London Regional Transport

HC Deb 07 February 1985 vol 72 cc1196-223

Mr. Speaker

I have selected the amendment in the name of the Leader of the Opposition.

10.11 pm

The Secretary of State for Transport (Mr. Nicholas Ridley)

I beg to move, That provision may be made specifying as £258,179,588 the amount which the Greater London Council are to pay to London Regional Transport under section 49 of the London Regional Transport Act 1984. This motion paves the way for the introduction of a Bill to determine the total of grants to London Regional Transport to be payable by the GLC for the financial year 1984–85, after 29 June 1984 when the Government took control. [Interruption.]

I explained why this measure is needed in my statement to the House on 29 January. The High Court quashed the direction that I made under section 49 of the London Regional Transport Act 1984. There is thus now no direction in force regarding the payment to LRT of the grants that the GLC budgeted for and precepted to pay to London Transport in 1984–85. [Interruption.]

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

On a point of order, Mr. Speaker. We are debating probably one of the most important measures that will ever affect London transport, but I cannot hear a word that the Minister is saying.

Mr. Speaker

Order. I appeal for quietness, in order that the Secretary of State may be heard.

Mr. Ridley

This matter must be urgently resolved, if possible before the end of the financial year. As I told the House, I intended to appeal against the High Court judgment. But, having studied the judgment, I concluded that it was the Act itself that did not correspond with our intention, which was clearly stated at the time when it was passing through Parliament. Clearly an appeal would not resolve that problem, let alone the uncertainty over the amount to be paid. The Government had no option but to bring a new Bill before Parliament to settle quickly the amount of grant that the GLC should pay to LRT.

I say "settle quickly" beause both LRT and the GLC need to know what their financial position will be, and they need to know as soon as possible. LRT has to budget and plan ahead for 1985–86 and beyond, as well as to settle its 1984–85 accounts. The GLC is at the crucial final stages in its annual budgetary and rate-precepting processes. Legislation is the only way to resolve the uncertainties and give Parliament the opportunity to determine the outcome in a way that is reasonable as between the parties concerned. If the House approves the resolution, I intend to introduce a Bill immediately.

Mrs. Dunwoody

I had understood that it was not the Secretary of State's intention to take the Bill immediately this evening. Am I to understand that he has changed his mind?

Mr. Ridley

I said that I would introduce the Bill. It is not possible to introduce the Bill until the House has passed the Ways and Means resolution, but the normal intervals between introduction and Second Reading will of course obtain.

In laying this motion, I have at the front of my mind the interests of travellers, LRT and London ratepayers. All stand to lose if we do not legislate. The GLC, through creative accounting and legal action, has tried to deprive LRT of substantial sums of money which ratepayers paid specifically for public transport and which LRT, by its efforts during the past seven months has earned. I think that the House would agree that such money should be returned to the ratepayers and passengers, not squandered on GLC lunacies. The Government are not trying to rob the GLC—we have not seen the colour of any of the money under discussion tonight. It is the London ratepayers and the London traveller who the GLC is seeking to rob.

Mr. Frank Dobson (Holborn and St. Pancras)

Would this so-called robbery by the GLC have been possible if the Secretary of State had drafted properly the Bill that became the Act that he is now amending?

Mr. Ridley

I used the word robbery as it is the word which the hon. Member for West Bromwich, East (Mr. Snape) used on the day of the statement. So untrue were those phrases that they are more appropriate put as I have used them. I agree that the legislation is defective. I am sure that the whole House wants to put it right so that the intention of the House can be fulfilled.

There are four separate sums of money at issue as a result of the court's judgment. The first is a sum of £10.2 million which the GLC argued that it had already paid in the financial year but for which we had not given it credit in setting the direction.

When I made the direction under section 49 on 29 June, the statute required me to deduct from the total grant required the amount of grant already paid to LT by the GLC up to 29 June. Accordingly, acting on the best information then available to me, I deducted the sum of £78.7 million. In fact, a payment of some £10.2 million had been made by the GLC at the beginning of 1984–85, which LT had requested to close its accounts with the GLC for the previous financial year, 1983–84. It subsequently came to light that the GLC had paid that money but had carefully labelled the payments as relating to 1984–85. This was a trick—a piece of creative accounting—to enable the GLC to avoid paying what it owed LT in 1983–84. LT clearly considered that the payments should have been made for 1983–84. Indeed, the ratepayers had been precepted for the full amount. LT endeavoured to settle the matter with the GLC accordingly, but the GLC, of course, was in charge, and LT had reluctantly to accept the GLC's decision.

In all conscience, the GLC should have paid this money out in 1983–84 to settle its outstanding liability and because it had already asked the ratepayer for this amount. However, I did not pursue this sum before the court because section 49 relates only to payments during 1984–85. The GLC got round section 49 by relating the payment to 1984–85. The payment amounts to £10,220,412. I therefore propose to increase the amount for which the GLC was given credit in the period before the Government took control to £88,920,412. The House should be under no doubt that the GLC has robbed LRT and the ratepayers of this £10.2 million by a trick.

Secondly, there is an issue arising from amendments agreed by this House to the GLC's Money Act 1984, which covers the financial year 1984–85. At the time that the direction under section 49 was made, the House had passed an of instruction to the Committee considering the Money Bill. The import of this was that, unless specific proposals for reductions in expenditure were put forward by the GLC, the expenditure provisions in the Bill should be reduced by just under 7.5 per cent. In the event, and after the direction had been made, the GLC decided not to put forward proposals, so reductions were duly made across the board according to the instruction to the Committee. The effect for LRT was to reduce the provision for prescribed capital expenditure to be funded by grant from the GLC by some £12.9 million. The Money Bill has recently been enacted in that form and the Bill will reflect the reduction in provision for capital expenditure.

The figure quoted in the motion, therefore, is accordingly the figure in the original direction, £281.3 million, abated for payments in respect of 1984–85 and the £12.9 million reduction arising from the GLC Money Act. That gives the figure in the money resloution. Within that sum, two sums of money remain at issue. The first is LRT's expected surplus for this financial year.

The hon. Lady will doubtless seek to argue, as her amendment implies, that payments of grant by the GLC should be further abated in respect of the improvements in LRT's financial position which have developed since control was transferred to the Government. That is an intolerable suggestion. It would mean that additional income, which has resulted from improved productivity, better than expected sales of travelcards and from LRT's decision to raise fares earlier this year, would all be handed over to the GLC. It would mean that the benefits from the efforts of LRT's management and work force since the GLC lost control of LRT would go to the GLC, and not to LRT, its passengers, and London's ratepayers.

I would like to remind the House of two remarks I made during the debate on section 49 in Committee— It is not my intention to take more through the clause than is strictly necessary for running LRT for the year in question, so that they shall not end up with a surplus."—[Official Report, Standing Committee B, 15 March 1984; c. 1114.] When I made my original direction, LRT's forecasts showed that it would need funds equal to the maximum that I could specify under section 49. Indeed, LRT had forecast a deficit. I made my direction accordingly. As I said in Committee, it was almost impossible to get it plumb right when we were working for a year ahead and did not know what the circumstances would be. I therefore said: If there is a surplus or deficit at the end of 1984–85 … that will go towards next year's determination of subsidy. It will either be added to or subtracted from the needs for the following year."—[Official Report, Standing Committee B, 15 March 1984; c. 1116.] Later in the year, in November, I had to decide how much grant LRT would need for the following year, 1985–86. By that time the estimates showed a small cash surplus for the current year. It is now forecast at £29.5 million. Also by that time LRT, in the course of turning the business round, had necessarily incurred transitional costs which will now show as accrued liabilities in this year's account. Therefore, LRT's grant for 1985–86 and the proposed ratepayers' contribution have been calculated on the basis that LRT would not have to meet any unfunded liabilities accruing from 1984–85 in 1985–86.

I expect that we shall hear the hon. Lady argue that that money should be given to the GLC instead. Not only would the GLC receive an undeserved windfall, but LRT would be left without adequate funds. Is that what Opposition Members really want? It would mean big fares increases or cuts in services or investment, or an increase in the ratepayers' contribution for next year.

It is quite clear to us that the only fair outcome is for the money to be retained by LRT and used to benefit the passengers and ratepayers who contributed to it in the first place. As I said, I made it perfectly clear in Committee that our intention was that any unforeseen surpluses or deficits should be carried forward into the subsequent year.

There is a further sum at issue. Before the Government took over LRT, the GLC encouraged London Transport to enter into agreements to lease £27 million worth of assets —mainly buses. The GLC had never done that before. It decided to indulge in leasing for 1984–85 after the Government had determined the GLC's capital allocations for the year. That was another piece of creative accounting deliberately designed to circumvent the controls of the GLC's capital expenditure. By financing part of LRT's capital through leasing, knowing that it would shortly lose responsibility for LRT, the GLC hoped to escape the responsibility for funding more than a tiny fraction of those costs, pushing the rest on to LRT and the hapless ratepayer for future years.

