HL Deb 05 April 1982 vol 429 cc45-72

5.13 p.m.

Lord Underhill

My Lords, I beg to move that this Bill be now read a second time. The purpose of the Bill is to restore the position of the Greater London Council and the London Transport Executive to that which it was held generally to be prior to the judgment of the noble and learned Lords of Appeal. The importance of London's passenger transport can hardly be overstressed; 5½ million trips are made each day, some 55 per cent. of which are in connection with work. Central London alone provides employment for 1 million persons, 80 per cent. of whom commute by London Transport and British Rail.

We are not debating here the Greater London Council's low fares policy but it must be made absolutely clear that until the judgment, few if any had thought that the fares policy adopted by the GLC was unlawful. I have a 157-page discussion booklet on Labour's GLC election policy which was considered at a two-day conference as long ago as October 1981. This included a 22-page section on transport policy drawn up by a 19-member working party. The low-fares policy was argued and recommended in that document. This was publicised, but no one suggested the policy was unlawful. This was included in the GLC election manifesto and was one of the controversial items in the campaign. No one suggested that it was unlawful. A number of independent observers said that this was an imaginative effort to tackle traffic congestion, energy saving and to deal with environmental aspects in connection with London Transport. There may be some who have criticised the proposal, but no one has suggested that it was unlawful.

One important reason why the proposals were not considered to be unlawful was because there was general acceptance that they were within the powers under the Transport (London) Act 1969. That Act was quoted in some detail in the course of the judgment and it was stressed that there was a difference between that Act and the Transport Act 1968 which dealt with the provision of public transport outside Greater London.

When the London Bill was introduced in 1969 the Ministers of the day intended clearly to give wide powers to the GLC. I am pleased that the noble Lord, Lord Marsh, is in his seat today and is down to speak because I want to quote from a statement that the noble Lord made at the Second Reading in another place on 17th December 1968 (in cols. 1247–8). He said: The main power that the Council will have, apart from the power to appoint, will be to pay grants to the Executive for any purpose it thinks fit and to issue directions to the Executive. This gives the Council the right to prescribe the policy lines to be followed and to take financial responsibility for its decisions. This is very important, because if the Council wishes the Executive to do something that will cause it to fall short of its financial targets, it will itself have to take financial responsibility for it. The Council might, for example, wish the Executive to run a series of services at a loss for social or planning reasons. It might wish to keep fares down at a time when costs are rising and there is no scope for economies. It is free to do so. But it has to bear the cost". That statement was made on behalf of the Government of the day when the 1969 London Bill was introduced. The statement, your Lordships will agree, is clear and needs little or no elaboration.

I could give a number of extracts from the Minister's speech, but I will content myself with just one more statement which the noble Lord made in reply to that debate in another place. He said: if a democratically-elected authority decides that it wishes to spend its rates in a particular way for the benefit of its electors it is a rather unconstitutional theory that Parliament should tell the authority that Parliament knows best". That, I am sure noble Lords will agree, is what democracy, the constitutional position and local government are all about.

I thought it might be helpful if I read through the debate on Second Reading when the 1969 Bill came to your Lordships' House. The noble Lord, Lord Winterbottom, then Parliamentary Under-Secretary, on 10th June 1969 (in column 533), when dealing with the financial duties to be placed on the Executive and the procedure for controlling fares, said: The practical effect of this will be that Londoners through their elected representatives on the GLC will decide the pricing policies and levels of service for their public transport and will take financial responsibility for their decisions. This would appear to be an eminently reasonable approach". I am sorry that the noble Lord, Lord Nugent of Guildford, is not with us. He was speaking for the then Opposition and said: The future financial policy for London Transport will be strongly influenced by the fact that the deficit will fall on the ratepayers who elected the GLC. This, I think, is a thorougly sound constitution and I commend both the Government and the GLC in agreeing to it". To be absolutely fair to the noble Lord, Lord Nugent, I must say that in a later part of his speech he hoped that any subsidy from the rates would be on capital expenditure and would not be on current revenue. The noble Lord was entitled to that policy viewpoint. But at no time did he challenge the interpretation which has been generally placed on the 1969 Act that the GLC have powers to pay from the rates towards current revenue.

Just a few words on what has happened with the low fares policy. It is claimed that it generated 10 per cent. extra journeys, 400,000 additional bus journeys and 140,000 additional tube journeys each day during which the policy was in being. A survey that was undertaken indicated that 40 per cent. of these related to work journeys; the other 60 per cent. were additional journeys through fares reductions. Surveys generally showed that high fares discourage employment in central London, and I must remind your Lordships that 60,000 persons outside the Greater London area travel into work each day by London Underground. A journey of only 30 miles return will now cost a husband and wife £6.40, and when we remember that same journey can be done by car for £1.60, there is obviously an encouragement not to go by public transport but to add to the congestion of London's roads.

