HC Deb 22 December 1981 vol 15 cc889-929 4.44 pm
Mr. Albert Booth (Barrow-in-Furness)

I beg to move, That this House do now adjourn.

Leave having been given on Monday 21 December under Standing Order No. 9 to discuss: the need for the Government to make clear their intention to introduce early legislation to clarify the legal basis on which a fares increase can be determined by the Greater London Council and the London Transport Executive not later than 7 January 1982 to comply with the ruling of the House of Lords. Everyone who lives and works in London is directly or indirectly dependent upon the running of London's public transport services. The commerce, industry and the services of the city could not function without an effective transport system. It is conceivable that we could get by without any private transport but it is inconceivable that we could survive effectively in London without public transport.

The present transport policy of the Greater London Council was developed to deal with a crisis. Under the Conservative Greater London Council decisions were taken substantially to increase fares on London Transport. In a period when general prices rose by about 50 per cent., fares on London Transport were increased by 79 per cent. There were five fare increases between June 1978 and September 1980. As a result, the number of passengers using London Transport was falling considerably. Between 1974 and 1980 bus passenger miles fell from over 3,000 million to fewer than 2,600 million, while passenger miles by the Underground trains of the London Transport Executive fell from 3,200 million to 2,643 million.

The experience of London was that of a number of metropolitan authorities which tried to bring in fare increases in the same period. The result of the increase in fares was that the number of passengers using the London Transport system fell. In London, to a greater extent than elsewhere, the result was considerable congestion in the city, the inability to schedule proper bus services and the possibility of the system being run down even more rapidly and London grinding to a halt.

In the short time that the cheap fares policy, or the "Fares Fair" policy as it is called, has been in operation, it has achieved an 11 per cent. increase in the use of London buses and a 7 per cent. increase in the use of the Underground. It has been in operation since only October of this year. The policy, if it deserves nothing else, deserves a fair trial against the major problems which it was addressed to tackling. It has been seriously undermined, if not set at naught, by the decision of their Lordships. I contend that the decision thwarts the clear intention of the Minister who introduced the legislation and, therefore, the intention of Parliament.

Mr. Terence Higgins (Worthing)

The right hon. Gentleman says that fares were reduced and usage increased. What was the effect on total revenue?

Mr. Booth

I appreciate that revenue is an important part of the argument. However, if the right hon. Gentleman will forgive me, I shall come to that when I deal with the fares and revenue effects of the policy.

I wish to demonstrate to the House the intention of Mr. Richard Marsh, the then Minister of Transport, who introduced the Bill that became the Transport (London) Act 1969. He said: I turn now to the role of the GLC in relation to the Executive. The main powers that the Council will have, apart from the power to appoint, will be to pay grant to the Executive for any purpose it thinks fit and to issue directions to the Executive. This gives the Council the right to prescribe the policy lines to be followed and to take financial responsibility for its decisions. This is very important, because if the council wishes the Executive to do something that will cause it to fall short of its financial targets, it will itself have to take financial responsibility for it. The Council might wish, for example, the Executive to run a series of services to run at a loss for social or planning reasons. It might wish to keep fares down at a time when costs are rising and there is no scope for economies. It is free to do so. But it has to bear the cost."—[Official Report, 17 December 1968; Vol. 775, c. 1247–8.] That might have been written to envisage exactly the situation that faced the Labour GLC when it came into office. That is exactly what it wanted to do—to keep down fares at a time when prices were rising, to run a policy for social reasons. Therefore, I believe that it is clear beyond a peradventure of doubt that it was the Minister's intention. As far as I can see, Parliament in no way sought to change that in the proceedings on the Bill.

Mr. John Page (Harrow, West)

The right hon. Gentleman said that the intention was that it would be possible for the Greater London Council to keep down fares. Here we have an active policy of reducing fares. Does he consider that to be on all fours?

Mr. Booth

I believe that the determination of fares policy in the sense in which it was described by the Minister of Transport of the day had to cover increasing fares at less than the inflation rate, holding them steady or reducing them, in order to embrace the objectives that the Minister was outlining, because he was outlining social objectives as well as financial policies and financial practices which could be carried out by the GLC by giving directions and giving grants to the London Transport Executive.

Yet, in the face of a decision of the House of Lords, which will clearly throw the greatest doubt, if no more, on the GLC's ability to pursue a policy which was within the Minister's intention, the present Secretary of State for Transport has refused to legislate to give effect to that intention. He has gone further. He has accused the GLC of raising manpower and expanding services beyond what is needed in pursuit of its policy. He has accused it of incurring costs substantially greater than those required for the pursuit of its present fares policy. The right hon. Gentleman is on record as having said all that. Therefore, I accept that it is very important to examine the financial effects and implications of the policy decision taken by the GLC in pursuit of a policy that it outlined in a manifesto and put before the electors, and on which it was elected.

I readily concede that the supplementary rate that the GLC proposed to levy embraced much more than the cost of the low fares policy. But that had to be so, because the GLC was required to recover a deficit that had been made in the operation of London Transport under the Conservative GLC. The deficit that it had to recover, which it inherited, was about £48 million. The cost of implementing the fares policy that the GLC proposed to introduce was about £64½ million. In addition, there was a sum of £4.7 million, which was used for the improvement of London Transport services.

By far the major bill which was incurred was a result of the Government's policy, as outlined to the House by the Secretary of State for the Environment, which was that the GLC's rate support grant would be cut, because its expenditure exceeded what the Secretary of State considered to be proper. That added £111 million to the bill. So, of a total transport expenditure of £228 million, only £64½ million was directly attributable to the low fares policy.

If one is to take seriously the allegation made by the Secretary of State for Transport in the House, that the GLC was spending much more than was needed in improving services, one must look at the service level inherited by the Labour GLC. The scheduled services are those published in the timetables stuck up on the lamp posts and in bus shelters. By careful inquiry, I have found that when the Labour GLC was elected those scheduled services totalled 200 million miles a year. That was a cruel deception, a wicked joke perpetrated on the travelling public of the capital, because the number of available, serviceable buses and the number of crews then being employed by the London Transport Executive were sufficient to cover only 168 million of those 200 million miles.

Therefore, it is not surprising that our constituents, the electors and voters of London were complaining to their representatives about the standard of the service. It is not surprising that a Labour GLC immediately set about spending some money on the improvement of the services. it has improved the service level from the 168 million service miles run, not to the 200 million—it has a long way to go before reaching that—but to 174 million.

How can the Secretary of State claim that the GLC has unreasonably expended money on improvements in services, against performance levels of that order? It inherited a service significantly in need of improvement. The increases in manpower that the GLC has made, the increases in services, have gone only a small way.

However, we should not belittle the GLC's achievement, because its increasing manpower, of which the Secretary of State complained, comes to a total increase in staff of 568 persons out of a total staff of 60,000. With less than a 1 per cent. increase in manpower employed, it has achieved a substantial increase in service miles run. That is not to say that the GLC is satisfied with the efficiency of the London Transport Executive. It is not. In fact, it is putting on considerable pressure, and it is accused by London Transport of withholding £5 million, against requirements for improving efficiency. But there is no doubt that it is a more efficient service now than when the Labour GLC inherited it.

The Secretary of State for Transport has also, subsequent to the House of Lords judgment, accused the GLC of taking revenue and grant support to ridiculous extremes. He said in the House last Friday that there was no doubt a place for some revenue support. He was right to say that. He has to approve a certain amount of it for transport supplementary grant. But he claims that the GLC has done a terrible thing; it has carried the matter to "ridiculous extremes". By what criteria does the right hon. Gentleman hold that London's level of support for its public transport services is ridiculous or in any way extreme? Has he compared it with that of any other cities which have begun to run services approaching the level of London's?

Mr. Sydney Bidwell (Ealing, Southall)

May I impart to my right hon. Friend, and through him to the House, the information that Mr. McIntosh, whom I met last night, wishes to emphasise that the Labour members on the GLC are unanimously in support of this policy? It has nothing to do with violent extremism of the kind that a reactionary press has been trying to portray.

Mr. Booth

I am grateful to my hon. Friend. As he suggests, it is important to divorce the issue whether there is correct funding and a proper, democratically determined policy for London Transport from allegations that it is manifestation of an unusual, peculiar or special view of one or two people includng Mr. Livingstone. Mr. Livingstone and I shared a platform at the time of the GLC elections and he was putting forward to the elector of London the policy on public transport of the London Labour Party.

The Secretary of State for Transport alleged that the GLC's policy was extreme. By what standards does he make that allegation? If he says that it is the amount of subsidy given to public transport services, I must point out that the subsidy paid by Brussels for its public transport system is about 70 per cent. of the total running costs. The subsidy paid in Barcelona is about 60 per cent., and in Paris—I congratulate it on its recent improvement of public transport—the subsidy is about 56 per cent. In Helsinki the subsidy is about 51 per cent. Yet the subsidy for London Transport was raised to only 46 per cent. That is well below the general level paid in capital cities throughout the world, and well below the level paid generally in cities which attempt to run major public transport systems to give the service that their electors require.

Mr. Michael Shersby (Uxbridge)

I am interested in the right hon. Gentleman's comments, especially about the 46 per cent. subsidy. In all fairness, does he consider it right and proper that the GLC should pay a 46 per cent. subsidy when people who live in the Home Counties benefit from it without making any contribution?

Mr. Booth

London ratepayers do not pay all of the 46 per cent. That is the amount which the London Transport Executive receives from the public coffers towards running its services. Of course, part of it is paid by London ratepayers, but the amount which the Secretary of State allows as qualifying for transport supplementary grant is paid to the extent of 70 per cent. from general taxation.

I do not wish to enter the argument whether the Secretary of State has allowed enough to qualify for transport supplementary grant. That is a matter of some importance and it can be argued later. It is not the issue at stake tonight. The issue at stake is whether the Secretary of State should introduce legislation to make it clear that the GLC can, in the event of his not being prepared to accord the transport supplementary grant, raise rates to carry through the fares policy which it believes to be the correct one.

I hope that I have established the point that, on the basis of comparisons between London and other cities running major public transport systems, there is no evidence to support the Secretary of State's contention that the GLC has gone to ridiculous extremes. On the contrary, it is doing rather less than the average.

Mr. Clive Soley (Hammersmith, North)

Does my right hon. Friend agree that if the case put by the hon. Member for Uxbridge (Mr. Shersby) were carried to its logical conclusion no service which in any way lost money could be subsidised by the GLC? In other words, every bus, Underground or other route that did not make money would be cut. I suspect that many of the cuts might be in areas such as Bromley, Chingford and similar parts of Greater London.

Mr. Booth

Of course there is a danger that anyone who pursues the argument that it is unreasonable to load the burden on to the rates might come to the conclusion that it is unreasonable to load it on to taxation and finish up arguing that we should have only such public transport services as can be run profitably. There would then be massive cuts. I therefore hope that that is not what was implied by the hon. Member for Uxbridge (Mr. Shersby).

Mr. W. R. Rees-Davies (Thanet, West)

Is not the real question whether this should be dealt with by taxation or through the rates? If it is decided that it should be local and not through taxation, we must have a fairer system than the present one. Old-age pensioners in London travel virtually free, whereas pensioners in many other parts of the country cannot do so because the ratepayers there cannot possibly carry the burden that the GLC carries. It is therefore grossly unjust to the old people of this country when some people, because they live in London rather than in Margate or the North of England, can enjoy that privilege. For that reason, I submit that transport should be dealt with on a national basis, and if it be local at all it should be on an agency basis operating to the Department.

Mr. Booth

I have considerable sympathy with the case that the hon. and learned Gentleman advances, but that is not the issue at stake today. There is no possibility of changing the rating and taxation systems today or of passing a resolution to transfer the entire cost of sustaining public transport to the national Exchequer. The issue before us today is that which arises from the House of Lords judgment and the extent to which it prevents the GLC from pursuing a fares policy which at the time when it was enunciated was legal.

I return to the Secretary of State's contention that the GLC is doing something so extremist as to be ridiculous. I have shown that international comparisons do not sustain that argument, but why does not he make the internal comparisons in this country? Does he hold, for example, that it is right for South Yorkshire to have a fare box ratio which carries only 35 per cent. of the cost of sustaining the services through the fare box? I am quoting 1979 figures now, not current figures. In Merseyside the fare box carried only 59 per cent. and in Tyne and Wear 68 per cent., when London was drawing 75 per cent. of the cost of maintaining the service from the fare box. Was that fair and just?

If it was acceptable then that the policies of those massive local authorities should operate on different fare box ratios, why should the right hon. Gentleman accept an interpretation of legislation by the House of Lords which cuts across that in the light of the special situation of London trying to tackle a problem which was perhaps tackled earlier in other areas? Does he regard the legislation applying to metropolitan authorities as different from that which applies to Greater London? That was not the case for the Secretary of State who introduced the 1969 legislation, who made it clear that he was trying to create a similar situation. Is it the view of the present Secretary of State that the metropolitan authorities are in a different position?

