HC Deb 08 November 1999 vol 337 cc729-37

Lords amendment: No. 194, in page 72, line 36, at end insert ("or in pursuance of a transport subsidiary's agreement")

Mr. Hill

I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker

With this it will be convenient to discuss Lords amendments Nos. 195 to 212, 703 and amendments (a) to (e) thereto, 214, 215, 223 and amendment (a) thereto and motion to disagree, 224, 225, 228, 232 to 234, 235 and amendment (a) thereto, 236 to 238, 334, 336, 338, 346, 423, 565, 566, 572, 577, 582, 657, 659 to 696, 698 to 702, 712, 714, 715, 717 and 799 to 801.

Mr. Hill

The House is enormously grateful to you, Mr. Deputy Speaker. If I may say so, that was beautifully enunciated.

The amendments in this group are largely technical improvements to the detailed transport functions of the mayor and Transport for London. Some are reproductions of current statutory functions of London Transport—functions conferred on London Transport under legislation introduced by a Conservative Government. Some of them represent a positive reaction to points which have been raised in the other place.

Some concern new powers and duties to reflect the wider responsibilities of Transport for London and the integrated approach which it will be able to take to transport in the capital. The amendments are intended to be helpful, and do not alter the basic structure of the Bill.

I hope that it will assist the House—as I describe the general effect of these amendments—if I distinguish between those which give Transport for London its powers, those which impose duties and those which are editorial or technical in nature. It may also help if I give some illustrative examples of each type of amendment. I should mention that this group also includes a power for the Secretary of State to make regulations to enable the current tax status of Transport for London's predecessor bodies to be maintained once those bodies have transferred to Transport for London.

Let me deal first with the powers which this group of amendments gives to Transport for London. TfL will, of course, be a new organisation, but it will need to have many of the same powers as its predecessors. These amendments ensure that the relevant powers of London Transport are passed to Transport for London. For example, the amendments give it the power to make railway byelaws.

The amendments also allow Transport for London to run a transport museum and to pay grants to bodies such as the dial-a-ride companies. Those activities are of course already undertaken by London Transport, and will be continued by Transport for London. However, Transport for London will need not only to inherit the relevant powers of its predecessor bodies, but to have powers to discharge its wider statutory duties and to reflect the changing nature of transport provision. The amendments allow for that.

For example, the amendments give Transport for London the power to form joint venture companies and to provide transport facilities without itself having to run services to and from those facilities. The amendments recognise that Transport for London's responsibilities will not be limited to passenger transport. It will thus have the power to provide intermodal freight facilities—a point suggested by my noble Friend Lord Berkeley in the other place.

The duties imposed on Transport for London by the amendments relate primarily to the provision of information. Amendment No. 236 requires Transport for London annually to inform local authorities and the London Transport Users Committee of its plans for fares and services, and to publish details of its fares. Again, this is a reproduction of a current duty of London Transport. However, we have also given Transport for London a new duty—I ought to mention that we were prompted to do so by Conservative peers—to provide information to the public about the Transport for London public transport services. This duty builds upon the present travel information service provided by London Transport to its customers, and will assist in the delivery of the passenger transport information 2000 initiative to provide a national public transport information service during the course of next year.

We have made a number of editorial and technical changes. For example, we have included provisions allowing Transport for London to fulfil the contractual obligations of predecessor bodies so that there is no disruption to services. We have provided for Transport for London to make transfer schemes for the distribution of property among its subsidiaries, so that the mayor can structure Transport for London and its transport functions as he or she wishes.

Government amendments (a) to (e) to Lords amendment No. 703 make technical and consequential changes relating to the operation and the interpretation of the new schedule on Transport for London transfer schemes.

In conclusion, Madam Speaker, these amendments complete the toolkit which Transport for London will need to deliver the mayor's vision for transport in the capital. I am conscious that, in the time available to us today, it might be inappropriate for me to describe the amendments in exhaustive detail, but I will try to answer any queries that hon. Members may have, either now or in writing.

