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Lord McIntosh of Haringey: My Lords, I have listened carefully to the exchanges in this Chamber on the issue of the Ernst & Young report. I have listened to what the noble Lord, Lord Peyton, has said previously, and to what my noble and learned friend Lord Falconer has said in reply. It has nothing whatever to do with "on balance sheet" or "off balance sheet". Nevertheless, I thought that my noble and learned friend gave rather effective replies to the questions raised.

Lord Saatchi: My Lords, does not the Question reflect the growing concern that the dangerous practice that has been revealed recently in the private sector of hiding a build-up of debt off the balance sheet might now creep into the public accounts via the public/private partnerships? Is not full disclosure the answer? Will the Government publish an analysis of the full amount of public liability that is, or may be, involved in all the existing public/private partnerships?

Lord McIntosh of Haringey: My Lords, the noble Lord is in danger of drawing a false analogy between what is happening here and what happened, for example, with Enron, where, indeed, funds—or lack of funds—were kept off the balance sheet. The issue here is one for London Underground's auditors. They have to decide whether the amounts of money involved in

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the public/private partnership make a change to London Underground's assets as a whole. By "London Underground's assets as a whole" I do not mean merely the book value of the assets—which exclude all the written-down assets over more than 100 years—but the total assets. That is the consideration that will influence the auditors in making a decision as to whether the amounts are off balance sheet or on balance sheet.

Lord Bruce of Donington: My Lords, will the noble Lord give the House an undertaking that he will deal with these matters in greater and more pertinent detail, in relation to the Statement which I understand is to be made later?

Lord McIntosh of Haringey: My Lords, no; the Statement which will be made this afternoon is not even remotely on this subject. It is about audit and accountancy in the public sector. The Statement is about the Sharman report, which is not about London Underground. It would take some ingenuity to get me to respond later this afternoon to these matters.

Lord Blackwell: My Lords, does the Minister accept that, wherever this particular expenditure is scored, the real test of whether it is effective to replace public with private funding is, first, whether there is transfer of risk from the public sector to the private sector; and, secondly, whether it achieves the introduction of effective private-sector management disciplines? Would he be prepared for the PPP, in this case, to be judged on those two criteria?

Lord McIntosh of Haringey: My Lords, yes; I entirely agree with the noble Lord, Lord Blackwell.

Lord Northbrook: My Lords, would it have been cheaper or more expensive to finance the London Underground capital investment through Ken Livingstone's bond option rather than through the PPP?

Lord McIntosh of Haringey: My Lords, the answer is no—partly for the reason just given by the noble Lord, Lord Blackwell, with which I have just agreed. As he rightly said, the issue in this case is the transfer of risk. Although that could be done by issuing bonds, and the price of bonds would be lower than the rate of return on capital that the private partners will expect, the private partners will be taking very significant risks in return for that rate of return. When such risk has been taken by the public sector—as, for example, in the extension to the Jubilee Line or the improvements to the Central Line—it has been shown to be very poor value for money for taxpayers.

Baroness Carnegy of Lour: My Lords, perhaps I should already understand this—I am sure that I should—but, given that the noble Lord is telling us that sometimes these enormous figures will be on the

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balance sheet and sometimes they will not, according to what the accountants say, how will the public know what their total debt is?

Lord McIntosh of Haringey: My Lords, the figures will not be sometimes on and sometimes off the balance sheet. At some stage soon after 10th April, when it is expected that the agreement between the private partners and London Underground will be signed, KPMG, London Underground's accountants, will make a decision on the whole of the amount. It will either be on or off. It will not be partly on and partly off.

Lord Boardman: My Lords, without discussing the balance sheet, can the noble Lord say whether giving letters of comfort exposes the Government to the risk and liability of ultimately having to meet the balance that they have guaranteed?

Lord McIntosh of Haringey: My Lords, as I made clear in an earlier answer, the letters of comfort are confined to third-party debt. Public discussion on these matters tends to make the wrong assumption—that they relate to shareholder funds.


2.53 p.m.

Baroness Massey of Darwen asked Her Majesty's Government:

    What impact anti-smoking initiatives are having on the numbers of people giving up smoking and taking up smoking.

The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, in the first six months of 2001-02, about 104,800 people set a quit date using the NHS smoking cessation services, and 53,500 had successfully given up at the four-week follow-up stage.

Baroness Massey of Darwen: My Lords, I thank the Minister for that encouraging reply. As today is National No Smoking Day, will he join me in congratulating all those noble Lords who in the past year have given up smoking—or indeed not started smoking? Will he also tell us what investigations NICE has conducted into the cost effectiveness of the anti-smoking strategies and how those strategies compare with strategies to combat other substance misuse?

Lord Hunt of Kings Heath: My Lords, I am delighted to congratulate all noble Lords who have given up smoking in the past year. I stopped smoking on 28th July, and I am still going strong at the moment—

Noble Lords: Hear, hear!

Lord Hunt of Kings Heath: My Lords, both Zyban and nicotine replacement therapy have been referred

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to NICE, and my understanding is that it will soon reach a conclusion. Unless an appeal is made against its final appraisal determination, that advice will, we hope, be issued very shortly.

Lord Carlile of Berriew: My Lords, in congratulating the noble Lord on giving up smoking successfully, may I ask him whether he believes that the Government's anti-smoking initiatives are sufficiently robust and shocking to have an impact on the many teenage girls who take up smoking round about the ages of 13 and 14?

Lord Hunt of Kings Heath: My Lords, the noble Lord is right to suggest that teenage smoking, particularly among young girls, is a matter of concern. The Government have a strategy designed to focus particularly on teenage smokers which I believe is effective.

As for the substantive point, on the actual messages given out, I draw the noble Lord's attention to the Smokescreen Youth Initiative, launched last autumn, in which young people themselves produced a set of films that have been shown on television and will soon, we hope, be shown in cinemas. The films are very hard hitting and entail young people talking to young people, and I think that they will be very effective in getting the message over.

Baroness Noakes: My Lords, does the Minister agree that the Chancellor of the Exchequer's action in increasing tobacco duties has led to increased incentives for illegal smuggling and illegal distribution? Does he also agree that that has worked against the other government measures designed to reduce smoking, particularly by increasing the availability of cigarettes to young people?

Lord Hunt of Kings Heath: My Lords, I do not think that one should underestimate the impact of fiscal policy on smoking habits. As a general point, research has consistently shown that demand for cigarettes is undoubtedly affected by their price. However, the smuggling of cigarettes and hand-rolling tobacco is a matter of concern to the Government, and we are dealing with it through a tobacco-smuggling strategy. The indications are that Customs and Excise has had some very big successes in the first year of that strategy and has hit its key target of holding the market share of smuggled cigarettes. It has seized 2.8 billion cigarettes and broken up 56 major excise smuggling gangs.

I should add that European Union countries which may have lower duty levels also face smuggling issues. I therefore believe that it is right to have a fiscal policy of discouraging smoking alongside vigorous policies to reduce smuggling.

The Countess of Mar: My Lords, as one who is approaching the second anniversary of having given up, may I express my huge relief at no longer being a slave to that horrible weed? May I also say how much

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fresher I feel, and that I am sure that everyone who approaches me feels the same? I now find that when I approach someone who smokes, I am very conscious of the fact that they do smoke. However, in their approaches to the European Union, what are the Government doing about the subsidies being paid to countries to grow the most filthy, disgusting tobacco that there ever was?

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