable to do so; they are embracing the changes with much alacrity. They are bringing rigour and discipline to the management structure and the organisation. That can be uncomfortable—it has proved to be so initially—but in my view the approach will bear fruit in the longer term. Benefits will flow primarily from the introduction of the PPP set-up. In the short-term, there are unexpected but substantial problems relating to NATS operations. They could not be foreseen or taken account of in any business plan—they relate entirely to the unfortunate events of 11th September, which have thrown us off course. Regrettably, the tragedy earlier this week in New York will not have helped—it will have adverse effects on the operation of the PPP.

Notwithstanding those difficulties, the organisation is responding positively. A close and supportive relationship is developing between all those involved—my main message today is that they are endeavouring to build a proper partnership. We have to consider different structures for PPPs and have a positive approach with regard to building relationships between all the relevant parties.

What has probably impressed me most about the new organisation is its commitment to maintaining the previous safety standards within NATS and to considering ways in which those standards might be

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made even more demanding. Safety is truly paramount in that PPP. If we get the structures right, there is no reason that that will not similarly be the case with regard to the Underground.

If the coming value-for-money tests are passed, the public will expect investments and they will want improvements in service to start to be apparent. People want the quality of their travelling life in London to be improved; they do not want a continuing political wrangle.

If the proposed PPP contracts had been put in place on 1st April 2001, would not an extra £5 million have been injected every day since that date into the Underground's infrastructure? Secondly, for how long is the injection of that investment in the London Underground system likely to be deferred? Thirdly, might the mayor of London take legal action when the value-for-money tests have been concluded? If so—if there continues to be no movement in that regard—does the Minister agree that that would be an outrage to the travelling public in London? Finally, if the noble Baroness, Lady Hamwee, were with us, I should implore her to continue her efforts as chairman of the GLA to ensure that we bring this wrangle to a conclusion as soon as possible, so that we can start to ensure that London Underground travellers get the service that they so richly deserve.

4.54 p.m.

Lord Ezra: My Lords, I am very pleased to follow the noble Lord, Lord Brooke of Alverthorpe, because I recently appeared before his sub-committee in relation to energy security.

To my certain knowledge I can affirm that for the past 15 years—possibly for very much longer—we have regularly addressed the subject of the Underground. We have done so by asking Questions, in debates and in other forms. The reason for that continued interest involves the abiding problem—the basic problem—of under-investment. However, the situation was worse than that. I remember an occasion when a previous government decided on a three-year plan for investment, which was somewhere near the level that was required not only for current maintenance but also for future investment. However, in the immediately succeeding year, the plan was cut. It is no surprise that in those circumstances management was demoralised and many of the best people left. Inadequate and uncertain investment led to inadequate management.

The present Government have recognised that problem; as the noble Lord, Lord Brooke, pointed out, there is no doubt about that. They have accepted that an adequate flow of investment over an adequate period of time is needed—they are committed to an investment of £13 billion over 15 years. The noble Lord, Lord Peyton, to whom we are indebted for this debate, and other noble Lords have frequently discussed the way in which that is to be done. The simplest way would have involved an injection of government funds that were properly accounted for or

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the money could possibly have been raised in the City on the basis of bonds, as has been done successfully in the United States. However, the Government chose an alternative route, which has been the subject of continued debate and which has led to unfortunate delays in getting investment into the Underground. The noble Lord, Lord Brooke, drew attention to that.

In the mean time, it is regrettable that the system has continued to decline. As the noble Lord, Lord Fowler, pointed out, the number of delays that are due to signal failure and points failure has increased. We are faced with a situation in which, although everyone agrees that more investment and determined management are required, the system continues to deteriorate.

How could that be put right in the present circumstances? I should like to put a few questions to the Minister. First, on the face of it, the PPP is apparently going to introduce a system of divided responsibility. Everyone agrees that if the management of such an important enterprise as London Underground is to work successfully—indeed, this applies to any enterprise—it needs to be unified; there needs to be somebody who is in control. In the circumstances of the PPP as the Government presently envisage it, how is that unified management control to be achieved? That is the first point on which we should like some reassurance.

