I beg to move amendment No. 84, in page 76, leave out line 31.

With this, it will be convenient to discuss the following: Amendment No. 35, in page 76, line 31, at beginning insert

`On the date of the first meeting of the Assembly under section 44(1) above,'.

Government amendments Nos. 85 to 92.

Government new clause 16—Transfers of LRT's property etc to Transport for London.

Government new clause 17—Functions during the transition from LRT to TfL.

Government new clause 18—Fares etc during the transitional period.

Government new clause 19—Continuity: repealed or revoked functions of LRT.

Government new clause 20—Transfer of former functions of London Transport Executive.

Government new clause 21—Dissolution of London Regional Transport.

Government new clause 22—Interpretation of Chapter XIV.

The new clauses and amendments provide for a staged transfer of functions and undertakings from London Transport to Transport for London. Mindful of the importance to Londoners of our underground system, the Government's policy will preserve the elements of the existing system that tube users value: a single public sector operating company; unified planning; the integration of services; unified ticketing; and the retention of travelcard in the public sector.

The public-private partnership will address the root cause of most problems with the network—past underfunding and underinvestment—by bringing in substantial private sector funds to improve the services, providing greater reliability; refurbished stations; improved trains; upgraded signalling; faster journey times; and greatly improved access for disabled people. There will be real local democratic accountability via the mayor, who will have ultimate responsibility for the underground.

The Government intend to hand over the underground to the mayor knowing that all those benefits have been secured. My right hon. Friend the Deputy Prime Minister made it clear on Second Reading that once the public-private partnership process was under way, the Government would see it through to completion. London Transport will remain in existence under ministerial sponsorship until the PPP contracts are let.

After 3 July 2000, for a transitional period, Transport for London and London Transport will exist in parallel. On completion of the PPP the mayor will be responsible. A full explanatory paper has been provided, setting out what will happen during the transitional period.

The Minister said that the Government's proposals ensure full democratic accountability. Is it still the Government's intention that the new governing body for London will have no say in the system for which it will be accountable?

I am somewhat perplexed by that question, because I have made it abundantly clear that after the completion of the public-private partnership, responsibility for Transport for London, which will include every aspect of public transport in London, will lie with the mayor. I can think of no greater democratic transparency or credibility than that the individual who will be responsible for London's integrated transport should have been placed in that high office by the people of London.

The Minister is still ducking the question. Will she confirm that it is still the Government's policy that the mayor and the assembly will have no say in the transport system—with the financial arrangements and those between the private and the public sector—for which they will be accountable? They will be told that they have to run it, but they will have had no opportunity to influence the arrangement that has been made.

The hon. Gentleman is leaping ahead to amendments that we will debate later. Should the PPP not have reached completion before the mayor is in office, there will clearly have to be close co-operation and consultation with the mayor. If the hon. Gentleman is attempting to refloat the argument that has informed the majority of Liberal Democrat contributions to our debate—that not the mayor but the assembly should be the executive arm of the GLA—let me repeat that it is as hollow today, given our clear commitment to the structure of the GLA, as when it was first voiced in Committee.

We have repeatedly made it clear that the PPP negotiations will not take place against a self-imposed deadline. That would obviously compromise the Government's ability to achieve best value. No one will be surprised to hear that we cannot accept amendment No. 35, which would set an arbitrary date for the dissolution of London Transport. New clauses 16 to 22 and amendments Nos. 84 to 92 will allow us to implement our policies. The new clauses will form a new chapter to part IV of the Bill: chapter XIV.

New clauses 16 and 19 to 22 are intended to replace clauses 144 to 147 in the latest print of the Bill. They allow for the staged transfer of LT's undertaking and functions to TfL. Amendments Nos. 84 to 92 are consequential and would simply remove clauses 144 to 147 and replace any references to them.

New clause 16 makes it clear that the staged transfer will be implemented under the general transfer powers in part XII of the Bill.

I am interested in the question of stages. Will the Minister comment on the suggestion in the Evening Standard of Wednesday 28 April that the delay in transferring the semi-privatised, private finance initiative infrastructure of the tube to Transport for London will cost the Treasury so much that fares will have to go up by 30 per cent. to meet the shortfall? Is that figure correct?

Neither the story nor the figure is correct. Despite what has appeared not only in the Evening Standard but in other organs of the press, such stories are mere speculation. We have made it abundantly clear that the process—a public-private partnership, not semi-privatisation or, indeed, a private finance initiative, as the hon. Gentleman implied—is on course.

Will the hon. Lady give way?

If I may, I shall finish my response to the question of the hon. Member for Ruislip-Northwood (Mr. Wilkinson). The fantastic fares cited in newspapers are absurd.

The Minister says that the story, which was properly raised by my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson), is not correct. The point is that it is not a story; it is a report by Chantrey Vellacott, a well-known and respected firm of accountants, which calculates that if the Government's plans for the PPP continue as they have set out, fares will need to rise by 30 per cent. to pay for them. There is no speculation. That is the opinion of people who know much about the subject—dare I say more than either the Minister or me?

I am perfectly prepared to accept that most people know more about this than the hon. Gentleman, but I certainly rebut the idea that I am as ignorant as he claims. It is not for me—or, I presume, the hon. Gentleman—to define a sense of pique that may rest in the bosom of one firm of accountants which had no part in the detailed examination of the proposals that informed the Government's policy on PPP. I repeat that such stories are mere speculation; they are not founded on any sort of fact; they are mere scaremongering. I wish that I were surprised that the official Opposition had participated in such scaremongering stories, but I regret that it is somewhat par for their particular course.

New clause 17 sets up a legal framework in which both London Transport and Transport for London will have the necessary powers and duties that they will need to run their respective public passenger transport services during the period when both are in existence. For the duration of the transition, London Transport, the mayor and Transport for London will also be under a duty to consult and co-operate with each other for the following transitional purposes: ensuring that public passenger transport services are not disrupted, securing the PPP agreement and transferring the property, rights and liabilities of London Transport to Transport for London. New clause 18 places a duty on the mayor to have regard to the financial and other interests of London Transport when setting the general level and structure of fares for London Transport, or negotiating the concessionary fares agreement on behalf of LT.

New clause 19 provides for Transport for London to take over LT's legal liabilities. New clause 20 is necessary owing to the eventual repeal of the London Regional Transport Act 1984, in order that Transport for London should inherit certain necessary powers from LT. New clause 21 allows the Secretary of State to dissolve LT by order when all its property, rights and liabilities have been transferred. New clause 22 defines two of the major terms used in new clauses 16 to 21. 1 commend the new clauses to the House.

I will not drag the debate down to the Minister's level.

This group of amendments relate to the transfer of London Underground to the authority. They are necessary only as a result of the shambles that the Government are in over their plans to transfer London Transport's undertakings to the new authority. They have no idea how they will get there, no idea where they are coming from, and no idea of the finished project. The Minister takes the biscuit when she says that the process is clear and easy for everybody to understand and that no one is as bright and intelligent as she is. I am sorry, but we are simply not as gullible as that.

In response to the hon. Member for Southwark, North and Bermondsey (Mr. Hughes), the Minister talked about whether the public-private partnership would be ready. The only reason why the amendments and new clauses have been tabled is that the PPP will not be ready. If she thought that it would be, there would be no need for the amendments because the transfer could be completed before the elections next year.

4.30 pm

The Minister said that the Government refuse to be tied to a deadline for the transfer because they want to achieve best value. I have to say that that is a pretty good line, but it does not fly. The Minister is not tied into a deadline because she has no idea when she will be able to reach her conclusions about setting up the PPP and when it will be transferred.

We have an awful lot to say about the PPP and its transfer, and about the nature of London Underground and its relationship with the new authority. I shall not waste the House's time by saying it all twice, so I shall save my remarks for the next group of amendments, which relate directly to the PPP rather than to the transitional arrangements.

We started considering a Bill whose original clause 144 is very simple and which states:

"London Regional Transport shall cease to exist."

We assumed that that would happen when the Bill became law, or at least when the Bill was implemented as an Act. In other words, LRT would cease to exist on the day the Act took effect. That was always the proposition, and the presumption.

In Committee, Liberal Democrat Members, with the Conservatives, explored the issue. We discovered that Alice, from "Alice in Wonderland", had walked across the Bill, in that clause 144 now meant that London Regional Transport shall not cease to exist. The reason was that the Government had decided, in the period since the Bill was published, that they would have to keep it going. We asked how long LRT would exist before ceasing to exist, but answer came there none.

The Government new clauses that are to substitute for the original—and very simple—clause 144 are hugely longer. They propose a set of transitional provisions that do not say when that transition will begin or end. As the hon. Member for Croydon, South (Mr. Ottaway) said, it became apparent that the plan had run into the sidings—or at least into a tunnel—and that the Government are not willing to reveal what is really going on.

We are willing to let the Government tell us that they are on target for the timetable set out on Second Reading by the Secretary of State for the Environment, Transport and the Regions. My questions relate to what he told us on Second Reading on 14 December, and to the Government's proposals in the amendments.

The timetable set out on Second Reading is the precondition to the public-private partnership. The Secretary of State said that London Regional Transport would be restructured in the first half of 1999 into an operating division and three infrastructure divisions. My understanding is that that has happened. He added that the aim would be to invite expressions of interest from infrastructure bidders early in 1999. It is understood that the invitation went out and that some people have responded. Will the Minister confirm that the date by which people were asked to express an interest has passed? Are all the expressions of interest that have been considered now with the Government? Even if she is not at liberty to say who has expressed an interest, will the Minister say how many such expressions were received?

I understand that the Government intend the Bill to be enacted by the summer. Will the Minister say when the Government propose to start the transfer referred to in new clause 16, which will allow the Secretary of State to set up programmes for transferring London Regional Transport's property, assets or functions? What is the first date for such a transfer?

Can the Minister say what is the last date by which the Government intend London Regional Transport' s property, obligations, assets and so on to be transferred?

Bet she can't.

I am not willing to take that bet because I do not believe anyone could win it. I understand, but I am willing to be proved wrong, that the Government do not yet know.

Government new clause 21 says that LRT will be dissolved by the Secretary of State when he or she is satisfied that all functions have been adequately transferred. Does that mean under the current Government? Would it be in the next Government's period in office, or the one after that? Does it require the Labour party to be in office for a generation, or two? May we have some idea?

To their credit, the Government faced the electorate on certain specific pledges. For example, taking 100,000 off the waiting lists was an early pledge. We are still waiting,

as it has not yet been quite delivered, but other pledges were made, and all of them were given time frames. What is the time frame for this one?

Finally, I was not surprised to hear the Minister say that she was not minded to accept amendment No. 35. We took a simple view that anyone who believed in devolving power and responsibility for London transport to the new government for London should transfer responsibility to that new government once it had been set up. There is nothing complicated about that idea. It resembles tomorrow's Scottish elections, in that the plan is that once the people of Scotland have voted for their Parliament, power over a range of matters will be transferred to Scotland in a few weeks, which the Liberal Democrats welcome. The same applies in Wales.

We had understood, naively perhaps, that when the Government said that they would, from next July, set up a new Greater London assembly, then once elected, the new mayor and deputy mayor would assume responsibility. When London government returns next year it will be welcome because many of us believe that there should be democratic government. However, will it or will it not take on responsibility then for London transport?

If the answer to that question is no, a whole raft of proposals for the work that the London government will do will become theoretical. It will have work to do, but the proposition that it will take over transport clearly will not come to pass. If the Government cannot tell us by which date the new underground system will be handed over—whether or not the new mayor and assembly should have a say in its form—the election campaign will be interesting. Mayoral candidates will produce policies for running a transport system that they may not be able to run during their entire term of office.

That is Alice in Wonderland politics. People are invited to stand for election to run London transport, but may not be given that prize before leaving office four years later. That is nonsense. The Government would do us all a service by loosening the apron strings and not being the nanny state. They must allow the mayor and the assembly, whoever they are, to take responsibility and to be accountable. If they do a wonderful job, they will be applauded. If they do a bad job, they will be kicked out. But if we are to have devolution, let us have it, not never-neverland, say-one-thing-and-do-another politics that replaces the simple proposition that LRT will go with clauses saying that it might be with us for the rest of our lives.