On the question of financing, the Secretary of State said in the debate on Friday that a 60 per cent. increase in London fares would bring them back to the 1980–81 level in real terms. I do not contest that as a literal statement, but I contest the implication that it would right the situation. It ignores the fact that in 1980–81, NA hen fares were at that level, London Transport was running at a deficit. That deficit must be recovered and paid. That alone will require a further increase in fares. The 1980–81 level which could be achieved by a 60 per cent. increase would not compensate for the accumulated deficit with which the GLC must now deal or for the revenue lost during the period of the present fares policy.

The chairman and chief executive officer of the London Transport Executive told me and made it generally clear that the calculations made by London Transport show that a 150 per cent. fare increase would be required and service cuts would need to be made so that it could break even by the end of 1983. It is no good the Under-Secretary shaking his head in dissent. That statement was made by a man with the responsibility for running the London Transport Executive and he takes the view that the decision of the House of Lords confers, if anything, a greater responsibility on the executive in the running of its services and the meeting of the costs involved.

Sir Peter Masefield's view is that the judgment would also mean a reduction of service levels on the buses of at least 30 per cent., and possibly 40 per cent, and the cutting back of London Underground services by as much as 20 per cent. Nobody knows what the drop in ridership would be on London Transport if there were fare increases of that order, and, therefore, we are all speculating when trying to calculate the effects of a 150 per cent. increase in fares. However, extrapolations that can be made from the experiences of metropolitan authorities suggest that such an increase might have the effect of reducing the number of passengers by as much as a half and could cut down the use of Underground trains by as much as 30 per cent. Sir Peter Masefield's judgment was that that would mean branch line closures and the closing of up to 20 per cent. of the Underground stations.

A transport crisis can be precipitated by the Law Lords' decision and it is, therefore, clear that decisions are urgently needed about what subsidy should be permitted. The fare increase that may be made with confidence in March should be supported, if necessary, by legislation which the Secretary of State should introduce so that London Transport can be run in an orderly manner.

We must decide the level of transport services needed in the capital and who is to determine it. Will the Secretary of State shelter behind the House of Lords decision and allow London Transport to collapse, or is he prepared to face up to the fact that the community of London voters must have some democratic rights to determine, on the basis of their being prepared to pay, a level of services that they regard as adequate?

Mr. Shersby

The right hon. Gentleman has rightly concentrated on the problems facing London passengers. That interests all hon. Members, particularly those who represent London constituencies. Will he also address his mind to the real problem—I am not making a political point—which faces London ratepayers, particularly those just above the rate rebate level and those responsible for running small businesses? From what the right hon. Gentleman said, I take it that he is now directing his remarks primarily to the——

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

Order. Interventions should be brief.

Mr. Booth

I have made it clear that, while I am sympathetic to arguments that a greater proportion should be borne by the national Exchequer, that is not a matter which directly arises from the House of Lords judgment. That judgment impinged on how far it was legal for the GLC, faced with the decision by the Secretary of State on how much transport supplementary grant he would allow, to obtain rates to finance a fares policy which it believed was right, which was advocated in the GLC elections and on which the Labour members were elected.

The judgment means that ratepayers, as opposed to national taxpayers—although in many cases they are the same—should contribute towards the support of the services. Taxpayers are relieved to the extent that the tax system is progressive, but I hold that rate rebates and the services that result from the improved London Transport operation affect the whole community. The man who drives his Rolls-Royce down the Strand benefits to the extent that the Strand is not congested because of an efficient London Transport operation. It is only fair that he should pay rates and taxes so that the London Transport system may be efficient.

If the House of Lords decision is not followed by legislation, it will produce a chaotic situation in London. It would be chaotic in the short term—trying to sort out the financial implications of a supplementary rate which could not be legally levied—but even more chaotic in the long run for the London Transport system.

There is a clear responsibility on the Government to make certain decisions and to give clear answers to certain questions. Whatever else the Secretary of State says tonight, he must say whether he accepts Sir Peter Masefield's judgment about the 150 per cent. increase in fares being required and, if he does not, on what basis he will require or go about achieving such reductions in services operating with only the 60 per cent. increase that he has referred to.

What is more, the Secretary of State must tell us whether he intends that Parliament should have the right, in the face of the judgment, to decide the way in which legislation should limit, curtail or free local authorities throughout the country to determine how far they should provide public transport services beyond those that can be financed on the basis of the transport supplementary grant ratio.

If the Secretary of State is not prepared to do any of these things, he will be like Nero fiddling while Rome burns. He will be sitting in his ivory tower while the London transport system goes from bad to worse and creates enormous problems for all those who live and work in the city.

It is no good the Secretary of State trying to tell London Transport that it must sort out the problem of legislation. Only the House can do that, and it can be done only within the required time scale if the Secretary of State brings forward a proposition for legislation.

If the Government will not give the necessary support to regenerate the transport systems of our cities, the least that they can do is to legislate to let those who have the will and support of local voters get on with the job of regenerating their own transport systems.

5.17 pm
The Secretary of State for Transport (Mr. David Howell)

The emergency debate is taking place, first, because Mr. Speaker has allowed it under the rules of the House and, secondly, because of the Opposition's concern, which they are entitled to express and which has been expressed forcibly by the right hon. Member for Barrow-in-Furness (Mr. Booth), that the GLC will probably have to approve the London Transport budget for 1982 during the Christmas holidays. The motion that the right hon. Gentleman moved yesterday speaks of the need for early legislation.

London Transport's budget should be settled soon. It should have been settled earlier, because London Transport's accounting year begins in just over a week, but I realise that it was delayed by the Bromley case.

I shall begin by again making clear the Government's view on the central issue to which the right hon. Member for Barrow-in-Furness returned time and again. It is the Government's view that nothing in the House of Lords judgment prevents the GLC and London Transport from going ahead and agreeing a budget that is within the law. If the right hon. Gentleman tells me that that is not now possible, I must ask him to consider the legislation which has worked for 12 years under parties of both colours at County Hall and under successive Governments. Both parties have paid revenue support and received transport supplementary grant towards revenue support from successive Governments.

Mr. Ron Leighton (Newham, North-East)

What level of subsidy would be legal?

Mr. Howell

I shall come to the level of revenue support that has been given in past years and the level of revenue support for which TSG has been accepted. The hon. Gentleman asks what is legal. For that we must look back over the working of the Act in the past 12 years. During those years certain levels of revenue support have been approved by the Government and certain levels of grant have been given by the GLC. That has been the pattern.

Mr. Clinton Davis (Hackney, Central)

My hon. Friend the Member for Newham, North-East (Mr. Leighton) asked a pertinent question. Surely the issue is that over the years Governments and local authorities believed that a certain situation was lawful. It was never challenged.

Is it not at least possible that the situation that prevailed during that period could have been succesfully challenged? We do not know the answer, but the right hon. Gentleman must tell us what he considers to be the appropriate level of legal subsidy.

Mr. Howell

During the years levels of revenue support, grant and subsidy have been given. The judgments of the Law Lords make it clear that a degree of revenue support and of grant are proper elements in the making of the London Transport budget.

The GLC is in the same position as before to receive a budget from London Transport and to seek to approve it. If the GLC feels that it cannot carry out its duties, my door is open. It can discuss the position with me. There has been no change of policy. We have the judgments and the continuing policy of approving a degree of revenue support. The Government have always recognised that, and it is reflected in the TSG accepted expenditure that I announced only yesterday. If, after taking advice and considering the London Transport budget the GLC feels that it cannot carry out its duties, my door is open. We can discuss the position.

Mr. George Cunningham (Islington, South and Finsbury)

Is it the Government's view that, as a point of law, the revenue subsidies that have been given in past years—not the 25 per cent.—are lawful? If so, how do they square that view with the fact that two of the five Law Lords disagree with that view and another does not help us, because he based his judgment entirely on the loss of rate support grant? Two and a half Law Lords are against the right hon. Gentleman.

Mr. Howell

The Government's view is that the position is unchanged and that revenue support can be paid. If, after taking advice and considering the matter, the council feels that it cannot carry out its duties, let it come to me. I read in the newspapers that the council wishes to make an approach, but I have had no direct approach.

The Government believe that there is nothing in the judgment to prevent the GLC and London Transport from going ahead and agreeing a budget that is within the law. That would certainly include a degree of revenue support.

Mr. Douglas Jay (Battersea, North)

Will the right hon. Gentleman give way?

Mr. Howell

I have already given way about five times in 10 minutes. If the right hon. Gentleman will let me have 10 minutes of speech, I will give way to him later.

I understand that the GLC is not meeting to resolve its position until early in January. When it does meet, I shall be ready to discuss the problems with the council. I have made that clear, and I believe that is the right and prudent way to proceed. I am sure that, on reflection, hon. Members will realise that that is the sensible way to go about the matter.

In the House on Friday I said that we would not legislate simply to allow the GLC to carry on as before. I realise that that is not welcome to some, including the right hon. Member for Barrow-in-Furness, who feel that the GLC should carry on in that way. The Government's view, expressed in policies and in repeated warnings and observations by my predecessor and many others, is that the pattern being followed by the GLC was not in the interests of any Londoner, whether fare payer, ratepayer or, in particular, industrial ratepayer. It would not be appropriate to legislate to allow the council to carry on as before. However, if the GLC finds itself incapable of sorting out the difficulties, let it come and see me.

Mr. Toby Jessel (Twickenham)

Is not the position simply that the Law Lords ruled that the GLC and London Transport were entitled to have enough subsidy to keep the Underground and the buses going—without any subsidy they might not have been able to do that—but were not entitled to use a subsidy from the rates for social or redistributive functions?

Mr. Howell

I have chosen my words carefully, and my interpretation is that which I spelt out a few moments ago. If, after resolving its position and taking advice, the GLC concludes that it is incapable of sorting out these undeniably severe difficulties, let it come to me.

Mr. Jay

Will the right hon. Gentleman now answer the practical question that he did not answer on Friday and has not yet answered today: how is the GLC to determine what level of subsidy is within the law?

Mr. Howell

By taking advice and looking at the law as it stands, and has stood over many years, and at the practice under successive Governments. If the council has difficulty in reaching a view, after taking advice, it can certainly come and see me.

In the meantime, it must be recognised that an important judgment has been handed down. It is being studied by the parties involved, and we are studying the implications for the Government. That ought to be obvious. It does not justify the Opposition's demand that we should rush into legislation.

Let me confirm the Government's policy on the subsidy issue, because there have been a number of suggestions that there is a pitched battle between those who believe that there should be no support for urban and suburban transport systems and those who believe that there should be a massive degree of subsidy, with the question of how it is financed—whether through a sharp increase in the rates or an additional subvention from the Exchequer—being left on one side.

I confirm that the Government's policy remains unchanged. My TSG settlement announced yesterday accepts for grant £89 million of revenue support for London. That is 14 per cent. higher in cash terms and 5 per cent. higher in real terms than the 1981–82 level. It is not a punitive settlement—and, to be fair, I do not believe that it has been described as such. I have been equally fair and reasonable towards the GLC on its other transport expenditure. It will receive nearly 40 per cent. of the total grant paid to local authorities in England.

The settlement indicates clearly my view that urban transport cannot operate without support. That is surely confirmed by the TSG system. The GLC, or any authority, is not bound to keep to the TSG figure—the accepted expenditure on which grant is given by the central Government. That figure was taken as accepted expenditure by the Government in yesterday's announcement. It is guide to the Government's view of a sensible degree of support.

Of course, an increase in fares will be needed in 1982. How can that be avoided if ratepayers are not to shoulder a still higher burden? One of my hon. Friends asked the right hon. Member for Barrow-in-Furness about ratepayers. He had little of worth to say on the matter. A balance has to be struck between the duty to ratepayers and to transport users. That fact has always been recognised, and the point was made in the judgments handed down by their Lordships.

It is not for me to say what the increase in fares should be. If a sharp rise is now needed, it is a reflection not only of a reversal of the low fares policy, but of the GLC's inefficiencies and cavalier attitude to costs which have prevailed since May. If the right hon. Gentleman challenges me and asks what evidence there is for that, I refer him to the regrettable saga of the pay increases. Busmen were willing to settle for 8 per cent. However, that was followed by an 11 per cent. increase for Underground staff. That increase led to a reopening of the busmen's award and brought it up to 11 per cent., and all London Transport employees were given a one-off £50 payment to compensate them for the reduced value of travel concessions and the anticipated supplementary rate demand. Those settlements cost London Transport £5 million more than it had budgeted for. I cannot believe that any hon. Member would condone that attitude, especially when we are talking about ratepayers' money and high rates being imposed on people who often find it difficult to pay them. I am sure that the right hon. Gentleman would not wish to support that attitude, even though he strongly believes in the doctrine of low fares. There is another side to the story which cannot be dismissed, and a balance has to be drawn.

