§ Mr. Simon HughesI beg to move amendment No. 17, in page 19, line 21, leave out '£100 million' and insert '£250 million'.
When we debated this matter in Committee the Secretary of State rightly said that there is at present a project to extend the Piccadilly line to terminal 4 at Heathrow, and he said that that would be a profitable venture for which LRT would have to borrow. That project might cost between £60 million and £70 million. In addition, there is a margin for contingencies should additional short-term borrowing be needed if, for example, there were a long strike. A further £20 million to £30 million is allowed for that, and the total is £100 million. That is a large sum. Although the Piccadilly line extension might use £70 million of that, there is no provision at this stage in the Bill for another substantial sum to be aquired by borrowing for another project. We can all think of substantial capital investment projects that could be undertaken to improve London Transport.
The Department of Transport generally accepts the need to extend transport provision in the south-east of the city, where there is almost no underground system. It was proposed that the Jubilee line should be extended far to the east of where the docklands light railway is proposed to go, adjacent to the Isle of Dogs and crossing the river several time before it reached Thamesmead. We must also consider whether the docklands light railway should be extended to the south of the river, and there are other substantial investments for which a far-sighted London Regional Transport, like a far-sighted London Transport, could plan.
It seems highly sensible to say that, since London Transport is contemplating major public expenditure, we should provide at this stage for the Government, through LRT, to have that borrowing power. The alternative would be for the Government to return to the House each time the facility had to be increased, perhaps to £150 million, then to £175 million and then to £200 million. We should; grant LRT permission to borrow so that the foreseeable capital needs which are clearly identified — a phenomenal amount of needs are still unmet in London — can be planned for and the money provided. This amendment would allow that proposition to be contemplated now and the financial provision to be made.
§ Mr. RidleyThe hon. Member for Southwark and Bermondsey (Mr. Hughes) knows from our debates in Committee that the Government intend that the vast majority of London Transport's investments will be met by 100 per cent. capital grants. Its investments in the underground railway and in buses are unlikely to be profitable. Therefore, there is no point in requiring LRT to borrow. That would simply add to a growing capital debt which, in the end, would fall on the ratepayers.
However, the Government have decided to isolate those investments made by London Transport which will either be profitable or, if they are not profitable, should not be made—property development is one example—or other activities where it is carrying out activities extraneous to the provision of passenger transport. We shall also isolate investments, such as the extension of the Piccadilly line to terminal 4, which might be profitable. We have provided this £100 million borrowing power, which can be increased by order, for financing matters of that sort.
8 pm
The point at issue is the limit of the first tranche that can be increased by order. I say £100 million, and the hon. Gentleman says £250 million. After all the lectures from the hon. Gentleman about the need to be accountable to the House and giving it the opportunity to debate at length all that happens in London Transport, he now offers me a prize which, were it not for my democratic instincts, I might even have grabbed by accepting the amendment. It would mean that the Government would not have to come to the House nearly so frequently to renew the borrowing power by order or later by primary legislation when the ultimate limit is reached.
I think that the £100 million will last for a good few years. It can then be increased if the House makes an order to that effect. If the limit were £250 million, I doubt whether the Government would have to come back to the House for decades. Parliament has always been jealous of its opportunities to control the borrowing of the nationalised industries, and I should not like to defraud it of any opportunity that might occur earlier.
Indeed, the only regular statutory opportunity for the House to debate the affairs of a nationalised industry—unless it does so on a Supply Day or in a debate on a Select Committee report — is when the Government come forward with a borrowing order or a new borrowing powers Bill. Therefore, the custom has been to set the limits rather lower so that the Government must occasionally come back to the House.
If the hon. Gentleman wishes me to forgo that pleasure, there is a temptation to accept his amendment, but I am sure that the rest of the House would prefer to leave the limit at such a level that we would have to come back in a few years rather than for many years to come. In those circumstances, I hope that the hon. Gentleman will not press his amendment.
§ Mr. PrescottIn view of the Secretary of State's outrageous remarks, I should like to make a few comments. He now talks of democracy and accountability, having just voted down the proposed London Transport Money Bill which would have given the House an annual opportunity to discuss what was happening with the money. The right hon. Gentleman's defence is that as the limit is £100 million the House will have the opportunity 80 to debate the matter once that limit is exceeded. The Secretary of State must ask himself whether his arguments are consistent.
I do, however, have some sympathy with the nationalised industries when faced with these borrowing requirements. Inevitably, when such requirements are imposed upon the nationalised industries, their interest payments have become crippling. A good example is the borrowing requirements from the Treasury vis-a-vis the National Bus Company, which has to pay those interest charges as public dividends in competition with private companies which have not had the same stringent financial requirements placed on them.
When the right hon. Gentleman talks of lines, routes or services that are profitable or non-profitable, it takes us back to the horrible arguments that we used when discussing the Cooper formulae in relation to British Rail, when we differentiated between inner cities and so on. I understand that the Victoria line was justified on the ground of social costing. In other words, a judgment was made that what the community saved by way of congestion, accidents and so on should be put into the computer. I understand that the Glazier model has demonstrated that every £1 investment can give £1.25 return if all the savings to the community are taken into account.
I gather that the Secretary of State is not happy with that conclusion. I do not know whether he pulled out the plug, but modern economists take account of social costings in their assessments. I only hope that that modern way of looking at transport will commend itself to the Secretary of State, but I doubt whether social costings are an important consideration when he determines whether or not something is profitable.
§ Amendment negatived.