Following the judgment, the GLC has considered it desirable and essential to obtain counsel's opinion on various matters. One such opinion dealt solely with what capital projects could be lawfully embarked upon in the light of the judgment. This has serious implications for the future of the London Transport system in light of the break-even requirement which has been laid down.

It is estimated that by the late 1980s fares will need to rise by 50 per cent. in real terms over the increased fares which started on 21st March this year. There will be 40 per cent. less journeys by bus and 17 per cent. less journeys by tube. The problems of London traffic congestion will be immense. There are already in hand, because of the judgment, reductions in bus service levels by thinning out, withdrawal of some routes and cuts in service frequencies. The tube will suffer also by cuts in service frequencies, closure of some 25 stations and possible withdrawal of branch lines and little used lines in the outer areas. It is claimed that in the first week of the increased fares (since 21st March) the number of journeys fell by 17 per cent.—that is, 800,000 fewer journeys in one day. Higher fares can mean less travelling followed by further cuts and restrictions. All this has a multiplying effect for the problems of employment in the Central London area, and a possible increase in London weighting because of the heavy prices. A 30 mile return journey on a monthly season costs £330 in the course of 12 months, and there are great problems.

Since the judgment, editorials in various papers and journals have urged the need for the Government to clear the present confusion and for the law to be revised. I will not take time in quoting from all those publications because there are possibly more important statements to be made. I refer to the opinion of counsel regarding the capital projects. This was a 38-page opinion, which the GLC obtained. I am not going to read the 38 pages but I should like to quote the last paragraph: In conclusion, for as long as the duty to operate London Transport's bus and underground systems upon business lines attempting to break even on revenue account in any two consecutive accounting periods remains the overriding duty which must prevail above and be given priority to the duty under Section 5 of the 1969 Act' to provide or secure provision of such public passenger transport services as best meets the needs for the time being of Greater London', it is the melancholy fact that the public transport systems in the capital are likely to deteriorate and to contract. Capital expenditure must necessarily reflect the prospective public demand, as well as the need to attempt to balance the books on the revenue account". The concluding part of the opinion says: The Council is in the melancholy position of being prevented by law from 'securing the provision of such public passenger transport services as best meet the needs for the time being of Greater London'. That position results ineluctably from the existing consolidated revenue account deficit which will probably persist for at least another three years. If the Secretaries of State for Environment and Transport wish the Council and LTE to secure such public passenger transport services as best meet London's needs or if they wish to prevent the continual reduction in the scope and quality of such services and facilities, the law will have to be changed. In any event the conflict of legal opinions may be thought to call for its urgent clarification". That is the end of a 38-page opinion by Mr. Roger Henderson, QC, dated 8th March 1982.

I wish to refer to one other opinion. This is interesting because it is a joint opinion by three counsel for the Greater London Council and two counsel for the London Transport Executive. The opinion refers to known divergence of counsels' views on the proper interpretation of the Lords' judgment. I quote: The effect of this divergence is that counsel for London Transport consider that the GLC is entitled to provide a higher level of subsidy for the current year than is considered to be permissible by counsel for the GLC". The joint opinion then sets out points on which the counsel are in agreement: We are also in agreement that it is most desirable that the principles upon which the GLC may grant subsidy to London Transport should be clarified by legislation … We therefore consider it necessary that legislation for the operation of the London Transport system should state unequivocally the principles upon which subsidy may be granted. Successive GLC administrations had approved budgets without challenge until 1980 on the assumption of a subsidy which included an amount which was decided to be necessary as a matter of policy in order to maintain a particular standard of service at given fare levels. If the continuance of this approach is considered desirable, it is necessary for there to be legislation which makes it clear that such policy objectives may properly be taken into account. It will obviously be a matter of consideration as to whether, if such legislation is introduced, amendments to other provisions of the Transport (London) Act, 1969, are desirable". This Bill will go a long way to clarifying the situation set out in those two important legal opinions. It will provide grants which the GLC may make to the Transport Executive as provided in Section 3(1)(a) of the 1969 Act and will also include grants towards current expenses. The passing of this Bill would give the basis for effective planning for 1983, for capital projects and level of fares. I am assured, in the light of those two opinions, that urgent action is required on these matters for which planning needs to be started almost at once. It must be emphasised that the GLC would have the ability under this amendment to decide what is reasonable. Although the council will not be limited by statute, it would still—even if this Bill which I am introducing is approved—need to have regard to its fiduciary duty. My Lords, I beg to move that this Bill be read a second time.

