HC Deb 18 January 1982 vol 16 cc32-41 4.10 pm
The Secretary of State for Transport (Mr. David Howell)

Before Christmas I told the House that I was not prepared to legislate to let the Greater London Council go back to its unbalanced transport policies which placed such huge burdens on ratepayers. I said, however, that I was willing to see the GLC leader at any time if he or his supporters had problems. Since then Mr. Livingstone and other GLC leaders have come to see me and explain their problems.

In immediate response to those problems the Government are prepared to act in two respects. First, although the GLC has powers under the Local Government Act 1972 to spend up to the product of a 2p rate, which could be used to finance concessionary fares for the elderly, it is clear that it is not in a position to continue relying on those powers alone for this purpose; nor are the London boroughs able to get a concessionary fares scheme worked up in time. I have therefore stated the Government's willingness to legislate to give to the GLC the same powers as other local authorities have to operate a concessionary fares scheme.

Secondly, the high cost and low fares policies of recent months have led to a large accumulated deficit. I have said that we would be prepared to legislate to let London Transport pay this off over a reasonable period. Regrettably, the GLC has had to raise fares 100 per cent., not just to get back to 1980 levels, but to pay for the heavy costs of ineffeciencies imposed on London Transport in recent months. In the Government's view there is no need for further large increases in 1982. Talk of this, or of large-scale redundancies, is raising thoroughly unnecessary alarm. The GLC leaders have indicated their wish to come for further talks on the future of London's transport system in the longer term. I welcome these as providing an opportunity for constructive discussions on the needs of the public in London and how these can be best met and financed.

Mr. Albert Booth (Barrow-in-Furness)

I welcome the Secretary of State's acknowledgement that it is necessary to legislate to deal with the massive problem created by a combination of the Lords' decision, the decision of his predecessor about fares policy, and the decision of the Secretary of State for the Environment to cut London's rate support grant. However, does he realise that most of the people who are concerned with this issue will regard his statement as inadequate to meet the problem? Does he accept that legislation is required to enable not only the Greater London Council but metropolitan authorities throughout the country, to continue sensible transport policies as a result of the Lords' decision? Does he further accept that legislation is required to prevent a 100 per cent. increase in fares and a 5 per cent. cut in services in London?

Will the right hon. Gentleman give the House a clear assurance that, as the Secretary of State for the Environment cut £110 million off London's rate support grant on the ground that its fares policy involved overspending, when the Greater London Council brings in the new fares policy involving a 100 per cent. increase in fares the Secretary of State for the Environment will restore that £110 million to the GLC? Will he also give us a clear assurance that if the GLC—as I understand is its intention—operates the legal powers which he intends to confer upon it to provide from rates a fares concession for elderly people, that will not be held to be an increase in rates expenditure and thereby attract a further penalty from his right hon. Friend the Secretary of State for the Environment?

Can the Secretary of State for Transport give an estimate of how much extra it will cost London ratepayers to provide this concessionary travel arrangement for the elderly as a result of the increase in fares that has been forced upon them? Can he say how the fares requirement will be calculated for the repayment of the loan, in view of the fact that no one has any experience of the effect of a 100 per cent. fares increase and the drop in ridership that might result from that?

Finally, can he say how quickly this legislation will be introduced, bearing in mind that councils will have to take decisions within the next few weeks about their transport budgets for the coming year?

Mr. Howell

The right hon. Member for Barrow-in-Furness (Mr. Booth) has asked me a number of Questions. I begin by reiterating that, as I said before Christmas, it remains the intention of the Government not to propose legislation that would allow the GLC to go on crushing the ratepayers. If I may say so, it was surprising that the right hon. Gentleman omitted to express any sympathy for the plight of the ratepayers, or the fact that many of them were elderly people who were frightened by some of the enormous rate increases that were proposed.