I explained clearly when the Committee was considering section 49 that we regarded this dodge as unacceptable. I made it clear that we would expect the GLC to pay to set up a reserve for that leasing. Therefore, within the total sum specified in the resolution, there is provision for a payment by the GLC to enable LRT to set up a capital reserve to cover the financing costs of the assets leased in 1984–85. That reserve provision amounts to £20.8 million, which is no more than the GLC was notified at the time that it would be required to pay, and it is no more than would be required to cover the costs of the leasing payment. I will explain precisely how it is made up, if the House wishes.

I have given the exact explanation for the figures. No doubt the hon. Lady has come armed to the teeth with sheaves of briefing from the GLC. She looks a little perplexed, perhaps because I have anticipated so many of her arguments and she cannot think of what to say. No doubt that will not stop her. But before we hear the voice of London, intoning as though in a seance through the medium of Crewe and Nantwich, I challenge the hon. Lady to tell us whether she will oppose a measure that will protect the interests of London passengers, ratepayers and taxpayers, or whether she will vote to rob them of money they have paid for public transport to give the GLC a windfall to spend on God-knows-what. Does she want higher fares and rates in London? That is the implication of voting against this measure tonight, and I commend the resolution to the House.

10.32 pm

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

I beg to move, as an amendment to the motion, in line 1, leave out '£258,179,588' and insert '£208,300,000'.

I am deeply angered by the fact that we should be discussing such important legislation so late on a Thursday night. If I gave the Secretary of State the impression that I was perplexed, perhaps I could explain it to him in simple terms. Even I, after many years in the House of Commons, am astonished at the effrontery of any Secretary of State who dares to pass legislation which, when it is examined by the courts, is found to be so badly defective that he has to come to the House to put it right. What is more, he comes to the House, not in the state of penitence that one would have expected from any reasonable Minister, and not to explain to the House how he dared to introduce something that was regarded by a judge in a major court as being unlawful, irrational and procedurally improper; he comes here with true arrogance to suggest that, if his laws are unacceptable, he will change them.

This is the Government of law and order. This is the Secretary of State whose attitude towards the ratepayers of London is that, when it suits him, he will take over the major transport system. However, he will not pay for that system. That would be too easy. He will insist on levying on the ratepayers of London further sums of money to pay for something which they did not want, which will provide a worse service, and which in the final analysis will be extremely difficult to defend.

I am really deeply offended that we should be taking this measure now. I understand that the Government do not intend to go ahead with the second measure on the Order Paper today, but I would have thought that, knowing as they did that we had major debates to take place in the realm of water and a number of other things, if there had been even a grain of — I will not say "humility", because that is a word that the Secretary does not understand — but of sensitivity to what is really important he would have said that we could not possibly take a measure of this importance at this hour.

The Secretary of State has used the English language in a cavalier fashion which really astonishes me in his talk of creative accounting, robbery and trickery and all the other words that seem to be part of his normal, measured way of addressing those for whom he is responsible. Let me just remind the House of what this piece of legislation is all about.

I am deeply angered, and I think it is possibly a measure of the insensitivity of the members of the Government that they do not seem to understand that what we are talking about is a major transport system for the capital city of the United Kingdom of Great Britain and Northern Ireland. So let us talk about what the Secretary of State really intended to do.

The right hon. Gentleman decided originally that he was going to take over the whole of London transport and he set up, without any consultation whatsoever, a Bill which was to make the GLC pay for London regional transport. Four areas of really great importance were involved in this decision: first, the causes of the decision; secondly, the methods being used to implement it; thirdly, the Government's real reasons for wanting the change; and, lastly, the effect that this decision will have on the whole of London.

Three days after the LRT Act became law, the Secretary of State took over LRT and demanded, without consultation, £281.3 million from the GLC under section 49 of the Act. The Act did not require consultation, and of course it was not something which leapt naturally to the mind of the Secretary of State. But when the GLC took him to court Mr. Justice McNeil found in his verdict that natural justice entitles the payer at least to make representations". One result was that the Government made an error and charged £10.2 million above the maximum allowed even by their own section 49. The right hon. Gentleman conceded this after the court verdict.

The Government's claim also involved creating a surplus for LRT by three different methods. First, they decided to reduce the LRT capital needs by £12.9 million, but they still, of course, charged the GLC. Secondly, LRT's budget for 1984–85 was based on a fares freeze. The Government, however, when they took over, pushed up fares by 12 per cent. on 1 January 1985, thus reducing the need for grants by £8 million. But the Government still asked that the GLC should be responsible for that sum. The LRT reduced its need for redundancy money, after being taken over by the Government, by £21.1 million, but the Secretary of State still charged the GLC for the surplus.

So the Government tried to take £42 million from the GLC to create a surplus for LRT once it was within their sector—this in spite of the fact—and we have heard the Secretary of State quote from his own remarks in Committee—that he had said There is no intention of trying to make a surplus." — [Official Report, Standing Committee B, 15 March 1984; c. 1116.] He was referring, of course, to section 49.

However, when the GLC challenged the Secretary of State it was revealed in court that a letter from an LTE executive member to an Under-Secretary in the Department of Transport proved that there was an intention to create a surplus of at least £11 million by 6 June 1984—before, in other words, the Bill became law. The Government also sought to take a further £20.8 million from the GLC to pay off in one go the total cost of the leasing reserve. We have heard from the Secretary of State that this was because the GLC was cheating and trying to fix things. In fact, the right hon. Gentleman was asking the GLC to pay off the total cost in one lump sum.

The Secretary of State made it quite clear in Committee that he would do this, even though he was perfectly well aware that it is traditional that new authorities inherit the debts of their predecessors, and that a leasing reserve is a standard practice among transport authorities.

The Hon. Mr. Justice McNeill, who, after all, was asked to judge these matters, said of this decision that the Secretary of State could have legally enforced his view through a Money Bill but that he did not choose to do so. He concluded: was it reasonable for him to do so … in the circumstances set out above it was not". The Secretary of State used five methods to take a total of £73 million from the GLC. On every one he was found guilty by a court of law. On every one the judge allowed no possibility of misinterpretation or confusion, with the one exeption of the leasing reserve. That verdict was given on 11 January 1985.

The Secretary of State had conceded his £10 million error before the verdicts. However, he repeated in this House — not once, but four times — during transport questions that he would not discuss the implications of the case, apologise to the House or give any indication of what he intended to do to put right his own fault. He said that he had appealed or was appealing and that the matter was sub judice. That was not so. Not only did he not appeal but it emerged that he had been given very clear intimations by his own legal advisers that were he to do so, he would have no possible grounds for winning as it was plain that what he had done was unlawful, irrational and procedurally improper.

On 29 January, the Secretary of State announced plans to change the law. In other words, he had been found out and decided to create retrospective legislation. He gave five excuses for this action. First, he said in a rather lordly fashion that the court took a different view of his legislation. That is a nice way of saying that the court said that he had broken the law. It is rather like a burglar saying that theft is not actually against the law, just that the judges tend to take a different view.

Mr. Martin Stevens (Fulham)

I thought that section 49 meant exactly what my right hon. Friend thought it meant. Did the hon. Lady and her hon. Friend think it meant something different at the time when the Bill was going through the House?

Mrs. Dunwoody

I think that any Secretary of State who brings a law to this House has a responsibility to ensure that it makes sense and that it is written so that it will stand up to examination, particularly if it affects the transport system of London. On top of that, having been found out, the Secretary of State should have had the decency to apologise to the House. Instead of that, he has come back with a change in the rule book. He does not like the game, so he will change the rules. London Regional Transport would have to give back to the GLC £50 million, we were told. This is wrong because the grant happens to be paid in instalments and only £177 million has been paid so far. If the Secretary of State had accepted the ruling of the court, the GLC would have had to pay only another £31 million instead of £81 million.

The Secretary of State said that the old legislation would accomplish what he wanted. Of course, that is not surprising because what he wants to do is to break the law. He said that an appeal would not effect what he wanted. What the Secretary of State wants has been found by the law courts to be unlawful. He said that it would be wrong for rates that had been raised to pay for transport to be used to buy something else. In that case, perhaps the Secretary of State thinks that in 1983–84, when the GLC budgeted to spend £235 million on transport but needed only £173 million, the £62 million should have been spent on transport irrespective.

Secondly, if the money goes back to the GLC, all of it will go to reduce the rate. If it goes to the LRT on the other hand and reduces LRT's needs, only two thirds will go back to the ratepayers. So much for the empty boast of the Secretary of State that he is worried about the ratepayers of London.

What the Secretary of State is doing is putting before the House legislation which has already reduced the sum demanded. The amount has been reduced from £281 million to £258 million. In other words, the Secretary of State has surrendered on the £10.2 million but also on the £12.9 million surplus capital money. If the Government conceded that the capital surplus was unacceptable, why are they still demanding a revenue surplus of £29.1 million?