Only rarely do I agree with the hon. Member for Southwark, North and Bermondsey (Mr. Hughes). Rather more often, I agree with my hon. Friend the Member for Croydon, South (Mr. Ottaway). Today, I may speak briefly because they have spoken exactly as I would have wished to. The amendments would transfer responsibility from "London Regional Transport" to "Transport for London". It is no great radical leap in terms of the words used.

I accept what the Government intend to do, but I do not agree with it. Of all the amendments that have ever been proposed to a Bill, these Government amendments represent the most radical changes to the Bill as originally published. Vast changes are to be made to the Bill that the Government presented to the House: almost every amendment begins, "Leave out", and proceeds to delete chunks of text, in addition to which there are seven new Government clauses in this group. Talk about politics on the hoof—the hon. Member for Southwark, North and Bermondsey might have got lost in the tunnel, but the train appears to have gone off the rails.

The reason is simple: the Government realise that investment in London's transport is desperately needed, even though, goodness knows, investment increased dramatically under the previous Government. In the 1970s, the average level of investment in London transport was less than £50 million a year, whereas in the 1990s, the average was more than £500 million a year, and the figure is even higher today—but, whatever the sum, it is never enough. The reason for that is chronic underinvestment—especially in the underground system—during the 1950s and 1960s, when fewer people started to use the underground.

The only practical, realistic way in which to get investment for the London underground system—indeed, for London's transport as a whole—is privatisation. However, the Government do not like the word "privatisation" and, because their pre-election speeches were all about what an awful thing privatisation is, for the past two years they have been desperately searching for an alternative form of words that will enable them to get what they want without having to announce it to the country. Instead of "private finance initiative", they have come up with "public-private partnership". However, I have to tell them that, if the public-private partnership does not have control over assets, it will not put in the investment—it is as simple as that.

To return to the theme that I introduced yesterday, it is clear that what has been devolved to the people of London is a sham. The hon. Member for Southwark and North Bermondsey—sorry, the hon. Member for Southwark, North and Bermondsey; I suffer from dyslexia at this time of day—was absolutely right to say that there is to be no real devolution to the people of London. He mentioned that the Scots would be voting for their new Parliament tomorrow. The population of Scotland is 5 million, whereas there are 7 million people in London, but what the Government are not devolving to London is an insult when seen in comparison with what is to be devolved to the people of Scotland. London devolution is a sham—the Government's policy is all shadow and no substance. I support my hon. Friend the Member for Croydon, South in resisting the amendments.

Mr. Deputy Speaker, I wish that you had been in Committee when the Government dropped the bombshell that London Regional Transport would have to continue and that Transport for London could not assume the assets of London Transport underground because the public-private partnership, on which had been predicated all the Labour Government's fine plans for modernising the tube, would not now or in the foreseeable future go ahead. That little statement was slipped into our proceedings, and the Minister might have been surprised at the uproar that it caused. However, the fact that the uproar was justified can be seen in the scale and scope of Government amendments Nos. 84 to 92 and, above all, Government new clauses 16 to 22. As my hon. Friend the Member for Chipping Barnet (Sir S. Chapman) so eloquently explained, there can be few occasions in recent parliamentary history when such vast tracts of a major Bill have had to be completely rewritten. More than that, the Labour party's manifesto for London at the general election should have been rewritten. It is demonstrably a fraudulent document.

4.45 pm

On transport matters, I think that The Times is normally fairly sympathetic to the Government's transport proposals. In an article in the business section on Tuesday 4 May, it postulated that the tube sell-off faces delay until after the next general election. The article written by the transport correspondent, Arthur Leathley, states:

"The sell-off of London Underground is now so badly bogged down in a funding row between the Treasury and the Department of Transport and doubts over the availability of private finance that it will almost certainly have to be delayed until after the general election."

The article continues:

"Officials now concede that the private sector cannot take over the project until at least the spring 2001. But this is viewed by many observers as the likely date of the general election."

That is a year after the election for the Greater London Authority. As the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) said, the election campaign will be transformed by this fact, with candidates postulating policies for a potentially nugatory role. We are talking about the Greater London Authority integrating London's transport, including the tube; manifestly, in respect of the underground services, it will not be able to carry that out.

Notwithstanding that background, transitional arrangements are set out in the new clauses. I am glad that this is so. However, I think that the general public will be more worried about the funding gap than technical transitional arrangements. The failure in finding private finance means that the taxpayer will have to pick up the tab. It was imagined that leases of 25 years for the running of the tube's infrastructure would allow modernisation to take place over the first 15 years, and that private sector moneys would be available. Those moneys will not be available. The Treasury subsidies will be withdrawn from the beginning of the next financial year. They amount to about £350 million, and are badly needed by the underground management.

Who will make good the difference and see through the transition which will lead eventually, one hopes, to the assumption by Transport for London of its rightful role, ultimately taking responsibility for the tube? If the answer is the travelling public, they will be extremely upset. Conservative candidates will certainly highlight the additional risk that London commuters will have to pick up the tab in the election campaign unless the Government are able to say now that the Treasury will make good the difference and that the fears of some of us are wholly unrealistic.

There is one ray of hope which may change the transition schedule. It is the suggestion that I have read in the press today that Railtrack will assume responsibility for the running of the infrastructure of London Transport underground. If that is the case and a white knight such as Railtrack is to emerge at the 11th hour, I suppose that that is potentially good news. However, such a move would take away the element of competition that we had imagined was at least possible under the Government's arrangements. It will be a monopoly system. Whether that accords with what the Government have in mind, only the Government can say.

It is clear from the Report stage today that the Government have let the electorate of London down on one of the foremost elements of their 1997 election campaign. For the past two years, until the Standing Committee proceedings in March, the Government have not come clean and admitted that the transfer of the underground to Transport for London will not take place in the foreseeable future. Even now, the Government cannot give a date when Transport for London will assume the responsibilities that everyone expected it to take over on 3 July 2000. That is an admission by the Government of their failure to be candid with the electorate and to administrate on a central plank of their transport policy for London.

I am grateful to my hon. Friend for giving way, as he is developing a powerful case. Is not the situation especially serious in the light of the 36 per cent. increase in tube breakdowns since the general election. and the 20,000 breakdowns on the London Underground tube network over the past 12 months alone?

As ever, my hon. Friend has the facts at his fingertips. The House is grateful to him for the knowledge that he brings to these matters. The figures that he quoted demonstrate how essential is the new investment that the Government promised would occur through the public-private partnership. That will not happen unless the Treasury provides the funds. There is no indication in any Government document that I have seen from the Treasury, in any of the press speculation or in any of the commentaries in the transport press that the Exchequer is prepared to make good the difference.

That being so, the network will continue to deteriorate, the breakdowns will become more numerous and possibly more severe and, above all, the passenger is likely to have to pay more. That is the end result of Labour Government failure. The travelling public should be aware of the facts, and I am glad that we have had the opportunity to make plain these unpleasant realities.

That was one of the most fascinating contributions that I have been privileged to hear in the Chamber. Member after Member of the official Opposition expressed bemusement at the Government's proposals with regard to the transition from London Transport to Transport for London. I find it hard to believe in their bemusement, as my right hon. Friend the Deputy Prime Minister stated in the House on Second Reading that there would indeed be a transitional period.

The hon. Member for Croydon, South (Mr. Ottaway) clearly does not understand the complexity of the London underground. We are not selling a train set. We have the dread lesson of the experience of watching his Government enter into rail privatisation. They were so driven by a date, and by the desperate desire to offload a problem that they had neither the imagination nor the energy to tackle, that they cost the country billions of pounds. They sold off national assets for a fraction of their real worth, they fragmented an integrated railway system into 100 separate operations, and now they have the audacity to suggest that we should follow that disastrous example in pursuit of an empty date.

Our objective is to provide the best value and to ensure that adequate funding to modernise London's underground is brought into place, after more than a decade of lamentable stewardship by the previous Administration.

The hon. Member for Southwark, North and Bermondsey (Mr. Hughes) expressed similar bemusement. I have a clear recollection that he was in the Chamber when my right hon. Friend the Deputy Prime Minister made his statement. The hon. Gentleman asked questions with regard to the state of the public-private partnership. I can tell him that there have been no expressions of interest, and none has been invited. There have been no invitations for pre-qualification. There has been great interest from the private sector, as I have had occasion to say before in the House.

I also took on board the hon. Gentleman's point about Alice in Wonderland, because I was strongly reminded during his contribution of the White Rabbit desperately consulting a watch and crying all the time, "I'm late, I'm late!" He also seems to believe that the Government should be driven by some artificially imposed end date. That is not the way to produce the best possible value and the best possible results for the people of London in respect of the underground.

All official Opposition Members who spoke were bemused at what the situation will be, but the Government, through the statement made by my right hon. Friend the Deputy Prime Minister on Second Reading, made that abundantly clear. However, the hon. Member for Chipping Barnet (Sir S. Chapman) was quite right. We are introducing radical and reforming changes, and there is a clear and desperate need for investment, as I have already had occasion to say, because of the previous Administration's lamentable stewardship of London Underground and because of their grievous lack of investment for at least a decade-not because of a lack of investment between the '50s and '60s. If I remember correctly, the core funding for London Underground was halved in the 1996 Budget.

Nor do we come new to the idea of public-private partnership by virtue of being in government. My right hon. Friend the Deputy Prime Minister has been advocating public-private partnership for a considerable number of years—since well before the 1997 election.

The hon. Member for Chipping Barnet said that our proposals were a sham. I must tell him that the people of London voted for what the Government propose and they do not perceive our proposals as a sham. They perceive that there has to be a means of attracting adequate investment to ensure that the tube, which is one of the arteries of London, can maintain its proper place in moving them around this great city.

All I ask the Minister to do when she returns to her Department is check out the facts. In the 1970s, the average investment in London Transport as a whole—90 or 95 per cent. of which went on the London underground—was under £50 million a year. The Conservative Government brought that figure up, from 1979 to the 1990s, to £500 million a year or more. Indeed, the figure was about £750 million when we left office. Does she remember that? If she is disparaging what she calls the "lamentable" performance of the previous Government—that beggars belief—what on earth would be her epitaph for the previous Labour Government?

Will the Minister remember one other thing? She condemns the way in which we privatised the railways, but does she admit that, thanks to privatisation, the fares of the railway companies are less in real terms than they were before privatisation? The fares on the London underground have gone up way beyond inflation.

The most recent fare rise on the London underground was not way above inflation. I believe that it was 3 per cent., which is a marked contrast to the fare increases under the previous Administration. From 1986 to 1996, fares rose by an astronomical 38 per cent. in real terms.

The hon. Gentleman referred to the investment made by the previous Government; the core funding figures from 1994 to 1997 show £399 million, £462 million, £251 million and £175 million. One of our first acts on taking office was finding an additional £365 million for London Underground, which ensured for two financial years that it had more than £1 billion to carry out necessary modernisation and the rolling back of necessary work on the underground. The failures of the previous Administration meant that, year on year on year, London Underground had been incapable of doing such work—it was impossible for it to plan.

Will my hon. Friend confirm that the investment figures quoted by the Opposition include investment in the Jubilee line and investment required to resolve the problems arising from the King's Cross disaster?

My hon. Friend is entirely right. The figures that I just read out, to stunned silence on the Opposition Benches, exclusively related to the core funding. They excluded the Jubilee line extension costs to which my hon. Friend referred.

The Minister has taken just one particular part of the funding. If she looks at the total funding, she will find that the figures are very different from those that she quoted. Will she confirm that, for the 10 years from 1987 to 1997, the previous Government invested an average of some £700 million per annum, whereas, under the Labour Government, the average has been £500 million?

The hon. Gentleman can move the figures backwards and forwards as much as he likes; the fact remains that the core funding over the period to which he refers was reduced by the previous Administration. The proof of the pudding is in the eating. One has only to look at the state of the London underground when we came to office. Over 18 years, no major improvements were made in the core investment necessary to maintain one of London's vital arteries.

It is important that we clarify this point, and I can think of no better authority than the Department's annual report for 1999. May I draw the Minister's attention to paragraph 13(d) on London transport investment? Unfortunately, the figures start at 1993–94 and run for the six years to 1999–2000. I say "unfortunately", because the figures would be even more impressive if they went back further than 1993. In 1993–94, the core business was £520 million; in 1994–95, it was £554 million; and, in 1995–96, it was £589 million—compared with the figures for 1998–99 and 1999–2000, which were £394 million and—

What about the intervening years?