If people ask why fares have to go up so much, the GLC should say why it allowed this dangerous situation to develop. It was warned again and again by my predecessor and others that its policy was misguided and could lead to difficulties. That has happened. It is now for London Transport to propose, and the GLC to approve, a reasonable and legal provision of subsidy.

I have made clear in endless interventions that it is for the GLC, in the light of the judgments, to take advice and to make and approve a budget with London Transport. If the GLC is in difficulties, it can come to me and discuss the problem. It has only to look at the level of revenue support which is accepted for TSG grant, or to look back over the past 12 years during which the legislation has worked, to see that the law allows revenue support and a budget to be made for London Transport and for the city's and suburbs' transport systems to operate with a degree of grant.

That is the central issue that led the right hon. Member for Barrow-in-Furness to seek an emergency debate. I recognise his concern, but I do not believe that it is justified. We cannot be certain where the upheavals in London Transport over the past few months, or the attitude of the GLC as it develops, will eventually lead us. Some people have suggested that out of the turmoil since October and the GLC's present difficulties could come ideas for a better pattern of transport for London and the suburbs. That is one of the matters that the Select Committee is considering, and I look forward to its conclusions. No doubt it will take account of Sir Peter Masefield's views, as well as those of many others who have given evidence. This is a wide-ranging, complex and important subject. It would be disastrous to rush into immediate legislation of the kind that the right hon. Gentleman has urged today. I repeat, if the GLC has problems, it should come and talk to me, and I have no doubt that it will do so.

Mr. D. N. Campbell-Savours (Workington)

The Secretary of State has said that the GLC should come to see him in the evemt of difficulties. Would he object if it came to see him to discuss the possibility of legislation, because he ruled out immediate legislation in his earlier sentence?

Mr. Howell

I cannot answer that question until the GLC has produced proposals—I gather that it cannot do that until after Christmas—and formulated views on how to proceed in the light of the judgment. I have read in the press that the leaders of the GLC wish to come and see me, and I have said that my door is open. I shall certainly discuss proposals with the GLC, if it feels that it is in difficulty. My view is that the law remains as it has been on the statute book, that the Government's policy is the same as it has been on revenue support, and that there is nothing to stop the GLC making and approving a budget with London Transport. However, the GLC and London Transport will have to work that out.

I strongly advise the right hon. Member for Barrow-in-Furness to approach the whole matter calmly. Nothing will be gained, and a great deal of unnecessary anxiety will be caused, by demands for instant Government measures. I hope that, on reflection, he will agree that some of his remarks about collapse will be likely to cause worry rather than improvement. There is a danger that he and his right hon. and hon. Friends will overdramatise the implications of the judgment. It is perfectly clear from a cursory reading—clearly, its implications will need to be studied more thoroughly and at greater leisure—that he is exaggerating the situation. I am sure that when the House has debated the matter today, it will come to this conclusion and reject the motion for the Adjournment.

5.38 pm
Mr. William Pitt (Croydon, North-West)

A number of my constituents are concerned to know how much they will get back of the supplementary rate that they have already paid, and when they will get it. Some of them are faced with bills of £50, £60 and £70, and at this time of year they have a right to know whether they will get anything back and if so, what percentage it will be.

We are in an anomalous position. This debate has been called to clarify the position over the House of Lords GLC ruling. The opacity of the Secretary of State's speech has not clarified anything for me. However, we must accept the Lords interpretation of the law as it stands, and we call on the Government to rectify the situation. The judgment was given on only one set of facts—the implementation of the radical GLC "Fares Fair" policy—but there are signs that any deliberate subsidy so scrutinised could be found to be unlawful. It took this extreme state of affairs to expose the inadequacy of provision for local government autonomy in transport. For the sake of a soundly-based and respect-worthy constitution we should be grateful to Bromley council, but in other respects we should deplore the apparent immediate effects of the decision, because London fares are to be increased by at least 60 per cent. and the anthill of local government finance is again to be disturbed.

Economically, socially and environmentally, an about turn of the kind now required would be disastrous. The Liberal member of the GLC who represents Richmond has not joined in the clamour of Tory jubilation, because he recognises the need for a clearly thought out transport policy. On the other hand, the majority party at County Hall has set about implementing its policy in the wrong way and has dogmatically committed itself to freezing productivity and lowering fares while being less than open to ratepayers about the effects of such a subsidy.

Three major issues, excluding the issue of local government democracy, emerge from the judgment. The first is whether it is sensible to argue that only public transport travellers benefit from a good service. In most cities, support of public transport is not seen as a burden on ratepayers, taxpayers or employers. It is seen as a payment for significant benefits received in the form of greater employment opportunities, more successful retail activities and enhanced inter-city development potential, all accompanied by lower levels of road construction costs, road congestion, noise and pollution. Accordingly, a much wider range of public transport funding is available overseas.

Mr. Eric Deakins (Waltham Forest)

On a point of order, Mr. Deputy Speaker. Is it in order for hon. Members, who are not Front-Bench Members, to read prepared speeches?

Mr. Deputy Speaker

It used to be the practice of the House that prepared speeches were accepted only from Front-Bench speakers. It is a practice which, I regret, is not always followed.

Mr.George Cunningham

It is much quicker.

Mr. Pitt

I regret, Mr. Deputy Speaker, that I did not hear what you said above the noise.

Mr. Deputy Speaker

I was explaining that it had been the practice to permit the use of copious notes, but that speeches should not be read from the Back Benches.

Mr. Pitt

Thank you very much, Mr. Deputy Speaker, I shall continue. A much wider range of public transport subsidies is available overseas. I shall not give the list, for fear that I shall again be accused of reading.

My second point relates to British Rail services in London, which are funded nationally. Is it not a good point to argue that London Transport fares should also gain the benefit of subsidy that is not related specifically to London as a whole? In a letter to The Times Sir Peter Masefield said: Few would disagree that to load on to London's ratepayers the subsidy needed for services which benefit so many out-of-London passengers and include such a high social content is neither just nor equitable, though the GLC had no other source of revenue. Good public transport is recognised outside the United Kingdom as to a large extent a national responsibility, most of all for a capital city". It is stupid to accept that there can be no subsidy for public transport in cities, whether capital or otherwise. The Secretary of State has given the House no real lead about the subsidy that should be considered for public transport. There are exceedingly efficient public transport systems in Hamburg and Paris, as I know from experience, and in many other capital cities of Europe. Conservative Members indicated during the debate last Friday that such subsidies were the product of a Marxist imagination. I submit that the mayors of Hamburg and Paris would prefer not to be regarded as Marxists. Yet those two cities have particularly efficient public transport systems subsidised at a far higher rate than London even under Mr. Kenneth Livingstone.

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

Does the hon. Gentleman accept that when this issue was first raised in the House on Thursday last week the only hon. Member who referred to the present Labour majority on the GLC as Marxist was his alleged hon. Friend the SDP Member for Erith and Crayford (Mr. Wellbeloved)?

Mr. Pitt

I was not referring to what happened last Thursday. I was recalling last Friday's debate, when several Conservative Members referred to Mr. Livingstone's Marxist subsidies. That is irrelevant to the issue. The need is for a proper, sensible and intelligent public transport system in London.

Mr. Jessel

I should like the hon. Gentleman to make it clear—it is not clear to me—whether or not he favours a massive subsidy from London ratepayers to support London Transport. What is his position?

Mr. Pitt

I do not favour a massive subsidy by any particular body of people, whether it consists of London ratepayers, London industrialists or anyone else. My argument is that we must come to terms with the fact that capital city transport systems run by subsidy. There are various modes of taxation, including a local government income tax, taxes from road tolls and taxes from property that can be used to subsidise transport in major cities. These are the issues to which hon. Members should address themselves. Bromley council took an action to the High Court, as was its right, to defend, in its view, the democratic needs of its ratepayers. As a result, we find that if we are not careful, we shall condemn all subsidies on transport systems.

The Secretary of State was asked several times what level of subsidy the GLC could raise to pay for its transport system, but on each occasion he failed to answer. Hon. Members must address themselves to this issue. We must accept that subsidised transport is a fact.

Mr. James Wellbeloved (Erith and Crayford)

An essential subsidy.

Mr. Pitt

My hon. Friend says that it is an essential subsidy. As a result of their Lordships' judgment we face the peril of any subsidy granted to any transport system, or something else, being declared illegal. That is the morass from which we are trying to extract ourselves. Hon. Members were trying to get out of that morass last Friday. So far, however, the opacity of Government statements has made me even more confused than I was when I began the argument.

Mr. Shersby

I was interested to hear the hon. Gentleman advocate the possibility of road tolls to subsidise public transport. Will he expand on that?

Mr. Pitt

I was merely illustrating the variety of taxes and the variety of methods that could be used to attract income and revenue to subsidise transport systems. lion. Members must address themselves to the problem of inner city transport. The Labour administration at the GLC to its credit, addressed itself to the problems. It elected to subsidise the transport system from the rates. I do not agree with the political judgment that was made, but it should have made greater economic study of the whole operation. It should not have inflicted such swingeing burdens on the ratepayers of London.

Mr. Nigel Spearing (Newham, South)

It was the Secretary of State.

Mr. Pitt

I take the point about the Secretary of State. The burden imposed on local government by the Secretary of State for the Environment is a contributory factor to the level of rates.

Hon. Members should be clear, by the end of the debate, what they mean by a subsidy. The Secretary of State should say what he regards as the GLC's proper subsidy for transport. It should be agreed, without continuous recourse to the High Court and debates on the subject, that city transport systems, especially in a city the size of London, cannot exist as an entity in isolation. It must exist as a public service. There must be a proper, intelligently collected, level of subsidy.

5.50 pm
Mr. Terence Higgins (Worthing)

The official Opposition have fallen into the habit of moving emergency motions or motions of censure immediately before recesses. On the past two occasions their motions ended in fiasco. It will be interesting to see how the position develops as the eveninig progresses. I immediately declare an interest as a London ratepayer and a London Transport user. I am not alone in that, although some hon. Members may be users of London Transport without being London ratepayers.

The hon. Member for Croydon, North-West (Mr. Pitt) was rather opaque about the official policy of the Liberal Party. I presume that he is speaking for the Liberal Party in the matter. He believes that there should be clarification whether those who have already paid the supplementary rate will get a refund. An article in The Daily Telegraph a short time ago suggested they may not get refunds. That is an important matter, not least for those who pay the supplementary rate by instalments. They may wish to change their bankers' orders if they cannot get a refund for the amounts that they have already paid.

Broader questions must also be raised. I disagree with the right hon. Member for Barrow-in-Furness (Mr. Booth), who said that in clarifying the judgment and talking about the motion questions relating gnerally to concessionary fares in Britain should not be raised. I refer to the intervention by my hon. and learned Friend the Member for Thanet, West (Mr. Rees-Davies) about fares subsidies generally. It is grossly unfair that people, especially pensioners, who use public transport in London should receive a substantial subsidy from the ratepayers when people in other towns, including my constituency, do not. That is because, to a large extent, the pensioners who receive the fares subsidy are the pensioners who pay the rates, and there is a much higher percentage of pensioners in constituencies such as mine than in central London. Therefore, there is a strong case for considering the matter nationally.

Hitherto, the argument has been that the concession must be taken away from some people to give it to others. That would be the most equitable thing to do. If we are to have such arrangements, they should be on a national rather than a local basis. Perhaps the events of the past few weeks give us an opportunity—I hope that my right hon. Friend the Secretary of State will take it—to consider concessionary fares.

I wish to take up the point made by the right hon. Member for Barrow-in-Furness about fairness to ratepayers. It is important to stress that a large part of the burden that the GLC tried to impose on ratepayers, and which has now been altered by the House of Lords decision, fell on industrial ratepayers, who have no vote in the matter.

The right hon. Member for Barrow-in-Furness suggested that the courts should be guided by what was said in the debates at the time of the relevant legislation. That is a traditional argument about the courts being allowed to consider the travaux preparatories, and especially the Hansard records. I appreciate the arguments put forward in that debate. They were stressed by Justinian in the Financial Times a few days ago. However, we run into great difficulty if we say that the law shall be what the Minister said he believed it should be rather than the words in the legislation. It raised broad issues. We are not bound by the words of Richard Marsh in that debate.

Mr. Booth

I know that the right hon. Gentleman does not wish to misrepresent me. My view is not that the courts should believe that the law is whatever the House or the Minister intended it to be, but that if the courts or the Law Lords rule that the law is different from what the House intended it to be, we should relegislate.