Let us be clear, whatever the wording of the Bill, that it is retrospective legislation. The Conservative party in the past has been exceedingly outspoken on the question of restrospection. The GLC will be charged for services provided by another authority in a period of time predating the enactment of the Bill, and they never warned at any point that this might happen. The Conservative party has always prided itself on disliking such Bills. The present Foreign Secretary, referring to retrospection, said: First, warning must be given to the taxpayer of the intention to legislate in this way".—[Official Report, 12 July 1978; Vol. 953, c. 1641.] In 1978, the Financial Secretary to the Treasury said: This is entirely destructive of civilised life in this country. The House of Lords also does not care greatly for retrospective legislation. That may be one reason why we are debating a motion which cannot be amended by the House of Lords. We are not even clear whether the Government intend to allow the other place to debate the matter in any detail.

The discussion really concerns the fact that the Government intended to charge the GLC £73 million more than they had the legal right to demand. Now, as a great concession, they will charge the GLC only £50 million more than they have a legal right to demand. The reason is to conceal the cuts that have been made in LRT since it was taken over by Whitehall. Even though they are no longer the responsibility of the GLC, the rates for LRT will rise 35 per cent. in April under the subsequent levy order. The total burden will increase from £208 million to £281 million. The Government want control of LRT, but they do not want the financial responsibility. As far as the Government are concerned, the GLC can pay for a Whitehall-run service. That was the motive, of course, behind the 12 per cent. fare rise. It created a surplus of £8 million which the Government intend to use to cut fares and funds for LRT next year. The Secretary of State for the Environment is claiming that the GLC has balances of £71 million. When the law is changed, the GLC will have to pay more to the Government, but it estimates that its balances will then be zero, while its rate-capping limit and its rate targets are all based on the £71 million balance. Secondly, the Bill assumes that the GLC must pay over to LRT £20.8 million for the leasing reserve fund. However, it is interesting to note that the GLC would have to borrow that money to pay that sum. It has no powers to do any such thing. Therefore, are we to believe that the GLC will have to risk breaking the law to change the Secretary of State's calculation, and to support him in what has already turned out to be a clearly illegal move.

The Secretary of State said, in an article in The Standard on 4 April 1984: The savings of money is a matter of the greatest interest to 4,000,000 people who pay rates in London. We are determined to reduce the burden upon them". Very soon, the ratepayers of London will find themselves facing yet another intolerable levy on top of their existing problems.

Mr. Jeremy Hanley (Richmond and Barnes)

Is not the hon. Lady's anger based on the fact that LRT, since the Act came into force, has been more successful, efficient, profitable and popular than the hon. Lady and her hon. Friends suspected or hoped? Does she not prefer the GLC to receive benefits for its dubious causes rather than to provide genuine services to the people of London?

Mrs. Dunwoody

The hon. Gentleman has always had some confusion in his mind about what service to the taxpayers and ratepayers means, or he would not be a member of the Conservative party. I point out that many people in London have no doubts about the effects of the changes on LRT. Not only are the fares higher and services worse, but look at what the local papers are saying. When there was a discussion in Sutton about the rate for the next year, the local paper said: Optimistic forecasts about Sutton's rate next year were dashed this week with the announcement of the new Transport Rate. What this means is almost 11p in the pound will be added to rates bills by the new London Regional Transport quango… Next April, despite no longer having responsibility for London Transport, County Hall are to be permitted to keep their precept at 36.75p. So the new LRT precept of 10.8p just announced will be extra money. It will add about £26 to the average rates bill in the area… Dr. David Trafford, leader of Sutton Council, said it was absurd to permit the GLC precept to stay at 36.75p when they no longer had to pay for LT. 'It makes a nonsense of our rates plans,' he said. No member of a local authority has any doubt about what is happening. They all know that we have a Government that are so determined to centralise that they have gone ahead with their plans with no consultation either with the people who will be most affected, or with the duly and properly elected members of the local authorities.

We have a Secretary of State who produced inept, badly drafted and incompetent legislation, and then had the effrontery to come back here and say that as the judges had found that what he was doing was unlawful, he would redraw the law. Therefore, this is retrospective legislation. Those Conservative Members who boast of their commitment to law and order may find it difficult in the future to explain to the ratepayers of London how they can stomach this Government. They say that everybody else must obey the law, but when they found themselves in a position, created by the Secretary of State for Transport, in which they had a bad deal—the ratepayers of London will get a bad deal out of it—they came back to the House. They will not apologise, nor will the Secretary of State offer his resignation, or even suggest that he was in any way wrong. Instead, the Government are trying to make a new law so that the next time that the Secretary of State is challenged, he will not be told that what he has done is unlawful, irrational and procedurally improper. The Secretary of State may find it amusing, but there are many people in this capital city who tonight will understand exactly what is happening. They will know why it is necessary to take this measure late at night. They will know why the Secretary of State does not want it to be debated in the full light of day. They will draw their own conclusions about how genuine his commitment is to the transport system of the greatest capital city in the world.

10.55 pm

Mr. Frank Dobson (Holborn and St. Pancras)

The London Tories never cease to amaze me. At the last general election the Prime Minister announced— as an afterthought, so we are told by several distinguished members of her party—that the Greater London council would be abolished, that London Regional Transport would be set up and that the power to control transport in London would be taken away from the elected representatives of the people of London. What was not said—I have checked what was said in their election speeches—was that the power to control transport in London would be taken over by a secretive, unelected quango over which the people of London would have no control and which would be able to levy a rate on Londoners. It meant that the most arrogant, inept and stupid member of the present Cabinet—which means that he has had to work very hard for the title—had to introduce a Bill which had proved to be totally inept and did not do what he said it would do.

The Secretary of State then applied it wrongly and the High Court decided that what had been done was irrational —that should be no surprise to any hon. Member—unlawful and procedurally unsound. We do not know whether the Secretary of State overruled his ministerial advisers about the way in which he ought to proceed. Perhaps the Secretary of State did overrule them and that is why he placed himself in this position.

The Secretary of State then came to the House to announce what he already knew — that he had been caught out. He misled the House. Because he was scared stiff of being asked questions he applied the sub judice rule, which meant that he could not be asked questions. He said that he had appealed against the decision, and we now know that that was not true. On the strength of that alone, the right hon. Gentleman ought to resign.

The right hon. Gentleman has now introduced a most amazing piece of retrospective legislation. He did not have the guts to bring a Bill before the House and then the financial consequences that would flow from it. We have the financial consequences, and there is to be a Bill which will flow from the financial consequences. If others ran their businesses or Departments as the Secretary of State is running his, they would be hounded out of office. He should be hounded out of office for his abysmal performance.

Tonight the Secretary of State managed to give the impression that his own total incompetence was in some way or other the fault of the Greater London council. The GLC opposed his Bill. It said that it was badly drafted, but the Secretary of State took no notice. The GLC said that what he was trying to do was stupid, ignorant, incompetent and unlawful, and that is how it has turned out to be. Yet the Secretary of State has used it tonight to attack the GLC.

What I ought to say, because the Secretary of State does not represent a London constituency, to the few Conservative Members who purport to represent London constituencies — not many of them are here tonight representing those constituencies — is that they really ought to consider how they should discharge their responsibilities to their electors. Within the last two days this House, in a three-hour debate, has decided the budget of the GLC and the budget of the Inner London education authority. That is what we did last night by means of the rate-capping orders.

Those authorities would have spent hours and hours in detailed and careful deliberations before deciding the fate of many services in London and the fate and standard of inner London schools. Instead, Ministers have proceeded in their craven way and accepted everything that the Prime Minister has demanded of them. The Government decided the budgets of the GLC, the Inner London education authority and two metropolitan counties in one three-hour debate. It seems that "Yobbos rule — OK" under this Government.

Mr. Eddie Loyden (Liverpool, Garston)

My hon. Friend is being too charitable. He has not mentioned that Merseyside and South Yorkshire were dealt with as well in the three-hour debate.

Mr. Dobson

I accept that. That is a reflection of the Government's wide-ranging intellectual powers. Tonight we are determining partly the budget and future standard of service of London Regional Transport. We are about to come to a decision on another whacking chunk of the GLC's budget. This will follow the despicable speech of the Secretary of State, which clearly made some of his hon. Friends ashamed. That was their reaction to his inept presentation of his stupid case.

Mr. John Maples (Lewisham, West)

Does the hon. Gentleman think it right that money raised from London's ratepayers by the GLC for London Regional Transport's purposes should be applied by the GLC for some other purpose?

Mr. Tony Banks (Newham, North-West)

Yes, such as reducing the precept.

Mr. Dobson

As my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) said, the Secretary of State was trying to steal from the GLC. Some of the money could reasonably stay with the GLC and some of it could reasonably be returned to the ratepayers. The hon. Member for Lewisham, West (Mr. Maples) should be reminded that some of the money will go straight from the pockets of London ratepayers into the surplus of an unelected transport quango. That is the form of local government which he and his right hon. and hon. Friends have introduced.

Mr. Nigel Spearing (Newham, South)

The money resolution which accompanied the London Regional Transport Bill, as it then was, was a strange one, on which I spoke. It provided that any surplus arising from LRT's business would be transferred to the Treasury for the ensuing year. The hon. Member for Lewisham, West (Mr. Maples) shakes his head, but that is my understanding. Does my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) agree that we are discussing a sum that is £50 million more than the needs of London Regional Transport for the current year?