The intervening years were better still: 1996–97 was the only year in the last decade when that figure fell below £400 million.

Half.

My hon. Friend the Member for Mid-Bedfordshire (Mr. Sayeed) is absolutely right. The level of investment over the past decade has been, on average, £700 million per annum. The source for that information is the submission by London Underground to the Select Committee on the Environment, Transport and Regional Affairs. The Minister is responsible for London Underground, but she may not know what her own organisation is saying.

Order. The amendments are on the specific subject of transition, but we are now discussing investment, funding and the record of previous Governments. There must be a narrower discussion on the amendments before us.

Thank you, Mr. Deputy Speaker. May I simply say that, if the previous Administration were so committed to maintaining and modernising London Underground, I find it somewhat surprising that their only response was to sell it off?

The hon. Member for Ruislip-Northwood (Mr. Wilkinson) referred to the speculative stories that have been appearing in the London press. He referred in particular to one in The Times. I am sure that he is aware that it was virtually a rerun of a similar speculative story that appeared in the Financial Times several weeks ago.

The hon. Gentleman was also much concerned about what he perceives as a funding gap before the public-private partnership for London Underground is completed. We have made it abundantly clear, both inside and outside the House, that we are cognisant of the importance of London Underground and would never, ever allow it to fall into what Opposition Members have called a black hole.

The phrase "a black hole" has a resonance with the general public, who are genuinely and rightly concerned. Did the Minister not admit in the Standing Committee that, for the transitional period at least, passengers on the London tube would have to continue to pay fare rises over and above the rate of inflation? She said that that would be the case for the foreseeable future—we have no date.

What will happen during the transitional period between the assumption by the Greater London Authority of its responsibility and the assumption by Transport for London of its intended responsibility for London Transport underground? The Exchequer has made no provision for the necessary investment. Does she have any figures with which she can reassure the House and the travelling public?

That is not what I said in Committee about fares. I referred to the fare modelling on which the public-private partnership was based, and said that the modelling assumed a fare increase of the retail prices index plus one for the years 2000 and 2001 and, after that, the assumption was RPI plus zero. The general public in London can be in no doubt about the importance that the Government attach to London Underground. The hon. Gentleman is incorrect to say that the public are fearful.

One of the first actions that we took when we came to office was to provide an additional £365 million for London Underground. There is no way in which we would not continue to ensure that this vital part of London's public transport system serves the people of London. It will be the mayor's responsibility to set fares.

The hon. Gentleman also referred to a story that has appeared in the newspapers about Railtrack—it is again somewhat fantastical. It is interesting that that story has prompted a statement from the TubeRail Consortium, which says:

"TubeRail remain as committed now to the London Underground PPP process as we have since it started—along with a number of other consortia.

We have some very innovative proposals which will bring real benefits to London's passengers as well as offering best value to the taxpayer.

Like the Government we believe strongly in a competitive process which will ensure the real value of bidders' proposals is properly tested. A single hid for the network would not deliver that."

The TubeRail Consortium comprises Alstom, Amec, Brown and Root and Tarmac Construction.

I do not know how near the Minister is to the end of her speech, and I assume that she will deal in a minute with the specific questions that I asked her about the beginning and the end of the transition. I want to make sure that she will give us an answer on a matter that she touched on. She said that no expressions of interest have yet been sought. On 14 December last year, the Deputy Prime Minister said:

"The aim will be to invite expressions of interest from potential infrastructure bidders early next year."—[Official Report, 14 December 1998; Vol. 322, c. 630.]

What is now the timetable, given that we are in May and, by most definitions, "early next year" must be running out?

The hon. Gentleman clearly enjoys playing the White Rabbit. He is obsessed with time. Every time he gets to his feet, all he needs is the prop of the watch. I shall repeat what I said to him earlier: there have been no invitations from anyone to anyone for expressions of interest. The process is one of pre-qualification. The first stage of pre-qualification will be due later this spring. London Transport published a progress report on 15 March, and I repeat that there is great private sector interest in the public-private partnership. I have just read out the statement made today by TubeRail.

Will the Minister give way?

If I may, I should like to finish responding to the hon. Member for Southwark, North and Bermondsey. We have made it abundantly clear that we will not be driven by an artificial date; we will be driven only by that which is in the best interests of the public and will deliver best value.

The Minister says that she will not be driven by an artificial date, but a date is already specified in the proposals: that date is May 2000. According to Treasury figures, there will be no subsidy after May 2000. The fact is that the Government are well behind their plans for public-private partnerships. If PPP does not come about by the specified date, how will the Minister fund the tube?

May 2000 is important because that is when the mayor and the assembly will be elected in London. The hon. Gentleman should note that we are discussing amendments and new clauses that will bring about the transition from London Regional Transport to Transport for London. There is no date for when PPP will be completed, because, as I have said, the Government will not be driven by the artificial end dates that, as far as the people were concerned, proved such a disaster under Administrations hell-bent on rail privatisation.

Will the Minister give way?

No.

Those end dates cost the people an enormous amount. They were a gross waste of national assets. This Government are driven by a wish to provide best value for the taxpayer, and they will deliver the best of all possible values in terms of investment in London Underground.

rose—

Now I will give way to the hon. Gentleman.

If the Government are untroubled by dates, why, at the end of last year, did the Deputy Prime Minister blunder into talking about invitations for expressions of interest early this year—and why is it now necessary for his junior colleague to rescue him?

My right hon. Friend the Deputy Prime Minister never blunders. I do not understand what the hon. Gentleman is talking about.

I believe that I have answered all the questions put to me. I commend the amendments and new clauses.

I beg to move amendment No. 79, in page 88, line 1, leave out from beginning to end of line 16 on page 98.

With this, it will be convenient to discuss the following: Amendment No. 22, in page 88, line 24, leave out 'must not' and insert 'may'.

Amendment No. 23, in page 88, line 25, leave out 'must not' and insert 'may'.

Amendment No. 24, in page 88, leave out lines 27 to 29.

Government new clause 37—The PPP arbiter.

Government new clause 38—Terms of appointment etc of the PPP arbiter.

Government new clause 39—Staff of the PPP arbiter.

Government new clause 40—Directions of the PPP arbiter.

Government new clause 41—Guidance by the PPP arbiter.

Government new clause 42—Duty of PPP arbiter.

Government new clause 43—Further powers of the PPP arbiter.

Government new clause 44—Provision of information to the PPP arbiter.

Government new clause 45—Immunity of PPP arbiter.

Government new clause 46—Expenses of the PPP arbiter.

New clause 3—Funding and Management of London Underground—

`The Mayor shall not be bound by any Public Private Partnership entered into by London Regional Transport or Transport for London and shall be free to enter into any method of funding and management of London Underground including a long lease of management, maintenance, replacement of rolling stock and operation to a private contractor.'.

New clause 5—Public interest company if PPP agreement not signed—

`(1) If no PPP agreement has been signed by 1st July 2000, the Mayor and Assembly shall be permitted to establish a public interest company as defined by subsection (2) below.

(2) In this Chapter "public interest company" means a company—

(a) a majority of whose issued shares are held by or on behalf of any of the bodies or persons falling within paragraphs (i) to (iv) below;

(i) any Minister of the Crown, Government department or other emanation of the Crown;

(ii) any local authority;

(iii) any metropolitan county passenger transport authority;

(iv) any body corporate whose members are appointed by a Minister of the Crown, a Government department, a local authority or a metropolitan county passenger authority or by a body corporate whose members are so appointed;

(b) in which the majority of the voting rights are held by or on behalf of any of the bodies or persons in subsection (2)(a) above;

(c) a majority of whose board of directors can be appointed or removed by any of the bodies or persons in subsection (2)(a) above;

(d) in which the majority of the voting rights are controlled by any of the bodies or persons in subsection (2)(a) above, pursuant to an agreement with other persons; or

(e) a subsidiary of a company falling within subsections (a) to (d) above.

(3) The public interest company may borrow money for investing in transport in Greater London.'.

New clause 9—Public interest company if PPP agreement not signed(No.2)—

'.—(1) If no PPP agreement has been signed by the date of enactment of this Act, the Mayor and Assembly shall be authorised to establish a public interest company as defined by subsection (2) below to take over from London Underground Limited.

(2) In this Chapter "public interest company" means a company—

(a) a majority of whose issued shares are held by or on behalf of any of the bodies or persons falling within paragraphs (i) to (iv) below:

(i) any Minister of the Crown, Government department or other emanation of the Crown;

(ii) any local authority;

(iii) any metropolitan county passenger transport authority;

(iv) any body corporate whose members are appointed by a Minister of the Crown, a Government department, a local authority or a metropolitan county passenger authority or by a body corporate whose members are so appointed;

(b) in which the majority of the voting rights are held by or on behalf of any of the bodies or persons in subsection (3)(a) above;

(c) a majority of whose board of directors can be appointed or removed by any of the bodies or persons in subsection (3)(a) above;

(d) in which the majority of the voting rights are controlled by any of the bodies or persons in subsection (3)(a) above, pursuant to an agreement with other persons; or

(e) a subsidiary of a company falling within subsections (a) to (d) above.

(3) The public interest company may borrow money for investing in transport in Greater London.'.

If anything illustrates the ideological battle at the heart of the Government, it is the delay, dither and lack of policy on London underground. The Government have learned how to use the language of the marketplace; they have learned how to pay lip service to the value of the private sector; but, when it comes to the crunch and they have to face up to tough issues such as the future of London underground, they chicken out and return to their old Labour roots.

What party on earth other than the Labour party promises improvements to London underground in its manifesto, and then comes up with a scheme that offers less investment than was offered by their predecessors, and says that the solution is to leave London underground in the hands of its present management?

As my hon. Friend the Member for Buckingham (Mr. Bercow) said, the standards of London underground are slipping, and the problems have become increasingly acute during the past two years. The Department's own figures state that in 1994–95, more than 16,000 delays were caused by faults in rolling stock. That figure fell over the next few years, before rising to more than 20,000 this year. Signal failures are up, as are other track faults; breakdowns and signal failures are daily occurrences. Poor conditions, delays and people missing connections are a fact of life, and the Government are taking no positive action to improve the situation.

Since taking over the underground, the Government have cut investment. Table 13.d of their own annual report, to which I referred when we were discussing the previous group of amendments, shows a sharp fall in London Transport investment. As my hon. Friend the Member for Mid-Bedfordshire (Mr. Sayeed) pointed out, no investment has been announced for next year, and the Treasury is ordering the Deputy Prime Minister to take the money out of the road maintenance programme.

5.15 pm

In their last decade in office—which is increasingly looking like a golden era—the Conservative Government invested, at today's prices, £8 billion. We were the first to admit that that was not enough, and that we needed to bring in the private sector to secure extra investment. What is this Government's answer? A public-private partnership which will introduce £7 billion over 15 years. That is half a billion pounds a year, and about the same level of funding that the Government are providing at present as a temporary measure.

Why do the Government not admit that their plans for PPP are in a mess? As all the contractors involved are deeply wary of the Government's intentions, it now looks increasingly likely that the plan will not be up and running when the mayor takes office next summer, and quite likely that the funds will not be flowing by the summer of 2001. My hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) referred to a story in The Times yesterday, headed

"Tube sell-off faces delay until after next election".

A whole Parliament will have gone by, and the Government will have failed to deliver on their pledges. The reason for their inability to deliver on their pledges is their inability to embrace the private sector, and to use it whenever necessary or whenever it can help.

It is well worth making a comparison with the privatised railways. The railways carry only a few more passengers per annum than the underground, but the differences in proposed levels of investment are startling. The state-owned underground can expect £7 billion over the next 15 years if it is lucky, and fares are rising. A recent report by the chartered accountants Chantrey Vellacott, which was mentioned earlier, suggested that fares would have to rise by 30 per cent. to pay for the PPP. On the other hand, privatised rail fares are falling, and no less than £27 billion of investment has been pledged for the next 10 years.

