HC Deb 20 March 2000 vol 346 cc387-90W
Mr. Cohen

To ask the Secretary of State for the Environment, Transport and the Regions if he will place in the Library a copy of the invitation documents sent to consortiums selected to bid for the two deep-level tube PPP contracts, together with the draft contract for the proposed PPP; and if he will list the members of each consortium which was selected. [114195]

Mr. Hill

The invitation to tender and PPP draft contract contain commercially confidential material whose release could undermine the public sector's negotiating position and prevent best value from being achieved. London Transport has made an overview of the invitation to tender publicly available and I have placed a copy in the Library of the House.

London Underground announced the consortia selected to bid for the two deep-level tube contracts on 7 October 1999. The bidding consortia and their members are as follows:

LINC: Bombardier Prorail, John Mowlem and Company, Fluor Daniel, Alcatel Telecom and Anglian Water

Metronet: Adtranz (Daimler-Chrysler Rail Systems), W. S. Atkins, Balfour Beatty (BICC), Seeboard plc and Thames Water

Tube Lines Group: Bechtel/Halcrow, Amey, Hyder Investments and Jarvis

TubeRail: Brown and Root, Alstom Transportation Projects, Amec and Carillion

The Tube Lines Group has been invited to bid for only one of the two contracts.

Mr. Jenkin

To ask the Secretary of State for the Environment, Transport and the Regions if he is expecting PPP bids for the sub-surface London tube lines by 31 March. [114985]

Mr. Hill

No. London Transport will be inviting bids shortly.

Mr. Jenkin

To ask the Secretary of State for the Environment, Transport and the Regions what London tube lines and stations will be closed during the proposed PPP; and if he will make a statement. [114984]

Mr. Hill

Under the PPP, the private sector will take over responsibility for delivering a massive programme of work on the Tube network, totalling around £8 billion of investment and around £5 billion of maintenance over the next 15 years. This will reduce passenger journey times and make services more reliable, as well as improving the quality of the travelling environment.

As now, it will be necessary from time to time to close some parts of the network for limited periods to undertake essential work. Bidders' proposals in this area will be closely examined when London Underground evaluates the PPP bids.

Mr. Jenkin

To ask the Secretary of State for the Environment, Transport and the Regions (1) what is his policy on continuing with proposals for the London Underground PPP if none of the bids undertakes best value against the appropriate public sector comparator; [114986]

(2) what public sector comparators he will employ to assess whether potential bidders for the London Underground PPP are offering best value for money; and if he will make a statement. [114931]

Mr. Hill

To test that the London Underground PPP represents value for money, London Underground, with their professional advisers, are developing a rigorous public sector comparator. A paper explaining the principles underlying the comparator will be published shortly. The cash values produced by the comparator will also be released, but only once negotiations with bidders are complete. To publish them any earlier would risk jeopardising the taxpayer's negotiating position.

To ensure that the public sector comparator proves a rigorous and fair test, it is to be audited by London Underground's independent, external auditors. In addition, the comparator will be open to detailed scrutiny by the National Audit Office in the usual way.

We will not contemplate deals being done if they do not offer best value to the taxpayer.

Mr. Jenkin

To ask the Secretary of State for the Environment, Transport and the Regions (1) what representations about the political risks associated with the proposed contracts for the London Underground PPP he has received from potential bidders; and if he will make a statement; [114932]

(2) what commitment the Government have entered into to underwrite the bidders' costs of bidding for the contracts for the London Underground PPP; how much he estimates this will cost public funds; and if he will make a statement. [114934]

Mr. Hill

My right hon. Friend has received no representations about political risk associated with the PPP contract. My officials have, however, received a small number of representations about political and other risk associated with the bidding competition.

Under the terms of the Invitation To Tender for the deep Tube infrastructure service contracts, London Underground may make payments to bidders for bid costs:

  1. (i) should the PPP competition be terminated on grounds other than the fact that the bids do not present value for money; or
  2. (ii) where costs are incurred by an unsuccessful shortlisted bidder after London Underground has required offers with committed finances to be submitted.

We are confident that PPP will represent best value and go ahead, and therefore expect there to be no cost to public funds in the first case. If costs are incurred in the second case, arising from the successful completion of the PPP programme, it may be necessary to reimburse the eligible costs from public funds up to a limit of £1 million per shortlisted bidder.

Mr. Jenkin

To ask the Secretary of State for the Environment, Transport and the Regions how much has been spent on professional and consultancy fees in respect of the London Underground PPP; and if he will estimate how much will be spent in total by the time of completion of the PPP. [114933]

Mr. Hill

I refer the hon. Gentleman to the answer given to my hon. Friend the Member for Harrow, West (Mr. Thomas) on 21 December 1999,Official Report, column 525W. London Transport will not know the overall requirements or costs for external advice until the Public-Private Partnership (PPP) transaction has been completed, but the Government are working with LT to ensure that we receive the best advice while minimising the overall costs of implementing the PPP.

Mr. Jenkin

To ask the Secretary of State for the Environment, Transport and the Regions (1) what estimate he has made of how much public funding will be required to support the London Underground PPP; and if he will make a statement; [114980]

(2) what is his latest estimate for the total funding requirement for the London Underground for the period of the proposed PPP; and how this will be met. [114981]

Mr. Hill

Under the PPP, we expect to see around £8 billion invested in the Underground over the first 15 years with around a further £5 billion spent on maintenance. It would not be sensible at this stage, before London Underground have received bids, to estimate how this will be funded. However, we have made clear that if it should prove value for money, then Transport for London will receive the appropriate level of central government grant to allow for London Underground's need to make any payments to the PPP contractors.

The PPP is about obtaining best value in the way that farebox revenue and any public subsidy is spent. The evidence indicates that the PPP will be better value than the wholly public sector alternatives, even if central government grant continues to be paid.

Mr. Jenkin

To ask the Secretary of State for the Environment, Transport and the Regions what representations he has received from potential bidders for the PPP contracts on the London Underground concerning shortfalls against costs of the PPP. [114982]

Mr. Hill

None.

Mr. Jenkin

To ask the Secretary of State for the Environment, Transport and the Regions what cap he will set on increases in fares on the London Underground under the proposed PPP. [114983]

Mr. Hill

Fares on the London Underground will be a matter for the Mayor. The economic analysis London Underground and their advisers have undertaken for the PPP assumes that fares will do no more than keep pace with inflation once the PPP is in place.