Moved, that the Bill be now read a second time.—(Lord Underhill.)

5.30 p.m.

Lord Tordoff

My Lords, let me start by saying quite clearly from these Benches that we welcome this Bill and we thank the noble Lord, Lord Underhill, for introducing it. It fills a gap in the legislation which has been caused by the decision of the Lords of Appeal and the Government made it quite clear through the noble Lord, Lord Bellwin, during the discussion on the Transport Concessions (London) Bill recently when they sought to confirm the position of London Transport in relation to the elderly and the disabled that it was not their intention to take any further action. Therefore, I think it is greatly to the credit of the noble Lord, Lord Underhill, that he has brought this Bill before your Lordships today.

I made it clear during the discussion on that earlier Second Reading that even this is not enough to solve the problem, but at least it goes some way towards helping transport in London in that it gives London equality with the rest of the country. Having said that, one could almost sit down and hope that the thing would go through. In my opinion, there should be very little further debate. What is being asked for is a fair deal for London in relation to the rest of the country, but I have no doubt we shall not be able to leave it at that. I repeat that even this is inadequate to solve the existing problems although it does go as far as it is possible to go with this type of Bill—anything further would have to come from the Government side. If I repeat several things that I said during the Second Reading of the last Bill, I apologise to your Lordships, but I think they should be firmly on the record.

The first fact is that we are dealing with the capital city of this country, and that brings particular problems. It brings particular sorts of congestion and therefore perhaps a greater than usual need for a good public transport system. London has a very large number of commuters which other cities do not have in the same proportion. Some of those commuters pay rates and some do not. Not all of them can travel on London Transport—many of them travel on British Rail, particularly on the south side of the river. The problems of geography as well as the problems of finance bedevil this matter. Some of the ratepayers cannot benefit from the subsidies and some of those who benefit are not ratepayers.

The Minister was somewhat critical when I spoke on this subject before, and perhaps I did not make my position clear. I criticise the GLC for going too far too fast, and I think perhaps that has been at the root of some of the psychological reaction to the "fares fair" policy on the part of the Government and on the part of many ratepayers. I think they were wrong to expect to be able to recoup such large amounts of money—of the order of £125 million—from the ratepayers alone when, as I have said, many rate-payers are not able to benefit. Among those who do not pay but who do benefit are the large number of tourists who come into this great city of ours and the large number of business visitors, who naturally come to the capital city for a variety of reasons. A tourist tax is something which is outside the scope of this Bill, but it is something which has to be considered, it seems to me, if we are going to get the totality of this problem solved. However, in the end the cost of doing nothing is very high indeed. For a start, the sheer congestion has an enormous cost.

Many of us will have had various bits of information passed to us from a person called "Dave", to whom I have not been properly introduced. He sent me something about fare levels in London which I found quite interesting, and others may also have had that. I think, certainly, that many of the statistics given in that lead one to suppose that the extra cost of existing private vehicles under the new situation is of the order of £40 million. I do not know whether that figure is correct or not, but certainly the cost must be very significant.

The cost of accidents as a result of the extra congestion on the roads is another very significant figure. The estimate has been put as high as 3,000 more accidents in Greater London in a year and possibly between 30 and 40 fatalities, the cost of which I would not care to calculate. As the noble Lord, Lord Underhill, said, already in the short time since the fares rose we hear there has been a loss of something like 17 per cent. of passengers on London Transport. This increased congestion, increased pollution and increased frustration is only the beginning. I would remind your Lordships that the tourist season has not started yet and the congestion we shall have in the next few months is going to be horrendous.

Let me not pretend that throwing money at the problem is the complete answer. There is a need for greater efficiency, and the record of London Transport in many respects is not good. I am told that in the period between 1974 and 1981 there has been a decline in passenger miles of something like 6 million, while at the same time there has been an increase in staff of some 6,000. That seems to me to be a particular form of Parkinsonian law we could well do without. And it is not just the pen-pushers who are the trouble. There is a continued resistance to accept automation and a continued failure of management to press forward with it. There are far too many one-man buses that are being manned by two, but of course it is exceedingly difficult to achieve an improvement in productivity when the staff of London Transport are totally demoralised by being told that their services are no longer going to be required because of the increased fares leading to a rundown in services.

