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5.53 pm
Mr. Eric Pickles (Brentwood and Ongar): It is a great pleasure to follow the maiden speech of the hon. Member for Eltham (Mr. Efford). We on the Conservative Benches enjoyed it enormously, particularly his comments about the age of his predecessor. I was interested to hear of the connection with the author of "The Railway Children". For the best part of 17 years, I lived within a few hundred yards of the film location of "The Railway Children". Although I wish the hon. Gentleman a happy stay in this House, I could not help but speculate that, should the time come when the Prime Minister elevates him to another House, he will have quite a tongue twister of a title to take, given his name and the name of his constituency.
As the first member of the old Transport Select Committee to speak in this debate, I congratulate you, on behalf of the other members, on your new position, Mr. Deputy Speaker. I wish you every success.
I have been disappointed by the Government's response. I had thought that we might hear how the underground system would be financed. All we heard was that they are against wholesale privatisation. I suppose that that means that partial privatisation is okay. We heard some suggestions from the Liberal Democrats about a public interest company. I can think of no better way to sum up that argument than the words of an editorial in The Independent, which said:
We have seen some improvements in the tube. The hon. Member for Barking (Ms Hodge), who is no longer in her place, asked whether I travel on the tube. I have travelled on the tube since I have been coming to London. It remains one of the fastest ways of getting about the capital. With respect to the hon. Member for Eltham, it is sometimes quicker than a taxi.
The underground has the potential to take care of our transport needs well into the next century. Its operating surplus has risen from nothing to around £200 million, and improvements are planned. It will gradually move on to a self-financing basis, but only to keep itself in a steady state. Without a substantial increase in grant or capital from elsewhere, it will not be able to do anything about the backlog.
The hon. Member for Barking talked about the overspend on the Jubilee line, caused by technical problems at Heathrow. The previous Government put aside £100 million as a contribution. When the Jubilee line extension comes into action, it will add about £499 million extra to the cost of the steady state, and
that includes the overspend. That money must come from somewhere--from the proceeds of privatisation, from extra Government grant or from the core service.
The hon. Member for Barking talked lovingly about the Metrolink, which cost around £210 million. When the Select Committee took evidence, it was suggested that, if the same formula were applied to the underground, nearly £4 billion of investment would be needed. The Government will not be able to offer such sums to the tube.
Hon. Members on both sides of the House have used the words "private finance initiative" almost like a sword or a wand, as though it will be able to take care of everything. The Minister of Transport talked lovingly about the effects of PFI projects. The new Northern line trains will come soon. There are three other projects on the line: an auto-ticketing project; a project to take care of high-voltage generation; and one to integrate radio access. All of them combined are worth only £600 million. It would be interesting if the Minister would tell us the state of progress on each of those projects.
The private finance initiative is suitable for capital work, but not for taking over main funding. After all, PFI offers a way in which we could finance the tube network, but not any new funding. Funding is the moving over of real resources. The PFI is simply rescheduling of the debt. Someone has to pick up the tab over the period. The tube needs real funding. The experts, Mr. Travers and Mr. Glaister, who have been referred to already, draw a distinction simply between finance and funding. To use the analogy of a house purchase, the building society provides the finance, but the house purchaser provides the funding. Only the purchaser puts in any real resources.
It is unlikely that the private sector will be prepared to fund inherently loss-making activities. The hard truth is that the PFI cannot make any significant contribution to providing new funds for the underground. The hon. Member for Barking said, "Do not worry. All this can be taken care of. We can generate more income from shops around our tube stations." She might have been thinking of Baker Street, Liverpool Street or Bond Street stations, but most of our tube stations are old and cramped and there is no place to put any significant increase in retail development. In the past 10 years, commercial lettings have doubled. A reasonable estimate has been made that, in the next six years, that would probably provide, say, £250 million, but it is not enough. The truth is that salvation of the rail network will not come through a combination of Spud-u-Like and Tie Rack.
The hon. Member for Barking and the Minister of Transport said how important the new strategic authority for London would be. The hon. Lady talked in terms of the London infrastructure fund that has found such favour with London First and the Corporation of the City of London. It involves a levy on the national non-domestic rate in London. She also quoted Glaister and Travers. She talked about a modest increase. Glaister and Travers estimate that a 10 per cent. yield would bring in an extra £300 million to £400 million a year. I am not entirely sure that businesses in London want to pay extra, but whether they do or not, what is beyond debate is the point made by my right hon. Friend the Member for Cities of London and Westminster (Mr. Brooke)--that such money as was raised would be regarded as part of public expenditure.
When the Chief Secretary to the Treasury announced yet another of the Government's fundamental reviews a couple of weeks ago, this time of public spending, I specifically asked him whether he had any intention of changing the rules on the definition of what was and what was not public expenditure, especially in the light of expenditure on local government. He said:
We need action now. We know from evidence taken by the Select Committee that the previous level of investment means that there is a grave risk that we will lose people with engineering expertise from London Underground. Expansion by Railtrack means that contractors and workers will be attracted away to work on the railway network, and gradually they will lose their expertise in dealing with an underground railway.