Mr. Dobson

I confess that I no longer have a grip of one part of the detail on which my hon. Friend's intervention turns. The Secretary of State is smiling, but he has no right to claim that he has a grip on anything. It is only his incompetence that brings us here tonight. I remember that it was made clear during the debate on the money resolution of the LRT Bill, as it then was, that surpluses could go to the Treasury from London Regional Transport. I note that the Secretary of State no longer shakes his head. Perhaps the right hon. Gentleman has steadied his brain for a moment.

Mr. Tony Banks

I invite my hon. Friend to refer to the report of the proceedings in Committee on the London Regional Transport Bill of 15 March 1984, at column 1114. He will find that the Secretary of State gave a clear undertaking that money would not be taken away from the GLC to create a surplus for London Regional Transport.

Mr. Dobson

That is another argument to support our case.

Most London Tory Members have long ceased to recognise that their function is to represent the people who elected them. Apparently they think that their function is to vote with the Government everytime that they shout. In the last two days they have battered the GLC and the ILEA through rate capping. Today the bulk of them — including the bulky hon. Member for Fulham (Mr. Stevens)—have voted for an 11 per cent. increase in the water rate levied by the Thames water authority because the Government have invented a water tax.

Tonight Tory Members will show their loyalty to the Prime Minister, if not loyalty to the people whom they represent, by trooping through the Lobby to support the Secretary of State and his retrospective legislation to put right the consequences of his own incompetence, stupidity and unlawfulness. Some of those words were used by the judge in the High Court. According to the judge, the Secretary of State was also irrational.

Tory Members should remember that their primary duty is to the people who elected them. It is about time that they discharged that duty. The only way that they can discharge it is by sharing the anger expressed by my hon. Friend the Member for Crewe and Nantwich.

11.7 pm

Mr. Martin Stevens (Fulham)

The hon. Member for Holborn and St. Pancras (Mr. Dobson) rants about London Conservative Members sheepishly following the Government into the Lobby no matter what the Government propose, barely 60 minutes after a sizeable Tory rebellion. I did not take part in it because, although I thought my hon. Friends honest, I also thought them mistaken.

Opposition Members want to squeeze the last drop of outrage out of this debate. They are entitled to a bit of a giggle about something that went wrong, but they should not make absurd accusations such as that made by the hon. Member for Holborn and St. Pancras.

The hon. Member for Crewe an Nantwich (Mrs. Dunwoody) made a number of statements to which I took exception. She asked why the Government did not consult the GLC. Perhaps she can make us a list of the times when, over the last decade, Governments, Royal Commissions and proponents of the Local Government Bill sought discussion and were turned contemptuously away. If I were Secretary of State, I am not sure that I should feel an obligation to seek the views of members of that extraordinary gang.

Mr. Tony Banks

They were elected.

Mr. Stevens

The present team was not elected. The electorate voted for others who were immediately given the chop and the new lot were put in.

While my hon. Friends and I do not begrudge the Opposition their hour of fun and frivolity, I do not believe that hon. Members who served, as I did, on the Standing Committee on the London Regional Transport Act thought that section 49 meant anything different from what the Secretary of State thought it meant. They certainly did not say so.

I do not have the slightest doubt that the GLC leadership were playing tricks, in exactly the way that my right hon. Friend accuses them; I have been in their company too often not to recognise the signs. They resemble the modern Labour party; like a flash city financier who is much too fly ever to break the law. The moment he has done something, we must have a new law to prevent him from doing it again. In a way, that is what we are doing tonight.

Mrs. Dunwoody

And the court case?

Mr. Stevens

For the hon. Lady to exult in the result of the High Court case, she must be able to show that she and her hon. Friends disagreed with the Secretary of State on the significance of section 49, and she has not been able to do so. [Interruption.] I would not make an adverse comment about a judicial decision. What we are proposing tonight is to return the Act to what we all thought it meant, and I shall support the Government in so doing.

11.11 pm

Mr. Stephen Ross (Isle of Wight)

We are seeking tonight what happens when one divorces the upper tier of local government from its proper role as a transport authority and places it in the hands of civil servants and an arrogant Secretary of State.

I voted against the London Regional Transport Act—I, too, served on the Standing Committee on that measure— and I always thought that it was a lousy piece of legislation. The facts are proving it to have been so.

The breakdown in relations between central and local government, which this debate so typifies — there is much more to come, particularly when the Transport Bill is debated next week and in the many months to follow— is a tragedy not only for this House but for the whole United Kingdom.

I understood that leasing for most bus companies was a proper way of proceeding. Most local authorities have been forced into leasing because they have no means to fund the capital programmes for which there is a necessity.

We have had to adopt that means in my constituency to provide facilities for dealing with our rubbish and waste material. There are no more holes to fill up and we cannot finance a programme out of capital because we do not have any capital receipts, so we must go in for leasing. That is what bus companies have had to do in recent years to acquire the buses they need.

If we are now to run LRT in the way that we are running the water authorities, heaven help the ratepayers.

By introducing this motion, the Secretary of State is admitting that he could not win an appeal and, therefore, that he misinterpreted the law. He is also breaching the undertaking that he gave, when the measure was debated, that the money was to cover running LRT for "the year in question." It is widely admitted that £50 million is not needed for this purpose. That was the burden of the court judgment. The money included £20.8 million, which did not even feature in the GLC's budget. By this motion, the Secretary of State is trying to appropriate from the GLC money to which he is not entitled, either in law, as the law currently stands, or in equity.

As with the rate precept, to be debated another day, the right hon. Gentleman is proving to be more profligate with ratepayers' money than the GLC, which he frequently attacks. There is a clear element of retrospectivity in what the right hon. Gentleman is doing. Under the law as it stands, the GLC has a duty to pay the Secretary of State £208 million. This provision, and the order—when it comes before us — are changing the rules halfway through the game. I suggest that the probity of such action is open to challenge. We can imagine the screams of horror that the Tories would produce if a Labour Government were to do it to a Tory council. We should not be debating the matter at this time of night; that is certain.

The only honourable course for the Secretary of State to take is to admit that he did not understand his legislation, and settle for the sum to which he is legally entitled under the amendment. He should stop showing his naked contempt for the law and the courts, swallow his pride and withdraw his motion.

11.14 pm

Mr. John Maples (Lewisham, West)

I had not intended to intervene in the debate, but the phony indignation that has been worked up by the hon. Members for Crewe and Nantwich (Mrs. Dunwoody) and for Holborn and St. Pancras (Mr. Dobson), neither of whom was present in Committee, and the somewhat lesser indignation worked up by the hon. Member for Isle of Wight (Mr. Ross), who did not often attend the Committee, force me to do so.

I want to make just one point. It was abundantly clear during the Committee's proceedings on what was then, I think, clause 42, that money that had been raised by the GLC from London's ratepayers to subsidise London Transport should be paid to London Regional Transport. That principle was not challenged by any member of the Committee.

Mr. Dobson

It was.

Mr. Maples

It was not. The hon. Gentleman was not present in that Committee. The principle was never challenged by any member of the Opposition in Committee. A couple of amendments were tabled. They dealt with what would happen if there were a surplus, and my right hon. Friend the Secretary of State made it clear that surplus would stay in LRT, would inure for its benefit and would not be appropriated by the Treasury.

It would be outrageous if money that was raised from London's ratepayers for that purpose were to be left with the GLC to be misapplied for some other purpose and have to be raised again.

Mrs. Dunwoody

It would lower the rates.

Mr. Maples

Does the hon. Lady wish to intervene?

Mrs. Dunwoody

No.

Mr. Maples

The hon. Lady does not want to do so, but she was speaking from a sedentary position.

Mr. Harry Cohen (Leyton)

I was a member of that Committee. The hon. Gentleman has just mentioned the surplus and the fact that the Secretary of State said that the surplus would go to LRT. In fact, the Secretary of State said: It is not my intention to take more through the clause than is strictly necessary for running LRT for the year in question, so that we shall not end up with a surplus."—[Official Report, Standing Committee B, 15 March 1984; c. 1114.] He gave the undertaking to the Committee and the House that there would be no surplus. It is on that that the court case hinges.

Mr. Maples

The money that was raised by the GLC was raised from London's ratepayers for that purpose. It is indisputable that it would be outrageous for it now to be applied to any other purpose, which is what the result would be. London's ratepayers would effectively have to pay twice. The Opposition's amendment, which is designed to chop off £50 million, is pure political opportunism. It is another example of what we saw again and again during the proceedings on the Bill—the GLC tail wagging the parliamentary Labour party dog.

The people who live in this city, except for the hon. Member for Crewe and Nantwich and her right hon. and hon. Friends, are sick and tired of the GLC's meddling, interference and games with London Transport. We hope that this is the end of it.

