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Lord Rea: Can my noble friend clarify one point? With regard to exports to embargoed countries, do the extra-territorial controls involve all the goods specified in the new schedule or do they apply only to torture equipment, missiles and weapons of mass destruction?
Lord Sainsbury of Turville: With regard to embargoed countries, we are talking about the UK's military list which is a particularly defined list. If I am incorrect, I shall come back to the noble Lord.
Lord Razzall: I feel sympathy, as I am sure do other noble Lords, for the Minister. The noble Lord presents a Bill to the House with which we all agree. However, he has been subjected to extensive criticism that this clause does not go far enough.
The noble Lord could have presented the Bill to the House with Clause 4 as originally drafted and then produced the secondary legislation after the event. However, he has indicated to the House in advance what he intends to do and the criticisms relate to the secondary legislation limited to the categories of armaments, embargoed countries, torture equipment and ballistic missiles.
Members of this Housethe Minister will understand if I describe the arguments as coming from the forces of good in this House; I do not refer only to the right reverend Prelatebelieve that those three categories of restriction are not satisfactory. We strongly ask the noble Lord to consider between now and Report stage whether the fertile brains of his civil servants can produce wider proposals which will meet the genuine concerns of the Committee. Perhaps the Minister will reflect on the remarks of the right reverend Prelate relating to the German experience of dissatisfaction with the current position. Why are we not prepared to follow the experience of the United States on this issue? The restrictions that we ask the Minister to introduce would apply if this were the United States. Why will the United Kingdom not have the same controls as the United States?
I am sure the Minister will undertake again to consider the matter before Report stage. On that basis, I am happy to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Carter: I think that it will be convenient to break now for about an hour. I suggest that during the hour we deal with the Statement on the London Underground, and that as soon as we return we deal with the construction orders. I am told that they will be brief. We can then continue with the Bill. I beg to
move that the House do now resume. In moving the Motion, I suggest that we do not return before 8.30 p.m.Moved accordingly, and, on Question, Motion agreed to.
Brought from the Commons; read a first time, and to be printed.
The Minister of State, Department for Transport, Local Government and the Regions (Lord Falconer of Thoroton): My Lords, with permission, I should like to repeat a Statement made in another place. The Statement is as follows:
"The board of London Regional Transport will now consult the Mayor of London and Transport for London under the terms of the Greater London Authority Act 1999. The final decision on whether to proceed will be taken in the light of that consultation.
"Last autumn, I announced that I intended to take independent advice from Ernst & Young on the evaluation process that London Underground and London Regional Transport had followed and on the robustness of their conclusions. Ernst & Young began its work in October and has kept in close contact with London Underground during the evaluation of the final bids.
"Ernst & Young has reached the following conclusion: overall the methodology adopted for assessing the value for money by London Underground has been robust and appropriate; and London Underground's recommendation that the PPP proposals deliver value for money is a subjective one which is supported by its analysis. Copies of its report were placed in the Vote Office at 2.45 p.m. when I answered a Written Question on this issue.
"I have always made it clear that my approach to the modernisation of London Underground would be based on three principles. There must be no privatisation. Safety must not be compromised and the contracts must offer value for money.
"First, there must be no privatisation. Under these proposals there will be no privatisation or part-privatisation. London Underground remains in the public sector and will have control of all operations. It will run the trains, work the signals, control the track and operate the stations. The public sector will be in charge of the safe operation of a single unified network. London Underground will set the strategic priorities for investment and monitor the performance of the private sector contractors who build and maintain the infrastructure.
"Where the contracts differ from current arrangements involving the private sector is principally in their scope, duration, and in the allocation of responsibility for integrating the various packages of work necessary to upgrade the Tube and modernise it properly.
"These are long-term arrangements that envisage a real partnership between London Underground and the private sector, which will work together to deliver sustained improvements. This partnership should enable substantial efficiencies to be realised and locked into the long-term process of Tube modernisation. In particular, it should prevent the problems of the past, when infrastructure improvements, notably of course the Jubilee Line extension, have all too often come in over budget and later than originally planned.