Mr. Higgins

The right hon. Gentleman has clarified his position, but I see no reason to agree with what the previous Labour Government believed to be the right policy. The matter should be reappraised in the changed circumstances of today.

The right hon. Member for Barrow-in-Furness pointed out that fares have been cut and that bus and Underground usage has increased. I asked him what had happened to the revenue. He said that he would tell me, but he did not say what the effect on revenue was. On the figures that he quoted for fare changes and usage, it is clear that the revenue must have decreased substantially, as a result of which the burden on the ratepayers has been increased.

The transport undertaking should try to operate commercially, or greater inefficiency will result. If, after the event, we find that it is still making a loss, that is another matter; it is different from the undertaking and the GLC from the outset trying not to operate commercially but to achieve losses. The House should take into account the large distinction.

We are now told that the increase necessary to make up the 40 per cent. cut in fares is somewhere between my right hon. Friend's estimate of 60 per cent., through 150 per cent. and up to Mr. Livingstone's estimate of 200 per cent. My impression is that costs have risen substantially in the meantime, because London Transport knew that it had to rely on the ratepayer to subsidise it.

My right hon. Friend the Secretary of State said that the pay increase for London Transport employees included a lump sum of £50, in part designed to make up for the supplementary rate. If so, it raises the question whether the ratepayers will get back part of the £50. I hope that my hon. and learned Friend the Under-Secretary of State will clarify the matter when he replies to the debate.

There is an interesting article on the front page of The Standard today which relates to inefficiencies in London Transport's maintenance operations. There is a strong argument for investigating the pictures and accounts in that article.

The debate raises a fundamental point about the functions of the GLC, but it raises the even more important question whether, given those functions and the operating costs of the GLC, we need that tier of local government now. That is well worth considering, and I hope that, in a broader context, my right hon. Friend will consider it carefully.

5.59 pm
Mr. George Cunningham (Islington, South and Finsbury)

It is unfortunate that this subject raises such passions, and I do not plead innocent to these passions. One reason why it raises passions is that the 25 per cent. fare reduction as a policy has been identified with the name of Mr. Ken Livingstone. I would not want to identify myself in any way whatever with Mr. Ken Livingstone.

May I point out to the House, if it helps anyone, that reducing fares by 25 per cent. is far too sensible a policy to have come from the brain of Mr. Ken Livingstone? His idea and that of some of his friends in the Labour caucas in the GLC was to have completely free transport. He was pushed off that policy only by protests from trade unions, which pointed out that it would mean a massive loss of jobs. For Mr. Livingstone and his immediate friends that was not the preferred policy, so no one should feel obliged to oppose it simply because of its connection with that name.

It is a long time since the House, both in Committee and on the Floor, started to espouse the cause of general subsidies for public transport. I recollect, for example, the report of the Environment Sub-Committee of the Expenditure Committee in 1972, of which I was a member. I commend to hon. Members a re-reading of that report where it said: In the new local government structure, the conurbations will be run by the metropolitan authorities who will be able to give revenue support to the services they themselves operate". Later it said: It follows that capital support by itself is an unsuitable way of meeting deficits. Most witnesses thought that operational subsidies were inescapable". We concluded on that section: We are satisfied that, if public transport is to be substantially improved, operational subsidies will be needed". That was as long ago as 1972. The notion that operational subsidies—revenue subsidies as against capital subsidies—are something new, unheard of and unnatural does not bear examination.

That is without saying anything about the practices of other countries, which almost universally support the notion of operational subsidies. One can quote Paris, Bonn, Vienna, Strasbourg, Hamburg, Munich, New York and on and on. Clear-sighted Frenchmen have not regarded this as a revolutionary proposal. The Paris subsidy of 75 per cent. or so, which was mentioned by the right hon. Member for Barrow-in-Furness (Mr. Booth), was not invented by the present French Administration. It was invented by Chirac and Giscard d'Estaing in response to public protests about the situation that pre-existed.

I cannot believe that the House of Lords judgment will go down as illustrating a clear distillation of principles from the words of a statute and the circumstances of a case. Each of the five judgments rambles over the territory in what can only be called a head-scratching way, making it impossible for the consumer of the judgment to know at the end just what the law is held to be, except negatively, and then only negatively on a few points. When one puts the five judgments together, the effect is chaos.

Wilberforce, Scarman and Brandon, in different language, and for different reasons, seem to agree that although grants from the GLC towards revenue are lawful—Wilberforce seems a bit uncertain on that—they cannot be pre-planned. An unavoidable deficit—and presumably a deficit arising from incompetence—can attract a grant but, in the words of Scarman, as a necessity and not as an object of social or transport policy". On the other hand, Diplock and Keith say emphatically that one can pre-plan a fare system that requires a revenue grant from the GLC to fill the gap between expenditure and revenue from fares and the unlawful thing about the present case was the extent of the subsidy. Diplock says that it was certainly unlawful, given the need to road ratepayers with the burden of the lost Government rate support grant, without saying whether it would have been unlawful otherwise. Keith goes further and says that the 25 per cent. subsidy, presumably on its own without the loss of Government grant, was a breach of ordinary business principles and therefore unlawful.

Frankly, there are passages in the judgments that cause me concern over the quality of the work of the House of Lords. For example, Lord Keith on page 9 says that if the 25 per cent. subsidy was lawful, a 50 per cent., 75 per cent. or 90 per cent. subsidy could be regarded as lawful, but he does not seem to believe that it is right to put it the other way round. If the 50 per cent. subsidy is unlawful, on what ground can a 20 per cent., 10 per cent. or 1 per cent. subsidy be regarded as lawful? However, Lord Keith elsewhere accepts that some pre-planned revenue grant is lawful.

Diplock and Scarman both refer pointedly to the fact that a large proportion of the rates are paid by commercial ratepayers who have no vote. What on earth is the relevance of that? VAT is paid by commercial bodies alone. Does that alter the Government's obligations over what they can do with the funds?

Throughout the judgments there is the assumption that paying for public transport partially from tax sources is inherently bad and unnatural. Wilberforce is so misinformed as to believe that the idea of such a thing could not have been in the minds of Members of Parliament in 1969.

Diplock and Brandon would have ruled the GLC out only on the ground that it believed that it was bound to go ahead with the subsidy because of its election manifesto, even if on no other grounds. They did not seem to contemplate the idea that the GLC councillors believed genuinely that their action was lawful and that within the context of an assumption of legality they felt that they were under a moral obligation to implement their promise. Frankly, after reading the 100 pages of the judgment I am inclined to adapt an old saying—if that is what the lawyer says, then the lawyer is an ass. I am not a lawyer, but I believe that the House of Lords has wrongly and almost perversely interpreted the Transport (London) Act 1969.

Let us leave aside the debates in the House when the Bill was going through—which the court cannot take account of, but which we can. Even the words of the statute are, to put it at its lowest, as open to a contrary interpretation as the one found in various forms by the Lords.

The starting point is the words in section 3, which state that the Council shall have power to make grants … to the Executive for any purpose". Of all the bits of the statute and of case law invoked by the Lords, that is the bit of law whose apparent meaning is the clearest. Prima facie it allows the GLC to do what it did, and some of the Law Lords, but not all, accepted that the words allow subsidies to revenue in some circumstances and to some extent.

The first argument used to escape from the apparent meaning of the words is that the power to make grants is qualified by the requirement of section 7(6), that in exercising its functions the GLC is to have regard to the duty imposed on the London Transport Executive to try to break even, taking one year with another. The statute makes it clear that the policy-making body was to be the GLC. The London Transport Executive was to be the implementing or executive authority. The power of the GLC to make grants comes first in the statute and the duty of the executive to break even comes afterwards.

The natural interpretation of the Act is to regard the obligations of the executive as obligations within the framework of policy laid down by the GLC, including any decision to make grants under section 3. If Parliament had wanted to lay an obligation on both the GLC and the executive to try to break even, it could easily have done so. The fact is that it did not do so, and that is significant. It is significant that Lord Diplock accepted that view. He stated: Nor could I readily be persuaded that any such prohibition was intended to be imposed sub silentio by Parliament". We are entitled to look at what was said during the passage of the 1969 Bill. The fact that the House of Lords says that this is the law is not the end of the matter. Without changing the law, we can do something. When, in 1973, a court in Northern Ireland found the law to be what we did not want it to be, within 24 hours—it was an emergency—Parliament passed a declaratory measure which declared the law to be what we had always intended it to be and thought we were making it.

The 1969 Act was intended to implement proposals that were brought before the public in July 1968 in a White Paper entitled "Transport in London". Paragraph 38 said: The Government believe that urban transport is essentially a local rather than a national matter. Local people should be the best judges of the standard and quality of services they want and are prepared to pay for. In London, the Greater London Council can appropriately take on this major task. Explaining the Bill to the House on Second Reading, the then Minister of Transport, now Lord Marsh, said: The basic purpose of the Bill is to place the main responsibilities for transport in London where, in my view, they belong—with the people of London through their elected representatives, the Greater London Council. We aim here to give the council all the powers that it needs to carry out its job … A major difficulty of the London Board in the past has been that its two statutory duties—to pay its way and to provide an adequate system of passenger transport—are so framed as to be difficult to achieve and in practice impossible to reconcile. In the Bill, the overriding duty will be the financing one—to break even and to meet financial objectives set for periods fixed by the Council … These duties are completely interlocking. What they mean in practical terms is that the Council will be able to decide on the broad standards of service to be provided and will have, in return, the responsibility of ensuring, in one way or another, that the London Transport undertaking remains viable. I would have quoted the passage that was referred to by my right hon. Friend the Member for Barrow-in-Furness in his opening speech if he had not done so.

The transport spokesman for the Conservative Party at that time was the present Prime Minister, never backward in coming forward if she hears something with which she disagrees. The deputy Conservative spokesman on transport was the present Secretary of State for the Environment, about whom the same could certainly be said. Neither of them, either on Second Reading or in Committee, ever mentioned any disagreement with the principles set out in those quotations. Indeed, in her speech on Second Reading the present Prime Minister raised some objections to the Bill, but then said: I do not think anyone will quarrel with the main purpose, although there is often a vast difference between a purpose and a method of achieving it."—[Official Report, 17 December 1968; Vol. 775, c. 1244–55.] The right hon. Lady said that immediately after the Minister of Transport made the remarks to which I have just referred. She took no exception to them. That is indicative of what the House thought it was doing in 1969.

The Bill was to have gone before a Select Committee, but finally it went to a Standing Committee. There was a debate on clause 3, which allowed the Greater London Council to provide grants. The debate was initiated by a present senior Government Whip, the hon. Member for Southgate (Mr. Berry). He put down an amendment, not to stop the GLC giving revenue grants on a pre-planned basis, but to stop it giving grants for certain quasi-commercial operations.

At the conclusion of that debate the then Minister of Transport said in his defence of the existing text: First, the Greater London Council is an elected body, and one of its prime responsibilities is to safeguard ratepayers' money and to determine how it should be used. That is what local government is about, and there is no obligation on the GLC to spend its rates in any way that it does not wish to do, but if a democratically elected local authority decides that it wishes to spend its rates in a particular way for the benefit of its electors it is a rather unconstitutional theory that Parliament should tell the authority that Parliament knows best. The same might be true of the House of Lords. I am not sure that Parliament always knows better than local authorities, and I am certainly not sure that the Law Lords do.

What was the response? I am not sure whether the hon. Member for Southgate was on the Opposition Front Bench at that time. If he was not, the Front Bench was silent on the matter. He said: I thank the Minister for his reply. The debate has been useful in getting these points clear, and I agree that it is right for a democratically elected council, whether of London or elsewhere to use its money in the way that it wants."—[Official Report, Standing Committee A, 27 March 1969; c. 48.] In 1969 the action that had been taken by the GLC, whether one agrees with it or not, was intended to be within the law.

On the issue of the Lords misreading the intention of Parliament, on pages 9–11 of the photostat version of the report, Lord Wilberforce recites previous statutes for non-London transport authorities that mention a power to precept for grants towards revenue. He said that there was no reason to suppose that Parliament intended the same power for London in a subsequent Bill that did not use the same words. First, it is fundamentally silly to suppose that Parliament would not have intended the same for London. Secondly, on Second Reading of the Bill the then Minister of Transport, uncontested by the Conservative Opposition at that time, said: For the conurbations outside London our policies have been given effect to in the passenger transport authorities which are being set up under the Transport Act 1968. In London we need to go further, and we are able to go further."—[Official Report, 17 December 1968; Vol. 775, c. 1243.] Wilberforce got it wrong on that point, too. He is not allowed to read Hansard, or if he does he is not allowed to take account of it. I agree that that is correct court practice, but it leaves us with a problem. We know, even if the Lords did not know, that the decision that they reached is not the law that we thought we were passing and which the Prime Minister and the Secretary of State for the Environment thought they were passing in 1969. We cannot allow that position to continue.