11.17 pm

Mr. Nigel Spearing (Newham, South)

I came into the debate to support those of my hon. Friends who had served on the Committee, and the hon. Member for Isle of Wight (Mr. Ross) on this matter. As the debate has progressed, I have become more and more uneasy. The Secretary of State for Transport has not been known for being frank in the House.

The Minister of State, Department of Transport (Mrs. Lynda Chalker)

Not so.

Mr. Spearing

If I do him any injustice in what I am going to say, I am sure that his hon. Friend the Minister of State will do him more than justice and put me right. I invite the right hon. Gentleman to intervene if I have it wrong.

My hon. Friends and the hon. Member for Isle of Wight are familiar with the statistical interstices of this argument, but I doubt whether any casual listener to the debate will have been able to gather the degree of what I believe to be the enormity of the Secretary of State's action. That is why I wish to be strictly fair to him. For once we have the time, and he has the ability courteously to put me right if anything that I say is incorrect.

I intervened in the speech of my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) because I have vivid memories of the debate on the money resolution voted on and passed by the House on 13 December 1983 after the Second Reading of the Bill, and equally vivid recollections of a strange provision in that money resolution. I am testing the Secretary of State on this, as I availed myself of the opportunity in the No Lobby to re-read the Official Report of that debate.

The Secretary of State said in reply to that short debate: The system will be as follows. In any given year an estimate will be made of the subsidy needed by London Regional Transport which will be based on its own budget and plans. At the end of the year, having levied that amont partly through the rate and partly through taxes"— presumably that is the Department of Transport contribution— the sum will be determined, and may be slightly more or less than previously estimated, and paid over. Consequently, the figures will be adjusted next year. That is how it will work. There is no question of the Treasury making a profit at the expense of ratepayers, or of its pocketing surpluses, as has been suggested." —[Official Report, 13 December 1983; Vol. 50, c. 940–41.] As I understand it, however, that is exactly what is now about to happen. I shall be happy to give way to the Minister if I am wrong, but I am trying to understand this as a user of London Transport. Like most of my constituents, I do not own a car and this issue is vital to the quality of transport available to citizens of the capital which the Government have treated with such scant respect. As no one has challenged me, I assume that I am right so far.

Understandably, there was a clause in the Bill allowing money to be transferred from the GLC in the transitional period of six months or so when London Transport would be under the Minister rather than the GLC. That is perfectly reasonable. Having decided to effect the transfer in the middle of the financial year and of the calendar year, the Government had to make some provision to sustain London Transport during that period. As my hon. Friend the Member for Leyton (Mr. Cohen) has pointed out, that was accepted by the Committee as an administrative arrangement.

It is alleged, however—the Secretary of State has not so far rebutted the allegation—that the amount that was levied was in excess of the amount required by London Transport in that balancing period. The figure has been bruited around and my hon. Friends have stated that the excess is £50 million. Neither the Secretary of State nor the Minister of State has denied that, or indeed anything that I have said up to now—so far, so good.

On the money resolution and the matter on which I intervened in the speech of my hon. Friend the Member for Holbom and St. Pancras, it is within the knowledge of all my hon. Friends now present that when I made that allegation both Ministers shook their heads. The money resolution provides that the Secretary of State will be authorised to require that body to pay to him any excess of revenues over charges (as determined by that Act) in respect of any accounting year (within the meaning of that Act) of that body, so far as that excess appears to him to be surplus to that body's requirements". —[Official Report, 13 December 1983; Vol. 50, c. 933.) There we have it. There is a power voted by the House, by means of the money resolution, to enable the Secretary of State, if he so wishes — it is not mandatory, but optional—to take back from London Regional Transport any surplus that may in any one year arise out of surplus revenues.

The Secretary of State may say that the subsidy from the GLC is not, for the purposes of the resolution, revenue. That is the only loophole that I can see.

Mr. Ridley

It would be kind to put the hon. Gentleman out of his misery. He does not understand what happened in Committee, when it was carefully explained that all money from the trading accounts of LRT that was excess to its requirements would be rolled over into the following financial year. The hon. Gentleman has quoted what I said. The power in the money resolution was intended to cover the unlikely event of the discovery of oil or of a gold mine on LRT property, or of major property development, the proceeds of which had nothing at all to do with London Transport. Such proceeds would be paid into the Treasury. In no sense would the money resolution power be used for the purpose of paying in the surpluses.

The hon. Gentleman asked me to intervene if his point was a false one. I hope that he will accept that it is false.

Mr. Spearing

I am grateful to the Secretary of State for putting me right. Making the point was still worthwhile. Not all the citizens of London, and indeed not all the Members of the House of Commons, can sit in any one Committee. However, it seems strange that such a money resolution was included, because presumably the disposal of capital assets, land values and so on might have had to be considered.

I take it that the Secretary of State has no intention—assuming that the resolution is passed tonight—of taking back any of the moneys that he intends to transfer from the GLC to LRT in the succeeding year, as in the money resolution, or to abate his own contribution out of taxes through the consolidated fund by a similar amount. I assume that all the additional revenue, over and above the requirements for this year, will be used for improving the service or reducing fares. I hope that the right hon. Gentleman can give me that assurance.

Mr. Ridley

I am happy to give the hon. Gentleman that assurance categorically.

Mr. Spearing

I thank the right hon. Gentleman. I hope that at least we understand rather more than we did before the debate. The disgraceful way in which the right hon. Gentleman tied up the finances and operations of LRT is one of the reasons why we are right to probe these matters. People will always be suspicious of the right hon. Gentleman whenever the word "buses" is spoken, whether in London, Merseyside or any of the conurbations, because the difficulties that he has found himself in tonight will be magnified many times if he pursues other legislation now before the House.

11.28 pm

Mr. Eric Deakins (Walthamstow)

I did not serve on the Committee on the Bill. The hon. Member for Lewisham, West (Mr. Maples) seems to believe that only hon. Members who served on the Standing Committee may speak in the Chamber on matters that may arise once the Bill in question has become an Act and has been queried in the courts. That is a strange doctrine, especially from an hon. Member who may not have been in the House for very long.

What moves me to speak is what, if I were not in the House of Commons, I would regard as the humbug and hypocrisy of the Secretary of State. I understand that I am not allowed to use those words. I shall therefore talk about the right hon. Gentleman's brazen effrontery in daring to talk about the robbery of the four million ratepayers of London. That from a prominent member of the Government who for the past five years, have drastically cut rate support grant for London ratepayers by hundreds of millions of pounds, thus forcing up rates in all London boroughs, irrespective of their political complexion. Only today, the Government have forced through the House the first ever water tax in our history. Charges for Londoners will now rise by 10 per cent. instead of 3 per cent. I remind the Secretary of State, who probably does not know about these things, that there are no rebates on water rates, unlike general rating. The poorer section of the community will suffer as a result of what the House has done today.

The chairman of LRT recently unveiled the business plan. He was kind enough to organise a reception for London Members of Parliament. That was good, this being the first year of LRT's operation. The Secretary of State is suggesting that LRT is running its affairs much more efficiently than the GLC ran London Transport. The forecasts that many of my hon. Friends made in Committee, and which people outside made, are being shown to be true. There have been disproportionate fare increases and cuts in services. The 275 route which runs through my constituency on Sundays is being cut out. It is a double-decker bus route which runs principally to and from the Claybury mental hospital in north east London. Many elderly and disabled people use that service to visit friends at Claybury. Other services are available, but people in my constituency and neighbouring ones will now have to use three or four bus services to get to Claybury on a Sunday. That is expensive and inconvenient.

The 275 service is being cut out only because, according to LRT, it does not have enough passengers.

That is what the argument about the control of London's transport has been all about. We cannot expect every bus service to make a profit. We have always accepted that unprofitable but socially desirable services should be cross-subsidised by the profitable ones. The cut would not have been made under the GLC, but it has happened under LRT. It is the beginning of a long process of the attrition of London's bus services.

We will also have more one person operated buses. Some say that they are more economic in that only one person is employed. Some years ago, when London Transport was keen on introducing one person operated buses, it decided after an experimental period that it would limit the proportion of one person operated buses bacause, although it saved money, it held up passengers, held up traffic and was not good for business people. Under LRT's business plan there is a massive increase in the number of one person operated buses. It will save money but I question whether it will make a more efficient service for ratepayers and public transport users.

Many people who support the GLC and oppose its abolition might have thought that abolishing London Transport and establishing an undemocratic quango under the Secretary of State would make no difference. They are wrong. The greatest difference will be felt by poorer people in my part of London. That is insupportable, as it comes on top of many other burdens that the Government have imposed on them. Therefore, I shall vote against this motion and in favour of my right hon. Friend's amendment. I hope that the Opposition will carry its views with it and vote against the Bill when it eventually comes to the House.

11.37 pm

Mr. Tony Banks (Newham, North-West)

I apologise for popping in and out of the debate, but the Local Government Bill is in Committee upstairs. The Government are dragging the House deeper and deeper into the affairs of local government, to the point that this place is becoming like a mega town hall. At some stage someone will no doubt suggest that Mr. Speaker should be addressed as Mr. Mayor. All hon. Members must by now think that it is time for the Government to draw back because they are making life impossible for both hon. Members and democratically elected councillors in town and county halls.