No Government can come up with the level of investment that is required in the London underground system, because Governments will always be susceptible to competition for resources from schools and hospitals. It has been suggested that, to compensate for the activity brought about by privatisation, the Government would have to come up with about £4 billion. The tube network needs a more stable environment in which Governments do not change their minds about the level of investment. We also need privatisation to tackle the poor industrial relations that have bedevilled the tube network and done so much to damage its reputation.
Privatisation has brought some benefits to the railway, especially in my constituency. We have better services, improved conditions and smarter stations, and we know that Railtrack will invest about £16 billion over the next decade. The Government simply have to take courage and accept that they must do a U-turn. They should not worry about doing a U-turn. It is nothing in comparison with what they will have to face in the not-too-distant future. Whether they are in favour of wholesale privatisation is irrelevant. The only solution comes through privatisation. The Government may tinker about and wonder whether they require a golden share, but in a properly regulated regime they have nothing to fear from privatisation.
Mr. Ken Livingstone (Brent, East):
I understand why we have this Opposition motion. It aims at an irresistible target, but it is breathtaking to have the Conservative party now riding forward to the defence of the tube.
This may be one of those stories that are not true, but it sounds so close to the reality of the involvement of many Conservative Members with the tube that I cannot
help but repeat it. I recall reading an article when I was the leader of the Greater London council about a junior Minister, who for all I know may now be a member of the shadow Cabinet, who got stuck in a major traffic jam. Unable to get to his meeting with the then Prime Minister--a matter that would strike terror in the heart of anyone in those days--he led his civil servants out and rushed down the nearest tube station, only to discover a rather crowded and unpleasant train coming in. He turned to his civil servants and said, "Let's find the buffet car." The story almost has a touch of the right hon. Member for Kensington and Chelsea (Mr. Clark) about it, but I do not want to provoke him.
I seldom see Conservative Members of Parliament when I travel on the tube. Far too great a reliance on ministerial cars cuts people off from reality. That is something that will afflict my own Front-Bench colleagues. It is all too easy as one swishes along in a ministerial car not to notice the appalling conditions that the vast majority of ordinary London commuters have to put up with on the tube.
For years and years, the previous Government launched attacks on London's public transport. I do not have the slightest disagreement with their complaint that, in the 1960s, it suffered from under-investment; however, when, finally, there was an administration at the Greater London council that wanted to invest in transport, it was prevented from doing so. The previous Government took away that power from the GLC because we were spending too much.
When I intervened earlier, I pointed out that, as leader of the GLC, I lobbied the right hon. Member for Sutton Coldfield (Sir N. Fowler), now the Opposition spokesman on transport, and begged that Londoners should be able to manage their own tube network without Government interference. We were prepared to pay for the modernisation and extension of the tube out of the rate base in London. That is what Londoners had voted for. The then Government used their legal powers to prevent us from doing so.
It was not just the Labour administration at the GLC that encountered problems. The previous Tory administration, under the late Sir Horace Cutler, also went to the then Labour Government and asked for extra money for the transport infrastructure. I agree with Conservative Members that the record of the previous Labour Government was lamentable. I heard my hon. Friends protest at that, but they would not have done so if they had been on the receiving end of the delegations that Labour and Tory members of the GLC took to meet Bill Rodgers, when he was Labour's Secretary of State for Transport. He turned them away and denied their request to extend the tube network.
Administrations at the GLC, Labour and Tory, asked Labour and Tory Governments, year on year, for the permission to spend increased amounts of investment on that network. Their requests were refused--not, I suspect, because Transport Ministers were opposed to them, but because of the Treasury's deathly hold on so much of government in this country. The problem for whoever runs the country is that, at the end of the day, the Treasury snuffs out any excellent ideas.
We could have had the Jubilee line operating for the past 10 years if the politicians at county hall, Labour and Conservative, had not met with obstruction from Labour
and Tory Governments, and the Treasury. Any new London authority will be doomed to impotence when called on to tackle the problems that confront London if it does not have some independence from the stranglehold of the Treasury.
"while this might technically remove the company from the public finances, in truth it doesn't fool anyone. It is just Government borrowing by another name, and expensive to boot."
There is an irony in the debate. The tube has suffered from chronic underfunding for the best part of 50 years. The only Government to make a significant impact on the backlog was the last Conservative Government. Even after the cut in the projected expenditure, investment in the underground remains at double the level of the 1970s and 50 per cent. higher than in the 1980s.
"So far as changing definitions is concerned, the House will be aware that there are no shortcuts. Fiddling definitions to achieve an end is not justified, and we do not intend to do it."--[Official Report, 11 June 1997; Vol. 295, c. 1152.]
The possibility of raising money through a strategic authority or the transport infrastructure fund simply does not arise.
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