Mr. Brake

I should like to speak specifically to Lords amendment No. 223, which Liberal Democrat Members oppose and on which we shall seek to divide the House. First, however, I should point out that the Table Office has made a drafting error in our amendment (a). We have proposed omitting from "Secretary of State", in line 41, to "the", in line 42, as we accept that the mayor should be able to authorise the issue of shares, stock and—as we propose—bonds.

5.30 pm

London's transport system is undoubtedly in a shambles—we are able to see with our own eyes the evidence of that fact. Some months ago, I tabled a private notice question on delays on the underground between 1994–95 and 1998–99. The fact is that, in that period, delays increased by 25 per cent. or more. My own experience of travelling by bus, tube or train from Wallington to Westminster has also confirmed that delays have increased.

We have had very significant transport fare increases. Moreover, on 9 January, fares on the underground will increase by 2.5 per cent., whereas inflation is running well below that. The real fare increase, therefore, will be about 50 per cent. above inflation. Against that background, the mayor should be given all possible financial options so that he or she is able to invest the sums necessary to take our underground system from the 19th to the 21st century.

Liberal Democrat Members certainly welcome the Government's agreement that the mayor should be able to raise money in share issues—in Committee, we were pushing for such a provision—but we should also like the mayor to be given the option of issuing not only shares, but bonds. Our amendment (a) would provide the mayor with that option.

Around the world, there are many examples—New York is one—of transport systems that have been funded by bond issues. Many of the original tube lines were financed by bond issues. The mayor may need to use that financial option if the public-private partnership does not proceed—although hon. Members may not think that that is a possibility.

In a parliamentary question, I asked when the PPP contracts would be signed, and was told that they would be signed "when they are ready". That was a very helpful response, and I was pleased to hear that the contracts will not be signed before they are ready. The response continued: We have learned the lessons of rail privatisation and will not impose a politically driven timetable at the expense of ensuring that the resulting deal is right."—[Official Report, 2 November 1999; Vol. 337, c. 78.] It is, therefore, entirely possible that the PPP will not proceed.

What if the PPP does not prove to offer best value and fails the public sector comparative test? Hon. Members may be thinking, "Surely that couldn't happen. Surely the Government have already confirmed that the PPP will pass the public sector comparative test before contracts are signed." However, I do not believe that that is the case. In a debate earlier this year, the then Minister for Transport said: I have made it clear that, in the private-public partnership, the value-for-money proposal will be the criterion against which all our proposals are tested. The Government will not implement a public-private partnership unless we are entirely satisfied that it will secure best value for the taxpayer."—[Official Report, 27 January 1999: Vol. 324, c. 413.] At what point will the Government be able to confirm whether the PPP secures best value? Such questions have prompted our desire to provide the mayor with the additional financial option of issuing bonds, so that he or she will have fall-back funding if the PPP proposals should fall apart.

What exactly are the Government's objections to issuing bonds? Last week, in another place, we were given an explanation for their objection. The Government said that they believed that the PPP that they are putting together would prove to be better value than bond financing. I hardly consider that a ringing endorsement of the PPP—but it is not a damning criticism of bonds, either.

Having outlined the reasons why the Government should take on board our modest amendment (a) to Lords amendment No. 223, I shall also speak in favour of another amendment in the group—amendment (a), tabled by the hon. Member for Hayes and Harlington (Mr. McDonnell) to Lords amendment No. 235. That amendment seems sensible to us.

In my constituency of Carshalton and Wallington there is strong demand for transport infrastructure improvements. For instance, many residents would welcome the extension of the Croydon tramlink into Carshalton and Wallington, and on to Sutton. The amendment would allow the borough of Sutton to enter into discussions with Transport for London to provide such an extension.

I urge the Government at this late hour to accept our motion to disagree with Lords amendment No. 223. They have nothing to lose, and Londoners have much to gain.