I shall try to answer as many of the right hon. Gentleman's questions as I can. The 100 per cent. fares increase which the GLC approved is regrettable. It appears to be necessary in order to finance nor merely getting back to the policy on fares that prevailed before May 1981 and getting some sability and balance between the ratepayers and the fare payers, but the substantial increases in costs that have resulted from the GLC's extremely cavalier attitude to the operations of London Transport in recent months. That is why this regrettable and deployable 100 per cent. increase appears to be necessary.

The right hon. Gentleman asked about the GLC's expenditure budget generally, the penalties that might be incurred and whether money would come back to the London boroughs. These are matters for my right hon. Friend, but the answer is that some money will come back.

The right hon. Gentleman asked whether the rates penalty will be incurred if the GLC proceeds, for instance, with its concessionary fares policy. This relates to the GLC's expenditure priorities. The GLC has to decide its priorities and expenditure in a way that maximises efficiency and is consistent with the overall public expenditure constraints. That is a matter for the GLC, as is the question that the right hon. Gentleman asked about the extra cost to ratepayers. In prompt response to the GLC's request, as I said I would do, I have offered two ways in which the GLC can proceed and make a budget for 1982 with London Transport which is legal and which enables it to proceed in 1982 in a legitimate manner.

The right hon. Gentleman asked about the repayment of the loan that I am offering the GLC. London Transport is to be given powers to borrow over five years. It is for the GLC to decide whether to take up that offer and to what extent to rely on that source of funds. The council may have other sources of funds, in which case the burden will not fall exclusively on the fare payer. It is for the council to decide how much of that offer it wishes to take up. I am giving the GLC more room for manoeuvre, so that it may proceed in this way, and accept London Transport's suggestion to raise fares to pay off this large and regrettable accumulated deficit over five years.

The speed of legislation will depend upon my right hon. Friend the Leader of the House. The Government wanted to move as soon as possible, particularly on concessionary fares, because I was worried about some of the unnecessary scaremongering talk about the threat to old age pensioners' concessions. There was no need for that scaremongering talk. The Government have acted promptly in making their position clear on the matter.

Several Hon. Members


Mr. Speaker

Order. I propose to allow 20 minutes for questions on this statement. If hon. Gentlemen are brief, everyone should be called.

Mr. Terence Higgins (Worthing)

I support my right hon. Friend's opposition to a general subsidy on fares arid I agree with him on the need to protect ratepayers. However, is he aware that the present situation is very unfair in the way that it affects concessionary fares for pensioners? Pensioners in London travel free but in many other parts of the country that have elderly populations it is impossible for local authorities to subsidise pensioners' fares because those who are paying the rates are the people who are getting the concessionary fares. Will my right hon. Friend see whether this can be done on a broader, national basis rather than on the present unfair basis, which discriminates in favour of London?

Mr. Howell

I am grateful to my right hon. Friend for his general support. I am aware of the points on concessionary fares that he has made in earlier debates. I should perhaps make it clear that what the Government are proposing is legislation to put the GLC in the same position as practically every other local and metropolitan authority. It would then be for the GLC, like every other local authority, to decide what proportion of its resources it wished to use and the type of policy that it wished to operate on concessionary fares for the old or support for other groups of people. The Government are proposing that the GLC should be put in exactly the same position as almost every other local authority.

Mr. William Pitt (Croydon, North-West)

Is the Secretary of State aware that his statement, which moves us no further forward from the House of Lords decision, has thrown the future of London Transport into chaos? Is he further aware that he has put London Transport out on a limb in relation to other capital cities of the West? Will he assure the House that the Government will seek to introduce legislation to promote a properly subsidised transport system in our capital city?

Mr. Howell

The hon. Gentleman is unjustified and unwise to speak about chaos. There is no reason why there should be chaos. There is every reason to suppose that the present situation can be used by the GLC to put London Transport on a fair and balanced footing. There is every reason for future talks involving the GLC and other local authorities to include the more fundamental issues that arise. That is a much better approach than campaigning on the streets. The hon. Gentleman has his own recipe. I can only assume from what he says that he, like everyone else, would like to see low fares, low rates and, no doubt, low taxes. There happens, however, to be the question of deciding who pays and, in particular, who pays when a major bungle has been made by the GLC, for which someone has to pick up the tab.

