HC Deb 18 December 1981 vol 15 cc532-49
Mr. Speaker

As the House is aware, I said yesterday that there could be a very broad debate today involving the issues that arise from the judgment in the House of Lords concerning transport in London. That is my ruling this morning.

9.37 am
Mr. Michael Neubert (Romford)

I beg to move, That this House, recognising the crucial importance of good communications to business and social life, urges Her Majesty's Government to give high priority to the co-ordinated development and improvement of facilities for travel, whether by road, rail, sea, air, river or canal, in the capital city of London and the surrounding area of which it forms the focus, together with a matching modern telecommunications and postal network, so as to create conditions conducive to resumed economic growth and a rising standard of living. It would be churlish of me not to begin by remarking on my great good fortune in coming top of the ballot and securing the opportunity to introduce this debate. For me it is a case not of third time lucky but of three times lucky. I know that some hon. Members have been in the House much longer than I and have never had the opportunity once, let alone thrice. If the law of averages is being broken on this occasion, it will not be the only law to have been broken in recent weeks.

I welcome the chance to introduce a subject of my choice. The scope of the motion is quite shameless. It is sufficiently broad—and was intended to be so—to allow as many hon. Members as possible to introduce issues arid to get on their hobby horses and gallop off in all directions. Hon. Members have certainly been given that opportunity today as a result of your ruling, Mr. Speaker, that the debate may be extended to cover all the implications of the Law Lords' ruling on the GLC policy for London Transport. That ruling gives the debate extra weight and significance, and I welcome it.

I welcome to the debate my right hon. Friend the Secretary of State. It is a bonus for Back Benchers to have him present, together with his colleague the Solicitor-General. It must be a rare private Member's debate which has such a battery of ministerial talent in attendance. That is very much appreciated. Clearly their presence relates primarily to the issue which I feel will dominate the debate—the policy on London Transport and the policies for public transport of other major cities. I hope that in responding to the other issues which will undoubtedly be raised in the debate they will not feel in any way restrained by ministerial responsibilities.

Too seldom does the House have the chance of debating a widely drafted motion. When we have a debate on transport over a wide area of the country there should be no inhibitions. Too often our thinking is stratified by the organisation of Government in Departments of State. Our policy making is departmentalised, not to say compartmentalised, by the structure. It would be refreshing and positively helpful if today at least we could range over departmental boundaries. Therefore, I hope that my right hon. Friend will not feel inhibited but will, if necessary, carry out search-and-destroy raids deep into his colleagues' territory in order to secure some response to the important issues raised by the motion.

I must declare an interest as a travel and industrial consultant. I do so without any diffidence, because these issues are of great importance to each and every one of us. The controversy associated with yesterday's ruling demonstrates the public concern. However, the general question of travel goes more widely than that.

The events of the last 24 hours have made it clear that the GLC policy on transport will dominate the debate. That is no bad thing, but I should like to draw the attention of the House to the fact that, although the policy is confined to London and is perhaps only of immediate interest to Londoners, it highlights issues which have implications elsewhere. The crucial phrase in the Transport (London) Act 1969 on which the judgment rests is that the GLC has a general duty to promote the provision of integrated, efficient and economic transport facilities … for Greater London. The words of the motion echo that and call for these objectives not only in London but within the South-East—for which the capital city is inevitably the focus—and not only in respect of buses and underground trains but for travel by sea, air, river and canal. For good measure, the motion also calls for a modern telecommunications and postal network. The free and fluent movement of people and information is important both to economic prosperity and to the quality of life in these islands. That is the starting point of the debate.

The GLC's "Fares Fair" policy was manifestly unfair to millions of ratepayers who could not fully benefit from the subsidies which the GLC were conferring on London Transport. Ratepayers were hard-pressed to pay the supplementary rate needed for that subsidy and could see others benefiting from it without having any opportunity to benefit themselves.

The pensioners are a particularly important category. They already had the facility to travel free with their bus passes. Many of them would be elderly house owners who had to pay the supplementary rate but could not afford a subsidy to the general travelling public. I am not suggesting that public transport should completely pay its way. What is at stake is the question of reasonableness, and the judgment turned on that. It is clear that public transport in all countries, as in ours, has to be subsidised to an extent, but the important question is whether the passengers should pay a substantial part of the cost of their facilities.

Mr. Clive Soley (Hammersmith, North)

Does the hon. Gentleman think that pensioners should be subsidised? Is that economic? If we subsidise pensioners, have they a moral right—apart from the fact that we all complain about increased rates—to complain about rates being used to subsidise fares?

Mr. Neubert

As a Conservative, I believe in the right of every individual to make his own free choice. I believe that it is the duty of the Government to provide pensioners with sufficient means to enable them to make their own choices and decide their own priorities. The principle of the subsidy for bus passes has been established. I am not saying that there should not be subsidies. Mortgage relief is an example of a subsidy which is beneficial, if one believes in home ownership, as I do.

The point about the GLC rate subsidy is that it was massive, it was unreasonable, and it was not directed to the benefit solely of the people who were contributing to it. It is an irksome fact for many of my constituents that the subsidy was going not towards their neighbours who might be travelling to town but to visitors from other parts of the United Kingdom and from the wider world—tourists coming here and being subsidised by hard-pressed ratepayers living in very difficult economic conditions. There seems to be no justice or sense in that.

Is it to be argued that the GLC subsidy is a source of great attraction to people to come to this country from all over the world, thereby boosting our foreign exchange? I cannot imagine that travel brochures in foreign countries are extolling Mr. Ken Livingstone's County Hall administration as a good reason for coming to London—quite the reverse.