Mr. John McDonnell (Hayes and Harlington)

I shall speak to amendment (a), tabled in my name to Lords amendment No. 235. Hon. Members who served on the Standing Committee will recall—or they may not—that I tabled an amendment then that would have allowed the mayor to enter into a voluntary arrangement with the City of London corporation for a voluntary contribution towards infrastructure projects in London. That was not a duplicitous plot to undermine the financial standing of the corporation—I wish that it had been—but simply an attempt to release resources for the benefit of London, especially for transport infrastructure projects.

The amendment built upon the attempts that we have made over the past 10 years to encourage voluntary agreements between the City of London corporation and Londonwide local government and service structures overall, to provide the necessary resources for the development of infrastructure projects, especially for transport but also for environmental purposes.

My amendment would build on Lords amendment No. 235, which would enable Transport for London to enter into agreements with the common council of the City of London corporation and London boroughs for the provision of transport services, but it would also clarify the fact that the definition should include transport infrastructure projects as well.

Hon. Members representing constituencies throughout London have made clear the need for long-term investment in transport infrastructure projects. The amendment would enable the same clarity to exist in relation to the question of where the resources will come from. I note that all three contenders for selection as Labour candidate for mayor have expressed support for the concept of "going to the City" to finance infrastructure projects in London, and within the definition of the City, I would include the City of London corporation itself.

I will have to be convinced during the debate of the reasons why the Government do not wish to accept the amendment to facilitate the issuing of bonds. I agree with those who say that we should maximise the flexibility for the new Greater London Authority, the mayor and Transport for London to draw upon a range of resources to fund transport developments in London.

I do not support the public-private partnership. I understand the arguments in favour of it that have been mobilised in the House and elsewhere, but there are elements of risk involved. Putting that to one side, however, even if the PPP were the best option for now, we would not wish to prevent a future administration from being able to draw upon other financial sources.

The amendment would provide the opportunity not only for shares to be issued but for bonds to be drawn upon. I shall need convincing of the reasons why we should rule that out in the long term. The Government may not want to support the idea now, but at some future stage it might give the mayor and the new strategic authority the necessary flexibility. We should not use the Bill to prohibit that, and if I am not convinced by the Government's reasons, I shall support the amendment in the Lobby.

Mr. Hill

I shall deal first with amendment (a) tabled by my hon. Friend he Member for Hayes and Harlington (Mr. McDonnell) to Lords amendment No. 235. I congratulate my hon. Friend on his amendment, but I hope that I can persuade him that it is unnecessary.

Amendment No. 235 provides for the retention of the existing powers of London local authorities other than the GLA to procure additional rail services and facilities from the franchising director and train operating companies, and of local authority powers to enter into agreements with Transport for London for additional services and facilities. Those powers are currently available to London local authorities under sections 28 and 59 of the London Regional Transport Act 1984.

Amendment (a) would mean that the powers of London local authorities would include the ability to enter into agreements for transport infrastructure projects, as well as for facilities and services. Local authorities' powers under amendment No. 235 are really designed to allow them to secure services and facilities that would not otherwise be provided by Transport for London or rail operators. For example, a London borough might use those powers to arrange for additional bus services to cater for a special event. However, transport infrastructure projects are neither facilities nor services, although it is possible that a project might result in facilities or services being provided. I fear that amendment (a) confuses the idea of a project, which could require new facilities and services, with the provision of those facilities and services. Local authorities do not necessarily need powers to embark on a project, but they do need powers to do things in connection with those projects. Amendment No. 235 will give them the necessary powers.

I should also mention that any proposal for a large transport infrastructure project could require statutory authority, either by means of a Bill or by the making of an order under the Transport and Works Act 1992 by the Secretary of State. London boroughs and Transport for London have the power to promote applications for such orders. Accepting amendment (a) could create some uncertainty in that area, and I therefore urge my hon. Friend the Member for Hayes and Harlington to withdraw it.