I shall deal with the question of performance shortly; but what a contrast that is. The Government, however, say that PPP is the best way of attracting investment. Labour Members nod: they believe that. But what do others say? The London school of economics is not a stupid organisation. In a report prepared with the respected transport economists Glaister, Scanlon and Travers, published on 20 March, it says:

"The Government's plan for the Public Private Partnership…for the Underground is flawed in principle, and impracticable. The long-term capital needs of the Underground are of paramount importance to London and to the future of its economy. Before it is too late, the Government should alter its plans and modify the GLA Bill to allow the new Mayor and Assembly the freedom to choose the best solution from amongst a range of available alternatives."

Will the hon. Gentleman give way?

I am still quoting. The report continues:

"It is now apparent that the PPP as proposed will meet few of the promises made when it was announced exactly one year ago. The PPP threatens to impose burdensome long term pressures on Underground operating revenues, including the prospect of continually rising fares, in order to pay back up front investment by private contractors."

The hon. Gentleman is quoting rather selectively from the academics' publication. If he read other parts, he would see that they back the idea of a public interest company, proposed by the Liberal Democrats and others in the capital. What they do not back is the privatisation option favoured by the Conservatives.

The hon. Gentleman says that I am quoting selectively. In fact, I have quoted the first two paragraphs. He is right in saying that the report suggests a number of options, but one is a long-term lease of the underground to a single contractor. I shall say more about that.

That is not privatisation.

I accept that, but a long-term lease to a single private contractor over, say, 99 years is not far off being a full-scale privatisation.

Will the hon. Gentleman confirm that the option that he has just described is not the favoured option in the report? The favoured option is a public interest company.

I do not read that in the report. The academics do not express a favoured option; they put forward a number of options on an equal basis. I am sure that the hon. Gentleman will get the report out and quote it in his speech.

The Government are failing in an ideological logjam. All the evidence of the past two decades is that privatisation works. All the companies that used to be at Labour's

"commanding heights of the economy"

are performing better in the private sector than they were in the public sector. It was not all straightforward, but no one suggests that companies such as British Airways, British Gas and the electricity boards would perform better back in the public sector. As the investment level in the railways comes through, the Government will soon be taking the credit for the performance of the railways as well; indeed, the language already seems to be moderating. Therefore, we urge the Government fully to embrace the private sector for London underground and to involve it in operations, as well as the infrastructure and management.

The annual report for 1999 from the Department of the Environment, Transport and the Regions continues to make interesting reading. Against the background of falling investment that I have described, it says at paragraph 13.8:

"The Government is setting London Underground quality of service targets to 2000–01…At the time of writing, London Underground was on target to meet three out of nine quality targets".

That is getting a bit off message. Such glossy documents are meant to be new Labour spin. If it thinks that failing on six out of nine quality targets is a success story, it has another think coming. The real point is that London Underground is currently making an operating profit of £250 million a year. If it can do that under the present management, while failing on two thirds of the quality targets, think what the private sector could do if the Government could get rid of their dogma and let it run the underground in the way in which it runs many former public services.

It is possible to make London underground viable; I know that the Government have trouble believing that. They said that privatising the railways would not attract investment. They were wrong, and they are wrong on their public-private partnership.

The Government will hang on to London underground until they have set up their PPP, but buses and roads will be transferred to the mayor next summer. It will be the first time since the 1920s that the buses and the underground have been under different management. It is not an integrated transport policy, but a disintegrated transport policy. The public are becoming increasingly aware of it.

The worst thing—it is a further point made by the London school of economics—is that the mayor will have no say in the best way in which to run the underground. In response to interventions from the hon. Member for Southwark, North and Bermondsey (Mr. Hughes), the Minister said that, if the PPP was not ready by the time of the election, it was inevitable that the mayor would be involved. That does not seem to be a pledge of any sort, or perhaps I have read it wrongly. [Interruption.] The Minister says that it is a pledge.

The hon. Gentleman clearly misheard what I said from a sedentary position. It has been abundantly clear to everyone who takes an interest in these issues that we have consistently said that, if the PPP is not concluded by the time the mayor takes office, as the mayor will eventually be responsible for the underground, clearly, the mayor will be involved in the discussions on the PPP.

What happens if the mayor has campaigned on a manifesto pledge not to accept the PPP?

I should think that any candidate who campaigned on a pledge not to ensure that the relevant levels were invested in the underground, to transform it into the modern underground that London needs, would stand little chance of winning the favour of the people of London.

The Minister is in for a big surprise. The people of London will not welcome a £7 billion debt being landed round their necks, with the Deputy Prime Minister walking off into his next job and saying to the people of London, "You pay for it over the next 30 years." In Committee, the Minister said that she would be proud to introduce a congestion charge. No doubt she would be proud to lumber London with a £7 billion debt, but she has not answered my question: what would happen if the mayor were committed to a pledge not to accept the PPP?

I say again: I cannot believe that any serious candidate for the mayoralty of London would turn away from the only certainty of securing the relevant level of investment, over a sustainable period, to ensure that the underground could be modernised.

I know that the Minister is a wise and intelligent person, but just suppose for a second, on that narrow issue, that she is wrong. Let me soften the line slightly. Let us suppose that a mayor is elected who is not opposed to the PPP and who is committed to a transfer, but on different terms from those that have been proposed by the Government. Is the Minister saying that she would override the mayor, or that he would have the last word? Who would have the last word in those circumstances?

I have tried to shield the hon. Gentleman from the painful truth, but it is highly unlikely that anyone other than a Labour candidate will be elected as mayor for London. It is impossible to conceive of any Labour candidate not endorsing that imaginative and productive policy.

If a Minister ducks a question three times, it is clear that she does not know the answer. Frankly, she should not come here unless she knows the answers. She should brief herself better before she comes here. It is almost as bad as yesterday, when she said that a passenger in a taxi could order a taxi driver to put out his cigarette. There seems to be no evidence for that; she has not produced any. She just makes statements off the top of her head without thinking about it and without any background, support or information whatever.

Does my hon. Friend conclude that what the Minister has now confessed publicly is that the form of the Bill that the Government are offering the House will not cater for some of the most likely outcomes of the election? Does he agree that that puts London in a most dangerous and unpredictable position, and means that we cannot now sensibly deal with the future of the underground?

My right hon. Friend is right. We have absolutely no idea where the Government are going. London underground is not a tin-pot organisation; it is a substantial part of London's economy. The Government have no vision, no idea, and no future for London underground which is coherent in any sense.

In our judgment, the mayor should have the last word. What the Government are proposing, with their interim transitional plans, is to negotiate a PPP, and then to dump it on to the people of London and walk away from it. As I have said, it is a £7 billion millstone hanging from the neck of the people of London.

There is a fourth way. The Government should consider pursuing a long-term leasing arrangement for London underground as an integrated operation with one private sector firm. There is a precedent for that: Eurotunnel has a lease on the channel tunnel until 2086. That was not negotiated by a Conservative Government; it was agreed by the present Government in December 1997. It is a model that would work admirably on the underground, with the authority as the landlord imposing terms in the lease, and with a regulator to keep an eye on performance. That is one of the many ways in which the potential of the private sector could be fully realised for the benefit of London underground. Best of all, that solution would impose no financial burdens on the new authority, it would satisfy the Treasury and would benefit London as a whole.

Last year, the Transport Sub-Committee looked at the Government's plans for a public-private partnership and described them as a "convoluted compromise". We have no reason to believe that the Committee was wrong. A PPP is not the best way forward. It must be dawning on the Government by now that they have got it wrong.

The hon. Member for Croydon, South (Mr. Ottaway) started by talking about ideology and then exhibited a great deal of it. He wants to scrap the Government's proposals, which are really about countering the chronic under-investment in London underground during the Tory years. His solution in the amendment is wholesale privatisation, which simply negates the public service nature of the London underground. Only profit would matter. A few choice lines would run and the rest would be scrapped, regardless of public interest. The system would be unreliable and decline. Privatisation has already been thoroughly rejected by the London public, especially the travelling public.

Only last week, the right hon. Member for Hitchin and Harpenden (Mr. Lilley) said that the Conservative party wanted to change the public perspective of it as being about privatisation, particularly in terms of essential public services. Like that famous lager, he has not reached all parts, certainly among the shadow Transport spokesmen. At their first test, the London underground, their solution is wholesale privatisation. The hon. Member for Croydon, South should speak to his right hon. Friend on that point. I want to take this opportunity to read into the record some serious points made by the Capital Transport Campaign, to which I hope the Minister will respond. Louise Hudson, a campaigner and researcher for that good organisation, referring to the Greater London Authority Bill and the London underground, said:

"Capital Transport Campaign has become increasingly concerned during the past few months that the current proposals for the funding of London Underground will not meet the funding requirements of London's most heavily used public transport service. In addition, the proposals have not taken into account the findings of the Environment, Transport and Regional Affairs Committee's investigation into London Underground published in July 1998.

The Government grant to London Underground ceases in April 2000. The proposal is that the public-private partnership will provide over £7 billion over 15 years. That is less than the Underground is getting now. In addition there is the question of what will happen when the Government grant ceases. This will occur prior to the securing of extra revenue through the PPP.

The deal for the Underground will be struck between the Government and the private sector. This will happen prior to the establishment of the Greater London Authority. Fifty one per cent of respondents to a recent London First business survey said that the Underground was the most important transport issue for the GLA. With this in mind the Mayor is likely to be judged on whether he succeeds in delivering an improved Underground service. Capital Transport Campaign is concerned that under present plans the Mayor will be scapegoated. The Mayoral candidates will have no idea of the nature of the contracts being negotiated. However, the Greater London Authority will have to pay back the private contractors their £7 billion, plus interest. The only way to raise this money is:

1. Through raising fares

2. Through road pricing

Since most people who travel to work in central London travel by public transport, often those using the car do so out of necessity. They will ultimately pay for the public-private partnership along with the fare paying passenger who has already endured above inflation fare increases for a number of years.

With all this in mind we believe that if the PPP does go ahead then the Mayor and Transport for London should have access to Government funds. This will enable them to secure revenue for the Underground when the Government grant ceases or if the PPP is likely to make unnecessary demands on the Mayor's revenue stream. If extra revenue is not forthcoming then it is unlikely that enough money will be available for projects such as the step free access programme for the Underground. High road charges, above inflation fare increases and an inaccessible public transport system will ultimately lead to social exclusion."

I am sorry to have had to read that submission into the record, but those are important points that need to be addressed. I would be interested in the Minister's response. As the letter says, the Select Committee on the Environment, Transport and Regional Affairs said that the mayor could come under pressure to combine a cut in services with a hike in fares should there be a gap between income and fares, and payments to contractors. It called for fare increases to be capped and for the Government to clarify whether, in the event of a funding gap, they would make money available.

I welcome the Minister's statement that the Government would not let London underground fall into a black hole. I should like the Minister, if not today at some other point, to expand on that and give greater assurances.

Reference has been made to the article in The Guardian today which spoke of Railtrack possibly putting in a bid for London underground. The same article states:

"Mr. Prescott had originally planned to let the private sector take over the Underground's track and signalling systems by next April, and no subsidy was set for 2000–2001."

The article also alleges that the Secretary of State for the Environment, Transport and the Regions

"has been told by the Chancellor…that next year's £350 million maintenance costs for the Underground will have to come out of the department of transport's budget."

The financial situation is of concern to Londoners.

I asked the Minister of Transport about the cost of the Jubilee line extension. He replied that the new estimate for the final cost of the project was about £3.2 billion. Set against that is £2 billion ring-fenced by the Government and directly funded by Government grant. In addition, there are some private contributions, but they are quite small—£135 million already paid by the Canary wharf developers and £7.5 million from British Gas, and another £400 million is to be spread over 25 years. That is a small sum. The final cost of the Jubilee line will be about £3.2 billion and there will be a Government grant of £2 billion. If one adds another £0.2 billion from private amounts, there is still £1 billion to come from the DETR's budget.

The Minister of Transport told me that the Government were providing an extra £365 million for investment in the underground system, which means that a total of about £1 billion will be in the core network in 1998–99 and 1999–2000. That is for two years. As the Jubilee line extension is not being funded properly, the gap is £1 billion, and we are seeing the possibility of no Government grant subsidy from 2000 onwards. That is a serious problem for London Transport.