Mr. Alfred Dubs (Battersea, South)

Does the hon. Gentleman agree that in almost every advanced industrial country the major cities have public transport systems which are subsidised, and that British people visiting those cities benefit from those subsidies?

Mr. Neubert

I agree, of course, that there are transport subsidies in other major cities in the world, but they have different historical backgrounds, different economic circumstances and different cultures. Their choice of priorities has been made over the years, whereas in London we have had a massive and an abrupt shift of a burden from the fare-paying public to the ratepayers in a way that was certainly not expected by those who voted in the Greater London Council elections in May. They thought that they were voting for a Labour Party at County Hall led by Mr. Andrew McIntosh. Within 24 hours of that election they found that County Hall was being run by Ken Livingstone. As a result, one of the great capital cities of the world is being used as the opportunity for a Marxist experiment by Mr. Livingstone and his colleagues. [Hon. Members: "Oh"] There may be some scorn for that suggestion, but my belief, which I am sure is shared by millions of Londoners, is that Mr. Livingstone is a do-it-yourself disaster area and has created more damage for London in the short time in which he has been allowed to be in control of our affairs than anyone in living memory—and not only in connection with London Transport.

We have been told that, as a reaction to the ruling yesterday, fares are to go up substantially, by two or three times, that 15,000 people may lose their jobs, and that services are not only to be reduced but cancelled altogether. If this is true—and the matter needs to be examined closely—it is some indictment of the mess into which County Hall has managed to get our affairs in the seven months since the election last May.

A fare that was 80p two or three months ago and which went down, as a result of Mr. Livingstone's policy, to 30p may now go up to 90p—an increase of 10p on the original 80p. It would seem to be much more sensible that fares should be increased broadly in line with inflation, and that there should be a contribution of that order from the fare-paying passengers. Once subsidies are introduced, they penalise the efficient, they protect the inefficient, they distort the market generally, and they are very often counter-productive.

For example, if London Transport is subsidised there is a drain on British Rail's facilities. On my side of London on the Eastern region there is the facility for interchange between British Rail's overground services and the Underground. If the Underground is subsidised, British Rail loses revenue, and that has happened. Naturally there will be increased traffic if fares are subsidised. There are always plenty of people who are ready and willing to buy pound notes at 50p each. The unfortunate feature of the subsidy is that the other 50p has to be paid by ratepayers throughout London, irrespective of whether they are using transport facilities.

Mr. Frank Dobson (Holborn and St. Pancras South)

A differential developed because the Secretary of State was unwilling to allow subsidies to be paid to British Rail equivalent to those paid to London Transport. I hope that the hon. Gentleman will not claim that his right hon. Friend was legally advised that he should not allow a subsidy or will indulge in any claptrap like that.

Mr. Neubert

British Rail has already received a massive subsidy. Within the past fortnight it has been given an extra subsidy to make good a deficit on passenger revenue.

Mr. Nigel Spearing (Newham, South)

No.

Mr. Neubert

Unless we have a co-ordinated approach to transport, whether public or private, we shall get inefficiencies. There will be gross examples of waste and counter-productive expenditure that will produce burdens on the people of London and those who live elsewhere.

The GLC's policy was introduced in October and it has run for two or three months. It has now been set aside by the ruling of the Law Lords. Their ruling will bring great relief to many ratepayers throughout London. I have rarely seen such outrage expressed as in the letters that came to me as a result of supplementary rate demands this autumn. I am sure that I am not alone in that experience. Individual householders, not to mention business men who saw their companies being crippled by ever higher rates, appealed to me as their Member of Parliament to protect them against the GLC's profligate policies.

One of the clear and comforting results to emerge from the judgment is that local authorities have a responsibility to exercise restraint in their administration of the rates that they levy on ratepayers. The judgment has made clear that their purpose is not, as so many Labour authorities seem to think, to spend ratepayers' money as if there were no tomorrow. It is to exercise considerable restraint and to subsidise only to a reasonable degree. It is not for them to try to make the massive shift that the GLC embarked upon this year.

The subsidy was to increase to £123 million, and there was the threat that there would be no increase in fares for the four years of the Labour administration's period of office. One can imagine the burden on individual and business ratepayers if that had been allowed to happen. They would have been in terrible trouble. The ruling is undoubtedly a great safeguard for ratepayers, who foresaw ever-rising rates despite their increasing inability to pay them.

In view of my connections with the London borough of Bromley—I am sure that the House will understand this—I pay personal tribute to the leaders of Bromley, my successors, in the form of the leader of the council, Councillor Dennis Barkway, Councillor Simon Randall and Councillor Fred David, who when I was mayor was my choice as deputy mayor, for producing a safeguard for ratepayers on behalf of the rest of London. If they failed in their action—they were carrying the risk alone—they would have been severely criticised, but they took the initiative and sought to challenge the GLC's policy in the courts, and their view has been upheld. Apparently they came to their decision one Sunday morning in the Bird in Hand, a pub which I used to represent, among others, on the council for 10 years. To me that is the stuff of which history is made. I congratulate those councillors and the officers of the council on their success.

The ruling has implications beyond transport and the London authorities because many major cities have been encouraged by the example at County Hall to embark on subsidising fares to an unusual extent. We must realise that unless we achieve a balance we shall create more trouble and not less.

I shall give an illustration of the effect of public transport subsidies on individual public transport services. I cite the 721 Green Line service, which ran from Brentwood through my constituency of Romford to London for 50 years from 1926. In the late 1970s it ran into difficulties because it could not compete with the fares policy of the then Labour administration at County Hill. This is an illustration of the distortions that are caused by such a subsidy. The then Labour administration did not increase bus fares and that had its effect on long-distance coach services, which provide a service which cannot be matched by any other form of transport other than the private car, which is not a facility available to all in my constituency.