Mr. George Cunningham (Islington, South and Finsbury)

Will the Secretary of State accept that in every other major capital city in Europe subsidies are required to save city transport, but that such subsidies are now—at least possibly—illegal in this country? In addition to the temporary legislation that the right hon. Gentleman now offers in respect of the GLC, have the Government any intention of bringing forward legislation later to clarify the situation in regard to such subsidies?

Mr. Howell

The clear legal advice, and the Government's view based on that advice, is that the position for 1982 is within the law if the GLC proceeds with the 100 per cent. fares increase. No more is required by the law. If the GLC wished to put up fares further, that would be a policy matter. As to the longer term, I have recognised that more fundamental problems are raised by what is recognised to be a complex judgment. The GLC has said that it wishes to come to see me again. I shall also be talking to the metropolitan authorities. We shall need to look at some of the difficult issues raised in the longer term. I believe, however, that it would be wrong to be rushed, as some hon. Members were suggesting before Christmas, into early legislation of a kind that would put the clock back and allow the GLC to carry on punishing the ratepayers, as it was doing.

Sir John Biggs-Davison (Epping Forest)

What increase in paying passengers resulted from cheaper fares?

Mr. Howell

I should need notice in order to give the precise number. I can, however, inform my hon. Friend that some of the claims made for the dramatic reduction in fares, first in South Yorkshire and then in Greater London, have been wholly unjustified. In particular, it was claimed that there would be a dramatic cut in traffic. That has not emerged at all. The GLC's own estimate is that general traffic mileages will be cut only by 1 per cent.

Mr. Douglas Jay (Battersea, North)

Why did the Secretary of State tell the House before Christmas that old people's concessionary fares were not threatened, when it now turns out that they were and that legislation is needed?

Mr. Howell

In fact, the legisaltion was on the statute book for concessionary fares to continue to be paid out of the 2p rate. When I discussed this problem with the GLC, it was clear that the council was not in a position to rely on the 2p rate to meet the larger sums needed for concessionary fares and that the London boroughs could not go back to the scheme that operated previously. The right hon. Gentleman is therefore right. It was necessary to take the steps that I have taken over concessionary fares.

Mr. Michael Shersby (Uxbridge)

Is my right hon. Friend satisfied that the legislation that the he intends to introduce will meet the important point raised by our right hon. Friend the Member for Worthing (Mr. Higgins)? What is the Government's policy towards the introduction of concessionary fares for elderly people on a wider basis than that already enjoyed? Can my right hon. Friend give an assurance that any future subsidy for London fares will not be met by Greater London ratepayers alone, but that those in the Home Counties, who have benefited substantially from the scheme introduced by the GLC, will have to pay their fair share of any future subsidy, whatever form it may take?

Mr. Howell

I listened closely to my right hon. Friend the Member for Worthing (Mr. Higgins) and also to my hon. Friend the Member for Uxbridge (Mr. Shersby) on the matter of concessionary fares, Wider issues arise than the one with which I have been concerned, which is to put the GLC in precisely the same position as all other local authorities and settle concessionary fares on the basis of local requirements and local variations.

On the question of general support for London Transport, it is worth bearing in mind that in the past year national taxpayers gave about £100 million of support to the London Transport system. Overall, the system last year received about £¼ billion in public support before the introduction of the super low fares policy. Considerable sums are therefore available. Against that background it is nonsense to talk of a system starved of resources. A substantial degree of support exists and this has been recognised in Government policies over many years. It continues to be so recognised.

