London Underground: Privatisation Advisers (Hansard, 17 March 1997)

§ The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen)
My Lords, advisers have not yet been appointed. 646 The privatisation of London Underground remains the policy of the Government. We intend to continue with the appointment process after the general election.

§ Lord Clinton-Davis
My Lords, is the Minister aware that that is a departure from the answer given in another place by the Secretary of State, who said that the Government would immediately go ahead with the appointment of experts? Is he also aware that that would have been an absolute moral outrage? Bearing in mind that the Government know that the proposition they are advancing is not acceptable and is opposed, it would have been quite wrong, would it not, for the Government to have incurred expenditure of this kind in advance of the general election?

§ Viscount Goschen
My Lords, my remarks were fully consistent with those of my right honourable friend, which I re-read but moments ago. My right honourable friend said that we wished to press on as soon as possible with the privatisation of London Underground. That is exactly what we are doing. However, we have had an important announcement this morning. The Government want to see London Underground privatised as soon as possible but there are rules to be followed in the election campaign and we shall follow them.

§ Lord Clinton-Davis
My Lords, with respect, that is not what the Secretary of State said in another place on 25th February. He said: In deciding on the detailed structure for the privatised underground, we shall need to take account of the network's unique nature and operating characteristics, and to obtain further technical and financial advice. Specifically, detailed work will now begin on three possible models … We also intend to start the process of appointing advisers".—[Official Report, Commons, 25/2/97: col.150] The Minister seems to be out of kilter with the Secretary of State, not for the first time.

§ Viscount Goschen
My Lords, it might have escaped the noble Lord's attention but there has been an announcement in the intervening period since the statement he quoted. I believe that we are following properly the rules concerning the conduct of government business during a general election campaign.

§ Lord Ezra
My Lords, bearing in mind that the Government's proposal for privatisation, even if they were returned to power, would take some three years, according to what we were told, and bearing in mind the statement in The Times today that London Underground is underfunded—which we all know—and will presumably continue to be underfunded for the three-year period, have they considered some half-way house whereby, without remaining in the public sector 647 but not necessarily being in the private sector, London Underground could be given the opportunity to raise money from the commercial market?

§ Viscount Goschen
No, my Lords, we do not intend to fudge the issue. We believe that privatisation is best, as it has been for the railways, and that is the model that we shall follow.

§ Lord Marsh
My Lords, will today's announcement trigger contract cancellation charges?

§ Viscount Goschen
My Lords, as I said, the process has not yet begun, so the noble Lord's question, as I understand it, is not material.

§ Lord Dean of Beswick
My Lords, is the Minister saying that no negotiations are yet taking place with regard to the privatisation of London Underground? Can he give an undertaking that when the process does begin, if by some mischance we have the same government, the privatisation will not be at 30 per cent. less than the market value, which was the case in past privatisations, as a result of which a future Labour Government will have to charge a windfall tax to claw back some money for taxpayers?

§ Viscount Goschen
My Lords, the noble Lord is quite right to contemplate seriously the very likely return of a Conservative Government to power and indeed to start thinking about what questions he will ask the Government concerning the way in which we shall privatise London Underground. This is a good policy. We have clearly seen the benefits of privatisation for British Rail and we shall bring those benefits to the travelling public in London.

Lord Bruce of Donington
My Lords, does the noble Lord agree that the Government have already spent some £450 million in employing consultant advisers on their various privatisation programmes? If only for the sake of the money involved, would the noble Lord not agree that he would do far better to take the advice of noble Lords on these Benches, who provide their services free of charge?

§ Viscount Goschen
My Lords, I am certainly sure that the noble Lord provides very good value for money with regard to the number of questions that he asks and the amount of briefing involved in order for Ministers to answer them. He said that privatisation has incurred costs through employing advisers. Yes, indeed it has, but it has also brought massive savings to the taxpayer that hugely outweigh those costs.

§ Earl Russell
My Lords, perhaps I may turn the Minister's mind back to the question asked by my noble friend Lord Ezra. Is he aware that that question did not relate to the merits or otherwise of privatisation but to investment in the interim before privatisation can take place? He was asked whether he would relax the rules 648 on borrowing on the capital market in the interim between now and privatisation. I should be grateful if he could answer that question.

§ Viscount Goschen
My Lords, the noble Lord's question suggested some half-way house in the run-up to privatisation because, in his view, the Government were not investing sufficiently in the network in the intervening period. It is worth noting that over the next three years investment in LT's core network will, on average, be in real terms 50 per cent. above the level of the 1980s and twice the level of the 1970s. The sums being invested are very serious indeed. They are very large sums of money. Yet we feel that the real benefits will come through the full privatisation. Our policy remains to fund the London Underground properly up to that time but then to embark on the privatisation as soon as possible.

§ Baroness Symons of Veinham Dean
My Lords, in the unlikely circumstances of the Government being in a position to see through the privatisation, will they be in a position to waive the usual commercial-in-confidence rule and give the House details—as my noble friend on the Front Bench has asked—of how much the advice on privatisation has cost the Government? In the past we have always had the excuse that such information could not be given to either House because of commercial-in-confidence rules. Will the Minister tell the House that he will be in a position to give us the information in that unlikely eventuality?

§ Viscount Goschen
My Lords, the noble Baroness, like her noble friend Lord Dean of Beswick, is right to contemplate very seriously indeed the prospects of the Conservative Government being returned to power. I am pleased that there is such positive thinking on the Labour Benches about that. There are proper rules for disclosure of information. The Government have always had the policy of open government and delivering as much information as possible into the public domain without interfering with the commercial process. If things are commercially confidential, we have to respect those confidentialities.