The viability of the 721 Green Line service was undermined because it depended for its economic survival on the short-distance travelling passengers that it picked up along the route into London. As the service could riot compete because of the fares charged on the buses—they were set at an uneconomic level by the Labour controlled GLC—it was discontinued, thus removing a very convenient service for many of my constituents who depend upon public transport. The Green Line garage in Romford is now a do-it-yourself warehouse.

That is one example of what happens when we attempt to subsidise. Unless subsidies are part of a co-ordinated policy, there will be adverse side effects.

I know that many hon. Members wish to participate in the debate. I shall allow them the time to do so by moving on quickly to three other issues.

The second issue that I wish to raise is that of British Rail's commuter policy, which is also under close review. It is a policy that is related to public transport operations in the London area. In a letter of 10 November to Sir Peter Parker, my right hon. Friend the Secretary of State made plain the background against which the review is taking place. He wrote: In present circumstances it would be unreal to expect that the nation can afford more financial support for London rail services That means that these improvements in reliability and punctuality, and cleanliness, must be paid for by economies and by accepting some changes in the present pattern of service provision, if the cost is not to be put straight on to higher fares. The constraints on public expenditure mean that radical improvements are not practicable for the present. That sums up the climate in which we are considering the motion. It is a fact that only a limited amount of money is available. I hope that the principle that the money that provides broad subsidies should come from those who use the subsidised services will be unquestioned.

Reliability and punctuality are of the essence. This applies to British Rail and London Transport. Time is often precious to travellers and time lost on delayed journeys is irritating, irksome and damaging to our economic performance. Anybody who has been stuck in a traffic jam for 10 or 15 minutes must resent the waste of time. Therefore, it is in all our interests to ensure that facilities are freely available, reliable and punctual.

It is part of the quality of living that commuters—my constituency is prime commuting territory—should be able to expect reasonably clean carriages for their travel to and from work. Many of my constituents live in the area specifically in order to be able to commute to the city and many trains are a disgrace and dirty, outside and inside. Although efforts are being made to improve their condition, they cannot come too soon for the travelling public.

As a non-smoker, I find it particularly unpleasant to travel in a smokers' carriage. Plainly I can choose not to do that, but even smokers must find it an insult that no ashtrays are provided, and the clear implication is that if they wish to smoke they are expected to distribute the debris of smoking all around them on the floor and for it to remain there for the rest of the day. That is not good enough and, although I welcome the increasing number of non-smoking carriages on long and short distance trains, British Rail, in its own interests, should reconsider the matter because, although it will mean extra cost in a more extensive cleaning service, it is an unacceptably low level of cleanliness that does not provide ashtrays for smokers.

I look for increasing improvements on the line to Romford. I was glad to be present at the recent inauguration of new rolling stock on that line. It replaced 30-year-old units. We must recognise that, if we are to have a healthy and prospering public transport service, continuing investment is needed. I accept the Secretary of State's view that the investment must come from increased resources made available by economies, but I am sure that he will recognise that in order to achieve economies one sometimes must invest first. For example, automatic fare collection in my region would cost £21 million, would do away with the need for ticket collectors at both ends of the journey and would be a significant advance. Similarly, the provision of one-man operated trains would enable fewer staff to be employed—and I could go on.

There is a clear conflict between the resources available and the need for greater investment. However, I hope that if British Rail or any other transport undertaking in the public sector could demonstrate to the Minister that it could achieve real productivity savings if it were allowed to invest more, scope would be found for it to do so, because that must be the key to advance.

Another vexed topic is the Dartford tunnel and the principle of tolls for estuarial crossings. As a good Conservative, I generally approve of the principle that those who benefit from a service should pay for it, but we live in a mixed economy. A social market economy, which I support, not only believes in the free play of market forces, but recognises that it must be conditioned in part by Government intervention. That must be common ground on both sides of the House.

The increasingly high tolls charged for crossing through the Dartford tunnel are an anomaly. There are few such toll crossings in Britain. One is on Merseyside, but the Dartford tunnel is particularly important to my constituents because if they work on the other side of the river they have to pay 50p a day each way out of their taxed income. That must have a damaging, or at least a distorting, effect on the Essex and Kent economies, which will be compounded by the provision of a new crossing—the East London river crossing—costing £103 million.

That will be a great advance and will facilitate river crossings and ease congestion in the Blackwall tunnel. However, it is building up a series of complications which must be tackled. There is free passage through the Blackwall tunnel, the new Thames crossing will cost much public money and there are tolls at the Dartford tunnel, which will become part of the M25 orbital road route.

The Dartford tunnel finances are in a sick state. The original grants were not sufficient to cover the eventual cost of construction. The principle that the users of the tunnel should pay for the burden of debt interest is obviously creaking loudly. The debt will never be repaid and the cost of using the Dartford tunnel will increase.

Mr. Spearing

Is the hon. Gentleman asking for subsidies?

Mr. Neubert

I made it clear some minutes ago that I am opposed not to subsidies in the public sector, but to the unco-ordinated application of public resources in a way which leads to distortions and perhaps to more public expenditure than is necessary to achieve the objectives. It worries me that provision for a new crossing, although it will be a great advance, will be at the expense of the Dartford tunnel, which already finds it difficult to pay its way.

There needs to be a new look at the whole question of toll tunnels. In particular, it is unfair that if the Dartford tunnel is to be part of the M25 orbital route—the major project in the Department's programme—expecting those who happen to live on either side of the river at that point to pay for the tunnel, which is an essential part of the circular route, is unfair and unwise.

