HL Deb 08 October 1998 vol 593 cc571-4

3.21 p.m.

Lord Dean of Beswick asked Her Majesty's Government:

With regard to the recent report by the House of Commons Public Accounts Committee Getting value for money in Privatisations, what is their estimate of the final cost to the Treasury and the taxpayer of the previous government's policy of privatisation.

Lord McIntosh of Haringey

My Lords, the House of Commons Public Accounts Committee report GettingF value for money in privatisations followed the committee's normal practice of not making judgments about the rights or wrongs of the policy of privatisation. However, the report concluded that the way privatisations were implemented in the past meant that the taxpayer did not always get full value for assets being sold. Because there is no easy way of estimating what the full value of the assets would have been, it is not possible to produce a definitive estimate of the final cost to the taxpayer. Any such estimate would be subject to a wide margin of uncertainty.

Lord Dean of Beswick

My Lords, I am grateful to the Minister for that detailed reply. Is he aware that the valuation for the sale of water authorities in Wales and England was £4.4 billion? However, they were sold for £3.6 billion. That is an identifiable figure of £800 million which was chucked away. Is he also aware that when I left Manchester the assets in water were approximately £500 million. Those assets were stolen from local authorities by the last government and flogged off to buy a few boats, with no compensation, despite the pleadings of the former Prime Minister Edward Heath and the late Lord Rippon, a former Secretary of State during that period. They asked the Government to give the money to the people to whom those assets belonged. Is it not about time that the people responsible for that legalised robbery were brought to book for it?

Lord McIntosh of Haringey

My Lords, I am grateful to my noble friend for choosing to refer to the privatisation of water. I refer him to an excellent pamphlet which I wrote after the privatisation of water which was published by the Institute for Public Policy Research in which he will find further ammunition for what he said.

The Public Accounts Committee report refers back to two earlier reports which made two specific criticisms of privatisation of water: first, on the scale of the completion and success fees which were granted: and, secondly, on the major mistake made in selling the shares at one go rather than in stages. However, that is only one of many examples which are in the fascinating report from the PAC.

Baroness Oppenheim-Barnes

My Lords, can the Minister say what estimate has been made by the Treasury as to the amount of taxpayers' money it would have cost if those industries had not been privatised but had still been the subject of debt and subsidy, about which we hear very little?

Lord McIntosh of Haringey

My Lords, I said in my first Answer that there is no definitive estimate of the final cost to the taxpayer. However, I remind the noble Baroness that privatisation has not resulted in the end of subsidy. On the contrary, in the case of the railways the public subsidy to the railway industry has doubled as a result of privatisation and, as we all know, the quality of service has declined dramatically.

Lord Razzall

My Lords, in the light of the Minister's answers to the previous questions, and of the report of the Public Accounts Committee to which he referred, have the Government had any change of mind regarding the future of the Post Office, or London Transport? As the noble Lord will be aware, in both cases there are rumours that the Government propose privatisation.

Lord McIntosh of Haringey

My Lords, I do not comment on rumours.

Lord Mackay of Ardbrecknish

My Lords, is the Minister aware that we welcome the conversion of his Front Bench, if not his Back Bench, to the merits of privatisation? We are not surprised, given the world success of such companies as British Telecom, BritOil, British Airways, British Steel and a whole list of others which are now world leaders. Our example has been followed around the world.

Can the Minister assure us that the privatisation programme will continue under this Government now that they have seen the light? When will the privatisation of, for example, the National Air Traffic Services, the Tote and National Savings be brought forward?

Lord McIntosh of Haringey

My Lords, the noble Lord will not succeed in driving a wedge between me and my Front Bench colleagues on the one hand and my colleagues on the Back Benches on another hand. On the other hand, we are of one mind on these matters.

As the noble Lord well knows, proposals for the extension of public private partnerships in the areas to which he refers were made by the Chancellor of the Exchequer in announcements this summer. Further announcements will no doubt be made by the appropriate Ministers is due course.

Earl Russell

My Lords, the Question asked for the final cost. When we consider such issues as disrepair, is it not a great deal too early to say?

Lord McIntosh of Haringey

My Lords, it is always too early to give the final costs of anything, unless we come to Armageddon within the lifetime of this Parliament. Even if we did, it might be rather difficult to achieve that.

Lord Clinton-Davis

My Lords, does my noble friend recall the grotesquely exaggerated claims made by the then Government about the benefits that would be conferred on the travelling public as a result of privatisation of British Rail? Does he also recall that British Rail was denuded by that Government for some 18 years of the wherewithal to enable the appropriate investment to be made and which was so necessary?

Does my noble friend agree that the omission of any mention of that factor in the question by the noble Baroness on the Opposition Benches is somewhat surprising and misleading?

Lord McIntosh of Haringey

My Lords, anyone who travelled to Blackpool on the Sunday before the Labour Party Conference, as did my noble friend and I, will have first-hand experience of privatisation. To be fair, the Question by my noble friend Lord Dean was much wider. It referred to the analysis of the experience of privatisation, with no fewer than 35 previous reports of the Public Accounts Committee. The report to which I referred is fascinating. It gives a detailed analysis, which deserves the attention of all Members of this House, of the many failings of the previous Government in implementing privatisation.