Secondly, there is the question of accountability. To whom are the infra-cos going to be accountable? To whom is London Underground going to be accountable? Will they be accountable to Transport for London or to the Department for Transport, Local Government and the Regions? The noble Lord, Lord Elder, suggested that accountability could continue to involve the government department. We need to be clear about that.

Unified responsibility is a matter about which we want to know, and accountability is another. Accountability is going to be a complex matter so far as the infra-cos are concerned. As my noble friend Lady Hamwee pointed out, no fewer than 135 different documents have dealt with the issue. They raised all kinds of ways in which the infra-cos will have to deliver under their contracts. Nearly 2 million words have been written. How is this mass of material to be translated into practice, and who is to go through it in order to see that the infra-cos do what they are committed to do? Therefore, we need some clarification on the question of accountability.

Thirdly, how will this tie in with the responsibility of the mayor to introduce "a safe, integrated, efficient and economic" transport system for London, having regard to his misgivings about the whole system? It does not appear to augur very well for the PPP that ultimately it should be put in the hands of someone who is fundamentally opposed to it. How is that problem to be resolved?

I believe that I have referred to some of the basic issues which confront us. We all want to see an effective solution to the problem of London Underground. We all agree with the Government that extra funding on a consistent annual basis is required

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so that not only current funding but future investment requirements are met. But we still have doubts about how that is to be achieved for all the reasons which have been deployed in the debate so far.

5.1 p.m.

Baroness Gardner of Parkes: My Lords, I am grateful to my noble friend Lord Peyton for initiating this very interesting debate. I note that the debate is concerned with London Underground's future, not its past. The future is inextricably linked with the present. In order to plan for the future we must study what is happening in London now. We cannot look at the Underground in isolation; it is part of the London transport system. We have heard today about closures and delays lasting hours on the Underground. Increasing numbers of passengers use London Underground. Whereas there was once a morning and evening peak hour, today there is never a slack period on the Underground. At whatever time of day one travels on the Underground, there is barely a seat to be had.

I do not know whether the trains are learning from buses. Unfortunately, trains have developed elephant-style timing and arrive in clumps, which never happened. Today, two or three trains may arrive at one or two-minute intervals followed by an eight-minute break. I am aware that there have been a good number of station closures, real emergencies and hoaxes. I know also that escalators are being replaced at many stations. Like the holes in the road referred to by my noble friend Lord Peyton, escalator replacements appear to go on for ever. We have also heard about signal failures. I believe that too much money is spent on refurbishing and glamorising the interior of Underground stations when passengers would much prefer to have more train services and greater reliability.

Buses are very important. I have just seen a report of 96 pages dated October 2001 commissioned by Westminster City Council entitled West End Entertainment Impact Study. That report deals with the problem of getting people out of the centre of London at night. Unfortunately, it makes clear that the Underground cannot possibly run 24 hours a day, which would be desirable, because most of the maintenance is done at night. Whether it is possible to reduce that problem without the Underground I do not know, but it is essential to have adequate replacement transport during those hours.

In the West End there are 2,350 premises licensed to sell liquor, and 128,000 music and dancing venues. The Coventry Street pedestrian flow peaks between 11 p.m. and midnight, but there are more people on the street between 4 a.m. and 5 a.m. than during the morning rush hour. How to deal with that great influx of people is a very serious problem.

London is a national centre for tourism, but the West End—the very heart of the city—is the destination of 95 per cent of visitors to the capital. The number of licensed premises per square mile is greater than any other place in the United Kingdom,

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continental Europe or North America. There is a trend towards larger bars which support even greater numbers of people. It is essential to be able to deal not only with all the people who want to travel to London for entertainment but the staff who service those premises. Staff must travel to and from work, often at very anti-social hours, and at present they rely heavily on late night buses. There is a need for change in that area. Instead of Trafalgar Square being the only centre for buses, there should be other areas where people can access more transport facilities. In the view of many people, London is a 24-hour world city. Many clubs discharge up to 60,000 people between 3 a.m. and 5 a.m. every day.