Talking about crossing the river brings me to the subject of transport on water, because more should be done to encourage the use of inland waterways. I am a member of Transport on Water, which is a council established mainly to promote greater use of the Thames—that natural highway through the capital city—and other canals and inland waterways. There are great advantages to be gained by the use of waterways. The craft that use them can carry far larger loads than Armitage lorries and, whether barges or more modern forms of river transport, they are non-pollutant, quiet, unobstrusive, safe, economical in their use of energy and therefore cheap, and they exploit an existing asset.

That asset is under-employed because investment in maintenance or improvement has been lacking. Therefore, I welcome the Government's recent announcement that they will make another £7 million available to the British Waterways Board. That is a step in the right direction.

I hope that we recognise that there is scope for the greater use of waterways, and the London docklands development offers such an opportunity. Docklands is all about revitalising a region of the capital city which has been neglected for too long and allowed to become derelict. It is important that the area should be developed, and not only for housing and businesses. The waterside should be developed for traffic that can operate economically, in commercial terms, on the Thames.

My view is not incurable romanticism. I am not an idealist who wants to go back 100 years to the time when waterways were more important and prominent. There is a demonstrated need for such traffic and it has been shown that it can be viable. There is some traffic, but it needs encouragement and I hope that that will not be overlooked by the Government or those concerned with developing London's docklands.

I have had the luxury of speaking to the House for more than 30 minutes. However, because of the great interest in the subject, I shall now give way and hope that my motion has provided an immediate opportunity to debate a lively and controversial issue, the Law Lords' ruling. It was always my intention to raise this subject today, but the fact that the case against the GLC was upheld by the Law Lords has given it added point and importance. I welcome that, and I make the plea that, in all our considerations of transport policy in London, the South-East and elsewhere in the United Kingdom, we preserve a sense of balance to achieve the best possible travel facilities for the public and the most effective use of public resources.

Mr. Speaker

Unusually, I shall call a second speaker from the Government Benches. I shall call two speakers from the Opposition Benches later.

10.10 am
The Solicitor-General (Sir Ian Percival)

It has been suggested to my right hon. and learned Friend the Attorney-General that it would be for the convenience of the House if a Law Officer said something about the GLC decision. I understand that that has been agreed, and that is why I intervene at this stage. I stress that it is in my capacity as a Law Officer that I intervene in an endeavour to advise the House as best I may on the effects of that case, so far as I can do so at this moment.

The first advice that I respectfully offer the House is that all of those who choose to comment on it should bear in mind the basic considerations of what it was about. I know that that is sometimes boring. It is sometimes boring for lawyers. It would be more interesting sometimes if we did not have to bother with clients, evidence or the law, but we must. In this case it is advisable to recall that, basically, it concerned a dispute between two democratically elected bodies as to the powers claimed by one to take money from ratepayers of the other. The question was: was the GLC entitled in law to levy the supplementary rate on the ratepayers of Bromley and all the others?

Secondly, we should remember that whether or not the GLC has that power depends entirely upon whether it has been given such a power by statute, because the powers of our local authorities are only such powers as have been given to them by statute. This case resolved itself into the specific question whether the powers claimed were given to the GLC under the Transport (London) Act 1969—the date of which will not escape right hon. and hon. Members. The question whether the GLC could or could not do what it wanted to do was a pure question of law as to whether the GLC had been given by that statute the powers which it claimed to have.

I shall not quote from the case, save in this one instance. There were no political questions or considerations before the House of Lords and this was stressed by Lord Diplock in the following words at the beginning of his speech: It cannot be too emphatically stated that your Lordships in this appeal are not concerned with the wisdom or indeed the fairness of the GLC's decision to reduce by 25 per cent. the fares charged in Greater London by the London Transport Executive (LTE) which made it necessary to issue the supplementary precept, or the greater part of it. All that your Lordships are concerned with is the legality of that decision: was it within the limited powers that Parliament has conferred by statute upon the GLC? This may also be a good moment for everyone here and outside the House to remind themselves that one of the most priceless assets that we enjoy in this country is an independent judiciary. If we had no independent judiciary, how would such disputes be resolved? In every case there must be a losing party, but one of the things that has struck me most forcefully in a lifetime of practice has been the way in which those who lose usually accept their defeat. That has always seemed to me to be a tremendous tribute to our judges and the clearest possible recognition of their independence—independence of all considerations outside those that are material to the case.

If evidence were required of independence from political considerations we have of course had it in the last three years. Sometimes those who suggest that in a particular case their Lordships have been influenced by political considerations tend to forget that even in these three years there have been at least two cases where the boot might have been on the other foot. I have in mind the case where a hospital authority south of London did not do as it was requested to do by the Government, and commissioners were put in. The courts held in favour of that authority and against the Government. There AS an even more recent case in Camden—

Mr. Christopher Price (Lewisham, West)

Does the Solicitor-General agree that in that case, which affected his right hon. Friend, who at that time was the Secretary of State for Social Services, the Government brought in an indemnity Bill, in the week following the judgment, and it was taken through all its stages on the Floor of the House? Thus, had any citizen innocently been in breach of the law during the period of that illegality it was possible to put the matter right. Does the Solicitor-General think that this is a comparable case in that respect?

The Solicitor-General

The hon. Member knows perfectly well that that is not a question for me, and I shall not be drawn. I have been here too long for that. I am gently reminding the House that for every case in which their Lordships might be said to have favoured one political view, one could find another in which it might be said that they hadfavoured a different political view.

Mr. Clinton Davis (Hackney, Central)

I should like to take up the point raised by my hon. Friend the Member for Lewisham, West (Mr. Price). In my opinion, the Solicitor-General has a duty to advise the House in this connection. Does he consider that, as a matter of law, the councillors who were responsible for this policy and who, presumably, believed honestly that they were behaving lawfully, might now be subject to a surcharge? If so, what action could be taken by the Government to provide them with immunity against a surcharge by the district auditor?