"The private sector is committed, under contract, to deliver specific improvements. London Underground will be empowered to monitor the contracts closely and enforce them rigorously. If the private sector companies fail to perform, they will be penalised. If that sanction fails, they could lose their contracts. And if the private sector does not do the work properly or puts safety at risk, London Underground will be able to step in and do the necessary work itself at the private sector's expense.
"Secondly, safety will not be compromised. The Health and Safety Executive is currently considering changes to London Underground's railway safety case to reflect the bidders' proposals for maintaining and upgrading the network. Only if those are accepted will the modernisation plans be allowed to proceed. If they do proceed, the infrastructure controller, London Undergroundin the public sectorwill retain clear statutory responsibility for safety across the entire network. The private sector infrastructure companies will have a contractual safety case with London Underground. They will have to perform to standards every bit as demanding as those required by London Underground's own statutory safety case. It will be for the Health and Safety Executive to accept the safety case. This is not a matter to be decided by politicians. It is far better to leave it to the independent experts.
"The third test is value for money. I have always said that the Tube modernisation plans should not proceed unless they were likely to provide appropriate value for money. In preparing its final
"Essentially, the public sector comparator measures the cost of providing the same modernisation of Tube infrastructure under current arrangements. It also takes account of two possible funding scenarios: annual grant and bond finance. Honourable Members will be aware that in December 2000 the National Audit Office reported on the public sector comparator that London Underground proposed to use and made various recommendations. These have been taken into account in the construction of the comparator used for this final evaluation of the bids.
"London Underground's evaluation demonstrates that the Tube modernisation contracts are likely to deliver good value for money over the 30-year term of the contracts. Even when tested on a much more demanding seven-and-a-half-year basis, the value for money of the PPP remains favourable. And the bids look good not just against a public sector option funded in the conventional way through annual grant, but also one funded by bonds, which was, of course, the Mayor's preferred approach.
"On the basis of the advice that we have now received, the Government believe that the Tube modernisation proposals represent the best way forward. In headline terms London Underground will receive investment on an unprecedented scale. Now that the actual bids have been evaluated, I am able to report that we would expect to see investment of some £16 billion over the next 15 years. That figure includes nearly £8.5 billion to be spent on trains and signalling, nearly £4 billion on track, and more than £3.5 billion on stations. By any standards that represents a step change in the amount of money spent on the Underground to make it a system fit for the 21st century.
"The benefits of proceeding with the Tube modernisation contracts would be considerable. Over the first 15 years of the contract London Underground will save £2 billion compared to traditional public funding. On any measure, that represents a significant saving to the public sector. What is more, the contracts will mean faster and more reliable Tube journeys than the alternatives. London Underground says that these could be worth as much as a further £2 billion to its passengers.
"Such savings can only be achieved through harnessing the private and the public sector together, which is why this partnership is such an important feature of the Government's reform of the delivery of public services. Over the first 15 years
"There is a clear choice. On the one hand, we can move ahead with proposals that will see the Tube transformed, with real year-on-year improvements beginning immediately the contracts are signed. We think that that is the right way forwardsubject, of course, to the outcome of the consultation process and to the board of London Regional Transport taking a final decision to proceed with the contracts.
"Alternatively, we can look forward to more delay while different plans are prepared and a new procurement exercise put in place. That would condemn Londoners to several more years of the status quo, with a creaking infrastructure that is unable to deliver the efficient and modern Underground system that the travelling public rightly deserves.
"Our modernisation plans for the Tube will unlock £16 billion of investment over the next 15 years, which is the equivalent of £5,000 for every household in London. There will be no privatisation. The publicly owned London Underground will remain in control, and safety will be paramount, which is why the final say on safety will rest with the Health and Safety Executive. These proposals form the basis of creating a Tube fit for the 21st century and I commend them to the House".
Viscount Astor: My Lords, I thank the noble and learned Lord for repeating the Statement. My first question is: why are we having a Statement at this hour? It is rather extraordinary to have one so late in the day. Is it because the Government have not been able to make up their mind until the very last moment about what they are going to do?
I notice that yesterday the Institute of Actuaries said that government officials had threatened to stop Andrew Smith, the Chief Secretary to the Treasury, from speaking at a conference because a press release that the institute was about to release was critical of some private finance initiatives associated with the Tube scheme. I await the Minister's comments on that. As usual, he will no doubt be robust in his defence of his Secretary of State; it is probable that the more robust he is, the more we shall wonder about the case he is putting forward.