Many of the methods which are intended to get people around London do not really work. As to cameras in bus lanes, I am delighted that there is now greater enforcement. It is no good having bus lanes unless they are enforced. On many occasions one sees a bus lane completely obstructed by a parked vehicle, even with its hazard lights on. It prevents taxis and buses from using that lane.

But there is no point in having bus lanes unless there are buses to use them. When I was a member of the Greater London Council one of the objectives was to decide whether an area was suitable for a bus lane. Unless a certain number of buses per hour used a particular lane, traffic was allowed to be more free flowing. I believe that we should look at the possibility of allowing cars containing more than three people to use bus lanes. We should also think about whether there is a way in which minicabs can identify themselves after they become a registered form of transport in London. Noble Lords will be aware that for many years I was closely involved in the legislation involving minicabs. At last, by 2002 all minicabs in London will be registered and standards will improve.

It would also be good if in some way people could be speeded along. We have gone mad and narrowed every street and restricted speeds. I am all for restricting speed, but there are a number of humps and bumps. There have been debates in your Lordships' House about the danger and damage done to ambulances and police cars which must travel at a certain speed. I believe that people want traffic that is cleaner and moves faster. By "faster" I do not mean more speed but the ability to move in a better way. The bus lane from Heathrow has been amazingly effective, in that it has narrowed the traffic in that area to just two lanes. Whereas three lanes funnelled into two, now the bus lane has automatically slowed traffic and prevented the awful jam that one experienced all the time.

There is a need to do other things. I believe that a tunnel under Hyde Park to take traffic from north to south would be a good idea. Nowadays, toll roads are common—I saw them in Melbourne—and that may be a favourable way to deal with these matters.

There need to be improvements in the phasing of traffic lights. If one travels along Great George Street towards Parliament Square one knows that during each phase only three or four cars will get through.

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I believe that a change of only one or two seconds will make for more free flowing traffic. Above all, we need a quick decision in favour of CrossRail.

I was involved in your Lordships' House with the Jubilee Line extension. At that time Wilfred Newton was the chairman of London Transport. He told me that when he built the Hong Kong Mass Transit Railway the whole thing was up and built in much less time than it took for the legal processes of getting planning permission for the Jubilee Line extension. So people should not be surprised that it took that long, cost that much and that there were so many delays.

The procedure was bad in those days when transport issues came as private Bills through your Lordships' House. Now there is a public inquiry procedure for transport matters, it can be much worse. I feel horrified that the Terminal 5 decision has been delayed yet again. I conclude by saying that I am worried about PPP. My noble friend Lord Fowler mentioned the National Health Service experience of PPP. It has been totally disastrous and expensive. We have mortgaged the future of the National Health Service. We should not do the same for London Underground.

The noble Lord, Lord Brooke of Alverthorpe, spoke strongly in favour of PPP. Of course I was not surprised about that after the noble Lord told me that he was a member of such a board. How could he be anything but supportive of that idea? The noble Lord was certainly giving a prejudiced view of it. He said that all the people involved were "building relationships between all the parties involved". That is all very well. I do not mind them doing that. But I want to see some real results and not just spending time windmilling everything around among themselves. I therefore was not too cheered by his remarks.

The noble Lord referred also to the value for money tests being approved. I am sceptical about that because we hear regularly at Question Time that a report on the money side is being suppressed. As a member of the public I automatically react unfavourable to that. I ask: why is the report not being made public; why is it being suppressed? It is essential that we do everything we can to make life better for people who live and work in London. The Underground is a most important part of that.

As the noble Lord, Lord Ezra, said, we have had a continuing problem of under-investment. Over the years we have been to lunches together at London Transport. We have been told that one of its major difficulties is having a short-term budget that enables it only to plan year by year instead of being able to make long-term plans. There is a real need to know where one stands financially. I am sorry to say that I do not think that PPP is the way to do it.