The Solicitor-General

I understand the anxiety of hon. Members to raise these issues, but they know as well as I do that they are not matters for me. In any case, it would be foolish for anyone to answer them off the cuff. But, further, they involve matters of policy, and as such hon. Gentlemen should pursue them with other Members of the Government.

Mr. Soley

The Solicitor-General has given way many times, and I am grateful to him for doing so again. This is an important matter. If the district auditor were called in, he would have to surcharge the previous Conservative councillors, too. So we should clear up the matter of the indemnity.

The Solicitor-General

My answer is exactly the same. I understand why hon. Gentlemen wish to raise these points, and I hope that they will raise them in the right quarter. They concern questions of policy, which are fair do's and require answers, but that is not my function.

Mr. Dobson

There are two issues which have nothing to do with policy and on which I hope the Solicitor-General will advise us. My understanding is that the House of Lords said that there was a fiduciary responsibility on the part of the Greater London council to the ratepayers. Will he confirm that there is no suggestion anywhere in the judgment that there is a fiduciary responsibility between individual councillors and ratepayers?

I shall be grateful, as will Londoners, if the Solicitor-General can say whether this judgment invalidates that part of the supplementary rate levied in respect of the costs of the Inner London Education Authority, or whether it simply invalidates the supplementary rate in respect of the GLC's transport policy.

The Solicitor-General

That intervention convinces me that I ought not to give way again. I have now given every opportunity for hon. Members to air their political views in the course of doing what I am seeking to do.

Mr. Robert Hughes (Aberdeen, North)

I am afraid that the Solicitor-General has walked into precisely that difficulty. His purpose in intervening was to give us advice on the judgment. Instead of doing that he proceeded, in a fairly lengthy preamble, to defend the political independence of the House of Lords and the judiciary. That has not been called in question. If the Solicitor-General would get on with what he came here to do, we might save some time.

The Solicitor-General

I hope that that has been heard on the Opposition Benches. As for the length of time that I had taken, I think that I had about two minutes uninterrupted. If that is a lengthy preamble, I plead guilty, and I hope that other speeches will have similarly lengthy preambles. I was merely giving a gentle piece of advice, because of some of the comments that I heard on the radio this morning. I ask the House to bear in mind my short preamble as a background to what I wish to say, because I wish to give dispassionate advice on the effect of that case to the extent that an amount can be given if it at this stage.

The case decided that what the GLC did went beyond the powers given to it under the 1969 Act. That is all that it decided. It did not decide that the GLC had no power to give grants for revenue purposes. On the contrary, it was conceded by counsel for the plaintiffs that there was power to give grants for revenue purposes. That was confirmed by at least three of their Lordships, who made it clear that they were not saying that there was no power to give grants for revenue purposes, but were saying that a grant of the kind given in this case could not be given. That was not within the powers given to the GLC, and therefore the supplementary rate for the purpose of bringing in the necessary money was unlawful. They decided that the grants given in this case were not within the relevant powers but they confirmed that there were grounds on which the GLC could give grants for revenue purposes.

What else does the case do? The speeches of their Lordships give guidelines which may be of assistance in any one of the immense number of cases that may fall between those two clear extremes. Hon. Members will have time over the Christmas Recess to read these speeches and evaluate the guidance which emerges from them.

My advice to the House is that he would be a foolish lawyer who sought at this stage to take any hypothetical case or cases and say that that comes within or is outside the guidelines set by their Lordships. Laymen would be even less wise to do the same. We can all be clear on what the judgment decides and what it does not decide. Having got that clear in our minds, the wise course for all of us, including the lawyers, is to give ourselves plenty of time to digest the details of what has been said and how it may be applied to future cases.

Mr. Robert Hughes

Before the right hon. and learned Gentleman sits down, will he advise a non-lawyer on how the GLC should proceed? Apparently there are guidelines, but will the Solicitor-General say whether the revenue support for pensioners is permissible? Will he say whether the revenue grant for free travel for policemen is permissible? If the GLC decides to provide some type of revenue grant for the future, how is it to know whether it is within the law? Is it not obvious that we need a clear policy decision? We cannot have the GLC or any other transport authority having to face the full rigours of the law right up to the House of Lords every time it wishes to change its transport policy.

The Solicitor-General

I cannot advise the House on any of those questions.

Mr. Clinton Davis

Why not?

The Solicitor-General

The hon. Member knows that better than most. These are major questions. I acknowledge freely their importance. For that reason, they deserve a considered answer. I have no doubt that they are receiving urgent consideration by the legal officers of the GLC and in the legal departments of everyone else concerned.

Mr. Clinton Davis

And the Government?

The Solicitor-General

Yes, indeed. Any lawyer who sought to give a specific answer off the cuff to questions such as those asked by the hon. Member for Aberdeen, North (Mr. Hughes) would be an ass. I do not believe that he would be assisting anybody, and my job is to assist the House. I decline to answer questions of that type, extempore, because I do not believe that it would be in accordance with the traditions of my office or of assistance to the House if I attempted to do so.

10.25 am
Mr. Nigel Spearing (Newham, South)

I listened to the contribution of the Solicitor-General with mixed feelings because we hope that there will be a debate on this matter in the very near future. Today we are discussing a private Member's motion which happens by accident to be related to the judgment in another place. I hope that, because the Solicitor-General has made a brief and not very enlightening contribution, it will not be taken by anybody as a discharge of the Government's function to give time for a debate in the House so that hon. Members may know exactly where they are.

The Solicitor-General said that this was an extremely complex case and that, although there were powers in the present Act, they were not sufficient to cover the present revenue grants. The fact that he described the judgment as something which gave guidelines emphasises that.