The issue can be sufficiently starkly and simply put for even the average Tory Member to understand. It is that the Secretary of State broke the law. What is worse, he broke his own law. The fact that he acted illegally is compounded with incompetence — he did not even understand the law that he had taken through the House. That puts into context the Government's position vis-a-vis local councillors. They lecture councillors about breaking the law and constantly accuse them of abusing their powers.

The Widdicombe inquiry will not be impartial—it is a fig leaf. Tory Members ask when these abuses will be stopped, which shows that they have already prejudged the issue of local government. In reality the purpose of the inquiry is to produce sufficient evidence for the Government to move strongly against local government spending under sections 137 and 142. However, when the Government abuse their position and break the law they merely change the law, and retrospectively at that.

If a councillor had broken the law as the Secretary of State has done, there would have been an outcry from Conservative Members. I can imagine the articles in the loony Right-wing rags, such as The Sun, the Daily Mail, the Daily Express and The Times. While we are getting the Secretary of State off the hook this evening, I remember Claycross in 1972, when councillors did the decent thing and defied an appalling piece of legislation. Many of them are still suffering from the imposition of bankruptcy and are unable to hold elected office. However, when the Government break the law, they simply change that law. Tonight we are witnessing the Government's double standards, which stink to high heaven and call into question their position and statements about occupying a higher moral stand point than local councillors.

In the judgment of 11 January the judge said that the Secretary of State had acted unlawfully, irrationally and procedurally improperly in giving a direction which exceeded his statutory powers without consideration of all the relevant material and without consultation with the GLC". What an indictment of a Minister. He should feel ashamed of himself. I can only hope that at some time in the near future he will do the decent thing and offer his resignation.

I raised this issue at Question Time on 14 January, soon after the High Court judgment. The Secretary of State came to the Dispatch Box and said that the matter was sub judice. At best, that was a deliberate attempt to prevent debate in the House; at worst, it was a deliberate attempt to mislead the House. On that score, too, he should offer the House an apology. The Secretary of State had not appealed at that time; he was only thinking about whether to appeal. One understands now that his officials advised him that there would not be much point in appealing, because he would lose. That is why we have this Ways and Means motion and the Bill that will follow.

The Secretary of State will ask the GLC to pay money to London Regional Transport which that body does not need. That point is crucial, and we discussed it at length in Committee on 15 March last year, on what is now the London Regional Transport Act 1984. I was a member of that Committee, and I looked up what the Secretary of State said. He said: It may help if I start by underlining the principles on which I intend to operate the clause. He was talking about clause 49.

The normal processes of determining the subvention to LT by the GLC will be gone through, and most of them have been … The GLC having determined both the revenue and the capital amount, we shall expect it to pay us that amount for the full year. However, that amount is not to be taken entirely at its face value because we must be careful that neither the Government demand too much from the GLC nor that the GLC gives too little to LRT. I hope that the matter can be agreed sensibly and without difficulty. It is not my intention to take more through the clause than is strictly necessary for running LRT in the year in question, so that it shall not end up with a surplus. That is our firm intention but I am sure that the Committee will agree that it is almost impossible to get it plumb right when we are working for a year ahead and do not know what the circumstances of that year will be. He went on to repeat: There is no intention of trying to make a surplus … However, there is no intention of trying to get more out than we should. That is what the Secretary of State said in Committee, but he is now suggesting that he should be allowed to do precisely the opposite to what he promised the Committee in 1984.

My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), who was leading for the Opposition on that Committee, said: I do not think that the Secretary of State's assurance is worth a great deal. If I were a London ratepayer … I should not put much store by that promise." — [Official Report, Standing Committee B; 15 March 1984, c. 1114–17.] How right my hon. Friend was. But, of course, that had no influence on the Secretary of State, and the Bill duly received its Royal Assent on 26 June.

As to consultation, officials of the Department of Transport promised that there would be consultation with the GLC before issuing the direction. But no such consultation occurred. That is why Mr. Justice McNeill found this contrary to the principles of natural justice. Had the Secretary of State consulted the GLC and taken account of its reponse, he could have avoided an illegal direction, and especially avoided an error of £10.2 million, which was the amount that the GLC had already paid that year.

The Secretary of State's illegality is compounded by his incompetence and his impoliteness in not consulting the GLC, which could have told him that he was making an error. Indeed, in July 1984, the GLC told him that he was making an error and that, in its view, the direction was unlawful. However, the GLC said that it would continue to make payments without prejudice to maintain the continued operation of LRT's services. The GLC was not prepared to play ducks and drakes with London's transport services, despite all the accusations that have been made by Conservative Members. It told the Secretary of State that he had got it wrong, but the Secretary of State, in his usual arrogant manner, decided completely to ignore the GLC because he did not believe that it was worth consulting that body. We now see the consequences of his incompetence.

I could have raised many points tonight, but I shall content myself with one that was mentioned by Conservative Members. The Secretary of State says that it would be improper for this money, which has been taken from ratepayers for one purpose, to be used for another. He says: I cannot accept … that the money belongs to the GLC. The GLC precepted the ratepayers of London for the express and explicit purpose of passing the money on to LRT. How it can then be said that because it rated the money it should not give it to LRT baffles me."—[Official Report, 29 January 1985; Vol. 72, c. 171.] Of course, most things baffle the Secretary of State, including his own legislation, but let me answer the point.

The argument that he is putting, which is supported by other hon. Gentlemen, and particularly by the hon. Member for Lewisham, West (Mr. Maples), who also raised that point during questions in January, is contrary to all normal local government practices and to all past practices between the GLC and the LTE. The GLC precepted for 1984–85 on the assumption that the council would maintain fare levels, secure close integration between London Transport and British Rail and extend dial-a-ride schemes, concessionary schemes, and so on. That was the reason why the GLC precepted at the levels. that it did. But, of course, all that has since changed, because LRT is now busy changing all the policies upon which the GLC precepted ratepayers in the first instance.

It is outrageous that the Secretary of State should now ask the GLC to pass over money to London Regional Transport which it does not need, in order that LRT should create a revenue surplus. Consider that against what the Secretary of State said in Committee last year. The GLC would not voluntarily hand this money over, but if it is required to do so it will be against all good financial management in local government.

In 1983–84, for example, the GLC's budgeted grants in transport were £235 million, but only £173 million was paid. The balance was used to reduce the precept for 1984–85. It is quite absurd and contrary to the interests of London ratepayers that moneys must be spent for the purpose for which they were precepted regardless of need or changed circumstances. It is absolutely crazy, and no sensible, well-managed local authority would do it. That surplus could be used, as it has been used in the past, to reduce the transport precept being required from London. That is how we could use the £50 million which the Secretary of State is to steal from the GLC by legal means, and we shall be discussing the 35 per cent. increase in the transport precept very shortly.

So much for the good management of London Regional Transport now that it has found itself in the bungling, incompetent hands of the Secretary of State, who is trying to screw the ratepayers of London in order to build up a revenue surplus in LRT which it does not need and should not have because of the assurances which the Secretary of State gave the Committee on the London Regional Transport Bill.

On the question whether the short LRT Bill should be a money Bill, what concerns me is that if it is to be a money Bill—I understand that the Government want it to be, according to a note that I have of the minutes of discussions that took place between officials of the Department of Transport and the GLC—there will be certain constraints operating on the House of Lords when that Bill goes to it. I find it rather strange that the Government should be talking in terms of its being a money Bill, because I have always understood that it was only Mr. Speaker who decided what Bill was to be a money Bill. I hope that we shall be able to decide this at a later date, because it would appear to me that the Government, by insisting that this should be a money Bill, will prevent the Lords from bringing to bear their judgment and their decisions on retrospective legislation, which is what this is all about.

If the Government are able to achieve a compliant House of Lords by denying it the right properly to debate and discuss that Bill, they will thereby continue their practice of acting in a high-handed and undemocratic fashion, using the language of democracy while they ride roughshod over democracy, and in this case over the ratepayers of London, who, unfortunately, now find that their transport system, which was previously under the control of a democratically accountable Greater London council, is in the hands of an incompetent, bungling, undemocratic and unlawfully acting Minister, the Secretary of State.

11.49 pm

Mr. Harry Cohen (Leyton)

I shall be brief, given the hour and the relevant comments which Opposition Members have already made.

The whole substance of the Secretary of State's speech was to describe the GLC as robbers and tricksters, whereas the court's decision—I do not apologise for repeating it again—was that the Secretary of State acted unlawfully, irrationally and procedurally improperly in giving a direction which exceeded his statutory powers without consideration of all relevant material and without consultation with the Greater London Council". For the right hon. Gentleman to describe the GLC as robbers and tricksters is really a case of him being caught with his hand in the till.

I was reminded of the fact that a few years ago there was a campaign in the east end of London with the slogan George Davis is innocent, OK? The same could be said of the right hon. Gentleman's speech. He made out that he was innocent, even though the court decision came out against him. I remind the Secretary of State that George Davis eventually got sent down, and the same may well apply to him.