With respect, we have a poor quality judgment by any standards, largely invoking ordinary business principles that are not ordinary in relation to public transport undertakings anywhere in the world. It leaves a completely obscure position. By three to two the Law Lords, appear to be against pre-planned subsidies for rates, but they might have been two or three if there had been no loss of rate support grant. Clearly they have misunderstood the intentions of Parliament, according to the quotations that I have read out. We must declare the law, one way or the other, so that that obscurity is not perpetuated.

Mr. Spearing

On a point of order, Mr. Deputy Speaker. Will you tell the House at what time we are due to complete the debate?

Mr. Deputy Speaker

We shall conclude the debate three hours after 4.44 pm—at 7.44 pm. It may be of assistance to the House to know that the Solicitor-General will speak for only five minutes now, which will be deducted from the time of the other Government Front Bench speaker, who will speak for 15 minutes, and the Opposition Front Bench spokesman will speak for 20 minutes.

6.19 pm
The Solicitor-General (Sir Ian Percival)

First, may I apologise to the right hon. Member for Barrow-in-Furness (Mr. Booth), in his absence, for my absence during his speech. May I also assure the hon. Member for Aberdeen, North (Mr. Hughes) that I shall not indulge in any preamble on this occasion.

From what I have heard and what has been reported to me, it seems that there is one question that has been vexing the House and upon which I might be able to give more assistance now. That is: where are people left after this judgment? What, if anything, can the Greater London Council do by way of making grants for revenue purposes without putting itself in peril of the law?

Having myself followed the advice which I gave on Friday to study the judgment more closely, I think that I can assist a little more. I respectfully think that a number of the questions which the hon. Member for Islington, South and Finsbury (Mr. Cunningham) referred are quite clearly dealt with. I shall refer hon. Members to one or two passages in one or two of the speeches. I shall do so quickly, because I do not want to take up time, in the hope that hon. Members will find them reassuring when they look at them later.

On the question of section 3, I would draw the attention of the House to page 4 of the photostat of the speech of Lord Wilberforce, where he says: Section 3 gives the GLC power to make grants to the Executive 'for any purpose' and no doubt these words are wide enough to cover grants to revenue as well as for capital purposes. Lord Wilberforce then goes on to express in general terms some of the context against which that has to be considered. I shall not take time on that part of the matter.

I would, however, draw attention to the fact that Lord Wilberforce goes a lot further than that. He then goes on to examine the various relevant provisions of the statute. As I have said before, that can be very boring for any of us, but it has to be done when the court is faced with interpreting such provisions. What is more interesting perhaps is what conclusions were reached after doing that.

In brief and in lay terms, the guidance given was this. The London Transport Executive, said his Lordship, has a statutory duty to ensure, so far as is practicable, that its revenue in any accounting period balances with its expenditure, so that it does not run up a deficit. If in any accounting period it runs up a deficit, it has prima facie a duty to make good that deficit in the next accounting period. It did not take a lawyer to see that that was what section 7(3) was saying. Whatever some people may have intended, that is what was before Parliament and passed by it. The sense of it is obvious. The London Transport Executive must endeavour to run on businesslike lines. [Interruption.] I hope that the hon. Member for Islington, South and Finsbury will bear with me. I am doing my best to assist, and to do it in the minimum time. That entails perhaps taking the matter less fully than I should like to take it, but I am trying to balance all the considerations.

Neither the duty to balance the books in any particular period nor the duty to make up the deficit in the next period is absolute. Both are subject to the condition as far as is practicable". That is a most important provision. It gives great flexibility. If I were not on my feet, someone might be saying "What if it is not practicable for the LTE to do that? What is to be done then? If it is practicable, so be it; that is fine. The important question is: what, then, is to be done if it is not practicable for the LTE to balance its books?

Lord Wilberforce went on to point out that the answer to those questions is to be found in the corresponding obligation—not merely power, but obligation—of the GLC under section 7(6), to have regard to those duties of the LTE—to balance its books so far as is practicable—and to take action which will enable the executive to comply with those duties and requirements.

I refer the House to page 10 of the speech of Lord Wilberforce, where his Lordship said: Such actions might take several forms: the Council might direct fares to be raised or services to be adjusted. Or the Council could decide to make a grant. This was to make up the deficit, which it was not practicable for the LTE to finance itself.

His lordship then went on to qualify that by saying: But it can only do that after it has 'had regard" to the Executive's duty under section 7(3)"— that is to say, the duty of the Executive to do its best to ensure stability. He continued: The respective statutory obligations of the GLC and London Transport Executive fit in with one another: the London Transport Executive must carry out its duty as defined in section 7(3): the GLC cannot exercise its powers unless and until the London Transport Executive carries out that duty". Then it can do so, only it must also do so with proper regard to its fiduciary duty". The guidance does not stop there. Lord Wilberforce also referred to the budget proposed by the LIE in November 1980, and it is well worth looking at that part of his speech, which is on page 12, where his Lordship said: Acting, as I am willing to accept, in accordance with their obligations under the 1969 Act the LTE—which was then running a deficit— submitted to the GLC, in November 1980, proposals to achieve a break-even by a possible increase in fare revenue, increased productivity, and an assumed GLC grant of £80 million.' What was being said in the budget was "We will raise the fares; we will increase productivity; that is as far as it is practicable for us to go and we will need an assumed grant of £80 million from the GLC." His Lordship is saying here that he is "willing to accept" that it was within the powers and duties of the LTE to put forward such proposals and that the GLC could accede to them and pay that grant.

His Lordship continued: Its budget contains a careful review of the measures taken, by way of economy and better fare collection, to keep the deficit down as far as practicable. Obviously this was not the only possible budget at the time, but in its preparation and structure it represents a serious attempt to comply with the Act. What Lord Wilberforce is saying is "Here is a budget presented which represents a serious attempt by the LTE to comply with its duties to ensure that the books balance as far is practicable". Once the GLC is satisfied as to that, it is open to it—in fact it has a duty—to take steps to deal with the problems that that presents. It can do that either by putting forward proposals for fare increases or otherwise, or, as I have quoted, by making a grant for revenue purposes.

That is a very hurried exposition of, and drawing of hon. Members' attention to some of, the guidance to be found in the speeches in this case. Of course, there are grey areas. But there is a further principle which is relevant and is clearly reflected in the speeches. It is well known that a court will not interfere in cases such as this, save in cases in which the mark, wherever it comes, has been very clearly overstepped. [Interruption.] It is all very well for the hon. Member for Islington, South and Finsbury to utter such expressions; but I am telling the House that that is my experience as one who has tried to get a court to rule that a discretion has not been properly exercised. Others may have different experiences, but let us base our views upon the experiences in court.

Mr. Clinton Davis

I have tried to follow the hon. and learned Gentleman's observations. I know that he is seeking to be as helpful as possible. However, having read the judgment, I find that there are so many grey areas that considerable clarification is required if a local authority is to plan with any degree of certainty. Is not the essential rationale here that a local authority running a transport service is, in effect, required to endeavour to break even, and is not the logical consequence of that that it is required, therefore, substantially to increase its fares in order to achieve that? Futhermore, is it not in total defiance of the experience of some many other countries and cities which have been cited by hon. Members during the debate?

The Solicitor-General

I am seeking to advise the House on the guidance available to the GLC and nobody else, for this Act and this case refer only to the GLC. The LTE is the instrument to implement the policy of the GLC. I take them to be the same thing, or the two arms of the same thing. We are dealing only with the problems facing the LTE and the GLC in budgeting and the extent to which they can budget for a grant for revenue purposes.

It is for the House to say whether what they can do is adequate. My point is that there is considerable guidance as to the way in which the matter can and should be approached by those who have the responsibility of deciding these matters.

Mr. Robert Hughes (Aberdeen, North)

Is the hon. and learned Gentleman saying that it is open to the GLC and the LTE combined to pursue some sort of fares reduction policy, or is he saying that any fares reduction policy which reduces the deficit on the balance of the accounts is unlawful?

The Solicitor-General

The two questions are not mutually exclusive. It is open to the LTE and the GLC to consider whether on the one hand, a reduction of fares might increase the use of the system and of the revenue or whether, on the other hand, an increase in the fares might reduce the use of the system and the revenue. These may be relevant questions when deciding whether, as a practical matter, the LTE can balance its books, or ought to budget for a deficit to be made up by grant. [Interruption.] That is what Lord Wilberforce said in the passage to which I directed the attention of the House. He was speaking about the budget put forward in 1980. That budget included provision for an assumed—not an actual—grant of £80 million.

The position in which the GLC finds itself is, in short, this. The LTE must put forward a budget which ensures, as far as it can as far as is practicable, that it will balance its books. If there has clearly been a serious attempt to do that but it appears not to be practicable, the GLC may make a grant for revenue purposes. I suggest to the House that there is, in fact, plenty of guidance in the speeches of their Lordships as to the position of the GLC faced with the problem which is taxing hon. Gentlemen so much.

Several Hon. Members


The Solicitor-General

I do not think that I ought to give way again because I have taken much more of the time of the House than I intended, and I do not wish to take any more.

Mr. Deputy Speaker (Mr. Bernard Wetherill)

Has the Solicitor-General finished his speech?

The Solicitor-General

Yes, Mr. Deputy Speaker, I have.

6.33 pm
Mr. Frank Dobson (Holborn and St. Pancras, South)

Most people in London live not in the law courts—indeed, most of them do not even make their living there—but in houses and flats, and they travel to and from work on the roads, the railways or the Underground. The object of the debate is to try to help them to recover from the chaos created by the House of Lords decision in the case brought by Bromley council against the GLC.

The decision has created chaos in the finances of London Transport. We now have to avoid making London's transport system as chaotic as the contradictory judgments of the five Law Lords which have been so admirably spelt out by the hon. Member for Islington, South and Finsbury (Mr. Cunningham), whose speech was not acknowledged by the Solicitor-General. I sympathise with the Solicitor-General in his task of trying to explain to the House what the five Law Lords decided because, as they all decided different things, he had a difficult task to perform in five minutes.

In the run-up to the GLC elections in May 1981, there was much consultation by the Labour group and the Labour Party in London about the reduced fares policy. For the benefit of the hon. Member for Erith and Crayford (Mr. Wellbeloved), who denounced the policy as a Marxist activity I point out that the two Labour councillors who decamped to the SDP supported the policy all along and voted for it on all occasions. That is another aspect of policy that the SDP might seek to clarify during the next decade.

The policy of fares reduction in London was the main item in the GLC election campaign, with the exception of the "red scare" run by The Standard against the leadership of the Labour group. I am convinced that was the main reason why people in London decided that they wanted a Labour-controlled GLC. That is why Labour won the election. Now, however, the House of Lords decision has set aside that election result as if it had never been. That is similar to the pools panel deciding the outcome not of games which had not been played but of games which had been played, and that, in this instance, it was a Tory, not a Labour, win. We cannot face that prospect in London because it will be so damaging.

The GLC has always acted in good faith. I hope that no one on the Tory Benches will suggest that the Labour group on the GLC has done other than act in good faith in the belief that it was fulfilling an election pledge and not breaking the law in so doing. Until the Bromley council brought this action, no one had suggested, in any way or at any stage, that what the GLC wanted to do was illegal.

From time to time, Governments propose retrospective legislation, which is denounced by nearly every hon. Member. However, the House of Lords decision is retrospective legislation. The law has clearly been changed by the five contradictory judgments in the House of Lords. Now, instead of objecting to retrospective legislation, we are expected to applaud the brilliance of their legal insight. I cannot go along with that applause.

The House of Lords decision fails to reflect the changes in attitudes and circumstances which have arisen over the last 20 years in relation to the subsidy of public transport. An odd quirk of British law is that the common law appears to be based on attitudes of mind which were developed towards the end of the eighteenth century. Unless Parliament sets judgments aside and lays down statute law contrary to common law, the judges will apply old-fashioned attitudes to every situation before them. There is nothing in the common law which calls upon judges to bring themselves up-to-date in their attitudes and responses.

In the GLC case, the Law Lords placed great weight on a judgment in 1955 in a case affecting the Birmingham corporation. Then, in their usual illiberal way, the courts decided that it was illegal, contrary to the law, wrong, shocking, hideous, monstrous and likely to bring down the State if Birmingham corporation allowed free travel or concessionary fares for pensioners.

Parliament has since put right that loony judgment by the courts, and concessionary fares for pensioners are legal throughout the land. I hope that example will be followed on this occasion. It is clear that the law that everybody thought existed—until the Law Lords decided that it did not—was eminently sensible and acceptable. It was the law that everyone accepted and to which apparently such a competent person as the Prime Minister had not objected when it went through the House when she was the leading transport spokesman for the Tory Opposition.