According to the Solicitor-General, in substitution for certain sections of the Transport (London) Act 1969, we have three judgments from their Lordships. I suggest to the Solicitor-General and to the Government that it is not an adequate statutory basis for the sort of integration of transport—for which this morning's motion calls—to have to base it on three contrasting and complementary judgments and to determine, for example, whether old-age pensioners should travel free. As the Leader of the Opposition said yesterday, we need new legislation to make matters clear.

The Solicitor-General

I intervene only in the interests of accuracy. I have not said that anything has been substituted for anything else. The hon. Gentleman knows that that is a misuse of words. Five Law Lords were called upon to exercise their duty to place a meaning upon a statute. They have not substituted anything for anything. They have done the job for which they were appointed, which is to interpret the laws passed by Parliament.

Mr. Spearing

I am sorry that the Solicitor-General thought that I was trying to mislead the House. I did not intend to do that. I was attempting to show that, because of the nature of this judgment from the highest court in the land, for all effective purposes the powers that are now legally with the Greater London Council and legally discharged through it by the London Transport Executive must rest, and can only rest, for the time being on what is contained in the judgment. The Solicitor-General used the word "guidelines". Therefore, the powers that the GLC can discharge must rest on those guidelines. In due course we shall find that for our purposes those guidelines are narrow and much narrower than was commonly supposed when the 1969 legislation was passed. All the speeches from both sides of the House show that the options which one might expect the GLC to be given are much greater than the guidelines that have now emerged.

I congratulate the hon. Member for Romford (Mr. Neubert) on tabling the motion. I agree with its objectives. However, the co-ordination of transport requires the co-ordination of finance for transport. The two cannot be separated. I should have liked to spend some time speaking about the organisation based on the Thames called Transport on Water of which we are both members, but the importance of this morning's subject makes that impossible.

The hon. Gentleman's speech was typical of the speeches of those who, on this issue, are short on fact and long on fancy. It was typical of the speeches of those who are uninformed both as to fact and implications. I shall attempt to refute what the hon. Gentleman said and at the same time to show that I am wholly in accord with the motion and that it can be fulfilled only by a change in the law that restores the situation to what was thought to be the status quo before the judgment of the Law Lords.

The first fact that the hon. Member for Romford got wrong concerns the election manifesto of the London Labour Party. The manifesto was drawn up as a result of a series of study groups in which I was involved. It was put before the public when there was a different leader of the opposition in County Hall, but the manifesto commitment was entered into by the London Labour Party as a whole and by its candidates. There was another election to decide who should emerge as leader. The manifesto was not one individual's personal policy.

There is a great deal of common ground between the hon. Member for Romford and myself. He has tabled a very good motion and has said that, although he is not against subsidies for public transport, they should be applied in a co-ordinated manner. I am sure that he will agree with their Lordships that subsidies should be applied in an economic manner and should not cost more than is necessary. I agree with that, and in my speech I shall show him—contrary to his belief—that the GLC's efforts were made wholly within those criteria.

The hon. Gentleman also said that the issue was a matter of balance. That is right. He said that transport was a basic need of London and of our community. Even those who do not use public transport depend on facilities supplied by those who do. That is a fundamental point about the life and work of any urban city in the world. Those who use private transport must depend on others who use public transport. Therefore, we are all in it together.

There is wide agreement. We found that that was so in the Transport (Finance) Bill Committee, and what I am saying to the hon. Gentleman is even more applicable to the Secretary of State for Transport. We are glad to see him here this morning. One of the Secretary of State's predecessors created the London Passenger Transport Board in 1933. Private enterprise did not provide the co-ordinated transport services for London which were then considered by a Conservative Government to be needed. Today we have a system which provides bus services for 1,000 million passenger miles a year, and trains for 500 million passenger miles a year. They are co-ordinated—perhaps not well enough—with the services of the publicly owned network of British Rail. In that respect we are all at one.

Their Lordships had to decide whether the revenue from London Transport's operations should cover most or all of its costs. As we heard from the Solicitor-General, even their Lordships agreed that some of the costs could be met from sources other than revenue from fares. The only question to be determined is how much. That question lies within their Lordships' judgment.

The amount of revenue from certain operations is not always a good guide to efficency. It is not generally known that until fairly recently the whole of the London Underground network lost money. From the early years of this century, it has not paid. It paid only after a merger with the bus services and later a merger with London Transport. Year after year, buses subsidised Underground services. Without the merger of 1912 and the public ownership that emerged after 1933, the Underground services would not have paid their way or existed. They would not have existed if Conservative Members had insisted on revenue equalling expenditure.

Long before 1981, revenue was supplied by County Hall. In the last year of Sir Horace Cutler's administration, £127 million went on capital expenditure, £86 million on general revenue support and as much as £33 million on supporting old-age pensioners' passes. Mention has been made of such passes in Bromley and there seems to be no disagreement about them.

Therefore, £246 million was given, in one form or another, by a Conservative-controlled GLC to the London Transport Executive. That amount may even have been exceeded by the administration of Sir Reg Goodwin. As long ago as 1925, the municipal reform administration at County Hall—which, to all intents and purposes, was Conservative controlled—provided, in three successive years, more than £250,000 in revenue assistance to London County Council's tramways. It is true that the turnover was £4 million and that the proportions were perhaps not as great as those envisaged today, but in 1925 a Conservative administration at County Hall recognised the principle. Therefore, a precedent is not being set in terms of principle.