One has to ask: why do the Government like the PPP? The first reason is that it does not show up as public spending. The Treasury likes it because it is off balance sheet. What rate of return do the Government believe is reasonable for the private sector partners who come into the scheme? What is that on a per
annum basis and over the 30-year life of the contract? How much will they get out of it? Does the Minister agree that in the end the taxpayer has to pay? How can the Government claim that there will be significant savings when we know that there will not be a dramatic increase in capacity on the Underground? Will fares have to increase?The PPP may introduce finance but it does not give greater choice to London Underground about how that money is spent. In effect, the PPP saddles the Underground with a new bureaucracy. The Government need to explain what incentives there are to improve services and make savings that can be reinvested for the benefit of the travelling public.
How much have the department and the Treasury spent so far on assessing the PPP contracts? Some very large sums have been quoted in the newspapers. I know that the noble and learned Lord does not always believe what he reads in the newspapers but we should be interested to hear his views.
The all-party Transport Select Committee criticised almost every aspect of the Government's plans. It did so in relation to safety, fares, disruption and value for money. Three million people travel on the Tube every day but we have now been told that the Health and Safety Executive has been given only one month to decide whether safety plans are adequate.
On fares, the original plans assumed that surplus fares would pay for a significant slice of investment and maintenance for the system. We now know that, in relation to the Tube, revenue has been declining since 1998.
The all-party transport committee concluded that,
Under the plan, there will be no new rolling stock for several years. I believe the figures are seven years for the Victoria line and perhaps 10 years for the rest. What about increased capacity? How will overcrowding be managed? Can the Minister say in what monthor even in what yearthe first new carriage will enter the system after the contracts have been signed? He said in the Statement that as soon as a contract is signed there will be immediate improvements. What will they be?
The Government have given Ken Livingstone 15 days for consultation. They may live to regret that, but I am not sure whether they should give him a much longer or a much shorter period; however, that is their problem.
I return to the contracts. What are the risks of the PPP to the private sector? Is it correct that in the contracts the risk is capped? How do the Government square that with the rate of return that they will get? Will the rate of return be higher than that which could
be gained on the bond market, for example? If the contracts do not work, what will be the process for renegotiation?I note that the Ernst & Young report states:
This proposal is a massive leap in the dark and I doubt whether it will work. It will be expensive. If there are savings, it is clear that no one will be able to validate what they are until perhaps the last five years of the 30-year contract. In the first seven to 10 years, there will be no real difference.
The approach is going to fail unless it can pass four crucial tests. The Minister will have to assure us in this regard. Can he guarantee that there will be more trains running on the Tube network and that there will be less overcrowding? Can he guarantee that there will be a more reliable service? Can he guarantee improvements in safety for both passengers and staff? Finally, can the Government guarantee that passengers will no longer be left stranded at stations because of strikes?
Baroness Hamwee: My Lords, I, too, thank the Minister for repeating the Statement. I must declare an interest as a member of the London Assembly. One might describe that role as being the Mayor's watchdog. I am certainly not uncritically supportive of his position. However, my criticisms of the proposals announced todayno surprise, but we have finally got themare not a long way from those of the Mayor's.
Is the arrangement truly to be described as a partnership? Is it truly the best way of putting money in? And is it truly what in footballing parlance one might call a "result" for London? London is not just its residents; it is, among other things, the powerhouse of the British economy. The economy in London depends on London being able to operate, and it is hugely dependent on its Tube network.
I wonder whether the Ernst & Young conclusion really amounts to unequivocal advice with which the Government can be comfortable in going forward. I have had the report for only a very short time but noble Lords will noticeI know that one cannot use visual aidsthe number of yellow flags that I have already placed in it. I shall try to resist quoting all the parts I have marked.
On shadow running, to which the noble Viscount referred, the report states:
The context for the decision is, of course, devolution. It is remarkable how little central government and the Mayor have worked together. I cannot help feeling that personalities have played a part in that.