We need a recognition by the Government—just as there was a recognition following the 1955 judgment in Birmingham—that the law needs to be changed so that we can establish a proper balance between the income from fares, support from rates and support from central Government.

There are items for clarification with which I hope the Under-Secretary of State will deal in his reply. There is the bizarre question whether, in striking down the supplementary rate for London Transport, the Law Lords struck down that part of the supplementary rate in inner London which referred to the needs of the Inner London Education Authority. Common sense suggests that, as Bromley council did not get that part of the supplementary rate, the judgment in its case would not strike down the ILEA rate. I am talking common sense and the Law Lords are talking law, so that may not be the case.

The fare reductions and improvements in standards by London Transport contributed £69 million towards the total supplementary rate. Government penalties for such action amounted to a withdrawal of £111 million, which was practically half the supplementary rate, resulting in the Government taking away money that they had previously promised. The people of London need to know whether the rate support grant which was clawed back will now be unclawed or clawed forward—or whatever is done with a clawback when it is put into reverse. In other words, if the fares are increased, will the clawback be restored or will the Government hang on to their ill-gotten gains?

London Transport inherited a £48 million deficit from the previous Tory-controlled GLC. I find it nothing short of bizarre to read in at least two of the Law Lords' judgments that they thought that the procedures followed by the previous GLC and the previous LTE in setting the budget were wholly admirable. The Law Lords then spent their time saying that the main object of the LTE must be to avoid a deficit. Yet, this admirable budget-making process resulted in a deficit of £48 million. I do not know where that leaves the Law Lords or the £48 million.

We need some sensible answers from the Under-Secretary compared with the ridiculous contribution that we had from the Secretary of State and the not very helpful contribution from the Solicitor-General. The Secretary of State for Transport said: It is worth making it clear that the fares increase necessary in London Transport to bring back fares in real terms to the 1980–81 level is about 60 per cent.".—[Official Report, 18 December 1981; Vol. 15, c. 555.] That was not true, because it left out the £48 million deficit. It also left out other aspects of the expenses of London Transport which have arisen since the 1980–81 budget was established by the previous regime.

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

The figure given by my right hon. Friend the Secretary of State for Transport is the increase necessary to take fares back to the level of fares in real terms following the increase in September 1980. That is all that the figure means, and that is what my right hon. Friend said it meant.

Mr. Dobson

In that case, the right hon. Gentleman said it in a very misleading way. He has repeated it several times and his hon. Friends have repeated it outside the House. The clear impression created by the statements from the Government Front Bench and by press notices from the Department of Transport has been that a 60 per cent. increase, and only a 60 per cent. increase, is needed to rectify the problem. That is wholly false, and the Under-Secretary of State knows it.

The further point that the right hon. Gentleman made in his contribution on Friday was that there had been a substantial increase in costs in London Transport following policy decisions by the GLC, and that there had been an increase in costs of operation and a reduction in efficiency. As far as we can understand, the right hon. Gentleman was referring to a pay settlement and to the recruitment of staff.

The GLC decided that the LTE should recruit staff not up to but approaching levels which would be capable of providing the service advertised by Sir Horace Cutler, who had been deceiving everybody all along and who ought to be carted off and clapped into gaol for misrepresentation and various other consumer-type offences.

The GLC recruited staff to try to take the levels of service up to the levels that had been advertised by Sir Horace. It recruited 105 bus drivers, 161 bus engineers, 111 trainees, 39 trainmen, 56 tube engineers, 72 railway police—no doubt as part of the negotiations for reducing vandalism and the threat to passengers on London Transport—and 24 miscellaneous staff. I regret to say that no lawyers or merchant bankers appear to be included in the list of those who are to provide a decent service to enable Londoners to get about. The people who have been recruited are those who are needed if London Transport is to improve its efficiency.

It is nothing short of scurrilous abuse by the Secretary of State to suggest that the recruitment of such people reduces efficiency. He said that those people have been recruited to meet a need that does not exist. In other words, in future he will decide the needs of transport in London. I suggest that at the last GLC election the people of London made it clear that they thought that there was a need for a better and cheaper transport system in London.

Mr. John Wheeler (Paddington)

The hon. Gentleman says that the people of London made clear their views, but he should think again. Only about 40 per cent. of the electorate of London could be bothered to vote. Of that number, 41 per cent. voted Conservative and 39 per cent. voted Labour. Of those who voted, very few understood what they were voting for.

Mr. Dobson

To use a lawyer's tag, I reckon that in elections silence betokens consent. If 60 per cent. of the people did not vote, they obviously knew that the Labour Party would win. Therefore, they were satisfied with the prospect of Labour winning and thereafter reducing the fares and improving the service.

I turn to a matter about which the Under-Secretary of State misled the House. It was very uncharacteristic of him to do so. He said: As I am sure that the hon. Gentleman will realise, pensioners in London got nothing from Ken Livingstone, because they already had free fares."—[Official Report, 18 December 1981; Vol. 15, c. 562.] That was not true. The fares on the Underground were reduced to nothing for pensioners, as part of the very first package that the Labour-controlled GLC, under Mr. Livingstone, introduced in June last year.

There is a lesson there for us all. It is that there has been far too much personalising of the issue. As the hon. Member for Islington, South and Finsbury pointed out, this is a clear commitment. There is nothing novel or radical about it. It is just a sensible idea.

The future of transport in London is at stake. Are we to have a system that is efficient, that makes economic use of fuel, that avoids traffic congestion and that will get Londoners about, even if they cannot afford cars? That question must be answered. We need a contribution from taxation comparable with that provided by the GLC in rate support. We must not lose the opportunity to return to the situation that existed before the Law Lords' judgment. I hope that the Government will recognise that London's transport commands and demands a much greater central Government contribution than at present if the system is to be a credit to the capital and is to get our people about. The Government must quickly decide who will get the money back and who will bear the cost of the problems that have arisen as a result of the judgment. I am sure that the five ratepayers in the other place will not do so.

The Government must take declaratory action or change the law to ensure that such a situation cannot be repeated. We do not want to indulge in stupid political bandying about and personalities. Such activities have bedevilled the debate for the last six months. All hon. Members should recognise that Londoners are extremely concerned about the future of their transport system. They decided that they wanted lower fares, a more efficient system and a higher level of service. Five Law Lords have not got the right to "undecide" that for them. The Government are under an obligation to put the situation right and to make a substantially greater central Government contribution—as is done in many of the world's major cities and in many parts of the United Kingdom—towards the running costs of the public passenger transport system.

6.51 pm
Mr. Roger Sims (Chislehurst)

In the past few days—both in the House and in the media—the debate has been portrayed in various ways. We have just heard another interesting contribution from the hon. Member for Holborn and St. Pancras, South (Mr. Dobson). The debate has been presented as the little Conservative Bromley versus the mighty Labour-controlled GLC, as the Tory Government versus Livingstone and company, and even, because the other place is also the highest Court of Appeal, as another example of Lords versus the people.

The debate is nothing of the sort. Far from criticising the law, as the hon. Member for Holborn and St. Pancras, South did, I applaud it. The law has done exactly what it should do and protected the individual. The Government have enormous powers over local government. The State, in the form of central and local government, has powers over the individual, but the individual's ultimate protection is the law.

We know that Governments and local authorities are elected democratically. After four or five years the party in power is re-elected or thrown out. We also know that, given a working majority, those in power have a relatively free hand once in office. However, they are not omnipotent and are constrained by the law. The individual can turn to the law if he feels that the State is abusing his rights and if a local authority abuses its powers. That is what happened in this case.

I place on record my admiration for my colleagues—the leader of the council of the London borough of Bromley and his two fellow councillors—who had the courage to initiate the legal action under discussion. They did so with little support from other London boroughs or from quarters from which they might reasonably have expected support. Their motive was not to do down the GLC or to score party points, but to act on behalf of those whom they represent—a quarter of whom are my constituents—who were suddenly faced with a supplementary rate.

The GLC precepted the London borough of Bromley and the borough had to collect the rate, and with it the odium for doing so. Typically, the amount of the supplementary rate was about £50. However, £50 was the rate for the half-year and therefore people had to pay, not £1 a week, but £2 a week. The supplementary rate was demanded of pensioners, although many of them had free travel passes and gained no benefit from the reduced fares policy. Nevertheless, they had to pay the higher rates. The supplementary rate was demanded of the commuter who, in South London, has no tube service by which to take advantage of lower fares. The rate supplement was also demanded of the business man. There are several business men in my constituency who pay 62 per cent. of the rate, but who have no vote. They faced a supplementary rate that had a crippling—if not fatal—effect on their enterprises.

For what was the supplementary rate demanded? It was demanded to give overseas tourists cheap fares and to pay for those working in, or visiting, London, but who live outside it and who do not, therefore, pay GLC rates. To my constituents London Transport's slogan "Fares Fair" has a hollow ring. The policy is anything but fair.

The councillors' initiative has paid off not only by establishing that the GLC's action was illegal but by highlighting the important principle that, in the words of Lord Wilberforce, the GLC owes a duty of a fiduciary character to its ratepayers who have to provide the money. That is an extremely important principle and one that could well be applied to other local authorities.

The GLC deliberately reduced fares by 25 per cent. knowing that the deficit incurred would have to be met by the ratepayers and that as a result of its action it would forfeit a Government grant of about £50 million, which ratepayers would have to pay. In the words of Lord Diplock, that action was a thriftless use of monies obtained by the GLC from ratepayers and a deliberate failure to deploy to the best advantage the full financial resources available to it". What an indictment! That judgment and that of Lord Diplock's fellow judges make it clear that the GLC has the power to make grants. However, it also establishes beyond doubt that the GLC and other authorities must take account of their responsibilities towards ratepayers. To use a legal expression, they must consider their fiduciary duty to ratepayers. I accept that the judgment may well lead to the need to reappraise and restate transport policy. I suspect that it will open the door and that some of the more exotic expenditure of some local authorities will be queried. The judgment also puts the efforts made by my right hon. Friend the Secretary of State for the Environment to restrain local authority expenditure into an interesting new light.

There will be at least one beneficiary—the ratepayer. His position is now much more carefully safeguarded than it was before the judgment. For that, my constituents and many millions of others will thank their Lordships for their statement of the law, and will thank also Councillors Barkway, Randall and Reading for their bold and successful initiative.

7 pm

Mr. Eric Deakins (Waltham Forest)

Not being a lawyer, I am not concerned—as are other hon. Members—with examining the entrails of their Lordships' decision, although I read the judgment with interest. I was impressed with the speech of the hon. Member for Islington, South and Finsbury (Mr. Cunningham). I take issue with their Lordships on the considerations that they did not bring to bear in their judgment: first, the wider social and political implications; and, second—a point that has not yet been raised in the debate—the balance not: only between ratepayers and farepayers but between public and private transport in our great capital city. There is no mention of those considerations in the 80 or 90 pages of judgment. Their Lordships obviously felt precluded from dealing with them.

While their Lordships cannot consider social and political considerations in giving such a judgment, we and the Government, as politicians, are not precluded from doing so. We should address our minds to that matter rather than poring over the judgment and saying that it means this or that. Its meaning for the GLC is pretty evident. We know from Sir Peter Masefield and the GLC what the probable consequences of the judgment will be for London Transport and Londoners. I shall list them briefly.

There will be fares increases on buses and on the Underground in March—or a little later if that is phased—of 150 per cent.; a reduction in the service and of between 30 and 40 per cent. in Greater London; a 40 per cent. loss of passengers as a consequence of the fares increases and the reduction in services; the permanent closure of about 20 Underground stations; the dismantling of 10 per cent. of the bus routes in Greater London; and, last but not least, redundancies of up to 25 per cent.—that is, 15,000 employees of London Transport.

Faced with those serious consequences—the Minister cannot deny that they are serious—why cannot the Government come clean and say that they will do what many speakers have urged, and put back the law by amending legislation to where everyone thought it was? If they do not do that the people of London, especially those who travel by public transport, will know where to place the blame.

The effect of cuts in services will be dramatic, especially on bus routes. Many bus routes, even under the new dispensation, run bad services. Every Member of Parliament will know of such cases in his constituency. In mine, bus routes on Forest Road and Black Horse Lane are bad and will become worse unless the Government take action to avoid the consequences that will result from their Lordships' decision.

The rises in fares will be catastrophic. It is one thing to tell people by advertising "Hop on a bus and travel one mile for 10p", but quite another to say "Hop on a bus for a mile at a cost of 20p or 25p". We all know what will happen. Many people will not use buses for short distances—yet that is where the bulk of passenger usage lies. It will not effect pensioners with free bus passes, but what about those living on social security, especially the young unemployed? It will reduce mobility in London, as fares will have to rise drastically, especially for shorter journeys. Does the Minister want those consequences? If he does not, is he still prepared to do nothing about them by way of amending legislation? That is the key question; not what it is not legal for the GLC to do.