Mr. Christopher Price (Lewisham, West)

Will the Secretary of State accept that the responsibility for the chaos and the scaremongering lies with him, with his right hon. Friend the Secretary of State for the Environment, with the London borough of Bromley and with the five Law Lords who produced such a confused judgment that different Queen's Counsel have produced different interpretations of what that judgment means? Will the right hon. Gentleman confirm what he has said—that even though he is asking the House to legislate to make it lawful for the GLC to give pensioners free fares, he is giving no guarantee that the moment this is done his right hon. Friend will not come forward and penalise the council and say that it is acting unlawfully?

Mr. Howell

On the issue of blame and responsibility, I do not think that the hon. Gentleman has got the matter in perspective. A number of people have said that they intend to campaign for a clearly defined political objective in order to get back to a situation in which they can continue to impose an extremely heavy burden on ratepayers, including many elederly people and many small businesses, which is generally agreed to be extremely damaging. A political campaign is being mounted in a way that seems, in some cases, to be designed to create confusion of a greater kind than I believe is anything like the case. That is a poor way to go about dealing with an undoubteldy complex problem. It would be much better to follow the line suggested by the Government from the start—to sit down, discuss the problems and work them out in a sensible manner.

On the issue of money paid out for old people's concessionary fares, it is for the GLC to decide its expenditure priorities and how it wishes to spend its money. I am proposing that legislation should be sought from the House to enable the GLC to carry on unambiguously with a policy of concessionary fares for the elderly. How the GLC finds the money is a matter for it to work out within its own budget.

Mr. Tim Eggar (Enfield, North)

Is my right hon. Friend aware that his announcement will be welcomed by old-age pensioners throughout London? Does he know that many old-age pensioners were extremely upset by the supplementary rate imposed by Mr. Ken Livingstone, which they saw as a nasty and underhand way of forcing them to pay for their free bus passes?

Mr. Howell

I am very much aware of the matters to which my hon. Friend referred. As he said, there have been a number of statements in recent weeks allegedly intended to help the elderly, but which on examination seemed to do nothing but create unnecessary anxieties, which is to be deplored deeply.

Mr. Nigel Spearing (Newham, South)

The Secretary of State mentioned the need for a balanced transport policy in London. Does he not agree that the real balance is between the costs of private and public transport, and that it is essential to get it right? If New York has a 55 per cent. fare box ratio, why cannot London? If the right hon. Gentleman wants a balanced policy for the ratepayer, why does he not get his right hon. Friend the Secreatary of State for the Environment to remove his penalties? I remind the right hon. Gentleman that half the supplementary rate did not go to fares at all. It went to pay the penalties imposed by the Secretary of State for the Environment.

Mr. Howell

I am not sure that New York is the happiest example of a transport system. I know that the hon. Gentleman looks at these matters very fairly, but he should not underestimate the considerable amount of support and subsidy going into the London Transport system. In the budget for last year, before the introduction of the low fares system, for every £1 raised in fares, there was a further 55.1p added from public support. That is a considerable degree of subsidy.

Of course there are variations in European capitals. The example of Paris is quoted frequently. However, what is often forgotten is that the Paris system runs a similar passenger mileage with about 60 per cent. of the staff. If we want gains, it is to efficiency of operating and manning that we have to look.

Mr. John Cartwright (Woolwich, East)

Will the right hon. Gentleman accept that the legal advice, like the legal judgment, is anything but clear? Why, therefore, will he not legislate to clarify what is a reasonable balance between the fares income and the essential public subsidy in terms of national public transport, especially in London? Bearing in mind the confused state of London's transport, will the right hon. Gentleman now call together representatives from the GLC, London Transport, British Rail and the transport unions and try to get them working together to provide the efficient and effective public transport system that Londoners need and deserve?

Mr. Howell

The legal advice to the Government, which is the basis of the view being put forward by the Government—a view which I have put forward to the GLC—is very clear. In 1982 the GLC will be within the law and acting legitimately if it approves this regrettably large increase of 100 per cent. in fares, and no further increase is needed.

As for the longer term and the matters to which the hon. Gentleman referred, I agree that some fundamental questions about transport planning are raised by this affair. There is a confederation of interests between the different operators about how best to serve the public need. These are matters that need to be discussed and looked at. But they are not a basis for rushing into early legislation to put us back into the mess that we were in a couple of months ago.

