HL Deb 10 February 1997 vol 578 cc8-10

3.4 p.m.

Lord Berkeley asked Her Majesty's Government:

Whether they still support the privatisation of London Underground.

The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen)

My Lords, the Government support the principle of privatisation and are still considering whether its benefits can be extended to the London Underground.

Lord Berkeley

My Lords, I am grateful to the Minister for that comprehensive Answer, given the fact that in the past two weeks there have probably been 14 or 15 different reports emanating from the Government about what will be done, by whom and to whom. One of the more interesting reports from the Secretary of State is that the Government will have to pay somebody to take London Underground off their hands. Will the Minister explain to the House why the Government have cut the budget for London Underground by £300 million but at the same time are quite happy to pay a similar sum to somebody to take it off their hands?

Viscount Goschen

My Lords, on the first point, the Government do not comment on leaked documents, and I believe that that is a policy in which the Opposition also believe these days. But we shall await confirmation of that. Secondly, we have given major funding to London Underground and over the next three years investment in LT's core network will in real terms be on average 50 per cent. above the level of the 1980s and twice the level of the 1970s.

Lord Marlesford

My Lords, does my noble friend agree that there is enormous potential for the development of London Underground? One has only to look at somewhere like Hong Kong to see that potential. It is essential that it is realised. There is no way, whichever government are in power, that the sums needed for capital investment could come from the Treasury. Therefore, as in the case of British Telecom, privatisation is likely to produce a superb service which we need.

Viscount Goschen

My Lords, I agree with my noble friend that privatisation has resulted in better services at lower cost. We believe that that certainly has occurred in the transport sector. We wish to see to which other areas it can be extended, and that includes consideration of London Underground.

Lord Ezra

My Lords, following on that last question, does the noble Viscount agree that, in spite of the sums to which he referred having been paid to London Underground for investment, they are woefully short of what is needed, as the chairman of London Transport announced publicly recently? Pending whatever the Government may wish to do about privatisation, which could take some time, bearing in mind certain future events, would it not be possible to work out a way in which London Underground could turn more to the private sector to obtain the money while still being run as a public sector company?

Viscount Goschen

My Lords, there will always be a great demand for additional investment and finance for London Underground. We certainly believe that the private finance initiative has been a success in that field. London Underground is making good progress with the PFI, and the three competitions currently in progress should, if completed successfully, deliver investment worth between £450 million and £650 million. In addition, the Northern Line trains contract, which was signed in 1995, is leading to investment of more than £400 million. Those are illustrations that the PFI is working.

Lord Dixon-Smith

My Lords, does my noble friend agree that in order to meet the demand of which one hears for expenditure on London Transport, plus other matters that have been hinted at from time to time, it would imply setting aside the convergence criteria which we should be obliged to follow if we wished to have anything to do with the single currency?

Viscount Goschen

My Lords, that question goes a trifle wide of the Question on the Order Paper. But my noble friend is right that there will always be tremendous demand for additional spending on services such as the London Underground. We have illustrated that the PFI can work. We wish to see whether the great successes which have occurred—for example, the privatisation of the railways—can be extended to the Underground.

Lord Stoddart of Swindon

My Lords, is not the main argument used for privatisation that it will introduce competition into an organisation? Is that not the last thing that we want for London Underground? What is needed is far more co-ordination rather than competition.

Viscount Goschen

My Lords, competition is an important factor in business. We have not yet made any announcement about what our proposals may or may not be for London Underground. I am not in a position to say anything with regard to the detail. We are still considering the issue.

Lord Clinton-Davis

My Lords, is it not remarkable that the Minister is far more timid about this proposal than he has been in the past, when he was extremely gung-ho about all the advantages that it would confer? Is he aware that we hope that he will give an unqualified undertaking that this oft-deferred, flawed and unpopular proposal will appear in his party's election manifesto, because that would be yet another nail in its coffin?

Viscount Goschen

My Lords, what I have noticed is that every time the Government come forward with a privatisation proposal it is opposed by the Opposition. They say that it will spell disaster and then after a few years they come to accept it and realise that it works. Indeed, I have not heard this afternoon about plans to renationalise any of the industries that have been privatised—perhaps, for example, Railtrack or British Airways. No such commitment has been put forward. Therefore, we must take it that the Opposition are doing their traditional rubbishing of privatisation and yet will go on to accept it.

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