HC Deb 02 July 2002 vol 388 cc208-10W
Mr. Austin Mitchell

To ask the Secretary of State for Transport for what reason preferred bidder status was conceded to contractors for the London Underground PPP before closing major parts of the deal; and if he will assess the costs and benefits of reducing competition before final agreements were reached. [65480]

Mr. Jamieson

The negotiation of the PPP contracts is a matter for London Underground. However, I understand that, in line with guidance from the Office of Government Commerce, preferred bidder decisions were taken at the time they were because it was judged that the advantages to be gained from maintaining competitive tension were outweighed by the disadvantages of higher procurement costs and an increased risk of bids being withdrawn.

Mr. Austin Mitchell

To ask the Secretary of State for Transport (1) whether the seven-and-a-half-year review of the 30-year PPP contract for the London Underground is an upwards only review; and what extra costs may fall on his Department for cost overruns; [65482]

(2) what price protection London Underground Ltd has for the 22.5 years for which pricing is not yet established under the PPP; and what the cost is of contract termination provisions of periodic review. [65587]

Mr. Jamieson

In line with the provisions of the GLA Act 1999, the Secretary of State for Transport intends to appoint an independent arbiter. At periodic reviews, the arbiter has the power to set prices at a level appropriate for an economic and efficient infrastructure company. Prices set by the arbiter at these reviews could be either higher or lower than those currently expected. At this stage, it is not possible to say either by how much or in which direction they might vary.

Mr. Austin Mitchell

To ask the Secretary of State for Transport how much will be invested in the tube under the London Underground PPP; how much of this comes from the private sector; and how much of the private sector contribution the Government have guaranteed to pay back. [65484]

Mr. Jamieson

Under our plans for modernising the London Underground, private sector infrastructure companies will carry out an investment and maintenance programme that is expected to amount to at least £16 billion over the first 15 years of the contracts. This will be funded through a combination of private finance and payments from London Underground. The payments London Underground make will vary in line with the level of performance the infrastructure companies deliver. In total, we expect some £6.2 billion in private finance to be raised in the first 15 years.

The Government will not guarantee any private sector finance. However, the Secretary of State does intend to issue a letter of comfort in relation to the London Underground PPPs. This is intended to clarify his role in relation to the Greater London Authority and Transport for London, including his intentions towards providing funding for London Underground. This letter of comfort was reported to Parliament using the Minute procedure on 20 March 2002.

Mr. Austin Mitchel

To ask the Secretary of State for Transport what estimate he has made of the rate of return the private consortia will earn on the London Underground PPP; and what assessment he has made of the fees earned by the financial and legal consultants engaged on developing the PPP. [65485]

Mr. Jamieson

I refer my hon. Friend to the answers given to the hon. Member for Carshalton and Wallington (Tom Brake) on 14 May 2002,Official Report, columns 522–23W.

Tom Brake

To ask the Secretary of State for Transport which business men advised the Government to adopt the structure chosen for the tube PPP; which companies they worked for; and who they work for now. [66495]

Mr. Jamieson

The Government sought a wide range of views before deciding to proceed with the manifesto commitment to modernise the underground through a Public Private Partnership.