Mr. Alan Haselhurst (Saffron Walden)

Is my right hon. Friend aware that, as a result of the unsatisfactory position into which the GLC has led us, commuters from outside London are able no longer to purchase combined British Rail and London Transport season tickets on the most advantageous terms and thereby are losing money? Can something be done to compensate them?

Mr. Howell

I note what my hon. Friend says. Obviously this is a matter for the transport authorities concerned. I shall call it to their attention.

Mr. Guy Barnett (Greenwich)

The Minister consistently expresses sympathy for London ratepayers. If he has any respect for the responsibility and accountability of local authorities to their electorates, bearing in mine that London ratepayers voted for this policy at the last election, what has this matter to do with him?

Mr. Howell

There is also the question of who pays for it. It was the Government's clear view long before the Lords judgment—and, I suspect, the view of a growing number of people trying to operate the policy—that the dramatic reduction in fares and the general operation imposed on London Transport by the GLC were leading to a chaotic and impossible position for both ratepayers and fare payers. It would be utterly irresponsible of the Government merely to turn back the clock and restore legislation to allow that to continue.

Mr. Teddy Taylor (Southend, East)

Is it true, as reported in most newspapers, that the result of my right hon. Friend's discussions with Mr. Livingstone is that the GLC will be given another £65 million to help finance the concessionary fares policy? Is my right hon. Friend aware that if a generous package were given it would cause enormous resentment in places such as Southend where very limited concessions are offered to pensioners because last year we adhered to the Government's guidelines, curtailed our spending and reduced our rates? Would it not be a scandalous policy if there were a cash prize for breaking the rules and a penalty for keeping them?

Mr. Howell

I assure my hon. Friend that the story on which he has commented is untrue. No such proposal has been made. It is proposed that the GLC shall be in a position, by a change in the law to be passed in the House, to continue with concessionary fares. I understand that that would involve a pay out of about £65 million. The story that my hon. Friend has heard is not true, and he can contain his resentment.

Mr. Clinton Davis (Hackney, Central)

Quite deliberately, the Minister has sidestepped two essential issues put to him today by a number of my hon. Friends. The first is that if the GLC operates a concessionary policy it can expect a reduction in the support that it receives from the Government. Secondly, the Minister is misleading the House when he suggests that there is no need for increases in fares in 1982. Is it not clear that the GLC will have to repay the loan, plus interest and that the only way in which it can realistically do that and operate its transport policy is by reducing services, increasing fares and making London's roads more and more open to the use of private motorcars?

Mr. Howell

The repayment of the loan was taken into account by London Transport in the formulation of its budget and in putting forward its 100 per cent. fares increase. There has been no misleading of the House or anyone else about that. It is the Government's firm view, based on clear legal advice, that the 100 per cent. increase, although regrettably large, for the reasons that I gave earlier, is necessary and all that is required for the GLC to stay within the law.

The hon. Gentleman accused me of sidestepping the fact that the GLC would have its grant support reduced if it operated the concessionary policy. The matter with which the leaders of the GLC asked me to concern myself was the powers of the council to operate a concessionary fares policy. They did not ask me to concern myself with the details of the council's budget or with its expenditure priorities. The Government have moved promptly in response to the difficulties into which the GLC has got itself, and I should expect the hon. Gentleman to give a more sympathetic welcome to that move.

Mr. Hal Miller (Bromsgrove and Redditch)

Can my right hon. Friend confirm what some of us understood him to say just now, that in the matter of concessionary fares for the elderly in London he has agreed only to legislate to put the GLC in the same position as that of other local authorities, and has not given any Government subvention to the GLC for that purpose? It was reported widely in the press that he had given such a subvention. If he has, it will be resented bitterly by people in other parts of the country.

Mr. Howell

I can confirm that the position is exactly that explained by my hon. Friend in his opening sentence.