5.12 p.m.

Lord Faulkner of Worcester: My Lords, I join others in congratulating the noble Lord, Lord Peyton, on initiating the debate today. Two weeks ago, in our debate on the railways, I drew attention to the fact that

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there are now eight former Secretaries of State for Transport in this House on the Benches opposite. Today, we have had the pleasure of hearing from two of them. In the railway industry the period of office of the noble Lord, Lord Peyton, is looked back on as something of a golden age. It was the one occasion when the department managed to take on the Treasury and largely win many of the battles.

This is a timely debate. It gives us the opportunity to make clear how very different are the Government's plans for London Underground, compared with what has happened with Railtrack. The critical question that we must ask is whether the Government are in danger of repeating with the Underground the massive mistakes that their predecessors made in the privatisation of the railways.

A week last Friday I attended a public meeting on transport convened by the Wimbledon Civic Forum. It was a strictly non-party political occasion, at which about 100 residents discussed these issues in an unemotive but concerned way, with the help of speakers from the SRA, from Transport for London and the Railway Forum. It was clear that those present equated the Government's plans for the Underground with what the Conservatives did to Railtrack and that as a consequence there was strong opposition to the PPP.

The Wimbledon audience was not aware, for example, that the Government had considered, and rejected, a not-for-profit trust as an option for modernising the Underground. It also did not appreciate how the Government are determined to give absolute priority to safety, with the Health and Safety Executive given responsibility for enforcing a double lock on safety.

At the end of the evening—I stayed fairly quiet while all this went on—I felt like recalling Oscar Wilde's complaint after the first night of "Lady Windermere's Fan" in 1982, which was:

    "The play was a great success, but the audience was a total failure".

That brought home to me how much work the Government have to do in winning over opinion for their proposals. I must say to the party opposite that people hardly believe a word of what the Conservative Party says on transport issues because of the Railtrack legacy. Indeed, they recall that until just before the recent general election the Conservative Party favoured outright privatisation of the London Underground. It proposed breaking up the Tube into five groups of lines and then selling them off for ever.

I understand that that is no longer Conservative policy. I look forward to hearing from the noble Viscount, Lord Astor, what they believe should replace outright privatisation.

Much as I dislike having to admit it, Londoners tend to believe what Mr Livingstone and Mr Kiley have to tell them on these subjects. I notice that they have become rather improbable heroes of the Benches opposite.

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Let us remind ourselves what is the London Underground problem. For decades the Underground has not been properly funded. To make matters worse, government funding was chopped and changed from year to year, so that Tube managers could not invest effectively. From 1979 to 1997 average core investment was just £395 million a year. So by 1997 there was a massive investment backlog. Since 1997 core investment in London Underground has increased to around £530 million a year—better than before, but still not enough.

With economic growth and increased tourism, overcrowding, as the noble Baroness, Lady Gardner of Parkes, has said, is a daily problem, as those of us who use the Tube know only too well. It is not just a question of rush hours, it is all day long. Too many trains are still cancelled. One in 20 peak trains do not run. That produces awful knock-on effects for other services. Broken escalators take too long to fix. Some stations have been neglected almost since the day they were built. So everyone agrees that the Tube needs massive investment to bring it up to modern standards.

As things are, London Underground projects are often late and suffer huge cost overruns. The Jubilee Line extension was two years late. It is still not running at full capacity despite a cost overrun of £1.4 billion. We are all familiar with the "signalling problems in the Canary Wharf area" excuse as the reason for delays and cancellations as we try to get here to Westminster. London Underground enhancement works currently overrun by an average of 20 per cent on budget. Even allowing for a lower overspend on simple maintenance works, that amounts to some £2 billion over the next 15 years.

Therefore, the choice is either between the Government and the taxpayers keeping the risk and passing it on to passengers and London taxpayers, with funding dependent on the good will of the Treasury, or the PPP approach with government and taxpayers sharing the risk of overruns and delays with the private sector and achieving steady investment. It is not as if London Underground is not already working in partnership with the private sector. A forerunner of the PPP was put in place on the Northern Line. Trains now are far more reliable thanks to the new maintenance regime operated jointly by London Underground and its private sector partners.