I have one immediate point for the Minister. The Mayor, I am told, understood that he would have an extra five daysthat seems not very long in the context of this sagato consider the contract that he has not yet seen. He put his team on standby. They are available from now on to work overnight and through the weekend. In fact, the documents will not be available until 9 o'clock on Monday. Is this really partnership with London's government? How long will the consultation process last and whom are the Government consulting?
More importantly, not only has the contract been unavailable until now, but no financial information has been available. This is the time of year when the different spheres of government consider their budgets. The Greater London Authority's budget is no exception. At the GLA we shall have to take decisions with regard to the budget as early as next week. There is no information available and none has been provided to us despite requests about what dowry, if I may express it in that term, will be passed over by central Government to meet London Underground's liabilities. I imagine that there will be many such liabilities and that many will be substantial, and that is allied with its current deficit on the fare box. The noble Viscount mentioned that the fare box is reducing; it is actually now in deficit. Therefore, what guarantee is there that Tube fares can be maintained at current levels?
Given the possible scenario of an insufficient dowry, can the Minister assure Londoners that they will not face the risk of a huge rise in council tax to meet such a deficit or risk losing other improvements to London's transport which are the responsibility of Transport for London?
The context is also that of scrutinya role which central government are keen for local government to employ. However, given the highly critical report of the transport Select Committee, it seems to me that central Government will not take their own medicine. It is not only that criticism which is significant but the fact that the Government have given themselves no time to consider it.
Transport for London is the public part of the partnership. As I understand it, it will remain dependent on government grant. The Minister spoke
of unlocking £16 billion. Is it not the case that only £4 billion will be unlocked through this arrangement because £12 billion will come from central Government? What assurances do the public have that that £12 billion will be available in accordance with the timetable? I am not accusing the Government of not providing it, but it is certainly not clear to me where that fits into the contractual scheme of things. If there is no commitment that anyone can enforce, one simply has to rely on government good will.There are so many questions that one wants to ask and I must be mindful of not being tedious or exceeding my welcome, as it were. But perhaps I may point to the finance market's testing clause. That indicates that if the Infraco companies fail to come up with the cash at the seven-and-a-half year point, Transport for London will have to pick up the tab, with London council tax payers again being at risk of facing big rises.
Can the Minister explain what scope there will be under the PPP for Transport for London to determine the priorities for modernising the Underground? Will it be able, for example, to give priority to modernising track and signalling rather than stations? Perhaps more broadly, can the Minister give the House a target date by which he expects us to be able to describe the Tube as a "modern" service?
Over the past few days and weeks, we have heard much from the Government about public services. With regard to the Underground, they have spent four years saying, "We must do something and we must do it now". Indeed, we have heard the £16 billion figure mentioned for quite some time.
I would welcome a result for London, but I do not believe that this will be one. I consider this to be closer to a betrayal. Time has been wasted during which travelling in London is at best uncomfortable and at worst a nightmare. I do not believe that there is light at the end of the tunnel as a result of this Statementnot even, some might say, the light of an advancing train. This is a tale of delay which exceeds that of which even those who are accustomed to relying on transport operators have experience.
I return to my first point. Can this really be a good, effective partnership? Does it not give scope for the participants to squabble, to blame each other and to give the term "partners" a new and appalling meaning?
Lord Falconer of Thoroton: My Lords, the first question asked by the noble Viscount, Lord Astor, was: why are we having the Statement at this late hour? It is certainly not because of any indecision. I believe that the noble Viscount should ask the business managers on his side in another place why the Statement is occurring at 7 p.m.
Secondly, why do we like the PPP? Because, following thorough consideration of the matter, over a 15 year-period it involves levering £16 billion into modernisation of the Tube: £12 billion from the public
sector and £4 billion from the private sector, to pick up the figures given by the noble Baroness, Lady Hamwee.Thirdly, what return will the private sector receive? As the three PPP contracts with which we are dealing will vary within each of the three contracts, the amount that each of the three PPP contractors will receive will reasonably reflect the risk that they are taking.
The fourth question asked by the noble Viscount, Lord Astor, was: is it not creating a new bureaucracy? No; it is creating a situation in which London Underground will continue to run and control the Tube. It provides a means of bringing in investment in order to deliver modernisation of the Tube.
