London Underground

I wish to discuss the background to the original thinking on PPP and to emphasise that the House should not lose sight of the wider context of the tube PPPs. The hon. Gentleman talks about the Treasury, but it is worth while remembering that the PPP secured significant additional investment at a time of many competing priorities for the public purse, as my right hon. Friend the Member for Greenwich and Woolwich said. The hon. Member for Hammersmith and Fulham would not answer questions about his party's position on privatisation at that time, as my hon. Friend the Member for Eltham said, and I noticed that the hon. Member for Wimbledon did not try to resile from the comments that he made. It is important to remember that the London Underground PPPs are delivering performance benefits against the background of continuing growth in demand. The hon. Member for Putney (Justine Greening) said that no improvement had been made to the underground, but that is not true. Some 247 stations are programmed to be modernised or refurbished by 2010-11, and work on 91 stations has been completed; Tube Lines was expected to deliver 47 stations by the end of August 2007 and has done so; more than 115 km of track has been renewed, with delivery on some lines ahead of schedule; a fifth train is now in service on the Waterloo and City line during peak periods; a £40 million upgrade on that line has improved reliability and reduced journey times; the extension of the Piccadilly line to Heathrow terminal 5 has been completed; and work on a new signalling system on the Northern line is ahead of the contract date. As my right hon. Friend the Member for Greenwich and Woolwich, my hon. Friend the Member for Eltham and the hon. Member for Putney said, and as Terry Morgan stressed in his evidence, Tube Lines has delivered the 47 stations required by the end of August and is delivering the required increase in Jubilee line capacity, and not a single programme is running late. That shows that with the right approach to project management and a rigorous pursuit of efficiency, the PPP delivers. Having said that, major works remain outstanding. My hon. Friend the Member for Leyton and Wanstead (Harry Cohen) asked about those. The PPP contracts were always structured so that major capacity improvements to the network were not going to begin immediately. Such major capital works demanded careful planning and preparation, and were scheduled to deliver significant capacity improvements in the PPP's second period—between 2010 and 2017. That schedule remains for Tube Lines, and I can assure him that London Underground will work to ensure that Metronet's work can be put back on track as quickly as possible. Having set out the improvements made to the network, I reiterate that lessons must be learned from Metronet's failure if we are to secure continued improvements for passengers in the future. The hon. Member for Wimbledon and my hon. Friend the Member for Manchester, Blackley raised the issue of tied supply changes. Those are a common feature of PFI projects in the UK and in international project finance projects, but they demand effective governance. As many hon. Members have pointed out, when Metronet ran into difficulties, it did not have the appropriate corporate governance in place to resolve the situation at a sufficiently early stage. Only when the scale of the problems facing Metronet became apparent to its individual shareholders did serious attempts to restructure the business begin. Ultimately, the changes were then too little and too late to avert the company's collapse. My hon. Friends the Members for Liverpool, Riverside and for Manchester, Blackley referred to the level of risk transfer to the private sector. At least three of Metronet's shareholding companies have already written off more than £300 million due to the failure of Metronet. Those losses are significant, but I do not dispute the fact that, as my hon. Friend the Member for Leyton and Wanstead and the hon. Member for Lewes pointed out, they failed to motivate Metronet's shareholders to address the company's failings sufficiently early, earnestly or effectively. I assure the House that we will want to ensure that risk transfer is appropriate, meaningful and effective in future contracting arrangements. However, I remind the House that we are in a very different place from when the contracts were first awarded. The hon. Member for Richmond Park (Susan Kramer) pointed out the difficulty of knowing what assets were available. That is true, but Transport for London and London Underground now have a clearer understanding of the condition of the assets, so they should be able to bring more clarity to the specification and pricing of the contracts. The hon. Lady and the hon. Member for Lewes raised the issue of consultancy. I think that the hon. Lady was questioning not the need for consultants, but the need for different types of consultants. My hon. Friend the Member for Liverpool, Riverside asked when Metronet will come out of administration. It is for the administrator for Metronet to decide how and when the Metronet business can be transferred out of administration. I can assure her that the Government stand ready to support the early transfer of Metronet's businesses, to ensure that they can be put on a stable footing as soon as possible. Several hon. Members asked about the next steps. I can tell the House that a joint steering committee, with officials from Transport for London, London Underground, the Treasury and Partnerships UK, has been set up to develop options for the long-term structure of the former Metronet businesses. It will report to the Secretary of State for Transport and the Mayor of London by summer 2008. The hon. Member for Richmond Park asked about the consideration of alternatives, and the Government are working closely with Transport for London and London Underground to form a view on the best structure for delivering improvements on the network. We have made no presumption about the right structure, nor do we have a predetermined view on the best financing structures to support delivery. However, in making its recommendations, the committee will consider all of the lessons learned from the Metronet PPP contracts, including the Transport Committee's views and today's very helpful debate. I reiterate that the failure of the Metronet PPPs is a corporate failure, not a failure of the PPP contracts. However, we are working to understand the reasons for this failure and will ensure that the lessons learned from Metronet are understood and incorporated in any proposed long-term structure. That is a significant challenge, but my Department, Transport for London and London Underground are committed to ensuring the delivery of those essential improvements to the tube network is put back on track as soon as possible— It being Ten o'clock, Mr. Speaker proceeded to put forthwith the deferred Questions relating to Estimates, pursuant to Standing Order No. 54(4) and (5) (Consideration of estimates).