In many respects the right hon. Gentleman has also misled the House. When on 14 January my hon. Friend the Member for Newham, North-West (Mr. Banks) asked a question, the right hon. Gentleman said that his Department was in the process of appealing and, therefore, the matter was sub judice. We have now discovered that he has not appealed and has no intention of appealing, because he knows that he would lose.

The right hon. Gentleman also misled the House on the question of the subsidy. His Department's plans to ensure that LRT had a subsidy was contrary to his assurance to the House and the Standing Committee. This is important, because the subsidy was one of the essential pieces of evidence by which the court found against the Secretary of State.

In spite of the right hon. Gentleman's rantings against the GLC, the council has acted legally and responsibly throughout. It informed him in July of last year that it considered that his direction was unlawful. That proved to be correct. The GLC said that it would continue the payments to LRT without prejudice in order to maintain the operation of LRT's services. The GLC has made it clear that it has always been prepared to pay overgrants to meet LRT's operating needs in 1984–85.

The Minister has robbed the GLC of between £50 million and £73 million. That reveals an amazing level of incompetence, given that the right hon. Gentleman was responsible for the writing of the Bill and for steering it through Committee. It is clear that he did not understand its provisions.

For the Secretary of State now to bring forward this retrospective legislation and Ways and Means resolution is very much a fraud. It merely covers up his own incompetence. However, it must be introduced in this way because the Secretary of State would lose any appeal. It is not in the interests of the ratepayers of London. If the Money were paid back to the GLC, it could be used to reduce the GLC's precept to the London boroughs and thus the London boroughs' rates would be reduced. Taking that £50 to £73 million, which is relevant this year, and applying it to later years will result in London ratepayers being deprived of the benefit that the Secretary of State can claim—only two thirds of the amount in later years, with the Exchequer having to pay one third. The Secretary of State is robbing London's ratepayers of one third of the £50 to £73 million of which they would have received the direct benefit. That extra bill will have to be faced by the ratepayers.

The Government said that the GLC precepted for the amount, so what did it matter? The GLC, of course, was forced to precept for the additional sum. If the same principle were applied to all local authorities in the country, it would send the Secretary of State's rate-capping right through the roof. Indeed, there would never be any savings from underspending. The argument is therefore a phoney one.

The court made it clear that the money is GLC money and should be paid back to be used for the benefit of London's ratepayers. This retrospective legislation and the motion amount to robbery and trickery by the Secretary of State.

11.56 pm

Mrs. Dunwoody

With the permission of the House.

There are occasions when the House witnesses hon. Members who cynically try to distort the truth or who, for reasons of self-aggrandisement or as a result of other less attractive characteristics, seek to obfuscate rather than to clarify.

I believe that the Secretary of State should have come to the House today and said plainly that what he was doing had been found to be unlawful, that he knew himself to be wrong and that he therefore accepted the verdict of the courts and would not seek to bring in legislation. I believe that he should never have put retrospective legislation before the House. It is not in the interests of the House that a Government with a large majority should use that muscle in a blatant and unacceptable manner to insist on legislation which has been tried and tested in the courts and found to be sadly wanting.

I believe that the Secretary of State should have come to the House at least not to hand out cheap jibes against the GLC. He should have come to the House to apologise and to say he was wrong to have sought to suggest that the matter was sub judice because his Department was appealing when he knew that that was not so. He should have said that he was wrong to have insisted on legislation which would have a direct effect upon the ratepayers of London and upon the transport services that the ratepayers of London have a right to expect. Above all, the Secretary of State should have said that he would not move such a motion late on a Thursday night when the entire House could not be present to examine in detail the implications of the Government's proposals.

I believe that there has been a misuse of the Government's large majority. In every sense it has been a discreditable episode. If I were the only hon. Member present in the Chamber, I would still vote against this piece of chicanery. The matter is too important to be handled with levity and contempt. The Secretary of State should have had the decency to come to the House and apologise.

11.58 pm

Mr. Ridley

With the leave of the House, Mr. Deputy Speaker, I shall deal with some of the lesser points before coming to deal with the bogus hypocrisy that has effused from the Labour Benches. I shall first ask a question of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody). She said in her first speech that, if the £50 million had been left with the GLC, it would all have gone to reduce the rates. Would that happen? I doubt it, and I do not think that she will be thanked by her paymasters in county hall for having gone so far as to say that.

I confirm to the hon. Member for Newham, South (Mr. Spearing) and to my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) that any surplus from the money raised for LRT, either by the GLC or, in due course, by the ratepayer levy, that is surplus to the requirements of one year will be paid into LRT's accounts for use in future years.

Mr. Spearing

Although we do not always agree with the right hon. Gentleman's policies or actions, he is always courteous, so I am grateful to him for giving way. The £50 million over current requirements that he is collecting, which he says will be put to the use of LRT in succeeding years, he is taking from the ratepayers ahead of need. Why did he not go to the GLC and, on a gentleman's agreement, take only the amount that it was not going to send back to the ratepayers? Would that have not been a more satisfactory and businesslike way to go about the matter?

Mr. Ridley

I shall come to that point. I hesitated to give way to the hon. Gentleman because I prefer to make my own speech in my own order.

The hon. Member for Walthamstow (Mr. Deakins) said that the service has deteriorated, but I must disagree with him. It is improving rapidly, as is the efficiency of LRT. However, if he has a particular point, about the service, I am sure that he will find the chairman very willing to help. I shall draw the attention of the chairman to the hon. Gentleman's concern, and I am sure that the chairman will take any opportunity to get in touch with the hon. Gentleman.

Mr. Deakins

I have already taken the matter up with the chairman of LRT, and it was on the basis of his reply that I made my brief remarks about the fact that the service is being cut for financial reasons when it is really a social service.

Mr. Ridley

There have been very small, if any, cuts for that reason, but I do not know the circumstances of the case that the hon. Gentleman raised, and I shall draw his point to the attention of the chairman.

The hon. Member for Newham, North-West (Mr. Banks) is not here.

Mr. Spearing

He is in Committee.

Mr. Ridley

He did not hear my opening speech, and he will not hear my closing speech. He left me several questions—to whom would I be answering if I answered them? To answer one of them, this is a money Bill not by virtue of the Government's wish but because money Bills are things that raise money and are certified as such by Mr. Speaker, and the Government have no choice in a matter such as that.

The hon. Member for Crewe and Nantwich, and one or two other hon. Members, made the error of saying that rates for LRT will rise by 35 per cent. This is not true. The old total—the figure for the current year—raised by the GLC was £340 million, of which the ratepayers paid just about three quarters. When we debate the levy order the hon. Lady will hear that the total to be raised for next year is £323 million — that is, less. The ratepayers' contribution will be two thirds of that amount. How can two thirds of £323 million be more than three quarters of £340 million? It cannot be.

The rate in London has gone up because the Greater London Council drew down its balances last year and spent them. The result is that this year it has had to raise its rates for non-London Regional Transport purposes by a very great amount — indeed, by more than the relief to ratepayers that removing LRT from it has produced. The GLC has taken the opportunity of not having to finance LRT next year to increase its rate by almost the same amount as has been saved.

The hon. Lady asked how the GLC was going to pay this money. I do not believe that the GLC has any excuse for not paying this money since the London Regional Transport Bill was published in December 1983 and certainly since the Committee stage in March 1984, and for not planning on the assumption that their maximum exposure in 1984–85 would be £360 million. Indeed, even after the judgment on 11 January, the GLC has been told that the Government intend to contest the effects of the court's ruling. There has never, therefore, been a time during the past 15 months when the GLC could reasonably have assumed that it was not liable to pay.

The new legislation concedes £23 million to the GLC. It will have £23 million more than the maximum amount that it might have expected. I should have thought that that was a bonus. When the Department of the Environment proposed to rate-cap in December, the position was that the direction which had been made had not been overturned. But we had conceded the £10.2 million. Therefore the reserve position of the GLC must be £12.9 million easier than when the rate cap was proposed.

Several Opposition Members asked about the surplus. The total amount that was necessary for London Regional Transport this year was not just what it spent. It was what it incurred in liabilities. It has necessarily incurred transitional costs which will now show as accrued liabilities for 1984–85 in this year's accounts. Therefore, LRT is carrying forward a reserve to meet those charges. There is nothing special about that. At the beginning of the present financial year it carried forward £24 million from the previous year. The GLC left it with that amount of money as a working reserve. The Government have left it with a similar amoount of money. LRT needs money. It is not a question of a surplus but of money that is strictly necessary for LRT.

The other point that was made was that I had overturned the judgment of the court or in some way had broken the law. I reject entirely that suggestion. The only way that a judgment can be overturned is on appeal. On this occasion I have invited the House to change the law since it turns out not to be the law that the House was led to believe it would be. I would remind the hon. Lady of the Travel Concessions (London) Act 1982, which was the result of the Bromley case. The House of Lords decided that the Greater London council did not have the power to allow concessionary fares to be paid, although it had been doing so. I suppose that the hon. Member for Crewe and Nantwich would say that that was disgraceful, illegal and unlawful, but the Government legislated to overturn that decision of the courts.