The Under-Secretary of State for Transport (Mr. Kenneth Clarke)

The hon. Gentleman has made an elaborate case, but I have a feeling that he is tilting at windmills, just as some of his political allies did when reacting yesterday to the judgment. Did not the hon. Gentleman listen to the Solicitor-General and appreciate that their Lordships made it clear that there is nothing illegal in making grants to subsidise public transport? The Government have said that it is perfectly legitimate as a matter of policy. I am not quite sure what the hon. Gentleman's indignation achieves or why he feels that it is important to get vexed about yesterday's judgment.

Mr. Spearing

I understand the Minister's sensitivity. I have not been indignant or vexed. I hope that I have made my points in a reasonable, straightforward fashion. However, they may have been embarrassing to the Minister. Contrary perhaps to his opinion, most of the public—certainly those who listen to the media—believe that the question of revenue equalling costs involves a matter of principle. Many people believe that that is what the argument involves.

I am anxious to emphasise the Solicitor-General's comment that the point at issue is not the principle, but, if there is a point in their Lordships' judgment rather than a series of curves and swerves, how far such revenue support can go and on what basis. That is not a point of principle but a matter of balance that is ultimately for the electorate to decide, not the courts. If the Minister wishes to intervene and comment on my summing up of the picture, I shall gladly give way.

Mr. Clarke

I intervene only in response to the invitation. Of course the electorate will decide upon the basis of the manifesto put before them, but I am sure that the hon. Gentleman will agree that the manifestos of political parties in local government elections should offer only that which is lawful. In deciding what is lawful for the GLC, we must consider the Act that created the GLC and gave it various duties to carry out.

Mr. Spearing

We are largely in agreement. The point that the Minister has underlined is that, although everyone, when the 1969 Act was passed, believed that it would be possible for the GLC to give revenue support at will and at the wish of the electorate, everyone is now surprised that that is not the case, perhaps as a result of inadequate drafting of the Bill or its inadequate scrutiny in Committee. Therefore, it is logical now to ensure that the law is changed back to that which everyone thought it was.

Until 24 October 75 per cent. of the cost of London Transport came from revenue—fare-paying contributions. That meant that old-age pensioners or policemen who travel free were contributing much more than 75 per cent. In Berlin the figure is 39 per cent. and in Paris 44 per cent. In New York the figure is only 55 per cent. The hon. Member for Romford cannot accuse Mayor Koch of being a Marxist, as he accused the leader of the GLC—who is also not a Marxist—just because he gives 45 per cent. revenue support to the New York subway authorities. In Brussels—who am I to speak of Brussels—they pay only 30 per cent. of the costs. Dare I say that it might be an example to follow, because it is no doubt the sovereign wish of the burghers of Brussels and the electors of Belgium that that should be the case. It is not a matter of principle, but a matter of degree. The Minister has agreed that the amount is a matter for the electorate.

We should go a stage further to see what has happened about the so-called massive transfer of resources. It is not as massive as hon. Members may think, although it has had a dramatic effect. The alternative was to increase fares. The familiar spiral of decline, about which we all know, was beginning to set in and London was suffering from urban thrombosis. It was being felt especially by those who travel on public transport. During 1981 it cost between 8p and l0p a mile for public transport. I remind the House that the Civil Service and Parliament car allowance is about 20p a mile. The cost for one person travelling by public transport and perhaps having to wait for a bus, which is more inconvenient than travelling by car, is half the cost of running a car by Automobile Association or parliamentary standards. We were in that spiral, and that is why we in the Labour Party said that we must do something to stop it or the objectives of the package would not be attained.

The package contained a 25 per cent. cut in revenue. The dramatic result was an overall 32 per cent. reduction in fares. That was not a wild promise. It turned out to be economically sensible. Not only was it possible to do that, but it was possible to move towards a zoning system for which people in London have been asking for years. They wished to have something more rational than the previous fares structure. So there was not only a straight cut in the fares structure; there was a rationalisation of it and a reduction in costs—for example, those of ticket collecting.

How was the package to be paid for? The method must be spelt out because it is not generally understood. First, the Labour administration at County Hall inherited a budget gap for London Transport for the previous year. I shall not say that that was inevitable but it existed. The gap was £48 million. The fare and associated policies were to cost £70 million, which together with the budget gap added up to £117 million, or a 6.1p rate.

That would have been sustainable, but we forgot the Secretary of State for the Environment and Government policies. As a result of the extra spending, which I believe was good value for money, the Secretary of State added another £111 million with his clawback arrangements. Therefore, the ratepayers of London, although they have been hard hit, had to make up for the £111 million that the Secretary of State clawed back in order to gain the inestimable advantage of the "Fares Fair" structure. In order to pay for a £70 million fare policy for this year, they had to find £228 million. That is a 11.9p rate, only 3.6p of which went on the "Fares Fair" policy.

Between one-third and one-half—one can calculate it in different ways—of the GLC supplementary rate would have gone towards the policy. There were other supplementary rates for the Inner London Education Authority for some London people. Those were not imposed in Romford but they may have been imposed in Bromley. Even if the judgment is carried out and the problems that are envisaged arise, only a proportion of the supplementary rate can be repaid unless the Secretary of State stops his clawback. That is the first and perhaps the major misconception about the policy.

The hon. Member for Romford referred with affectionate reminiscence to his days in a public house in Bromley, where the whole matter started. In The Standard of 16 December, Councillor Randall said: We get no benefit at all in Bromley from the GLC's fares cut". I have news for Councillor Randall. Until 24 October if he hopped on a bus he had to pay 20p. After 24 October if he hopped on a bus, for a journey of about three-quarters of a mile or less, he would pay 10p and so would all the electors of Bromley. The Standard says that Mr. Randall is a solicitor, so no doubt he has assisted private transport. He must have used the bus very rarely, or he would not have made such an inaccurate statement. That also applies to all the electors of Romford.