What the noble Lord, Lord Underhill, has told us about the reduction of services is really quite frightening—the closure of stations and the removal of buses. How could anyone in that situation feel they have a secure future? And if they do not feel that they have a secure future, how can they possibly participate in genuine discussions on productivity? So the staff have become demoralised and they need a new boost to their morale. This Bill is a start, and I hope the Government will not allow their prejudice against the present rulers of the GLC to affect their judgment.

This, as I said before, is a Bill about fairness. It is a Bill about giving Londoners the same rights and rules as other people; and justice demands no less. The Government may feel that the rights will be abused. They are perfectly entitled to that view, but I submit, as the noble Lord, Lord Underhill, said in quoting the noble Lord, Lord Marsh: That is a problem for the electors of London at the appropriate time". Nothing is provided free in this world, and particularly is that true of transport. The question is: How shall we best pay for it in order to encourage an efficient, integrated public transport system in London, not only in the local interest but in the national interest? It cannot be achieved by charging economic fares: it can only be achieved by a subsidy of some sort provided either by the Government of by the GLC and preferably by both.

I note that the noble Lord, Lord Mottistone, is speaking after me and doubtless he will suggest that this is another attack on the ratepayers and industry. I hope he does not take that view. On that point, I would suggest that even if the rate costs go up slightly there will be some compensation in terms of a reduction in the London weighing and there is an equation to balance there. I hope I do not anticipate his argument.

The Bill deals only with the position of the GLC in this very unusual circumstance. As I said earlier, I think that there is a need to tackle the whole of transport in the South-East region, but that, again, is not a purpose that can be tackled by this Bill. But I hope that the Government will give a fair wind to this Bill and that your Lordships will give it a Second Reading today.

5.40 p.m.

Lord Mottistone

My Lords, in commenting on this Bill I speak as a London ratepayer in a small way. It so happens that, when the fares went down, I worked out that my increased rates just about balanced the extra value I would get from my own use of London Transport. Perhaps the situation is now reversed—I do not know. I have not had time to work it out. So your Lordships can take it that, though a ratepayer, I am a neutral one.

It seems to me—though I am sure that the noble Lord, Lord Underhill, was properly advised by his learned advisers—that the amendment to the 1969 Act as effected by this Bill does not give the value that is required of it to warrant the necessary authority. It seems to me that the underlying section in the parent Act is Section 1, where the Greater London Council is called upon, to develop policies, and to encourage, organise and, where appropriate, carry out measures, which will promote the provision of integrated, efficient and economic transport facilities and services". That, surely, is the real objective. Just to supplement Section 3(1)(a), to spell out what purposes might be covered, does not seem to me to add very much, because what it says is, "the Executive for any purpose ". Anyhow, that is as may be. I am not a lawyer and I do not understand these things. But I should not have thought that the Bill does what it sets out to do.

We had a comparison from the noble Lord, Lord Underhill, about the effects of the new high fares. He said that a husband and wife journeying in by car from 30 miles outwould have to pay £1.60, as against £6.40 to come a similar distance by Underground. I calculate that the minimum cost of running a car is what your Lordships and I are paid by the House for our own transport costs, which I think is 22½p per mile. That covers not only the £1.60 for petrol in the example given by the noble Lord, Lord Underhill, and it looks much more like £6.60—

Lord Underhill

My Lords, I am obliged to the noble Lord for giving way. I am not suggesting that people will buy cars especially to travel into town. They already have a car, and because they have one they will be tempted to use it and pay £1.60 instead of £6.40.

Lord Mottistone

My Lords, if they go on doing that for any length of time, as anybody with experience knows, it will cost them the equivalent of 22½p per mile; and the AA's figures are much higher. So I do not think one should take that as a categorical statement about figures. As I work it out for the kind of distance that I travel, which now costs 40p instead of 20p, it costs about three times as much to travel by car and about four times as much to use a taxi. Your Lordships may say that, because a taxi takes only one person and there are all the other factors related to it, that is very reasonable, and that it would be better if the differences were six times and eight times. But I do not know whether that is a very easy calculation. The fact is that, by any calculation, the new increased fares are not disproportionately high, even though it might be a good thing if they were lower.

To turn to the effects of the "Fares Fair" policy—and I have always wondered: fair to whom?—the benefits seem to go to the non-ratepayers who are often tourists. I am sure that they are necessary here and that they spend lots of money in the capital, but people have different views about how many they want here at any one time. Then there are the out of London commuters, to which the noble Lord referred, and I should have thought that Londoners as a whole did not particularly welcome giving special treats to them. They may have to give a treat to a tourist, in order to bring him into the country, but I question whether we should give a treat to an out of London commuter. I expect that some of your Lordships are out of London commuters, and I do not want in any way to be unpleasant to your Lordships, but for a resident that is not necessarily a good thing.