On the Docklands Light Railway, the £200 million PPP delivered the Lewisham link two months early and on budget in 1999. Another PPP is planned to link the DLR to London City Airport. The PPP proposals bring in the first committed long-term investment programme of £13 billion over 15 years for the Underground, with higher public sector support than ever before. PPP companies will be paid by results and charged for poor performance. To reduce risk and avoid penalties the companies therefore invest as early as possible in the most reliable systems and technology. This is not a Railtrack-style privatisation. The public sector will run the trains and deliver the service to the public, as well as own the network.

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During the travelling day, around 12,000 London Underground staff will run the system. At night, thousands of workers in consortium companies will do what the private sector does well, which is to manage maintenance and construction work efficiently and effectively. Some of the biggest and most respected construction and engineering firms in the world are among those bidding to work on the London Underground PPP.

What do we hope can be delivered? First, the public sector will continue to own and operate the Tube. The Tube map, travelcard and integrated services will all remain in place. Private sector companies will be contracted to carry out maintenance and upgrades to tracks, signals, stations and other infrastructure. That should mean that services will be faster and more frequent. Fewer breakdowns and delays will take place and thus services will become more reliable. The PPP will also update the technology—today around one-half of all train cancellations are caused by equipment failures. The public sector will co-ordinate the works. For example, one would not see both the Northern and Victoria Lines closed at the same time for upgrade work, which is the kind of problem that has been encountered in the past.

Every train on the Underground will be replaced or refurbished over the course of the PPP. Similarly, every London Underground-owned station will be refurbished or modernised over the next seven-and-a-half years. Over the first five years of the contract, 52 out of 255 stations will be fully modernised. Congestion problems will be tackled at overcrowded stations such as Leicester Square and Brixton.

Safety and security should be improved. The independent Health and Safety Executive will continue to ensure safety on the London Underground. Many more stations will be fitted with security cameras, while every carriage will carry CCTV for passenger safety. Fares will continue to be set by the elected Greater London Authority under the mayor. The PPP does not require fares to rise faster than inflation.

Because of the great ignorance as regards the Government's proposals, I hope that my noble and learned friend will be able to confirm that my understanding of the PPP is broadly correct. First, given that the PPP is based on fixed-term contracts rather than permanent transfers to the private sector, assets should return to the public sector after they have been upgraded. Secondly, the PPP will retain clear public sector accountability from the outset. It will put Transport for London firmly in charge of the overall planning of the service and will ensure that the public sector London Underground retains statutory safety responsibility for the whole network.

Thirdly, private companies will maintain and upgrade the network for the period of the contract, but public sector London Underground will run the whole network. Fourthly, no separation will be made between train and track infrastructure maintenance. We shall see no equivalent of Railtrack, where that company was responsible for track and signalling on

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the one hand, while separate companies were responsible for the trains on the other. For each Tube line, one company will be responsible for the maintenance of both trains and infrastructure.

All that should mean that the PPP will provide exactly the kind of integration in maintenance that disappeared from the railway with privatisation. The companies will be responsible for fulfilling contracts for the maintenance and modernisation of infrastructure and rolling stock. Thus every aspect of the London Underground system with which travellers come into contact will be in the hands of London Underground Limited, a public sector company. It will be in charge of all operational matters, from changing signals to driving trains and to staffing stations. The public-private partnerships will be very different from wholesale privatisation. Strategic control will be maintained by the public sector, which will report to the mayor.

In my view, the proposals that I have outlined are a sensible way to lever in private sector investment and project management expertise while preserving the necessary safeguards that the travelling public expect. I am sure that, if all these points were properly understood, we would see much greater backing for what the Government are seeking to achieve. I shall certainly do my best to give them my support and to win the argument that I know my noble and learned friend also seeks to win.

5.24 p.m.