Therefore, I again point to the Minister's answer that the Government will not let London underground fall into a black hole. At the moment, the figures look like a black hole. I hope that, if not today, later, we shall have a better explanation from the Minister, and that Ministers, who are also London Members of Parliament, will bring greater pressure to bear on the Secretary of State and, in particular, the Treasury to ensure that London Transport and the London underground have a proper deal.

I am concerned about the points made by the Capital Transport Campaign that the new London mayor could be seriously scapegoated, or have his hands so tightly tied on London Transport that he could not develop the necessary policies in conjunction with and following the aims of the Government. I should appreciate it if those points could be addressed.

This group of amendments goes to the heart of the matter: the future for transport in London. Liberal Democrat Members did not press amendment No. 35 to a vote so that we might able to debate this group at much greater length.

What is the current state of the tube? The hon. Member for Croydon, South (Mr. Ottaway) has already mentioned the figures—obtained by Liberal Democrats—on rolling stock failures, which both show that, in the two years since Labour came to power, there has been a 36 per cent. increase in such failures and demonstrate the signification deterioration in the situation. Other hon. Members have already mentioned the fact that £350 million will be needed for routine maintenance on the underground, and that that money will have to be found in the budget of the Department of the Environment, Transport and the Regions.

What about the current state of the public-private partnership? The Government's PPP proposals for the tube have been criticised by many well-respected individuals and organisations—to whom other hon. Members London have referred—such as London First; the London school of economics; John Kramer, the former chief executive of the Chicago rapid transport authority; the Capital Transport Campaign; and Chantrey Vellacott. All those people and organisations are either very worried about the Government's PPP proposals or are suggesting their preferred alternatives. Even a few Labour Members have expressed their concern about the proposals by supporting an early-day motion calling for an alternative to the PPP.

A report in the Financial Times stated that the Deputy Prime Minister is talking with the Treasury about alternatives to the PPP. We do not know what those alternatives are, but it would be interesting to find out. Moreover, the Minister for Transport in London has said that the Government

"will not do a deal for a PPP at any cost".

However, the Chantrey Vellacott report that has been mentioned by hon. Members estimates that the Government's PPP proposals would impose an extra cost of no less than £7.8 billion to deliver the £7 billion of maintenance required on the London underground over and above the cost of the Government themselves financing the maintenance. The PPP process is therefore certainly not progressing with the support of many sections of the population or sectors of business.

Even more alarming are reports in today's press that Railtrack is perhaps the only contender for the PPP. We all know the Deputy Prime Minister's views on Railtrack. Recently, he said that Railtrack has been

"engaging in the blame culture which has characterised the industry in recent years."

Until recently, that was his view on Railtrack. He has had his doubts about Railtrack, and I am sure that they remain.

Forgive me if I misheard what the hon. Gentleman said, but did he really say that my right hon. Friend the Deputy Prime Minister blamed Railtrack for "the blame culture"?

I am quite happy to quote again the Deputy Prime Minister's comment. He said that Railtrack has been

"engaging in the blame culture which has characterised the industry in recent years."

I am simply repeating his words.

I clearly did not mishear the hon. Gentleman. However, if he had read everything that my right hon. Friend has said in that context, he will appreciate that my right hon. Friend was not singling out Railtrack for engaging in the blame culture, but urging the entire railway industry to move away from that culture.

It may well be true that the Deputy Prime Minister was not singling out Railtrack specifically, but he was singling out the rail industry, of which Railtrack is a major player, generally.

What is the state of public-private partnership? We know that the tube system is deteriorating, and that concerns about the PPP are being expressed by various parties, companies and organisations. An alternative to PPP therefore must be found, which is why the Liberal Democrats have promoted the concept—which is supported by the Capital Transport Campaign—of a public interest company.

We believe that the concept of a public interest company is necessary as a fall-back position. It is not good enough for the official Opposition to propose ending the PPP entirely without proposing an alternative. Everyone knows that privatisation is not an alternative, as it would not receive the support of Londoners. It is therefore incumbent on parties to propose viable alternatives, such as a public interest company.

I hope that some Labour Members will agree that a public interest company is a viable alternative. Perhaps they will not actively and openly express their support for it today, but I hope that they are willing to work behind the scenes to promote it as an alternative to the Government's PPP proposals, which are rapidly running out of steam.

As the official Opposition have proposed no alternative to PPP, Liberal Democrat Members shall not be able to back them up on amendment No. 79. However, we call on the Minister to respond to the points that I have made on PPP, perhaps to give some ground on their PPP proposals, and to accept that, in the months and years to come, the mayor and assembly should be allowed to consider alternatives such as public interest companies.

Although we have heard many different views on the issue, I think that both sides of the House will be able to agree that—although it has improved in parts—the London underground system is in a parlous state. I speak as someone who has used the underground for a great many years, and even used it to go to school.

That was a long time ago.

It was indeed a long time ago, demonstrating the extent of my experience in using the underground.

Today, as I came in from Uxbridge on the Metropolitan line, a delay was caused by a breakdown at Neasden, and the passengers in my carriage were not very happy about it. I also do not think that they would have been very impressed to hear the Minister say that time is not a factor in solving the underground's problems. People in my constituency who use the stations at Uxbridge, Ickenham and Hillingdon demand—and deserve—a better service.

Another major issue is how to reduce the number of cars driving into central London. That will not be easily achieved while the underground is in its current state.

We have heard various options for rectifying the problem. One option from what I hesitate to call old Labour is the injection of public money. The Government would regard that as unacceptable. The Conservatives advocate privatisation and we have heard of the Liberal Democrats' idea of a public interest company. The public-private partnership that we have heard about seems to be the least acceptable option to the experts. I shall not repeat the full list of those who have been highly critical.

We should stop bandying investment figures about. It is time that the situation was resolved. The Government must realise that the public-private partnership is doomed from the start. We realised that in Committee when, in a sudden volte-face, the Government pulled out the clauses and said that they would come back to the issue, which is why we are debating it now.

Most Londoners thought that the Labour Government had a cunning plan. In the end, they have a PPP—a pretty pathetic plan.

I think that it was that great American President Ronald Reagan who said something like, "Here we go again." Here indeed we do go again. Yet again, we have before us another variant of the pathetic shambles that is the third way, in this case in the form of the mysterious PPP, which we are expected to believe will be the solution to what everybody knows are the problems of the London underground.

It has become ever clearer as we have debated the issue that the Government cannot decide whether they still believe in the virtues of public ownership—the Government or their agencies owning and running a facility—whether they have come the whole way in our direction and believe in the virtues of private ownership and management, or whether they would rather take refuge in something half way between, which is neither one nor the other and therefore has no credibility. I do not need to repeat the list that my hon. Friend the Member for Croydon, South (Mr. Ottaway) has given of the reputable sources—well most of them are reputable, although one or two of them are not quite so reputable—who have analysed the issue and come up with cold, thoughtful criticism of the kind that we have all come to recognise.

We are in a dangerous situation, with the Government groping their way forward—as they do on so many other issues, such as reform of the House of Lords and constitutional change—with no clear end position. They want us to trust them to come up with something and to believe that everything will be all right. We have heard that approach on many issues, and here we are in the same position today.

That is bad enough, but now, thanks to the close questioning of my hon. Friend the Member for Croydon, South, the Minister has admitted that she has no answer to the basic problem of the nature of the relationship between a mayor and a Government who take differing views on the way forward for the London underground. That is a serious matter. We are asked to take the role of the mayor and the assembly seriously. That is what the Bill is all about and what the referendum was supposed to be about. Here we have the clearest possible example of the Government failing utterly to work their way through the possible relationship between the Government, the London boroughs, the assembly and the mayor on the future of the London underground, its investment and management and the ultimate responsibility for it.

As I have always suspected, we are in danger of having institutionalised conflict between the different centres of power and authority for which there is no resolution. What was the Minister's answer? She said—in all seriousness, I assume—that we should not worry because only a Labour candidate would be elected as mayor and he would accept the Government's policy completely. That is odd, because we do not know what the Government's policy is and nor, apparently, do they. However, the Minister says that she does not need to give an answer about the relationship between the mayor and the Government on the London underground because the mayor will be a Government puppet.

Labour Members may have their own views on that. Regrettably, the hon. Member for Brent, East (Mr. Livingstone) is not here at the moment. Perhaps he has a view on that. I do not know. As we still do not know how the Labour party is going to select its candidate for mayor, I do not know how the Minister can be as confident as she appears to be that the Labour mayor will simply be a puppet of the Government who will accept completely the shambolic approach that they are offering for the future of the London underground. All is yet to be revealed.

It is not good enough for the Minister to say that we should trust the Government because it will be all right on the night and the mayor will probably not contest what the Government are doing. The Government do not really know what they are doing anyway, but, somehow, everything is supposed to work out. We are being asked to accept the Bill and the amendments in that context.

As if that were not bad enough, the Government new clauses contain all sorts of nonsense about a PPP arbiter. We do not know what the PPP is, how it will work and whether it will be biased towards the traditional public ownership approach that has failed this country so badly over many decades or the excitement and success of the new privatisation that we pioneered, and that the Government are playing with but have not quite come across to yet. The result is that a new bureaucrat will be set up to monitor, control or regulate the PPP, presumably because the Government do not know how it will work.

There are various provisions about how the arbiter will be appointed, the staff that he will have, the directions that he will take, guidance that will be given, the duties of the arbiter, the further powers of the arbiter, immunity and—that favourite of all bureaucrats—the expenses of the arbiter. We cannot leave expenses out, because the arbiter will obviously have to have loads of expenses. I do not want to detain the House by going into all those issues. Presumably, the Minister will tell us in detail why we need a PPP arbiter. I do not expect her to go into too much detail about the expenses, but that will all come out in due course.

All the provisions will add to the overhead burden of implementing whatever the Government want to do. All the measures that the Government have brought before us in these ill-thought-out, last minute changes to such an important Bill smack of a lack of thought and analysis and remind us that, every time that they do something, they add to the cost. Those who will bear the cost are the people who always bear the cost—the taxpayer and the users of the service. The combination may vary, but one thing is certain: the Government are telling the people of London, "Whatever we do to mangle your underground, you, the London taxpayer and you, the users of the underground, will pay the bill, which will be substantial." That is not good enough.

My hon. Friend the Member for Uxbridge (Mr. Randall) said that he used the tube to get to school. So did I—some years earlier than he did, I think. In the days when I first used the tube it cost half an old penny to go from Hampstead to Belsize Park.

Gosh, you are old.

I am old. That shows how many years I have been using the tube. Without the tube, London would grind to a halt. We forget that more people travel on the tube than on the whole of the UK railways.

In the past, we condemned the Soviet Union for a number of things, one of which was its suppression of demand by increasing queues, permitting shortages and making sure that life did not work productively. We are doing exactly the same with the tube service.

Breakdowns on the tube have increased by more than one third, much to the irritation of our constituents and ourselves. We know that the Government have cut the subsidy to the tube. In the last 10 years of the Conservative Government—between 1987 and 1997—the average subsidy was £700 million. Under the Labour Government, the subsidy has been £500 million, and the subsidy will end in May 2000. There is nothing in the Treasury figures to show what will happen after that.

Will the hon. Gentleman confirm that, in the last two Budgets of the right hon. and learned Member for Rushcliffe (Mr. Clarke), there were significant cuts in the funding of London underground and that the figures that he has given do not give the whole picture?

The hon. Gentleman is correct, but we must look at the entire 10-year period. We expected to denationalise London underground, and we were preparing it for that. As the Conservative Government had properly funded and expanded London underground enormously during their 18 years, there had been front-ended funding. To reassure the hon. Gentleman, I have no ideological hang-up about funding London underground. We should use the best system; whatever works.

When Price Waterhouse was asked about four options for future funding, the options were determined not by Price Waterhouse, but by the Government. In essence, the Government had determined the form of the funding for London underground. I find it extraordinary that the Government did not recognise that, if they decided to bring in a company of the repute of Price Waterhouse, they should have allowed it to decide on what it believed would work best. It would then have been for the Government to reject or accept it. However, the fact that the Government had determined the four options that Price Waterhouse was to look at meant that the company was constrained from looking at other options, including privatisation.