In the absence of definitive legal advice—I confess that I was not impressed by the advice of the Solicitor-General—London Transport and the GLC will have to operate on the basis of trying to break even, with all the consequences that I have described. The Secretary of State, in a rather bland and dreary speech, gave us little information about the Government's intentions. Does the Minister think that his right hon. Friend will go down in parliamentary history as a modern Marie Antoinette? Will he tell the people "If there is no bus, if the service is so bad that you have to wait for an hour, or if you cannot afford the fare, travel by car"? That would be a dereliction of the right hon. Gentleman's duty, as he is the Minister for all transport, not simply for private transport.

The Government must try to maintain a balance between public and private transport for social, economic, and energy saving reasons. The decision will lead to more cars on London's roads, which will clog up the traffic. It will reduce the road network available for the distribution of goods, which will raise costs to industry and commerce.

Another effect will be to add to the cost of living and the inflation rate, which the Government are trying to reduce. All those consequences will flow from their Lordships' judgment and the assumption that the Government are not prepared to take action through amending legislation. It is no good the Minister shaking his head. When London Transport and the GLC publish the fares increases, will he be so smug then about his attitude and that of his right hon. Friend?

Mr. Kenneth Clarke

I am shaking my head because the hon. Gentleman has no evidence to support any of his horrendous forecasts about the consequences of the judgment. Surely he can remember the period prior to May 1981, when there was no doubt about the legal position or anything else. It is not true that London will be bereft of public transport as a result of the judgment.

Mr. Deakins

The Minister's words will go on the record and, in due course, we shall see who is right. I rest my case on the evidence given to London Labour Members by the GLC, based on estimates given to London Transport following the judgment of the Court of Appeal. If we and the London Transport Executive are right about the consequences, is the Minister prepared to say "I shall do nothing to redress the burden that will fall on the whole of London as the result of the inactivity of the Government in not helping the GLC to cope with the consequences of their Lordships' decision"? To those—and there are many of them—who glory in and gloat over the decision, I say that they have not yet seen the consequences that will flow from the judgement. They all have constituents who not only pay rates but use public transport.

I end with a word of warning that Horace Walpole gave to the nation and the House in 1739 at the start of the stupid war called "The War of Jenkin's Ear", when he said They may ring their bells now; before long they will be wringing their hands.

7.8 pm

Mr. Toby Jessel (Twickenham)

I listened with great interest to the quotation by the hon. Member for Waltham Forest (Mr. Deakins) of the words of Horace Walpole, who was resident in my constituency at Strawberry Hill, Twickenham. He would have deplored the policy of the GLC as a monstrous injustice to ratepayers, because he was a fair-minded man. That injustice has been put right by the House of Lords.

My constituency is on the fringe of Greater London. It has no Underground station within its boundaries, but it has eight British Rail stations. Those stations all lead to Waterloo. Although they connect with the Underground at places such as Wimbledon and Richmond, to change over is inconvenient and often involves extending the journey from 25 minutes to 50 or 60 minutes. My constituents cannot be expected to do that when commuting merely to take advantage of a subsidy which is on a capricious geographical basis because of the uneven pattern of the distribution of Underground lines within Greater London.

It is a historical and geographical fact that on the south and south-west side of London there is a full network of suburban British Rail lines. There are over 100 such British Rail Southern region stations; whereas the Underground is much more developed in other directions to the east, north and west of central London. Therefore my constituents cannot take advantage of the subsidy to the London Underground in the same way as inhabitants of places such as Ealing, Hendon, and others roughly the same distance from central London but at different points of the compass. That is unjust and completely capricious. As the Greater London Council took no notice of that particular injustice, I am glad that the House of Lords, as the highest court in the land, acted in the interest of fairness.

7.11 pm
Mr. Peter Archer (Warley, West)

This debate is about a limited range of issues. It is not about what transport policy should be, nor is it about the merits of the judgment in question. It was a judgment that surprised many people, and no doubt it will be subjected to a great deal of academic analysis in learned journals. But this is not an academic debate and the construction placed on the statute by their lordships is not at issue in the House.

The reason for the debate is that the judgment has given rise to real problems for those who have to keep London Transport operating. It is not only they who are placed at risk, but those who depend in their daily lives on the services operated by London Transport.

The Secretary of State urged the House to take the situation calmly. Our anxieties arise from the fact that he appears to be taking it too calmly. It is easy to bear other people's problems with fortitude. Someone once said, "If you can keep your head when all about you are losing theirs, you have not grasped the situation."

Four questions emerge from this debate. First, as I understand it, at least four of their lordships took the view that the London Transport Executive must try, so far as is practicable, to balance its books, taking one period with another, and that it should try to do so without grant-in-aid from the GLC. In other words, it should be run on what are called business lines, generating income from fares as far as possible.

It is true, as the Solicitor-General told us, that the London Transport Executive may budget for a shortfall, but only if it is not practicable to achieve that balance. The Greater London Council has power to make a grant in aid, including a grant towards revenue, but it may do so only when it is satisfied that the London Transport Executive cannot otherwise achieve the balance. In other words, no one has the power under the present law to decide that fares should be subsidised from rates as a deliberate policy. That is what is at issue.

It is singularly unsatisfactory for the Secretary of State to say that the present legislation has worked so far. My hon. Friend the Member for Hackney, Central (Mr. Davis) said that various authorities had operated within their powers as they believed them to be and they had not been challenged. My hon. Friend the Member for Holborn and St. Pancras, South (Mr. Dobson) said that the decision came as a surprise to many who thought that they were operating within their powers. Now the practice has been challenged and it transpires that the discretion is substantially narrower than many believed it to be. My understanding is that no one has power to decide as a policy that fares should be subsidised from rates.

I could quote extensively from the speeches of their Lordships, but time is short and that is exactly how the Solicitor-General advised the House. I do not seek to improve on the way that the case was put in The Times leader on Friday. It said: Neither the council nor the executive has authority to go for a deficit as an objective of policy. So, so far as possible, London Transport should be run on lines that ensure that passengers pay for the cost of the service, as though it were privately operated but without the profit element.

That is what the present law requires. That is a possible view on the merits. Clearly it is a view which is held by some hon. Members on the Conservative Benches. Clearly, too, it is a view which can be held sincerely and in good faith. But I hope that Conservative Members will accept that the contrary view may also be held sincerely and in good faith.

The difference between the two views is a political one. It is a difference which should be decided by taking account of the considerations urged so well by my hon. Friend the Member for Waltham Forest (Mr. Deakins). Surely it is a decision which should be resolved by the political process. It is a matter to be decided by electors through their elected representatives. It is a classic example of a question that should be decided at county level rather than national level, because conditions differ from county to county. It is county representatives who are closely in touch with those conditions. In any particular county a debate may take into account all the considerations which the hon. Member for Twickenham (Mr. Jessel) urged, a debate on whether, as a matter of policy, public transport undertakings should budget on the basis of a subsidy and whether local county councils should provide the subsidy.

It is a matter which in a democracy should surely be laid before the electors. I do not argue that every item in a manifesto is completely binding, even when there has been a change of circumstances, but, as Lord Diplock observed, it is a matter to which the representatives should give considerable weight.

The problem which emerges from the judgment is that no one has power to take such a decision, even if the electors approve the scheme and even if the councillors believe that in all the circumstances it is the right course. Surely the law should be adapted to confer power to take the decision if it appears to be the right decision in all the circumstances.

Mr. Edward Lyons (Bradford, West)

Does the right hon. and learned Gentleman agree that the law, as laid down by the Law Lords, prohibits the adoption of a general subsidy policy even when it is in the interests of the ratepayers of a certain area? In other words, even if the discretion is exercised to have regard to the ratepayers' interests, councillors will still not be allowed to operate a general subsidy policy. The only way to alter that prohibition is to introduce new legislation if that is what is wanted.

Mr. Archer

I agree that that appears to be the position in London. That is the effect of the judgment.

The present law states that no one has power to adopt a policy other than one which tries to meet income requirements fron fares. That is a possible view on the political merits, but I doubt whether it is one that is widely held. It is not the view that is taken in most countries which operate similar public transport undertakings. Many people would adopt the view expressed in the leader which appeared in The Times on Friday, that the power of positive subsidy is certainly a power that a modern urban transport authority should have. As my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) and my former hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) observed, it was not the view of either side of the House when the Bill that became the 1969 Act was debated. And we have it from the Secretary of State that it is not his view either.

On Friday the right hon. Gentleman expressed the opinion that grant support should be available for public transport authorities, provided that it was not taken to "ridiculous extremes". That was at column 554 of Hansard for 18 December. What is a ridiculous extreme is, as my right hon. Friend the Member for 13arrow-inFumes said, a matter for political debate, but that is the Secretary of State's view about the degree of help which it should be open to give from rates. That certainly is not in accordance with the present law as it was declared by their Lordships, so, on the Secretary of State's own view of what should, on the merits, be an option, there is a need for a change in the law.

The question that the Opposition are asking is whether the right hon. Gentleman proposes to give effect to his own view. It clearly has not escaped him that similar questions may arise on other legislation for county councils in the province, including the county council dear to the hearts of the Under-Secretary of State and myself, the West Midlands. My right hon. Friend asked whether the Secretary of State had been advised that similar problems would arise in relation to provincial legislation. Those authorities are entitled to know where they stand, without further prolonged litigation.

The second matter which appears to arise from the debate seems to me to be this. The Judicial Committee decided that this supplementary precept was unlawful. I understood from the speech of Lord Scarman—this did not surprise me—that it had been agreed among all the parties that in that event the whole of the supplementary precept must be quashed, including not only the £64 million part of it which is intended to balance revenue in the future, but the £6 million intended to pay for improved services, and the £48 million intended to pay for the previous deficit, which accumulated while the Greater London Council was under Conservative control—not to mention the £111 million brought about by the actions of the Secretary of State himself.

The GLC is free to consider levying a further supplementary precept which would not be open to the objections discussed in the litigation. It may wish to provide for improved services; it may wish to meet the previous deficit. All these are what the Solicitor-General described as the grey areas.

It is not clear from their Lordships' speeches whether a precept which contained an element in respect of any or all of those objectives would be lawful. That is not a criticism of their Lordships. It is not the function of the courts to decide questions which are not before them. They cannot give precise guidance on the whole extent of the powers of the London Transport Executive or the GLC. That is the legislature's task.

Now that the situation has arisen, it is for the Government to formulate legislation designed to answer those questions. The alternative is for the GLC to expose itself to a whole series of legal actions, as it levies precept after precept in order to obtain rulings on the legality of various course of action. That might be very good news for the legal profession, but it is the Government's duty to try to resolve those issues.

I come to the third question. It happens from time to time, as happened in this case, that members of a public authority proceed on an honest but mistaken view of their powers. That means that various people may have inadvertently subjected themselves to penalties and liabilities. Unless the House were prepared in those circumstances, and irrespective of party politics, to relieve them of those penalties and liabilities, public life would become a minefield which only the richest could ever afford to enter. So I ask the Under-Secretary to tell us whether the Government have considered whether indemnifying legislation would be necessary.

Mr. Clinton Davis

I have sought on no fewer than three occasions to elicit some sensible observations on this matter from Ministers—so far to no avail. When the Secretary of State for Social Services was in some difficulties following a High Court judgment, when the court found that his direction in respect of an area health authority was invalid, the Government immediately sought indemnity legislation for him. Is it consistent with that attitude for the Government not to be absolutely explicit in the present situation, when the Under-Secretary himself says that nobody deliberately broke the law?

Mr. Archer

Not for the first time, I am most grateful to my hon. Friend. In my view it would be inconsistent if the Government were not prepared to introduce such indemnifying legislation as might be necessary. Let us hope. I am an optimist. The Government have not yet said that they are not prepared to do so. I should say in fairness that perhaps they have not yet had time fully to consider the details of the matter. We were in Government once and no doubt we shall be in Government again very shortly. I believe that the House would welcome an assurance, which the Government can reasonably be asked to give today, that they will seek to ensure that no one suffers from having acted in good faith to implement political opinions which they believed at the time they were entitled to hold.

Mr. Higgins

Is it the right hon. and learned Gentleman's understanding that the GLC took legal advice before it proceeded on this action?

Mr. Archer

I am told that it did. If the Government wish further details, they can be supplied.

