LONDON PASSENGER TRANSPORT (AGREEMENT) BILL. (Hansard, 8 July 1935)

§ THE UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (EARL STANHOPE)

My Lords, last year, during the debate on the Finance Bill I was asked if the Government had given up all ideas of instituting schemes of public works and I replied that when schemes of a remunerative character were produced and it appeared either advisable or necessary that Government assistance should be given, the Government would give favourable consideration to the proposal. This Bill is an example in proof of the correctness of my statement. The Schedule attached to this Bill is an agreement which has been signed by the Treasury, the London Passenger Transport Board, the Great Western Railway and the London and North Eastern Railway Company for a great scheme of transport development in North and North-East London. The scheme of works is given in the first Schedule of the Bill on pages 14 and 15. They provide for a number of matters, but the principal works are the building of twelve miles of new tubes, the electrification of forty-four miles of railway, the doubling and electrification of a further twelve and a half miles of railway and the substitution of trolley-buses for trams on 148 route miles. I believe that affects something like one quarter of the passengers carried by trams in the Greater London area. It also provides for the reconstruction of stations at King's Cross, Post Office and certain other stations in the Central London area, and the power supply of the London Passenger Transport Board is to be enlarged and improved, the scheme being undertaken in close consultation with the Minister of Transport.

In order to make the scheme possible the Government is prepared to come to the assistance of the three companies concerned by guaranteeing the money required so that it can be raised at a sufficiently low rate of interest. Parliament is asked to give its approval to this scheme in the Bill which actually consists of only two operative clauses. Clause 1 (1) enables the Treasury to guarantee pay-merit of the principal and interest of an issue of securities sufficient to raise a sum not exceeding £40,000,000. This is an outside figure to cover interest during construction and other contingencies in addition to the capital cost of the work 58 which has been provisionally estimated at £35,000,000. The issue of securities will be made for convenience by a holding company with a nominal share capital which will be formed for the purpose under the ægis of the Bank of England. Under subsection (2) any payments by the Treasury in fulfilment of the guarantee will be met from the Consolidated Fund and repayments will be paid into the Exchequer.

Provision is made in subsections (3) and (4) for Parliament to be informed of any guarantees given under the Act and of any payments from the Consolidated Fund and repayments to the Exchequer. These provisions follow generally the precedent of similar legislation in the past. By subsection (5) it is provided that if the Agreement is amended by any further Agreement or by a certificate of the Minister of Transport—to allow, for example, of a variation of the works which are shown in the Schedule—copies of the Agreement or certificate will be laid before Parliament. Some variation in detail may perhaps prove to be necessary in the working out of the scheme, and if so Parliament will be informed. The undertakers will of course be under obligation to carry out the scheduled works as they stand as soon as Parliament has given the necessary powers. Any minor variations will require agreement between the Government and the undertakers, and it will be unnecessary and inconvenient to require the consent of both Houses to such changes once the scheme has been agreed in general principle.

Clause 2 of the Bill relates to exemption from Stamp Duty. The guaranteed securities to be issued by the new holding company will pay the loan capital duty of 2s. 6d. per £100 in the ordinary course, and the effect of this provision in the Bill is to relieve the undertakers from additional Stamp Duty which would otherwise be payable as a result of the-method of borrowing adopted in this case. The proposal of the Government is that there shall be a holding company which will issue capital as required to these three railway companies as they undertake the work. It would be impossible to have three Bills for the three companies because it would take up too much Parliamentary time and we wish to get on with the work. There 59 fore the idea is to have one holding company set up and it would be obviously unfair to expect the railway companies to pay Stamp Duty on the shares issued by the holding company a second time when they have to borrow from the holding company for any purpose. Therefore Clause 2 provides that Stamp Duty shall be paid once, as would normally occur if there had not been a holding company.

Your Lordships will observe that under Clause 1 of the Schedule the transport undertakers engage to come to Parliament as soon as possible for the necessary statutory powers, and, if they are granted, to complete the whole work within five years from September 30 next. There is a clause in the Agreement that the Minister of Transport may be authorised to extend that period if it is considered advisable, but it is hoped, and we think it will probably happen, that these works will in fact be completed within the five years period. Under Clause 3 of the Schedule it has been agreed that these guaranteed loans shall mature for repayment at some date to be fixed by the Treasury between fifteen and twenty-five years of the date of issue with an option of prior redemption. There is no sinking fund, the proposal being that as these works will at the end of fifteen or twenty-five years be earning money the respective companies should be in a position to be able 60 to issue stock themselves in order to repay the holding company the amount borrowed.

In the Second Schedule your Lordships will see on page 16 the borrowings to be allotted to each of the undertaking companies—70 per cent. to the London Passenger Transport Board, 5 per cent. to the Great Western Railway and 25 per cent. to the London and North Eastern Railway. I do not know whether your Lordships would like me to go further into the scheme, but perhaps the best thing would be that I should be prepared to answer such questions as your Lordships may desire to ask. I beg to move that the Bill be read a second time.