We are told often that the Government want an integrated transport policy. I regret to say that that is no more than a slogan. The Government, with the Bill— in terms of the incoherent proposals for the underground, London's main artery—are making sure that we will not have fewer cars on London's roads, but more. They are suppressing demand on the underground, they are pricing it out of existence, they are making sure that the public subsidy is cut and they are making sure that travelling on the underground is an increasing misery.

As I said, without the tube, London would grind to a halt. Without the tube, people would not get to their jobs to earn money and to produce a prosperous Britain. It is incumbent on any Government to produce a public transport system for the capital city that will work. This Government are clearly failing to do that, and the Bill—which demonstrates that they are confused as to what they should do in the future—deserves to fail.

It is astonishing that we are having to consider 10 new clauses tonight. They are substantial new clauses, which change the dynamics of the commercial agreement to which the House is being asked to give its consent.

New clauses 37 to 46 are needed logically by the PPP in terms of the structure that the Government are proposing. With a 30-year lease to private sector companies, there is a need for review. In Committee—when the Minister surprised us with the announcement—it was stated that a review was needed because the technology might change, and that the agreement would have to be reviewed to take account of that.

There may be a need to review the performance of the contract, and how well the private sector company is doing with respect to the initial understanding. There is a need for a review to serve the interests of democracy. If we are to have elections for a mayor to oversee Transport for London, clearly the parameters of the agreement could be changed.

Am I right in thinking that when the Liberal Democrats proposed a review in earlier debates, the Minister pooh-poohed it?

My hon. Friend is right, but the Government have thought again. Within their own framework, there is a need for review, which shows the costs of their proposals. The right hon. Member for Bromley and Chislehurst (Mr. Forth) referred to the higher costs, and the Liberal Democrats contend that the Government's PPP proposal will be an incredibly expensive way of maintaining, developing and investing in the London underground.

In such contractual relationships, one must think of the risk involved. The private sector contractor must be compensated for those risks. There are risks inherent in such contracts, including construction risks; we have seen those on the Jubilee line extension, with the overruns and the difficulties in tunnelling. Such matters are difficult to know a priori, so compensation is needed.

There are funding risks, and we have heard about the higher costs for the private sector in terms of getting the capital—something to which my hon. Friend the Member for Carshalton and Wallington (Mr. Brake) referred. We have heard references to the Chantrey Vellacott estimates of the costs. The new clauses, with the introduction of the arbiter, add another, expensive risk. Anyone signing such an agreement will know that the contracts may change in future, not just by agreement, but by fiat. New clause 40(6) states:

"A direction under subsection (3) above shall be final and binding…and shall, if and to the extent that the notice given under subsection (5) above so provides, take effect as a term of the PPP agreement."

There is no doubt that anyone signing up to such contracts could be forced by the PPP arbiter to have their commercial agreement rewritten—without their agreement, necessarily. Which company would enter such a commercial agreement unless it knew that it would be massively compensated up front? That is where the higher costs will come in as a result of the Government's proposals. The travelling public of London and the taxpayer will be asked to pay those higher costs.

In the Financial Times, the Minister said that one of the reasons for the arbiter was to make sure that companies did not make "windfall profits". When the potential bidders heard that, they were amazed. They find the idea that they will make huge profits ludicrous, considering all the risks involved. One of them was quoted as saying:

"We don't see enormous profits, but the risks are considerable."

The risks are indeed massive, and people will be persuaded to take them on only by up-front payment.

The complexity of the PPP agreements lies not only in the need to analyse the risks before drawing up the legal documents. Imagine the extra transaction costs involved in setting up the whole system. There will be huge bills from the lawyers, bankers and other consultants. In opposition, Labour Members criticised the Conservative Government for paying so much in consultancy fees when they privatised the railways. The new proposals do not avoid that, despite what the Government hoped. Arguably, the transaction costs will be much higher. They will not be one-off, either, because of all the reviews. The costs inherent in the system, by basic common-sense analysis, are incredibly high.

My hon. Friend the Member for Carshalton and Wallington made it clear that there are alternatives. We set them out in detail in Committee. The hon. Member for Croydon, South (Mr. Ottaway) spoke about the academic studies. If the Government had bothered to cross the pond to the United States of America, of which the right hon. Member for Bromley and Chislehurst (Mr. Forth) is so enamoured, they would have seen, in the hotbed of capitalism, examples of public sector owners operating public transport systems in urban areas incredibly successfully.

John Kramer took over Chicago's urban railway company—it is overground as well as underground—when it was in a total mess and had been deteriorating because the previous public sector operation had not invested in it, but he was able to make it a success by issuing bonds, backed up by ticket revenue and state taxes, so that the people who provided the private finances knew that the returns would be stable. Over 20 years, he issued more than $20 billion-worth of bonds. That money enabled his management team to plan investment with certainty and transform Chicago's transportation system into the envy of the country.

That was a public sector option, using private sector capital, which is what the Liberal Democrats are arguing for. It has worked in America, and the Government could easily take it up. The hon. Member for Leyton and Wanstead (Mr. Cohen) made that point in a brave and excellent speech, and some Labour Members, including the hon. Member for Hayes and Harlington (Mr. McDonnell), signed the Liberal Democrats' early-day motion calling for a public interest company.

Many hon. Members support our approach. One would have thought that it was right up the Government's street and that the Deputy Prime Minister would have loved to adopt it. There is a huge battle raging in the Labour party between the privatisers in the Treasury and the people who take a different approach in the Department of the Environment, Transport and the Regions; unfortunately, the Deputy Prime Minister and his friends are not winning.

The Minister pooh-poohs all press reports, but I am pleased to say that we have heard that the Deputy Prime Minister has had an emergency meeting with the Chief Secretary and other Treasury Ministers to find out whether there is an escape route and they can get out of this mess. We have offered them an escape route in new clauses 5 and 9. I think that the way out that we have offered in case the Government cannot make a go of their scheme would attract a lot of support.

We are offering the Government a way, which I hope they will accept, even at this late stage, of getting off the hook. The great benefit of the public interest company, as in the Chicago scheme, is that it combines democratic accountability—it is run by those who are elected—with having more stakeholders. More people in the community publicly and openly participate, in that their finances feed the system and make it run, but it is controlled by those who are elected to that function.

That is absolutely right. Ours is a democratic and transparent option, as well as being the most efficient. It is the best value for money for both passengers and taxpayers. That is why my hon. Friend the Member for Carshalton and Wallington has today written to the Public Accounts Committee asking it to investigate the accounting of the PPP.

The Government will get their way and railroad through their 10 new clauses and the PPP scheme, even though the provisions are ill thought through and we will probably need to make many changes by regulation or by other means. The Public Accounts Committee needs to investigate, because in years to come the scheme will be seen to be an atrocious use of taxpayers' money.

The PPP proposal is the Government's worst mistake since they came to power. It is a total shambles and will be proved to be so in years to come.

I wondered whether the Conservative and Liberal spokesmen had rehearsed their contributions. They have been joined at the hip. I will ensure that the people of London know precisely what approach both the Conservative party and the Liberal Democrats take to the overwhelmingly important issue for London of how we attract sustainable funding to improve our underground. We have heard not one word from the official Opposition or the Liberal Democrats on how they would do that. We have heard endless fantasy, misrepresentation and scaremongering. Both parties have clearly failed to familiarise themselves with our proposals on the public-private partnership. The absurdities that have emanated from the lips of Opposition Members have been scandalous.

When in power, the Conservatives proposed privatisation for the underground. The hon. Member for Uxbridge (Mr. Randall) was much concerned about what he considered a wilful waste of time by the Government over the public-private partnership. Is he aware that the Conservative Government's privatisation proposals would, by the estimate of the then Secretary of State for Transport, have taken at least four years to be fully implemented, even though they planned to reduce the underground by a third? The then Secretary of State informed the then Chancellor that, even post privatisation, they were looking for at least £190 million a year to be invested in the underground.

How do you know that?

We know that because the notes between the two of them were deliberately leaked. That was one of the reasons why the people of London expressed their total opposition to the Conservative party's proposal to privatise and why they have endorsed the Government's proposal for a public-private partnership.

The hon. Member for Kingston and Surbiton (Mr. Davey) repeated the Liberal Democrats' favourite call about bonds issues, which he says work extremely well in America. He forgets that those major American cities that were brought to bankruptcy and beyond not only by issuing bonds for financing capital investments, but by breaking out of any overarching control over public borrowing for major investment.

We have made it abundantly clear that we believe in true fiscal prudence—and certainly in this area.

Will the Minister give way?

No. I shall finish my point, if the hon. Gentleman will allow me to do so.

It is absurd to presuppose that a public-private partnership evinced by this Government will do anything other than produce the best possible value for the taxpayer and the people of London by ensuring adequate investment. There will be no massive hike in fares, as the scaremongers on the Conservative and Liberal Democrat Benches have said in an attempt to delude the House and the people of London. There will be the certainty of long-term, sustained investment, which will improve the underground and its services.

Will the Minister give way?

No.

The representation of the London underground given by the hon. Member for Uxbridge (Mr. Randall) was less than fair. He neglected to mention the programme of investment in which this Government have already engaged. We managed to find an additional £365 million for London underground when we came to office, which is improving escalators, tracks and signalling. The sum has enabled the underground to prioritise issues of access at core stations. Over time, such stations will become truly accessible to everybody in London.

If anyone genuinely believes that the deterioration that the hon. Member for Uxbridge described has come about over the past two years, they are clearly as misguided as Opposition Members. Such deterioration does not occur in the space of two years. It is the accumulation of more than a decade of neglect by the previous Administration. I sincerely hope that if Conservative and Liberal Democrat Members are not persuaded to withdraw the amendments, the House will reject them out of hand.

I think that it would now be appropriate to speak to Government new clauses 37 to 46. I was surprised by the astonishment expressed by the hon. Member for Kingston and Surbiton on these new clauses because I announced in Committee that the Government would be tabling amendments on Report to facilitate the establishment of an arbiter. I explained to the Committee that the mayor and PPP contractors would need to review future underground investment from time to time. The PPP contracts will therefore set out the procedures for periodic reviews, which will be held every seven and a half years or so.

The scaremongering of the hon. Member for Kingston and Surbiton, who says that such reviews would lead to excessive and overweening costs, is unfounded. It is abundantly clear that the need for an arbiter will arise only if there is any basic disagreement between the mayor and the contractor. We expect the reviews to be conducted in a spirit of partnership, but it is inevitable that two parties may not always be able to agree. Therefore, it is necessary to provide for an arbiter. The parties to the contract will be able to refer unresolved matters to the arbiter, who will give a direction that is binding on both of them—unless both agree not to give effect to it.

I sent Members who served on the Committee an explanatory note which gives a brief summary of the new clauses. Copies have also been placed in the Library. It may, however, help the House if I describe the general purpose and effect of the new clauses.

New clause 37 provides for the appointment of the arbiter by the Secretary of State. The Government's intention is that there should be one arbiter for all three PPP contracts. Subsection (6) is therefore particularly important, in that it requires the Secretary of State to consult such persons as he considers appropriate before making an appointment.

New clause 38 makes provision concerning the terms of appointment and dismissal of the arbiter. New clause 39 deals with the appointment of staff and their ability to discharge functions on behalf of the arbiter. New clause 40 sets out the arbiter's powers to give directions on matters referred to him by the parties to a PPP agreement. As I have mentioned, such directions are to be binding on the parties unless they both agree not to give effect to them.

New clause 41 gives the arbiter a power to give non-binding guidance to the parties where they jointly refer a matter to him. The purpose of the new clause is to encourage the parties to reach agreement between themselves, in the light of the arbiter's guidance, without relying on a binding direction. New clause 42 sets out the arbiter's duties when making directions or giving guidance. New clause 43 sets out further powers of the arbiter, including one to inspect relevant assets. New clause 44 empowers the arbiter to collect information that he considers relevant to the discharge of his functions. New clause 45 removes the liability of the arbiter and his staff for any acts or omissions, unless they can be shown to have been committed in bad faith. New clause 46 provides for the funding of the arbiter by the Secretary of State and for the recovery of costs from the parties concerned.