I come to another question, which the right hon. Member for Worthing (Mr. Higgins) raised and which is the fourth of my questions. Perfectly sensibly, because life cannot stand still, some authorities have tried to collect the amount of the precept, and some ratepayers have paid the whole or part of it. It is clear from the judgment that they were under no obligation to pay it. I assume that all the authorities concerned will wish to refund money which has been repaid mistakenly. However, a problem occurs to me, although I confess that I have not had time to research it or look into it in detail. As a student I was brought up to believe that money paid under a mistake of fact was recoverable at law, but that money paid under a mistake of law was not. Of course, there is a whole wealth of learning on the topic. I do not propose to embark upon it tonight, partly because time is short and partly because I do not wish to reveal how much law I have forgotten.

I cannot believe that any authority would wish to retain money that has been paid in these circumstances, but if it is not recoverable at law, it may be that it has no authority at law to refund it. If not, it should be authorised to do so. I hope that the hon. and learned Gentleman will give the House the benefit of any consideration that the Government have given to that question. As the right hon. Member for Worthing said, many people are understandably anxious about it.

Those are some of our anxieties. I do not believe that anyone could think that they were unreasonable. It is important that the Government should make known their views on these questions at the earliest possible moment. That is why my right hon. Friend the Member for Barrow-in-Furness applied for this debate.

Of course the various authorities concerned will have to take advice about their position, and of course they may wish to discuss it with the Secretary of State. But, for the purpose of taking that advice, they are entitled to have some indication from the Government of the Government's intentions.

Our anxieties are shared by many of those who have the responsibility for keeping London Transport rolling. They are entitled to look to the Government for sympathy and help. That is true not only of the authorities but of those who in their daily lives depend on the operations of London Transport.

I cannot do better than to commend to the Government the conclusion of a leading article in The Sunday Times last weekend: More positively, the Lords' decision gives the government an opportunity to show it has learnt an important lesson. To the mounting dismay of its own supporters, it has so far ridden roughshod over local government, seemingly incorrigibly centralising, confrontational and plain arbitrary. By legislating clear transport subsidy powers for councils, it could show that it genuinely respects the principle of democratic local government. That is all that we are asking for in this debate.

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

As the right hon. and learned Member for Warley, West (Mr. Archer) has concluded on that note, I had better make clear the concerns of the Government at the moment and their position before going into the details of the debate.

Contrary to the assertions of some hon. Members, and the newspapers, the Government are obviously anxious that there should be an efficient and effective—cost-effective and low-cost where possible—transport system in London. We are concerned that there should be no confusion either of law or politics which penalises travellers on the London transport system. We are equally concerned about the position of the taxpayer nationally and the ratepayer in London, whose case was most effectively put by my hon. Friend the Member for Chislehurst (Mr. Sims). His case was the basis of the successful and commendable action undertaken by Bromley borough council.

The Government are also anxious to see any doubt and confusion in London transport put right as soon as possible and of course, we should like to see London transport turned back from the short-term problems and the immediate financial crisis which seven months of Labour policy from County Hall have achieved. We should like the transport system to be returned to stability as soon as possible.

The Government have no formal powers or legal responsibility for either London Transport or the GLC at the moment. There are no powers which anyone can urge upon us to step in and take over the basic responsibilities of either the GLC or London Transport. Also, we have had no representations from either the GLC or from London Transport to the effect that they need our assistance in any specific way.

As my right hon. Friend said, we have read newspaper reports which indicate that at some stage Mr. Livingstone, as leader of the GLC, will ask to see the Secretary of State. That is all that we know at the moment. My right hon. Friend says that his door is open and that he will discuss matters with the leader of the GLC. If, as the newspaper reports also imply, Mr. Livingstone wishes to ask the Government so to change the law that he can continue his policies unchanged, regardless of the cost to ratepayers, he will know from the Government's policy statements what reaction he is likely to receive. However, if he says that there are difficulties which it would be reasonable for the Government to resolve, my right hon. Friend will of course listen to what he has to say.

The emergency debate has been called for and has taken place although the Government have no legal powers or formal responsibilities, nor have formal representations been made by the GLC or London Transport to the effect that we can help. It is precipitate and far too soon to indicate what we can do.

While the Government have observed with concern for both travellers and ratepayers the unfolding of these difficulties, we have taken one step in line with our general transport policy. The transport supplementary grant settlement was announced on Monday this week as part of our ordinary policy of support for local authority transport. That included an increased settlement of taxpayers' grant for the GLC for revenue support for its buses. We gave Livingstone's council 14 per cent. in cash terms—5 per cent. in real terms—more than Sir Horace Cutler's GLC as a contribution towards revenue support in London. Other than that, we have not been involved. However, we are anxious to discuss with anyone from either the GLC or London Transport who can suggest a way in which the Government can be involved rather than lecturing the Government about political opinions and policies to which the authority wishes to return.

Mr. Christopher Price (Lewisham, West)

I am grateful to the Under-Secretary of State for clarifying the Government's position which has changed somewhat since the Prime Minister's first congratulations to the London borough of Bromley. Is he saying that he is not ruling out the possibility of introducing legislation in the new year if, after discussions, that seems to him and to those with whom he has discussed these matters the right way to resolve the problem?

Mr. Clarke

Of course, if someone can make out a case which demonstrates that the law is deficient or that the Greater London Council and London Transport are incapable of applying the law to their problems, we shall consider that. But a week after the judgment the first shock horror stories in the newspapers or the more reasoned comments in this debate have not persuaded us that anyone has yet established any basis for rushing into legislation. My right hon. Friend waits to find out whether anyone thinks that there are difficulties and whether the GLC sees any way in which we could help, and, if so, what it would be.

We have not changed our policy otherwise. We welcomed the Bromley decision and the victory on behalf of the ratepayers, at the same time as we reiterated our continued commitment to a reasonable level of revenue support which the taxpayer and ratepayer can afford.

Although the right hon. and learned Member for Warley, West said that this was not a matter of how we run transport, the right hon. Member for Barrow-in-Furness (Mr. Booth) made it clear that his primary concern was about the whole basis of transport policy and fare levels in great cities.

Labour Members and Labour councillors often say that they favour cheap fares, but I know of nobody who in principle favours expensive fares. We all favour cheap fares. The Government favour fares kept down to the lowest level that can be achieved by efficiency, good management, low cost and a reasonable level of revenue support which taxpayers and ratepayers can be expected to afford. That has always been our policy.

What has happened is that one or two of our cities—the most recent, but not the only one, being London—have suddenly gone in for a radical policy of dramatically and deliberately cheap fares far below anything which might attempt to cover costs, and at an ever-mounting cost to the ratepayer. I concede that this is not a new policy invented in London. It was not invented by Ken Livingstone. It is in fact an imitation of a policy invented in South Yorkshire. The people's republic of South Yorkshire embarked upon this policy at ever-mounting cost to the Sheffield ratepayers four or five years ago. Sheffield went in for a dramatically cheap fares policy aimed at achieving the very benefits that Opposition Members have claimed throughout the debate would follow from cheap fares policies. I remind the right hon. Member for Barrow-in-Furness that that policy was fiercely opposed by the Government of which he was a member.

People have talked about penalties being imposed upon local government. The right hon. Member for Stockton (Mr. Rodgers), as Secretary of State for Transport in a Cabinet which included both right hon. Members who have spoken today, around 1978–79 imposed fierce transport supplementary grant penalties on South Yorkshire because it insisted on following irresponsible cheap fare policies, and he allowed only £1 million of revenue support grant. We have never been so fierce. We do not agree with South Yorkshire but, unlike the Labour Government, we did not think it necessary to penalise the authority. As in London and everywhere else, we gave it a level of revenue support that we believe meets the needs of the area.

The GLC then came in and tried to follow a similar policy in May last year. It is true that it inherited a deficit, but that was over and above the budget that their Lordships made clear had been perfectly lawfully arrived at and which already allowed for some revenue support. Its reaction to what it inherited, despite the fact that fares had not been increased at all since September 1980 and inflation had risen since then, was to reduce fares by 32 per cent. across the board with an indication that there was more to come by way of special concessions later. It also reopened the busmen's pay negotiations, which had already been settled, raised the figure from 8 per cent. to 11 per cent. and gave compensation to them for loss of valued travel concessions, in contrast with the lack of compensation to pensioners who received no increased travel concessions to compensate for their increased rates. It also instructed London Transport to increase its staff and began to increase bus services, regardless of the level of demand.

There has been much argument about whether all this was voted for, whether the GLC's policy was legal and politically wise, and whether people wanted it. In effect, it took over a business that was running reasonably well but had a somewhat worrying deficit, downed the fares, upped the pay, increased the staff and started running more buses. The cost to the ratepayers, which would have been £46 million in 1981–82 if the Conservatives had continued in office, became £259 million under labour, and on Labour's own plans it would have risen to £385 million by 1982–83.

I have no idea where the GLC expected to find that amount of money. Reports that I have read suggest that it promised its allies in the Labour boroughs, who would be facing elections next May, that there would be no rate rises next year. Yet the bills would surely have mounted. Indeed, I think it is possible that for some in the GLC, although not the sillier ones, the House of Lords judgment may have come as a merciful release, enabling them to get back to thinking out exactly where they are going and what is a sensible balance in transport policy in London.

Mr. Sydney Bidwell (Ealing, Southall)

Will the Under-Secretary give us a better indication of the Government's thinking up to date? Does it mean that when Mr. Livingstone and Dave Wetzel, the chairman of the transport committee of the GLC, come through the open door to which the Under-Secretary has alluded additional support grants will be negotiable? Have the recently announced levels some reference to the judgment? That is what the House wishes to know.

Mr. Clarke

I will turn to that in the brief time left to me. I conclude on the cheap fares policies—I have no time to develop it—by saying that the argument in South Yorkshire—as it now is in London—was that a cheap fares policy was necessary to reduce congestion, car usage and so on. I refer the House to the research work in South Yorkshire which shows that such beliefs are near mythology and that any compensating reductions in traffic certainly do not justify the enormous costs to the ratepayers.

I also do not have time to deal with the international comparisons, but many of those are false. It is possible to pick out cities where present losses are even more staggering than in London. All cities accept some level of revenue support. For example, France concentrates all its revenue support in Paris, but does not have much in the rest of the country. Making national comparisons, our support to local public transport, as a percentage of national income, is much in line with what is paid in France, and our support is much higher than that paid in, for example, the United States.

Penalties are a matter first for the district auditor to contemplate. The Government believe that it is highly unlikely that any question of penalties will arise in the case. I refer the right hon. Member for Barrow-in-Furness and the right hon. and learned Member for Warley, West to section 161(3) of the Local Government Act 1962, which protects anyone innocently breaking the law against any possibility of surcharge. My right hon. Friend the Secretary of State for the Environment will obviously consider the problem if and when it arises. As with so many similar cases, Opposition Members assert that there are widespread fears—that certain things will happen—but the only people expressing those fears are themselves. We have no intimation that any surcharge will be imposed on anyone.

The Government are constantly asked what the GLC and London Transport should do now. The short answer is that they should face up to their responsibilities. They are assisted in doing that by the clarification of the law by the Law Lords, as explained by my hon. and learned Friend the Solicitor-General.

The Government have been told that it is not possible to work out a lawful level of subsidy. No one from London Transport or the GLC has told us that, but that is being asserted. Before we can decide the case, the first thing that must happen is that London Transport takes legal advice and, presumably, attempts to draw up a revised budget and fares proposals for submission to the GLC as soon as possible. Again, the GLC must take legal advice, and consider any budget submitted to it, its own policy and its powers. If it cares to study and take advice from the Law Lords, it will be guided in deciding how to strike the balance between fare payers and ratepayers and how to comply with the statutory obligations that Parliament, as recently as 1969, spelt out under the Act which governs them. Only when we have obtained a budget will we know what figures we are talking about.

The hon. Member for Waltham Forest (Mr. Deakins), who explained to me that he could not stay, also repeated the wilder assertions about what is to happen. It is not being complacent, but sensible, to say that we should wait and see. I know of no evidence to support those assertions. No one pressing for legislation had a clue about what legislation they wanted. Even the hon. Member for Islington, South and Finsbury (Mr. Cunningham), who made the best claims for it, seemed to be asking for the 1969 Act to be amended to allow London Transport to continue, free from any statutory duties which the Act spelt out and free from any fiduciary relationship with the ratepayers, and that is unacceptable. If the Opposition continue to have debates on this subject as frequently as they have recently, perhaps they will clarify what they want us to rush into and to legislate about.

Meanwhile, my right hon. Friend the Secretary of State for the Environment is considering the implications for the repayment of supplementary rates. We hope that local councils can sort that out, but if they need any assistance from my right hon. Friend he will consider what help he can give. I am glad to conclude on a favourable note. The gainers are the ratepayers and the majority of the inhabitants of Greater London; the loser is the London Labour Party and it deserves to be.

Question put and negatived.