Mr. McDonnell

I am happy to withdraw my amendment on the basis of a simple statement from my hon. Friend. Under the existing proposed legislation, will the mayor, the authority or Transport for London have the ability to enter into a voluntary arrangement with the City of London corporation, or a London borough, to fund a transport infrastructure project? I give the example of the City of London corporation because it proposed the idea some seven or eight years ago, and intimated that it would be willing to enter into a voluntary agreement on such projects with any new organisation or with the Government.

Mr. Hill

My hon. Friend asks whether the mayor can enter into agreements with City institutions or London local authorities for the financing of a major infrastructure project—for example, crossrail. The answer is yes, in principle. The Bill will give the mayor and Transport for London extensive powers—broadly similar to those that London Transport has now—to enter into agreements for transport purposes. Of course, much would depend on the precise form of the proposed agreements, and that would no doubt need to be looked at carefully if and when a proposal emerged.

Transport for London will of course be free to negotiate private finance initiative deals, to finance transport projects, for example, as long as they are considered off balance sheet. In other words, if sufficient risk is transferred to the private sector, the borrowing will not score against public expenditure or need credit approvals.

Under Lords amendment No. 235 local authorities will be able to enter into agreements with Transport for London regarding the provision of transport services and facilities. That will provide considerable scope for undertaking joint projects. I am sure that my hon. Friend the Member for Hayes and Harlington will be satisfied by those wide-ranging reassurances.

5.45 pm
Mr. McDonnell

It will take just one more sentence to satisfy me. My understanding of what my hon. Friend has said is that it will be perfectly appropriate for the new mayor and Authority, after next May's election, to approach the City of London corporation and request a voluntary agreement to fund crossrail, for example, although a more important example might involve the Central line extension to Uxbridge. Will my hon. Friend confirm that my understanding is correct?

Mr. Hill

I think that I have answered that question already by saying yes, in principle.

The hon. Member for Carshalton and Wallington (Mr. Brake) asserted several times that, under some new arrangement, the mayor will be permitted to float shares. I wish to emphasise that the mayor will not have that power. Although Transport for London can form companies, it cannot sell the shares in those companies if to do so would result in the contracting out of the operations of underground trains or stations.

On amendment No. 223(a)—

Mr. Simon Hughes

Will the Minister give way?

Mr. Hill

The hon. Gentleman asks to intervene a little early in my explanation, and I have to note that he was not in the Chamber for the beginning of this debate.

Mr. Hughes

I was in the Chamber, but I was somewhere else. [Interruption.] I was on another Bench. Will the Minister clarify what he said about the mayor? My understanding of the Government amendment agreed to in the Lords, to which my hon. Friend the Member for Carshalton and Wallington (Mr. Brake) referred, is that the Government were happy to accept the argument advanced by Opposition Members in Committee. That amendment appears to propose that the mayor rather than the Secretary of State would have the power to raise shares. Will the Minister confirm that that is indeed what is proposed?

Mr. Hill

I am pleased to clarify that point. The purpose of the amendment is to transfer to the mayor the power of the Secretary of State to authorise the issue of shares by Transport for London to a person other than Transport for London or its subsidiaries. I hope that that satisfies the hon. Gentleman, and I am sorry that I did not spot him when he was hiding elsewhere in the Chamber.

The Bill already confers powers on the Greater London Authority and its functional bodies to borrow money within the existing local authority finance framework. That includes borrowing by issuing bonds, as well as borrowing through credit approvals, entering into a private finance initiative arrangement or making a case for additional funding to the Greater London Authority transport grant.

Under the current local government finance regime, a bond issued by one of those bodies would count as public borrowing. It would need to be secured against all the revenues of the authority and could not be secured against a particular revenue stream. A bond issued by a Greater London Authority body would be a more expensive way of raising money than if the Government borrowed the money themselves. In practice, local authorities rarely borrow by issuing bonds, because it is cheaper and easier to borrow from the Public Works Loans Board.