These are important new clauses. They are intended to ensure that future investment needs of the London underground can be reviewed in the knowledge that the parties may call on an independent third party to issue binding directions when there are unresolved differences. The new clauses give the arbiter the necessary powers and duties to carry out such a task in a way that should be reassuring both to the mayor and Transport for London, and to PPP contractors.

The new clauses are yet another example of the care and attention to detail that the Government have brought to bear not only on the PPP, but on the Bill. So far from the shallow and fantastic criticism that hon. Members have levelled at the Government to the effect that the PPP project is some shambles, the Government will ensure, via the PPP, adequate, sustainable, long-term funding so that when the underground is transferred to the mayor, it will be able to deliver the modern underground services that the people of London so desperately need.

We have been meticulous in assuring ourselves that the model on which we base the definition of PPP contracts will deliver the best possible value to the taxpayer and, of course, to the underground itself. We have made it abundantly clear that, unlike the previous Administration, we will not be driven by empty ideology, or labour under the burden of an artificially imposed time scale. We will not be tinkering with Liberal Democrat proposals on financing the underground. I have serious difficulty in believing that the Liberal Democrat proposals could adequately fund a toy train over a long time, let alone cope with the complexities of the London underground.

It is this Government, with their imaginative and innovative approach not only to local government but to genuine partnership, who will deliver for London the democratic voice that it has so long desired and the means of ensuring that the underground will be properly and adequately funded in the long term. I commend the new clauses to the House.

It is unfortunate that the Minister still blindly refuses to recognise the great success of privatisation of the railways, which has put Railtrack in a position today to declare that it wants to take over the underground. Would not that be a great way of using the resources that Railtrack has built up for the benefit of users of London underground and all the people of London? Dogma prevents the Minister and her colleagues from envisaging how well such a system would work.

Will the Minister confirm that, whatever conditions are imposed on whichever company or organisation runs the underground, all services that are currently provided, especially those beyond the Greater London boundary—in other words, in my constituency at the end of the Central line—will continue to run?

I am most grateful to the hon. Lady for giving way. If I remember correctly, she asked the same question on Second Reading. My answer now is the same as the one that I gave then.

I beg to move amendment No. 80, in page 121, line 36, leave out clause 222.

With this, it will be convenient to discuss the following: Amendment No. 25, in page 121, line 36, after '(1)%% insert

'Where the revenue raised is to be invested solely and exclusively in better provision for public transport, cycling and walking in Greater London'.

Amendment No. 81, in page 121, line 41, leave out `keeping or'.

Amendment No. 83, in schedule 18, page 230, line 36, leave out Schedule 18.

Amendment No. 82, in page 230, line 45, leave out `keeping or'.

Government amendments Nos. 140 and 141.

Amendment No. 8, in page 235, line 12, leave out from `scheme' to third 'the' in line 13.

Amendment No. 9, in page 235, line 14, leave out

'during the scheme's initial period'.

Amendment No. 10, in page 235, line 19, leave out from `(2)' to 'the'.

Amendment No. 11, in page 235, leave out lines 24 to 27.

Amendment No. 12, in page 235, leave out lines 32 to 40.

Amendment No. 13, in page 236, line 36, leave out from beginning to end of line 2 on page 237.

Amendment No. 14, in page 237, leave out lines 24 to 38. Government amendment No. 142.

Amendment No. 26, in clause 223, page 122, line 3, after `(1)', insert

`Where the revenue raised is to be invested solely and exclusively in better provision for public transport, cycling and walking in Greater London'.

Government amendment No. 143.

Amendment No. 15, in schedule 19, page 247, line 6, leave out from 'scheme' to third 'the' in line 7.

Amendment No. 16, in page 247, line 8, leave out

`during the scheme's initial period'.

Amendment No. 17, in page 247, line 13, leave out from '(2)' to 'the'.

Amendment No. 18, in page 247, leave out lines 18 to 21.

Amendment No. 19, in page 247, leave out lines 26 to 34.

Amendment No. 20, in page 248, leave out lines 28 to 44.

Amendment No. 21, in page 249, leave out lines 16 to 30.

Government amendment No. 144.

New clause 6—Traffic disruption charge—

`(1) Where the money is to be invested solely and exclusively in better provision for public transport, cycling and walking in Greater London, each of the following bodies, namely,

(a) the Authority,

(b) any London borough council, or

(c) the Common Council,

may establish and operate schemes for imposing charges in respect of any disruption caused by works to roads, pavements or cycle lanes in their area.'.

Government amendment No. 145.

This debate is on road pricing. It would be sensible to get some myths out of the way before the debate begins. We concede that a transport Green Paper in the early 1990s, towards the end of the previous Government's time in office, said that there was a presumption that road pricing would be introduced. A Green Paper is a consultation document, not a statement of policy. That would not therefore have been a national policy as defined in the Bill.

Secondly, a presumption in a Green Paper can be rebutted, and the Government should be under no illusion but that that idea was rebutted. The proposal was not taken forward. The proposal to introduce road pricing did not appear in the Conservative party manifesto in 1997. It never formed a part of our policy.

We share the concern of all political parties about the problem of congestion. There is widespread concern about pollution caused by cars and other motor vehicles. The challenge to Governments of either persuasion is how to manage the car. In our view, clobbering the motorist is not the solution, and we reject outright the Government's anti-car rhetoric. Furthermore, making London the pilot scheme for congestion tax stands logic on its head. I can think of nowhere less suited and nowhere that would pose greater technical problems.

Amendment No. 81 may be described as the lesser of our two amendments. It would delete the power from clause 222 to impose a charge for keeping a vehicle on the road. That charge is not a road user charge or a congestion tax. It is just another stealth tax. The clause permits the mayor and the London boroughs to impose a further levy for parking or keeping a car within a certain area. It is a further back-door tax that has nothing to do with congestion, and we oppose it.

The main issue is the congestion tax, however. Already, 83 per cent. of commuters travel in and out of London by public transport. Public transport in central London is good, although that is, of course, a relative term. It is certainly better than in other cities in Britain and in most cities in the rest of the world. Whether under Labour or the Conservatives, public transport in London has been good. A wide variety of choice is available. By and large, and subject to the usual technical problems, the system gets people around the capital.

As a result, road traffic in central London is not growing. The Automobile Association notes:

"Road traffic levels within central London have hardly changed in 20 years. However, traffic levels in the outer areas have increased by 50 per cent in just 15 years."

The question is whether central London is the right place to impose a congestion tax. People like their cars, the most liberating influence of the post-war years. Cars allow people a freedom to travel that their parents and grandparents never knew. People feel safe in their cars. Mothers use them to take children to school. Nurses use them for their night duty. Pensioners or disabled people use their cars to get to the shops. These are the people who will be hardest hit by the congestion tax.

Let me turn to traffic speed. The AA, once again, states:

"Travel by vehicle through central London has always been slow going because of the high frequency of junctions. In outer areas, speeds tend to be higher. Overall traffic speeds are declining in London. though less so in the central area because traffic levels have reduced slightly."

Traffic speeds have slowed more generally in London and that is in large part attributable to the Government's anti-car stance. We are all in favour of pedestrian safety and of ensuring that drivers proceed safely, but do we really need each and every one of the extra crossings, traffic-calming measures and lane reductions that are currently being introduced? The widespread view is that the use of such measures has gone too far, and I have no doubt that it is a contributory factor to the reduction in traffic speeds in the capital.

I said on Second Reading and in Standing Committee that we have to hand it to the Government: they slow down the traffic and thereby create congestion, which they then tax—that is a smart move. The truth is that many of the traffic jams are man-made; they could be avoided and traffic could be speeded up through more pro-motorist thinking.

I recall the hon. Gentleman saying in Committee how strongly he supported local government in London being able to make its own decisions, so I find it difficult to understand why he criticises the Government on this point, given that most of the decisions on traffic calming are local borough decisions and will remain so. Why is the Tory party coming out, not against a proposition that there will be road charging, but against a proposition that, the issue having been debated during the election, those elected to represent Londoners may choose to impose road charging?

Surely Tory policy, if it means anything, is to give freedom to local government and other authorities to make decisions; but the hon. Gentleman wants to restrict London's choices by removing altogether one of the options available to it.

It is perfectly straightforward: we are against the congestion tax in London. As for the

introduction of traffic-calming measures being a local authority decision, the hon. Gentleman should recall that, about a year ago, the Government proudly published a press release in which they announced that they had authorised huge levels of spending for thousands of new traffic-calming measures in London. That was Government money being spent on schemes instigated by the Government, and the local authorities were nothing but the agents of implementation; the Government inspired the initiative and the drive behind the schemes came from the centre.

A large proportion of the money will have been taxpayers' money because a large proportion of transport spending in Britain comes from the taxpayer by way of grant to local government. In some ways, for some purposes, local authorities are agents, but to my knowledge no local council has been required to spend money against its wishes on traffic-calming schemes. If the hon. Gentleman can give me one example to the contrary, his case has credibility—but I suspect that there is no such example.

The hon. Gentleman has caught me unawares and I do not have such an example to hand, but he should not doubt that, if a local authority is given money, it will spend it. The truth is that if the Government take the credit for the schemes, they must be prepared to take the criticism as well. Let us suppose that I am wrong and the hon. Gentleman is right and that all the measures are entirely local-authority inspired; in that case, the local authorities are creating the congestion. However, the point is that the slowing down of traffic and the increase in congestion is, to a large extent, man-made.

Two of the hon. Gentleman's colleagues—the hon. Members for Carshalton and Wallington (Mr. Brake) and for Kingston and Surbiton (Mr. Davey)—are constituency neighbours of mine, and they might occasionally visit Coulsdon in my constituency; in fact, I know that one of them has, because he wrote to me to tell me so. The red route director has put no fewer than three pedestrian crossings across the A23 route into Coulsdon, which has caused tailbacks north and south of about a mile each way. Those tailbacks never occurred before the crossings were introduced, so the congestion is a man-made problem. The existing pedestrian crossings worked fine, but now that the additional traffic lights have been put in, we have huge tailbacks.

Is the hon. Gentleman saying that all traffic-calming and road-safety measures cause congestion? The Minister for London and Construction was kind and helpful in working with local police and me to reduce the speed limit on the A3 Kingston bypass, which has improved the flow of traffic on that road and so reduced congestion.

If the hon. Gentleman thinks that the reduction in speed on the A3 Kingston bypass is popular, he has another think coming.

It is popular in my constituency.

Perhaps it is in the hon. Gentleman's, but it certainly is not in mine.

I do not want to distract the hon. Gentleman from the wider issues, but I am perplexed. Is he arguing that, for example, many more bus lanes in London would be a bad thing because, although they would allow buses a greater speed of travel, they would have an adverse impact on car users? If we enhance the safety of pedestrians and cyclists and the speed of buses, we are bound occasionally to run the risk of car transport being slowed, but that might be an incentive for people to use different forms of transport, or to go around London rather than through it.

I certainly do not suggest that all the measures are not wanted. My point is that I think that the balance might have begun to tip too far in one direction. If a speed limit of 25 mph were to be imposed throughout London, the whole city would grind to halt, just as a 25-mph speed limit on a motorway would clog up the whole road, because any trip would take twice as long and twice as many cars would be on the same stretch of road. There has to be joined-up thinking—

Order. I have seen an awful lot of the hon. Gentleman's back in the past few minutes. He should address the Chair.

I beg your pardon, Mr. Deputy Speaker. I was carried away by the interventions.

Before the Liberal Democrats put out their press releases saying "Tories oppose safety measures", alongside the one about the cracked paving stone, they should think seriously. Their holy grail appears to be the removal of congestion from London's roads, but that is unachievable, because if a motorist sees an empty road, the first thing he will do is drive down it—he will not take the bus. Congestion, once cleared, will return. The point is that many of the safety measures slow down traffic in London, and those measures are the result of Government decisions.

The Government have given three reasons for proposing to introduce a congestion tax: first, to persuade the motorist to leave his car behind; secondly, to reduce pollution; and, thirdly, to raise taxes for transport purposes. Will the Minister, through the congestion tax, persuade the people of London to leave their cars behind? The AA report "New leadership for London: transport in the capital", under the heading "Car ownership", states:

"The number of cars per London household is lower than many other parts of Great Britain, reflecting the cost of parking and the availability and accessibility of public transport."