Mr. Dobson

rose—

Mr. Ridley

No. The hon. Gentleman can sit and listen to this. He had some pretty unfair things to say to me.

Mr. Dobson

On a point of order, Mr. Deputy Speaker. I know that there is extreme delicacy in saying that an hon. Member is misleading the House, but I think that it would be advisable for you to suggest to the Secretary of State that he looks to what the Solicitor-General said—

Mr. Deputy Speaker (Sir Paul Dean)

Order. It is clear that the hon. Gentleman is raising a point of argument and not a point of order for me.

Mr. Ridley

I shall repeat the matters which seem to have caused the hon. Member for Holborn and St. Pancras (Mr. Dobson) to be puzzled. There are the decisions of the courts on section 49, which we are discussing, and on whether the GLC had power to grant travel concessions. The courts found that what we believed was not the case. When the House was invited to legislate to give the GLC power to grant travel concessions in the 1982 Act, there were no accusations of impropriety and illegality, because the House was invited to change the decision of the courts. Of course there were not. I have never heard such a partial argument as that which has been advanced by the hon. Member for Crewe and Nantwich. I advise the House that there is no foundation for the charges which have been levelled.

The hon. Member for Isle of Wight (Mr. Ross) said, "God help the ratepayers." It is the Government who will help them and not God. They will do so by proposing that the money resolution should be accepted by the House. If it is not, London ratepayers will pay twice for that which has been provided by London Regional Transport. There will be an uncovenanted windfall to the GLC which will not be used to the benefit of the ratepayers. They will be made to pay twice for something and they have not been told what it will be. I invite the House to support the motion.

Question put, That the amendment be made:—

The House divided: Ayes 67, Noes 150.

Division No. 96]	[12.14 am
AYES
Banks, Tony (Newham NW)	Hughes, Sean (Knowsley S)
Barnett, Guy	Hughes, Simon (Southwark)
Bennett, A. (Dent'n & Red'sh)	Hume, John
Callaghan, Jim (Heyw'd & M)	Leadbitter, Ted
Campbell-Savours, Dale	Leighton, Ronald
Clay, Robert	Lewis, Terence (Worsley)
Cocks, Rt Hon M. (Bristol S.)	Loyden, Edward
Cohen, Harry	McDonald, Dr Oonagh
Cook, Frank (Stockton North)	McKay, Allen (Penistone)
Corbyn, Jeremy	McNamara, Kevin
Cowans, Harry	McWilliam, John
Cox, Thomas (Tooting)	Madden, Max
Craigen, J. M.	Marek, Dr John
Crowther, Stan	Maynard, Miss Joan
Cunliffe, Lawrence	Meacher, Michael
Cunningham, Dr John	Mikardo, Ian
Davies, Ronald (Caerphilly)	Parry, Robert
Davis, Terry (B'ham, H'ge H'l)	Pike, Peter
Deakins, Eric	Prescott, John
Dobson, Frank	Richardson, Ms Jo
Dormand, Jack	Rogers, Allan
Dubs, Alfred	Ross, Stephen (Isle of Wight)
Dunwoody, Hon Mrs G.	Ryman, John
Fatchett, Derek	Sedgemore, Brian
Fields, T. (L'pool Broad Gn)	Shore, Rt Hon Peter
Flannery, Martin	Short, Ms Clare (Ladywood)
Fraser, J. (Norwood)	Silkin, Rt Hon J.
Godman, Dr Norman	Skinner, Dennis
Hancock, Mr. Michael	Smith, C.(Isl'ton S & F'bury)
Harrison, Rt Hon Walter	Snape, Peter
Hart, Rt Hon Dame Judith	Soley, Clive
Holland, Stuart (Vauxhall)	Spearing, Nigel

Straw, Jack	Tellers for the Ayes:
Thompson, J. (Wansbeck)	Mr. Norman Hogg &
Torney, Tom	Mr. Frank Haynes.
NOES
Alexander, Richard	Hunt, David (Wirral)
Amess, David	Hunter, Andrew
Ancram, Michael	Jessel, Toby
Ashby, David	Jones, Robert (W Herts)
Aspinwall, Jack	King, Roger (B'ham N'field)
Atkinson, David (B'm'th E)	Knight, Gregory (Derby N)
Baker, Rt Hon K. (Mole Vall'y)	Knox, David
Baker, Nicholas (N Dorset)	Lawler, Geoffrey
Baldry, Tony	Leigh, Edward (Gainsbor'gh)
Batiste, Spencer	Lennox-Boyd, Hon Mark
Bellingham, Henry	Lewis, Sir Kenneth (Stamf'd)
Benyon, William	Lightbown, David
Biggs-Davison, Sir John	Lilley, Peter
Blackburn, John	Lloyd, Peter, (Fareham)
Blaker, Rt Hon Sir Peter	Luce, Richard
Boscawen, Hon Robert	Lyell, Nicholas
Bottomley, Peter	McCurley, Mrs Anna
Bottomley, Mrs Virginia	Maclean, David John
Bowden, Gerald (Dulwich)	Major, John
Bright, Graham	Malins, Humfrey
Brinton, Tim	Maples, John
Brittan, Rt Hon Leon	Marlow, Antony
Brooke, Hon Peter	Mather, Carol
Brown, M. (Brigg & Cl'thpes)	Maxwell-Hyslop, Robin
Bruinvels, Peter	Merchant, Piers
Buck, Sir Antony	Miller, Hal (B'grove)
Budgen, Nick	Mills, Iain (Meriden)
Burt, Alistair	Mitchell, David (NW Hants)
Carlisle, John (N Luton)	Moate, Roger
Carttiss, Michael	Morris, M. (N'hampton, S)
Cash, William	Moynihan, Hon C.
Chalker, Mrs Lynda	Murphy, Christopher
Channon, Rt Hon Paul	Neubert, Michael
Chope, Christopher	Newton, Tony
Clark, Hon A. (Plym'th S'n)	Nicholls, Patrick
Clarke, Rt Hon K. (Rushcliffe)	Normanton, Tom
Coombs, Simon	Norris, Steven
Cope, John	Onslow, Cranley
Couchman, James	Oppenheim, Phillip
Currie, Mrs Edwina	Osborn, Sir John
Dover, Den	Ottaway, Richard
Dunn, Robert	Page, Sir John (Harrow W)
Eggar, Tim	Page, Richard (Herts SW)
Evennett, David	Parris, Matthew
Fallon, Michael	Patten, John (Oxford)
Favell, Anthony	Percival, Rt Hon Sir Ian
Fenner, Mrs Peggy	Portillo, Michael
Forsyth, Michael (Stirling)	Powell, William (Corby)
Forth, Eric	Powley, John
Fraser, Peter (Angus East)	Proctor, K. Harvey
Freeman, Roger	Raffan, Keith
Gale, Roger	Raison, Rt Hon Timothy
Garel-Jones, Tristan	Rees, Rt Hon Peter (Dover)
Gorst, John	Rhodes James, Robert
Grant, Sir Anthony	Rhys Williams, Sir Brandon
Gregory, Conal	Ridley, Rt Hon Nicholas
Griffiths, Peter (Portsm'th N)	Roe, Mrs Marion
Hamilton, Hon A. (Epsom)	Rossi, Sir Hugh
Hamilton, Neil (Tatton)	Rumbold, Mrs Angela
Hampson, Dr Keith	Sainsbury, Hon Timothy
Hanley, Jeremy	Shaw, Giles (Pudsey)
Hargreaves, Kenneth	Silvester, Fred
Harvey, Robert	Soames, Hon Nicholas
Havers, Rt Hon Sir Michael	Spicer, Jim (W Dorset)
Hawkins, C. (High Peak)	Squire, Robin
Hawksley, Warren	Stevens, Martin (Fulham)
Hayward, Robert	Stradling Thomas, J.
Heathcoat-Amory, David	Thompson, Donald (Calder V)
Hickmet, Richard	Thompson, Patrick (N'ich N)
Holt, Richard	Trippier, David
Howard, Michael	Twinn, Dr Ian
Howarth, Alan (Stratf'd-on-A)	Walden, George
Howarth, Gerald (Cannock)	Wheeler, John
Howell, Rt Hon D. (G'ldford)	Wood, Timothy

Yeo, Tim	Tellers for the Noes:
Young, Sir George (Acton)	Mr. Tony Durant and
	Mr. Ian Lang.

Question accordingly negatived.

Main Question put and agreed to.

Resolved, That provision may be made specifying as £258,179,588 the amount which the Greater London Council are to pay to London Regional Transport under section 49 of the London Regional Transport Act 1984.

Bill ordered to be brought in upon the foregoing resolution by the Chairman of Ways and Means, Mr. Nicholas Ridley, Mr. Secretary Jenkin, Mr. Peter Rees, Mr. John Moore, Mrs. Lynda Chalker, Mr. David Mitchell and Mr. Michael Spicer.