Lord Bradshaw: My Lords, we must thank the noble Lord, Lord Peyton of Yeovil, for introducing the subject, to which I imagine that we shall return again and again. I do not have the confidence expressed by the noble Lord, Lord Faulkner of Worcester, in the new arrangements to which he has just referred. We need single-minded management of the London Underground. The noble Lord, Lord Fowler, referred to "strong management". I do not believe that we shall secure that if the system is divided in the manner just described to the House.

The management has to be intent on running all the trains listed in the timetable. At certain peak hours, an estimate of 5 per cent of trains not running to time or cancelled is a sad underestimate. That means paying close attention to detail on matters such as the recruitment and retention of staff, as well as attention to failures of equipment such as rolling stock, signalling and escalators. It also means paying attention to rates of staff sickness and absenteeism, and on insisting that the trade unions behave like 21st century organisations by giving up their Victorian attitudes when making outrageous demands of London commuters.

No management will be able to concentrate on such matters if it is distracted by discussions about where investment money should come from. At the moment, the management team at London Underground is extremely distracted. It is currently extolling the

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virtues of the PPP. Of course management needs a sure source of money, but it ought not to care from where it comes. It cannot do everything.

At the same time, the Mayor for London cannot run with the hare and hunt with the hounds by pretending to be on the side of the travelling public while, at the same time, he is on the side of the trade unions. However, that is what he is trying to do. His responsibilities lie overwhelmingly with the public, especially as he has stated his intention of introducing congestion charges in the not too distant future.

I conclude in the first place that management should be clear that its job is to provide a first-class service; it is not management's job to indulge in the niceties or otherwise of the PPP, of whether the Treasury will provide the money or, indeed, our preferred solution, which is that the money should be raised from bonds. I also believe emphatically that the wheel and the rail belong together in a partnership. I believe that that partnership will be split apart by the PPP, which will be fatal to the operation of a proper Underground service. No doubt all noble Lords realise that that would be the case, given the sorry saga of Railtrack.

Over all the time that the problem of the PPP stretches, not only do we distract the management of London Transport, but we allow the mayor and his team—which includes Mr Kiley—off the hook of taking full responsibility not only for the Underground itself, but also of taking responsibility for the introduction of congestion charges. I should remind noble Lords that the congestion charging scheme, which was set out in the manifesto and included in Mr Prescott's famous Green Paper, must be introduced. It is not an option; we must introduce congestion charges. In her contribution, the noble Baroness, Lady Gardner of Parkes, drew attention to the problems being encountered in the West End. My noble friend Lady Hamwee mentioned in her remarks that, in his Green Paper, the Deputy Prime Minister had given a commitment to these developments.

I have checked this morning and the financing favoured by these Benches, which includes using the bond system, is still available. Furthermore, it is still available despite the events which took place in America on 11th September, in spite of what has happened at Railtrack, and in spite of what was said yesterday in another place about that company. We are very much in favour of raising the necessary funds for the Underground in this way. As we know, the bonds will be serviced by that most secure method of funding, passenger fares.

I do not believe that the public want all the property and station developments which feature in the PPP; they want a good, reliable service. That is more about trains than about stations, although I imagine that the stations are writ large in the plans of the developers.

We believe that the mayor should have the money, because until he gets it he is not accountable to anyone; he can sit on the sidelines and watch what is going on. I agree with my noble friend Lord Ezra about

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accountability. The mayor should be accountable to visitors and tourists to London, as well as to the businessmen and the people who live here and use the Underground in large numbers every day. We hope that the mayor will go on to account to the electorate for his stewardship of the Underground. However, as matters stand at present, he can blame everyone else for what is going on. He no doubt will. He is a very astute politician, if nothing else.

We on these Benches believe that the mayor has made promises he cannot deliver. He has talked about a 24-hour Underground system, but we know that parts of the Underground need to be closed for quite some time in order for it to be properly maintained. You cannot have this and rebuild the Underground at the same time.

