HC Deb 10 May 2001 vol 368 cc255-6W
Mr. Jenkin

To ask the Secretary of State for the Environment, Transport and the Regions how the principle of reputational externalities is applied to the assessment of bidders for the London Underground PPP. [160530]

Mr. Hill

[holding answer 9 May 2001]: In recognition of the size of the London Underground PPPs and the potential for alternative funding sources, the financial analysis of the PPP bids is based around a number of different scenarios, including ones that allow for a public sector bond-financed London Underground. Where appropriate, an adjustment representing the "reputational externality" is included in some of these scenarios. This is designed to capture the impact additional public sector borrowing would have on the Government's reputation for prudence and therefore on the risk premium demanded on sterling-denominated securities.

Mr. Cohen

To ask the Secretary of State for the Environment, Transport and the Regions what representations Transport for London has made on the policy of preferred bidder status in relation to the London Underground; what control Transport for London will have over the preferred bidder when London Underground comes under the responsibility of the London Mayor; what aspects agreed prior to the transfer will be the sole responsibility of the contractor; and if he will make a statement. [160801]

Mr. Hill

I understand that Bob Kiley, Commissioner of Transport for London, wrote to Sir Malcolm Bates, then chairman of London Transport, on 27 April 2001 giving TFL's views on LT's proposed decision to select preferred bidders for the two deep tube PPP competitions. On 2 May, the LT board—after giving full and proper consideration to TFL's views—selected preferred bidders for these contracts. The preferred bidder for the Jubilee, Northern and Piccadilly Lines infrastructure company is Tube Lines. The preferred bidder for the Bakerloo, Central and Victoria Lines infrastructure company is Metronet.

On 4 May. my right hon. Friend the Deputy Prime Minister announced that he had reached agreement with Bob Kiley on a way forward which will provide a secure basis for progressing the PPP. As a result of this agreement, Mr. Kiley will be appointed LT chairman and will lead negotiations with the bidders aimed at finding a way to meet his concerns on unified management within the framework of the PPP and the current procurement. The way forward protects the key objectives of achieving safety and value for money. The details of this agreement are set out in a memorandum of agreement, a copy of which has been placed in the Libraries of the House.

Mr. Cohen

To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the preferred bidder for London Underground and the public sector comparator; if the preferred bidder has been informed that the comparator must be favourable when the bid is assessed; what information is being given to the preferred bidder about the terms of the comparator; when it is expected to make the terms of the comparator public; and what his policy is in the event that, the bidder receives an unfavourable assessment under the comparator. [160800]

Mr. Hill

The PPPs for London Underground are about delivering best value for both tube passengers and taxpayers. As such we expect the LT board to sign PPP contracts only if they are satisfied that they represent value for money. They will be guided in this decision by the results of a rigorously designed and constructed public sector comparator. This has been made clear to both the preferred bidders for the deep-tube contracts.

A paper describing the methodology used by LT in constructing the comparator was placed in the House Library on 30 March 2000. This paper has been made available to bidders. I understand that LT also intends to make the results of the comparator publicly available once contracts have been signed. To publish the results of the comparator earlier than this would undermine LT's commercial position.

Mr. Jenkin

To ask the Secretary of State for the Environment, Transport and the Regions what negotiations he intends to have over the next month with leaders of the RMT trade union concerning strike action on the London Underground. [160718]

Mr. Hill

None This is an operational matter for the union and London Underground to resolve between them.

Mr. Fitzpatrick

To ask the Secretary of State for the Environment, Transport and the Regions how much London Transport has spent to date on consultancy costs for London Underground public-private partnership. [161063]

Mr. Hill

I understand from London Transport that its expenditure on external consultants from 20 March 1998 (the date of the Government's announcement) to 31 March 2001, for work on the PPP and restructuring of London Underground, was £76.7 million.