How much has the DTLR or Treasury spent on evaluating the proposal? Central Government have spent approximately £0.5 million in relation to consultants' fees. Obviously London Underground has spent considerably more than that. When will there be increased capacity? Over the period of the PPP, capacity will be increased substantially: for example, by 22 per cent on the Jubilee Line; 15 per cent on the Victoria Line; and 17 per cent on the Metropolitan and Circle Lines. That process of increased capacity will take place within the next 10 years.
In answer to the question concerning early improvements, on the Jubilee Line southbound track will be replaced in the first year of the PPP in order to remove speed restrictions between Kingsbury and Wembley Park stations. Track work will be carried out on the Piccadilly Line so that speed restrictions can be lifted between Heathrow and Acton Town. Modernisation will begin at Parsons Green, Aldgate East and Notting Hill stations. Work will begin in October this year on replacing lifts at Elephant & Castle. Work will also be carried out to replace lifts at West Brompton. Work on additional train crew facilities will start at Plaistow on the Hammersmith & City and District Lines and at Earls Court. All 150 stations and all trains on the sub-surface network will be deeply cleaned in the first year of the PPP. And, as soon as the financial conclusions have been reached, Metronet will begin work immediately on the Victoria Line.
Therefore, both in the 10-year period and in the first-year period significant improvement to the Tube will take place. But let us make no mistake. This is a long-term process that requires long-term and sustained investment to make up for the previous shortage of investment that occurred over many years.
The noble Viscount, Lord Astor, ended his questions by asking whether we can guarantee that there will be more trains, more reliability and more safety. The proposal involves bringing in significant numbers of new trains; over 336 new trains by 2014 and an additional 42 trains by 2019. Can we deliver more reliability? Yes, the purpose of the scheme is to improve the reliability of the Tube. Can we improve safety? As has been made clear again and again, safety is a priority and it is subject to the views of the Health and Safety Executive.
The noble Baroness, Lady Hamwee, referred the House to the number of yellow flags in her copy of the Ernst & Young report, but happily did not read every extract, for which I express my profound gratitude. She asked what further information will be made available on the public sector comparator. London Underground, as the noble Baroness knows, has produced a detailed document setting out a full analysis of the public sector comparator. In due course, the National Audit Office will publish its own assessment. That office has made it clear that it does not want to publish one now because it felt that to secure its objectivity, it should not involve itself in the process of making the decision.
The noble Baroness also raised questions about how long the Mayor will have to consider the terms of the contract. He will have a reasonable time in which to do that, but let us not forget that this process and the evaluation have been taking place for some time. While a reasonable time must be given for consultation and consideration, I believe that most Londoners are keen that a decision is made and that the process of modernising the Tube gets under way.
The noble Baroness, Lady Hamwee, also sought an undertaking that the council tax will not be increased. As she well knows, the council tax is a matter for the London boroughs. The precept is a matter for the Mayor and the GLA. They must make their decisions in relation to that. She asked for confirmation of the figures of £12 billion of public sector money and £4 billion of private sector money over 15 years. I have already given an answer to that.
One can continue to ask specific and detailed questions and I am aware that I have not answered all the questions posed by the noble Baroness, Lady Hamwee. The proposals have been evaluated closely by London Underground. The reasoning and the approach have been considered by Ernst & Young. Subject to consultation, decisions have been made so that the process of modernising the Tube can begin.
Lord Faulkner of Worcester: My Lords, does my noble and learned friend agree that it cannot be stated too often that the PPP that he has announced for the London Underground bears no relation whatever to what happened with Railtrack? Control of the Tube will stay in public hands. Its operations, which include running the trains, staffing the stations and operating the signals, will be kept together and the responsibility for safety will remain with London Underground, subject to the approval of the Health and Safety Executive.
In relation to safety, has my noble and learned friend seen the comments of the Mayor of London which appear to have become even more intemperate as each day of this week has passed? Has he also seen the comment in the Evening Standard of Monday that stated that Mayor Livingstone has warned that there could be mass deaths on the Tube if the Government press ahead with the public private partnership
proposals for the system. Does my noble and learned friend agree that that is scaremongering and the politics of the playground?
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