We are all in two or more minds about where CrossRail will go. Each week we seem to have different terminals for something which we are still a long way from building. Thameslink 2000—it was called Thameslink 2000 because it was supposed to open in 2000—is still tunnelling its merry way through the planning system.

This is a Government who promise a great deal in transport but do absolutely nothing. Nothing is being done. We hear all the time about what will happen; we do not hear what is happening.

The mayor promises more frequent services in the inner suburbs. That is at odds with the requirements of the longer distance travellers and the commuters who live just outside London, where there is not room to meet what he wants and what they want. Again, a lot of work has to be done if we are to get the suburban railway services he wants in those parts of London which are not served by the Underground and are otherwise very poorly served.

I sympathise with the noble Baroness, Lady Gardner of Parkes, about bus lanes because they are a substitute for the Underground. The noble Baroness may not be happy with enforcement in London, but it is non-existent outside London because the rules, I believe, apply only to London, not to anywhere else. There are bus lanes outside London, but the amount of enforcement is ludicrously small.

This Government stand accused of not prosecuting the difficult transport decisions. This is but one of them. I hope that in his reply to the debate, the noble and learned Lord will tell us what the Government intend to do to make life a little better for people in London and elsewhere.

5.34 p.m.

Viscount Astor: My Lords, I thank my noble friend Lord Peyton of Yeovil for introducing the debate. He, of course, is a former transport Minister and he has kept up both his interest and expertise in the subject in this House.

This is one mess that the Government have got themselves into for which not even the noble and learned Lord can blame the previous Conservative government. It is entirely a self-created mess. The

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Government's plans fail their own first test, which was set by the Labour Party in its 1997 manifesto. They promised that,

    "Labour will improve the Underground and guarantee value for money for taxpayers and passengers".

The Government's proposals have been described by the Economist as, "half baked and either nai ve or dishonest". The Select Committee in another place called their plans "a convoluted compromise".

The Government's plans arose out of trying to square the circle of public ownership and private money. They came about after rows within the Labour Party about the part privatisation of the air traffic control system. The Government have come up with a cobbled together compromise called PPP—public private partnership. In the process they have fallen out with their mayor, Ken Livingstone, and have tried to discredit Bob Kiley, the head of Transport for London. After John Prescott prevented Mr Kiley from seeing vital documents concerning the proposed PPP, the Government launched an attack on him. They forced Bob Evans, a senior civil servant, out of a job because he refused to spin against Bob Kiley, and we have heard from my noble friend Lord Peyton of Yeovil about the letter that was sent.

The Government also promised that if independent evidence were produced to show that PPP does not offer value for money, it would not go ahead. Yet, when faced with the Deloitte & Touche report which showed a lack of value for money, they sought to bury the report and resorted to the courts. Luckily, the High Court ruled that the Government should not have suppressed the report.

Perhaps I may remind your Lordships of the executive summary of the Deloitte report. It stated:

    "We have seen no evidence that there is a valid basis for establishing that PPP will achieve value for money using commonly accepted techniques for projects of this nature. The selection of a 30 year contract for this purpose is flawed because bidders were not required to submit firm prices for the whole period".

No one can deny that London Underground needs investment. Like the rail industry, it has suffered from a historical lack of funding. However, we must be mindful that the Tube is running often at near full capacity and we cannot expect large increases in passengers without major long-term capital projects. My noble friend Lady Gardner of Parkes asked the Minister about CrossRail. Can the noble and learned Lord tell the House what is the position with CrossRail? Will it go ahead? If so, when, and how will it be funded?

As the noble Lord, Lord Bradshaw, said, the Government's record is one of broken promises. They promised recently £775 million of investment, but, when the Secretary of State announced the figures, suddenly there was 30 per cent less. That means cuts now in spending on safety improvements; cuts in spending on maintenance of lifts and escalators; and cuts in spending on other infrastructure.

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I do not totally blame the Minister because we know that the PPP policy has been forced onto his department by the Treasury. The Chancellor will do almost anything to get spending off his books, even if it means a greater cost in the end to the taxpayer and to the passenger.