Were I to introduce an anti-congestion scheme and someone were to tell me that lower car ownership had resulted, I should say that I had achieved my objective. However, the availability of public transport in central London is already achieving the objective of keeping London traffic movements at a lower level than they would be if public transport were not available—all the evidence suggests that the availability of public transport in London keeps cars off the roads.

In Committee, we examined in depth the pilot scheme in Leicester. The Minister for Transport in London said that she would publish the results when they became available, and I assume that she is a woman of her word. However, early reports from that scheme give rise to serious questions about whether imposing a congestion tax on motorists will make much difference to their habits. Early reports from Leicester indicate that it takes a road-use charge of £6 to make a motorist change his pattern of behaviour. It is believed that in London the figure would be nearer £8. I do not think that even this Government would have the gall to introduce a £8 charge on motorists every time they made a journey in London. Given that they would not do that, it follows logically that a lesser sum would not deter anyone. So what do we have? We have a revenue stream. It is a tax by the back door. It is yet another example of a stealth tax.

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What will happen in the London boroughs? In Croydon, there are reports that the council intends to produce a congestion tax that will bear on motorists entering London once the Bill is enacted. Apart from ensuring the re-election of the Conservative group at the next borough elections, what will be the net effect? The answer is that local shoppers will go to the new Blue Water retail development near the M25 rather than pay to go to Croydon. The congestion tax may solve the problem of congestion in Croydon, but it will make it into a ghost town.

A good example is provided by Bath, where the Liberal Democrat council has raised parking charges to such a high level that there has been a 7 per cent. fall-off in the local economy. The House must recognise that one cannot impose a congestion tax in isolation and expect there to be no knock-on factors.

Does my hon. Friend agree that those who are most in favour of congestion charges are those who want to drive on our roads? The main purpose of a congestion tax is to get everybody else off the road so that the road is freer for oneself.

My hon. Friend is absolutely right. I have yet to hear anyone advocating a congestion tax who does not drive himself.

The second objective of the congestion tax is to reduce pollution. Notwithstanding my point that the tax is unlikely to affect volumes, it is possible to reduce pollution without the confrontational approach of extra taxation upon the motorist.

Such have been the advances and technological developments in the production and construction of engines that a car manufactured 30 years ago emitted 95 per cent. more toxic waste from the back end than would a car produced now. That has been achieved by co-operation with the motor industry and without the need to introduce a congestion tax. We must try to remove the final 5 per cent. without imposing a charge. I am sure that the technology is available to produce the ultimate clean car. The Conservative party would encourage the motor industry to do so. It would also give every encouragement to cars powered by liquefied gas or electricity.

It is worth noting that Oxford street, which is considered to be one of the more polluted areas in the country, is a street from which the car is excluded. The pollution tends to be the result of emissions from diesel engines in taxis and lorries. However, the Government must not use the environment as an excuse to impose a charge when other options are available.

The Government's final, unashamed reason for imposing a congestion tax on Londoners is that it will create a revenue stream for the mayor. The Liberal party has been eyeing this up and has given it its full support. In "Yes, Minister", when the Minister in that programme was about to make a controversial decision, Sir Humphrey used to say, "Very courageous, Minister, very courageous." It is very courageous of the Government to be advocating an additional tax on London. They are doing so unashamedly with the full intention of creating a revenue stream for the mayor.

The Government should be aware, however, of a recent report contained in a confidential Scotland Yard memo, according to the Evening Standard, which warns that there could be

"a violent backlash by drivers, increasingly angered by moves to penalise them at every turn. A separate Government-commissioned study has also warned that drivers' acceptance of technology that charges them for driving on roads-and traps them when they don't pay-cannot be relied upon."

The congestion tax will not be an easy measure to introduce. It is a courageous decision on the part of the Government to introduce it. I do not believe that anyone will become the London mayor on a pledge to introduce the tax.

Is my hon. Friend aware of the report by the Sub-Committee of the Select Committee on the Environment, Transport and Regional Affairs on the integrated transport White Paper, which was produced last week? It comes to three clear conclusions on congestion charging. The first is that it must be 100 per cent. hypothecated. Secondly, it must be totally additional to any present expenditure. Thirdly, it must be permanent. We know that the Government are proposing congestion charging for 10 years. The Sub-Committee was plain that it must not form a revenue stream for the Government, the Treasury or local government.

We talk of nothing else in Croydon. I intend to address all three points that my hon. Friend has sensibly and wisely raised. Early reports suggest that the congestion tax could raise £200 million a year. First, it must be questioned whether that is enough. In Committee, the Minister made it clear that this money would not necessarily be used as a subsidy for London underground, and referred to road improvements or traffic-related improvements. I venture to suggest that improving London's roads or traffic-related schemes will need more than £200 million a year.

We congratulate the Government on the halfhearted establishment of the principle of ring-fencing and hypothecating the proceeds of any congestion tax. However, any congratulation must be tempered by two factors, one of which we believe to be fatal. First, the funding is ring-fenced for only 10 years in the Bill. That obviously prompts the question: what will happen after 10 years. In our opinion, the answer is clear. The money will go to the Treasury coffers. If it is to be ring-fenced, that should be the position in perpetuity and not for a limited period. To that extent we welcome the conclusion of the Sub-Committee to which my hon. Friend the Member for North Wiltshire (Mr. Gray) referred.

Secondly, the greatest weakness of the Government's proposal—in our view the fatal one—is the additionality factor. I have no doubt that a Chancellor seeing a mayor with a revenue stream of £200 million a year would immediately dock £200 million from his transport grant to London, with the result that the people of London

would be no better off. If the Minister is to reassure me that that will not happen, it will be clear that the Department has fought the battle over hypothecation. If so, why does it not fight the battle over additionality and enshrine the result in the Bill?

We do not have to look far for a good current example, and that is next year's funding for London underground, about which there has been much discussion today. All the early signs are that that funding will have to come out of the road maintenance programme. If ever there were a classic example of having to rob Peter to pay Paul, this is it.

The hon. Gentleman is exactly right about additionality. Why, then, did the Conservative party not support my hon. Friends and me yesterday when we tried, through an amendment to clause 86, to ensure that the Greater London Authority transport grant increased year on year, so that funding from central Government to Transport for London would not be a problem?

Because I had no idea that that is what the Liberals were voting on. As I read the amendment, it described something entirely different. In any event, I do not feel slavishly bound to follow the Liberals through the Division Lobby on every occasion. We know that they have a pious coalition deal, which they keep denying. The Conservative party makes up its own mind, introduces its own amendments and votes when it thinks appropriate rather than letting the Liberals decide for it. The Liberals could easily have joined us in the Lobby just now, as their spokesman endorsed every point that I made on the public-private partnership.

We oppose the congestion tax because it is a back-door tax—a stealth tax. It will not solve the problems of congestion in London, it will not ease pollution, it will damage local economies and it will hit the vulnerable. I urge the House to support our amendments.

I support the Government amendments and oppose the Conservative proposal to delete clause 222. The Government's proposal is not to impose road charging. As the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) rightly said in his intervention, the permissive provisions in the Bill would allow charging by the mayor and the London boroughs.

The hon. Member for Croydon, South (Mr. Ottaway) said that the balance between public transport and road congestion was moving the other way. That may be so in some areas, but surely it is a matter for each London borough to decide in accordance with local circumstances. On a Londonwide scale, it is a matter for the London boroughs, the mayor and the Greater London Authority to put before the electorate. If the Conservative amendment were accepted and clause 222 deleted, that possibility would be removed from councillors and candidates at the GLA election next year, which would be a disservice to the people of London.

Is the hon. Gentleman aware of the conclusions of the oft-quoted Transport Sub-Committee of the Select Committee on the Environment, Transport and Regional Affairs? The Sub-Committee's report on the White Paper on integrated transport were published last week. The hon. Gentleman's colleagues concluded that it would be wrong to allow any local authority to make up its own mind about congestion charging, as that would drive traffic into the neighbouring local authority. Labour members of the Transport Sub-Committee therefore supported a regional strategy only for congestion charging. Does the hon. Gentleman therefore differ from his hon. Friends on the Committee?

Yes. Local councillors need to take a broader perspective. I would propose a sub-regional approach. Councillors and members of the GLA will have to think much more broadly. I have not read the report to which the hon. Gentleman refers, but I understand the argument. My view is that the debate must take place on a Londonwide basis, recognising local conditions and the position of Londoners as a whole and the commuter transport implications.

The hon. Gentleman said a moment ago that the Government were not advocating road user charging, despite the appearance to the contrary—after all, as he knows, clause 222 dangles that prospect. In the light of what his hon. Friend the Minister said earlier, in a characteristically arrogant fashion, about the likelihood of a Labour mayor being elected, would the hon. Gentleman advocate a Labour mayor supporting such charges—yes or no?

The debate on the Labour manifesto and the manifestos of candidates for mayor will take place in the coming months. I recognise the point made by the hon. Member for Croydon, South about the balance.

In answer to the question from the hon. Member for Buckingham (Mr. Bercow), if the clause is removed from the Bill, that debate will not take place. It is taking place now in the Chamber, but, if the amendment is accepted, there will be no possibility of candidates for mayor and the GLA, and councillors in the London boroughs, debating the matter locally. For that reason, the provision should remain in the Bill.

I recognise that there will be competing arguments. For example, when a bus lane is created, there is often opposition from car users, but support from those who use the public services. There is opposition from people who may be affected by rat running as a result of the new bus lane, and local measures may be proposed to avoid that. All that takes place locally.

I support the measure because the revenues to be raised from the charges are hypothecated. I have some sympathy with the argument of the hon. Member for Croydon, South about the longer-term nature of the investment. The longer term must be taken into account in the decision-making process. The hypothecation of the revenues over a longer period would give much greater scope for investment. However, in subsequent elections, a party that opposed hypothecation after, say, 10 years could put its alternative proposals to the electorate. Those proposals might be unpopular, but parties would nevertheless need to consider the long term when formulating their policies.

Am I right in thinking that the hon. Gentleman is arguing in favour of hypothecation being permanent? If so, does he realise that it will be necessary for him to vote against the Government in the forthcoming Division?

I said that I had some sympathy with the argument for longer-term hypothecation. However, I support the Bill because it moves in an important direction and, with regard to hypothecation, it is unique in law making in this country. That is warmly welcomed, and the benefits will become apparent. It enables the argument about road charging to take place against the background of the resulting benefits and the scope for investing the revenues in public transport.

The hon. Gentleman's tone is immensely reasonable. What is less reasonable is his unwillingness to tell us whether a Labour candidate for mayor should advocate road charging. As his party has included the provision in the Bill, does he understand that some of us are eagerly waiting, with beads of sweat on our brow, for Pandora's box to be opened so that we can discover the earnest intentions of Labour Members?

I am sure that the hon. Gentleman's patience will be rewarded in due course. I am happy to give my opinion, but other colleagues may have different opinions. When we have formulated our policies, we will have the debate. I believe that there is considerable merit in road charging, provided that the revenues are used to improve public transport. The charges will be unpopular with some people, but, if those who pay them can see the benefits in improved public transport, the policy will be much more popular than Conservative Members think.

Most members of the public who have to travel in and out of London and use their cars to do so realise that a major problem is building up, no matter who is in government and no matter who controls the GLA. Local traffic problems apply in local areas. The public want those problems to be resolved. They know that resolving such problems is difficult and often requires increased capital investment, but the road charging provisions are a way of squaring that circle. That is why I do not believe that they are as unpopular as Conservative Members say.

I hope that hon. Members will oppose the Opposition amendment and support the amendments that would facilitate discussions on hypothecation and the detail of the Bill.

I shall speak against the Conservative amendment and in support of the Liberal Democrat amendments.

What would be the effect of the Tory amendment? It would simply remove the possibility—not the certainty—of road user charging. However, if road user charging were implemented after the viable public transport alternatives were put in place, it could play a major role in raising funds for investment in public transport, in improving the health of the one child in seven who suffers from asthma and in helping the United Kingdom to meet its CO₂ reduction targets. Finally, it could play a major role in helping the boroughs to deliver on their target of a 10 per cent. reduction in road traffic, which was agreed under the previous Government and which they have to hit.