§ 8. Simon Hughes (Southwark, North and Bermondsey)If he will make a statement on progress towards the start of the public-private partnership contracts for the London underground and the transfer of assets to Transport for London. [85908]
§ The Minister for Transport (Mr. John Spellar)Commercial agreement has been reached on the public-private partnership deals, and the preferred bidders have begun to raise their finance. We expect the JNP contract to come into force at the beginning of next year, and the BCV and SSL contracts to do so in the spring.
The Mayor of London has said that he may appeal the European Commission's decision that the notified PPP arrangements do not constitute state aid. It would be inappropriate to transfer London Underground to Transport for London during the appeal period, or pending any actual appeal, of the state aid decision. The same position applies in relation to any legal challenge in the English courts.
§ Simon HughesTransport Ministers will have received the report from London Underground yesterday showing that the private sector costs have gone up by £300 million and the public sector costs have gone down by £200 million. Therefore, the estimate for the total project over the seven and a half years, which is the guaranteed price period, is in the same ballpark—about £9.5 billion for each. Given that the Government pledge was that the private option would save £4.5 billion and would go ahead only if it proved better value for money, are Transport Ministers big enough to admit that they will not save that money, that the private option will not prove better value for money, and now choose the other better and cheaper option?
§ Mr. SpellarThe hon. Gentleman, in his mayoral bid, wants to postpone investment in the underground for several more years. He neglects to point out that London Underground says that this still represents value for money and that the contract is over 30 years and not seven and a half years. What the travelling public in London want is an end to the wrangling and an end to the threats of litigation after two failed court cases, at considerable cost to London travelers and ratepayers. They want the companies to get in, the investment to go in, and the tube to improve. I am surprised that the hon. Gentleman does not support that.
§ Mrs. Louise Ellman (Liverpool, Riverside)Is there any serious transfer of risk to the private sector with 30-year contracts without a clause enabling termination in 685 the public interest, and given the Government's new letters of comfort to the private sector issued only last week?
§ Mr. SpellarMy hon. Friend should observe that there is the shareholder risk if companies fail to perform. The key basis of the contract is that it is driven by performance, and there will be a review at seven and a half years as well. What voters and the travelling public want is for the contract to get on and the nitpicking to stop.
§ Mr. Christopher Chope (Christchurch)The prices in the contract are fixed for only seven and a half years. The Minister implies that the savings will continue afterwards. For the first seven and a half years, the Government subsidy will be £1 billion a year. Yet when they first made the announcement in 1999, they said that taxpayers would pay no subsidies. Will the Minister explain that?
§ Mr. SpellarI am grateful to the hon. Gentleman for pointing out that we are investing £1 billion a year in London Underground, which needs the money. As I said earlier, the contract represents value for money even with the adjustments that the hon. Member for Southwark, North and Bermondsey (Simon Hughes) mentioned. London Underground have been negotiating exactly that, and the contract would have been in place much sooner had not Transport for London brought two abortive legal cases. Without those, we would already be experiencing the benefits. The sooner that happens, the better. I hope that it will happen fairly early in the new year. I also hope that Conservative Members share that aspiration.