Through PPP, the Chancellor is transferring a huge risk to those funding the improvement of capital assets, but they will not own those assets. The private sector does not trust the Government after the Railtrack fiasco, but it will now be asked to become financially responsible for risks on assets that it does not own. The City banks working on loans for PPP are clearly saying that forcing Railtrack into administration has dented the City's confidence in supporting large infrastructure projects. The effect will be that lenders will charge more for the £4.5 billion of loans required. We know that those considering investing will demand a 35 per cent or higher return. Do the Government consider that good value for the taxpayer? When did the Minister's department last communicate with the financial institutions involved in financing the PPP deal for the Tube? What reservations have these financial institutions expressed about their continued involvement in PPP since 7th October?

Perhaps the Minister may care to answer the question put by his noble friend Lord Barnett to the noble Lord, Lord Macdonald, on Monday, when he asked whether the Government would,

    "publish a paper indicating how calculations are made as to value for money in the case of a PPP as compared with financing the projects through the Treasury".—[Official Report, 12/11/01; col. 365.]

We certainly did not receive a satisfactory answer on Monday. It has been suggested that the Government should allow London Underground to raise money through bonds, as the New York City Transit Authority did. That is not privatisation, but it might be a cheaper way to raise money.

Bringing private investment into a nationalised industry is not just about funding; it is also about changing the culture by introducing concepts of service and value for money for customers, brought about by investment, expertise and efficiency. The worry is that PPP will not deliver any of those. It separates management and the renewal of the infrastructure from the running of the trains and the interface with the passengers. The operation of the trains and passenger services is where private operators can make a difference, but under the Government's proposals there will not be any real incentives for maintaining and improving the frequency of trains or for upgrading the rolling stock.

We do not even know when PPP will come about, let alone when it will deliver improvements. We understand that a contract is supposed to be signed by the end of the year, but that now looks optimistic. The Government's plans are already running two years late. When do Ministers expect to sign the first contracts?

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I understand that there are two main contracts for 30 years, covering refurbishments and maintenance. As we have heard from the noble Baroness, Lady Hamwee, they are so complex that they run to 2 million words.

We hear that the Government plan to split the Tube into four sections, with three franchises responsible for the lines. The running of the trains and the maintenance of the signalling will remain the responsibility of the public sector. It is a bizarre scheme. Even the Minister seemed to agree, during a recent debate on Railtrack, that the train operating companies are an improvement. How does he explain such a different approach for London Underground?

As I understand it, the aim of PPP is to refurbish all the stations by 2008 and the trains over 18 years. After the end of the contracts, in 20 or 30 years, the ownership will revert to London Underground. Will the contracts include new lines and route extensions? My understanding is that they will not. Perhaps the Minister can explain how new lines are to be funded.

We know that the Health and Safety Executive will have a role. Can the Minister confirm that the HSE has yet to approve the complex and detailed safety plans? When does he expect the report on safety? There is concern that the Government's proposals put safety at risk.

The Minister and his department have achieved one magnificent feat—they have put forward a proposal that everyone seems to hate. Mayor Ken Livingstone hates it, but he will end up being responsible for it. The unions do not support it and nor to industry experts, for cost and safety reasons. I challenge the noble and learned Lord to name someone, apart from the Chancellor, who supports PPP funding for the tube.

While this mess continues, passengers suffer, trains are late and commuters are desperate to find other ways to work. I feel sorry for the staff of London Underground. They do their best and it is not their fault that the system is such a mess.

My noble friend Lord Fowler reminded your Lordships that the Evening Standard called Tuesday 23rd October "Black Tuesday", because there were 15 hours of delays on 10 tube lines—the worst on record. It may be true that many Londoners do not care whether London Underground is in the private or public sector, but they want action from the Government. They want improvements and accountability and they want them now. The Government have wasted five years. Their objective should have been to improve the reliability of services as well as building new lines to increase capacity. Under the Government's plans, that will take longer, fares will go up and, as with Railtrack, the poor old passengers will continue to suffer.

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