Mr. Les Huckfield (Nuneaton)

The right hon. Gentleman said that the intention of his proposed legislation was to bring the Greater London Council into line with local authorities in the provinces. However, will he bear in mind that the legal position relating to the powers of such authorities is equally uncertain? Will the right hon. Gentleman acknowledge that Conservative-controlled local authorities such as Solihull are considering legal action against such authorities as the West Midlands metropolitan county council? Does the right hon. Gentleman not realise that if he really wants to clarify the position he will have to introduce legislation for local authorities outside London as well?

Mr. Howell

The hon. Gentleman is not entirely correct to say that the legal position on concessionary fares is the same for other local authorities. All other local authorities have such a power, and the GLC is unique in not having it at the moment. That is where the Government propose to legislate.

On the broader question of support for public transport systems, I have said that I shall be seeing the Association of Metropolitan Authorities. If metropolitan authorities, or others, have problems that they want to discuss with me, I shall be happy to meet them. The proposals discussed with me so far have been raised by the GLC. The GLC said that it wanted to see me to discuss some problems and the Government responded promptly.

Mr. Speaker

There are two hon. Members on each side of the House still seeking to catch my eye. I shall call them if they will be brief.

Mr. Andrew Faulds (Warley, East)

Does the right hon. Gentleman not appreciate, and is he not worried by the fact, that the Government's position will force the GLC to make cuts in other parts of its budget? One of those cuts may well be the withdrawal of funding of the national arts institutions in London, with all the problems that that will pose for the Government.

Mr. Howell

The hon. Gentleman is tempting me into commenting on the GLC's priorities and its overall budget. I must avoid that, although it strikes me, as an outsider, that there is room for economy and efficiency in a number of the programmes on which it has embarked in the past few months.

Mr. Matthew Parris (Derbyshire, West)

Did I correctly understand my right hon. Friend to say that he does not believe that general subsidy of public transport is wrong, but simply that it is possible to go too far? Does he agree that "how much is too much" is a pressing question for many transport undertakings and that we need to give early guidance?

Mr. Howell

My hon. Friend is correct. That position has been reflected over the years in the whole system of transport supplementary grants. The legal position of the GLC in 1982 has now been made clear. If other local authorities and metropolitan authorities have problems that they wish to discuss, I have said that I am ready to see them, although no specific approach has yet been made to me. As I have told the House, I shall shortly be meeting the Association of Metropolitan Authorities, at its request.

Mr. Dennis Skinner (Bolsover)

As the Minister seems likely to meet several different authorities, including the various associations, and now that he is presenting legislation with specific reference to free fares for pensioners, will he bear in mind that in large tracts of the country, including most of Derbyshire, no bus undertakings belong to the local authority, or to any part of it?

Will the right hon. Gentleman accept that he may need to meet Derbyshire county council, and many other authorities which do not have their own bus undertakings, so that they can introduce concessionary fares for their old-age pensioners and, if necessary, obtain the treatment—through loans or other means—that he describes for Greater London?

Mr. Howell

I accept that I may need to meet all sorts of people, but I am not sure that the hon. Gentleman's points relate to the GLC and its unique position on concessionary fares.

Mr. Douglas Hogg (Grantham)

Will my right hon. Friend accept that, despite the GLC's antics there is a perfectly respectable case for subsidising local transport, but that there is not a respectable case for requiring local ratepayers to do that, if only because they are relatively few in number? It is a narrow tax base. If we are to have a policy of financing or subsidising local transport undertakings—for which, as I say, there is a good case—does my right hon. Friend agree that we must find a more broadly based local system of taxation and link it to that?

Mr. Howell

My hon. Friend has raised a much wider issue, but he is correct. The Government accept, and have long accepted, the case for a sensible degree of revenue and capital support for local transport undertakings. The problem with the GLC in recent months is that it did not know where to stop.

Mr. Speaker

I have received notice of three applications under Standing Order No. 9. I shall call them in the order in which I received them.