The hon. Gentleman may believe that he has a rather better case about British Rail. Bromley South is an important junction through which 300 British Rail trains pass every day. It has 600 train movements per day, as does Romford. It is an important railway centre with good all-round communications. The hon. Gentleman says that British Rail travellers cannot take advantage of the new "Fares Fair" offer because the silly GLC will not extend it to British Rail. I have news for him and perhaps for all Conservative Members.

The GLC press release on Friday, 19 June 1981 said: The Government has blocked plans by the Greater London Council to subsidise British Rail fares in London which are expected to go up in November. A GLC subsidy which would be about £20 million would have avoided the increase and brought BR fares into line with those on London Transport which are to be reduced. After an hour-long meeting with Mr. Norman Fowler, Secretary of State for Transport, on Thursday GLC Leader Ken Livingstone said: 'Mr. Fowler said he would refuse to allow British Rail's external financing limit to be increased. We wanted to get an integrated fares system between British Rail and London Transport. This we have been denied. This is going to be a major setback for everyone who uses British Rail to get around in London.' It was the then Secretary of State for Transport who told Mr. Livingstone that if he gave the £20 million subsidy to Britsh Rail to bring it into line with the "Fares Fair" policy the Government would cut their grant to British Rail. I understand that they intended to cut the capital for much-needed new stock. The real culprits in preventing the co-ordination of rail fares were the Secretary of State and the Government. So much for their protestations about wanting a co-ordinated fares structure in London.

What about commercial ratepayers? I have already shown that only one-third, or a little more, of the supplementary rate can be used for fares because of the machinations of the Secretary of State for the Environment and his clawback. I have even more news for Conservative Members. An interesting article appeared in last week's Labour Weekly, written by my hon. Friend the Member for Blackburn (Mr. Straw), under the heading "The business bounce". He analysed the importance of rates and said that interest rates were a far larger burden on industry and that they had doubled between 1978 and 1980. He said that the CBI is anti-rates, but keeps quiet about them being an allowable expense against corporation tax. He went on: It means that for every £1 extra that industry pays out gross in rates, its corporation tax bill goes down by 52p, in general. So the net cost to companies liable to main-stream corporation tax at 52 per cent. is only 48p for every £1 gross. (Some smaller companies pay at a lower rate than 52 per cent.). But what, say the CBI, if the firm is not making a profit? The rates bill will be allowed to increase the company's tax loss. Under our very generous system of company tax law losses can generally be set off against any profit in the preceeding two years, any profit in any future year, and any profit of any other firm within the group in the same year. My hon. Friend is correct. The Government must deny it if they can. That article has been published for a week and there has been no denial by the Government. Therefore, we can take it that the article is broadly correct. I have outlined facts which show that some businesses and commercial firms do not have much cause to complain.

What is the way ahead? First, the law must be changed to what everyone thought it was. It would be possible for the Secretary of State for the Environment to play Father Christmas and go further. He could return the clawback by including a facility for that in the new legislation that is about to descend on us. By his doing so, the ratepayers of London could be repaid about half of their supplementary rate and also keep the low fares. We want to encourage travel in London and ensure that we receive good value for money.

In 1971 the electorate of London decided that there should not be massive Government and public investment in a system of motorways that would have meant the destruction of 20,000 or more houses. They opted for a system of public transport. But we do not yet have a financial or physical structure to provide that alternative system. On 24 October, as a result of a democratic election, an imaginative step was taken in that direction. The scheme was no wild promise on the margins of legality. It was planned before the election, it was possible and practical, and it has been popular. All hon. Members, especially the Secretary of State for the Environment, recognised the need to sustain the life of our cities, and especially our inner cities. The electorate of London recognised that also, and it was one factor that determined their choice in the election last October. I have shown that the scheme was economic and in accord with international practice. That must be recognised by the Government, and Parliament must make good the lacuna in the law so that the objectives of the motion can be fulfilled.

Mr. Speaker

I had proposed to call the statement at the end of the hon. Gentleman's speech, but five minutes before time is a little too early because hon. Members may be waiting in the Tea Room for 11 o'clock. I shall call the Secretary of State for Transport and then two Labour Members consecutively later.

10.57 am
The Secretary of State for Transport (Mr. David Howell)

I hope that it will be for the convenience of the House if I intervene now and make a few remarks confined to the judgment that has excited a good deal of comment both inside and outside the House.

I hope that my hon. Friend the Member for Romford (Mr. Neubert) will understand if I do not range across the wider issues that he raised or accept his enticing invitation to conduct a search and destroy expedition into other policy areas. I want to concentrate on some of the points raised on the narrower issue. I hope that my hon. and learned Friend the Under-Secretary, if he catches your eye, Mr. Speaker, will have an opportunity towards the end of the debate to answer a number of the detailed points that have been raised on transport policy and its wider aspects.

I congratulate my hon. Friend the Member for Romford on the timeliness and prescience of his arrival here this morning, and on the opportunity that he has to promote a debate on a serious and difficult issue. I welcome, as others have done, the clear, unanimous judgment from the House of Lords. I congratulate Bromley on having taken the steps that led to a clarification and protection of the position of London ratepayers. I pay tribute to the dedication of London Transport, which has had to operate under difficult circumstances and is now faced with a difficult situation. That situation need not have been brought about, but it has been and, undoubtedly, has created difficult problems.

The House will have listened carefully to the words of my hon. and learned Friend the Solicitor-General and will realise that we need to give careful consideration to the lengthy judgment, which runs to 100 pages. It would be inappropriate to rush to instant conclusions, although that has not stopped a number of people from doing so. My hon. and learned Friend made it clear that the sensible and prudent course—

It being Eleven o'clock, MR. SPEAKER interrupted the proceedings, pursuant to Standing Order No. 5 (Friday sittings).