The hon. Member for Carshalton and Wallington and my hon. Friend the Member for Hayes and Harlington both asked why neither the Greater London Authority nor Transport for London might issue bonds secured normally against a revenue stream from a congestion-charging regime. The answer is that borrowing through a bond secured against the revenues from a congestion-charging regime still counts as public expenditure under the current local government finance regime.

As I have already explained, bonds must currently be secured against all the revenues of the authority and not just against one revenue stream. There would be no advantage in allowing borrowing secured against the revenue from a single project, such as a congestion-charging scheme, as it would offer lenders less security and would cost more. However, we are reviewing the local government finance regime. In particular, we are examining the possibility of allowing local authorities to borrow, subject only to limits relating the level of debt to their future income, and the use of prudential indicators to regulate borrowing.

We plan to publish a consultation paper in the spring, following completion of the review. The Greater London Authority, along with local authorities in general, will, of course, benefit from any changes that may follow the review, although it is too early to say what those may be or when they might be put into effect.

Mr. Hughes

I understand the Minister's argument but—and my hon. Friend the Member for Carshalton and Wallington (Mr. Brake) is more expert than I am—it may not be sufficient. The Minister that the Government plan to issue a consultation document in the spring after the review. But any decision may be made too late for the new GLA, which will be elected in May and in power from July, if it is to address what is an immediate issue. That is a defect in the Minister's argument, because the power may come too late for the GLA to act.

Mr. Hill

Let me seek to interpret the hon. Gentleman's point. I take it that the immediate issue to which he refers is new investment in the London underground system. Let me reassure the hon. Members for Southwark, North and Bermondsey (Mr. Hughes) and for Carshalton and Wallington that good progress has been made in implementing the London Underground public-private partnership proposals since my right hon. Friend the Deputy Prime Minister announced them in March last year.

On 7 October, London Transport announced that five consortiums had pre-qualified for the infrastructure contracts, and would be invited to tender for the deep tube infrastructure contracts. Invitation to tender documents were issued on 19 October, and bids are due back by March 2000. We are confident that the scheme is going ahead and that it will be successful.

Mr. Hughes

I understand the Government's plan, but some of us, including Conservative Members, are not happy with it. If the mayor and Assembly elected in May have different ideas about the project, does the Minister accept that the rejection the amendment would preclude the mayor and Authority from raising money in the short term by a bond issue, unless the Government had decided to change their whole policy on local government financing?

Mr. Hill

The blunt truth is that they would be precluded in the short term. However, the Government are confident about the timetable, and that achievement of the London Underground PPP project is well on course, so that it will be delivering to London, as scheduled, in the course of 2001.

In conclusion, I hope that the hon. Member for Carshalton and Wallington will be content with my reply and will not seek to press the amendment to a Division.

Mr. Brake


Mr. Deputy Speaker

Order. The hon. Gentleman cannot speak a second time. I was hoping that the amendment would be moved formally at a later stage. Is the hon. Gentleman seeking the leave of the House?

Mr. Brake

With the leave of the House, Mr. Deputy Speaker. I have listened carefully to the Minister's response. He gave no clear reason why the mayor should not have the flexibility to issue bonds secured against a number of revenue streams, not necessarily a single revenue stream. I believe that many of his objections to the amendment are Government-imposed restrictions relating to the public sector borrowing requirement and the Government's timetable for future business. I am afraid, therefore, that we ought to press the amendment to the vote.

I am disappointed that Conservative Members have not supported us on the issue, as I do not believe that there are any reasons to restrict the mayor's flexibility unnecessarily. The mayor needs to have as many options as possible for raising funds for transport.

Lords amendment agreed to.

Lords amendments Nos. 195 to 212 agreed to [some with Special Entry].

Lords amendment No. 703 and Government amendments (a) to (d) thereto, and consequential Government amendment (e) agreed to.

Lords amendments Nos. 213 to 215 agreed to.

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