HC Deb 28 February 2002 vol 380 cc817-9
3. Mrs. Patsy Calton (Cheadle)

What studies his Department has undertaken of the management costs of (a) PPPs and (b) conventionally procured public sector projects. [35744]

The Chief Secretary to the Treasury (Mr. Andrew Smith)

Studies have focused on overall value for money rather than the specific components to which the hon. Lady refers. National Audit Office reports have shown, of course, that that value for money is being achieved. Management costs in private finance initiative projects do of course cover items like whole-life maintenance, which are not typically provided for in conventional procurement.

Mrs. Calton

My question is about the cost of monitoring London Underground's public-private partnership. Transport for London has argued that the attribution process for London Underground's PPP is so complex and bureaucratic as to be practically unworkable. Given the Treasury's intimate involvement with London Underground's PPP, what estimate has the Treasury made of the cost of monitoring the 1,000 service disruptions and 350 facilities faults a week? Is the Chancellor aware that London Underground will have to monitor the performance of the infracos down to the amount of time it takes to fix a light bulb? How many people—

Mr. Speaker

Order. The hon. Lady's question is far too long.

Mr. Smith

As was committed by the Department for Transport, Local Government and the Regions, the House regularly receives reports on the costs of the consultancy involved in carrying forward London Underground's PPP. If we are talking about value for money, as we must, and the much-needed modernisation of the London underground, let us not forget that the PPP involves £16 billion of investment during the first 15 years of the project—the equivalent of six Jubilee lines will be constructed—and it is £2 billion cheaper than the public sector comparator. That is much-needed investment for London. London Underground remains responsible for the trains, ticketing, stations and has overall responsibility for safety, while we give world-leading companies the responsibility of carrying out that much-needed investment to world-class standards. Let us get on with it.

Ross Cranston (Dudley, North)

In addition to comparative costs, capital costs, economic efficiencies and so on, do not we also have to taken into account the Keynesian aphorism: In the long run we are all dead"? In Dudley, we would be on a waiting list for a new hospital; as a result of the PFI, we are getting a new hospital now.

Mr. Smith

My hon. and learned Friend makes a very good point. The crucial thing is not only that the PFI and the PPP are bringing forward much-needed investment, but, with this Government, that investment is additional to conventional public sector investment, whereas the Conservative party used it as an excuse to cut public investment.

Miss Anne McIntosh (Vale of York)

If the Treasury is so proud of its PPP programme for London Underground, why was a Treasury Minister not sent to the inquiry into that very subject of the Transport Sub-Committee of the Select Committee on Transport, Local Government and the Regions? Have the Government got something to hide?

Mr. Smith

There is a well established precedent that we do, of course, attend Select Committees, including the Transport Sub-Committee, when the matters under consideration are the lead responsibility of the Treasury. The DTLR has lead responsibility for the items discussed in the case to which the hon. Lady refers. My right hon. Friend the Secretary of State made a very good report to the Committee.

Mr. Tom Harris (Glasgow, Cathcart)

Is my right hon. Friend aware of a very successful—in fact, an award wining—PPP in Glasgow under which 10 of the city's secondary schools have been completely rebuilt and a further 19 have been refurbished? Can he tell the House what plans the Government will put in place to safeguard the security of tenure and the wages and conditions of those employees who move from local authority employment to that of private companies?

Mr. Smith

I join my hon. Friend in congratulating those responsible for introducing such a radical improvement to the school facilities available to young people in Glasgow. Those schools are among the 500 throughout Britain that are benefiting from PFI investment. On the important point that he makes about staff, not only will the Government act, but we have already acted to improve the pension protections for staff in guaranteeing the application of the Transfer of Undertakings (Protection of Employment) Regulations 1981 and in mandating consultation with the staff involved. That will continue to be the case.

Mr. Edward Davey (Kingston and Surbiton)

Is the Chief Secretary aware that the draft contracts for London Underground's PPP contain absolutely no provision for terminating the contract if an infraco fails during the first seven and a half years? Is he happy to have no termination rights in that draft contract?

Mr. Smith

I am satisfied that, as I said earlier, the PPP represents best value for money. It enables us to mobilise world-leading engineering expertise satisfactorily, as it must be to complete the much-needed investment in the London underground. The people of London will be very interested that the Liberal Democrats want to carry on scoring political points about that, whereas we want to get on with the investment.