Then there are the young people. It depends how young they are. There are quite a lot of people who are not ratepayers and who do very nicely out of that sort of thing. The young people and the not quite so young get much higher wages and salaries, relatively speaking, than they did 20 or 30 years ago. That is a fact, and they can afford more than they could when I was a young man. I understand that the old and infirm are not affected, so we can discount them.

I should now like to look at the penalties imposed upon the ratepayers. A very large number of domestic ratepayers end up evenly balanced, as 1 do. That must be the average situation, and it is nice to think that one is sometimes an average person. But the people who need to be considered—and here I must disappoint the noble Lord, Lord Tordoff—are the non-domestic ratepayers. They are the ones who get clobbered.

According to the rates information which I get from the Westminster City Council—I do not know to what extent this reflects itself on the GLC side, because it is rather difficult to identify the figures—332153; per cent. of the total rates are commercial and 6.4 per cent. are domestic. So that one-fifth of the rate income is domestic and four-fifths is commercial. That seems to be a bit hard. I do not suppose that the small businesses can afford to pay London weighting, though, of course, the big companies and the Civil Service pay London weighting. But the ordinary small trader around the place, who in many respects provides the life blood of this capital, is the person who is getting clobbered and going out of business. He is the one who will bear the main brunt.

One might suspect the London Labour Party of not being sympathetic to such people, and I wonder whether they realised when they formulated their great plan that that was where the real penalty would be imposed. I wonder whether they thought the increase would be paid by the rich ratepayers—the imagined Lordships, who are all supposed to be so much more wealthy than any of us are, except the ones who do not come to this place. It may be that they, thought they would clobber the wealthy millionaires, but I think they will find that they clobbered the small shopkeepers. So it is for that reason above every- thing else, that I do not think they had an undeniable right to make the kind of shift that they did.

One then wonders to what extent it is reasonable for any civic authority to have freedom to adjust the rates to provide something, if anything, to assist their local transport system. I think it is reasonable that they should be able to do something. I come back again to Section 1 of the 1969 Act which I suggest, to be effective, requires London Transport to operate with the minimum gross labour costs. Grants towards current expenses, which are referred to in the Bill before your Lordships, will not, I should have thought, encourage the diminution of gross labour costs. The noble Lord, Lord Tordoff, drew attention to this point. There is no doubt that London Transport and many other nationalised enterprises—if you can call them enterprises, because they do not usually turn out to be very enterprising—tend to have an awful lot of fat on the labour side. There was a frightening article in the Evening Standard about a workshop—think it was a tube workshop but it may have been a bus workshop—into which a reporter and a photographer managed to get where they found people waiting about doing nothing: having cups of tea, playing cards, et cetera. It was a gross waste of money. I am afraid that a further grant would encourage more of this. How properly to support, if support is necessary, a body which does not in the last resort have to rely on making the books balance is a great problem. It is the great problem of our era. It applies to any body, any organisation, which does not in the last resort have to rely on making the books balance in order to remain in business. I should not have thought any little grant like this would help them very much.

To sum up, I do not think that this Bill does what it sets out to do, and even if it did I do not think it would make life better for the people of London. Something much more radical is required. Selling off London Transport to private industry, in sections, is needed to get the efficiency and effectiveness which Section 1 of the 1969 Act requires. Therefore, I hope that when we come to consider whether the Bill should be given a Second Reading, we on this side of the House will decide not to give it one.

5.52 p.m.

Lord Marsh

My Lords, I listened with interest to the last comment of the noble Lord about the possibility of meeting at least part of the problem by selling off parts of London Transport to private enterprise. If he identifies buyers, I hope he will let me have prior notice. I shall then proceed to sell them the pigeons in Trafalgar Square.

The great problem that we have with London Transport is that inevitably it is a vastly expensive, complex undertaking. I find it a source of great pleasure that I am able to agree with almost everything which the noble Lord, Lord Underhill, said, because we have been friends for a long time. Having said that, I regrettably have to go on to say that I shall not support his Amendment Bill. On the arguments which he puts forward, all people would, I think, accept today the importance of an urban transport policy.

As a dedicated supporter of market forces I should be the first to accept that it is impossible to run an urban transport system without very large and heavy subsidies. The problem is that when one talks of subsidies and makes a case for them there is the danger of thinking that subsidies come from Governments, or local authorities. But subsidies come from people and there is a limit to how much they can pay, no matter how good the arguments which can be advanced. The problem, which has created this situation, is not that a decision was taken to subsidise Greater London's transport but that it is subsidised at a level which is insupportable, whichever party is in office. This is an argument which I would strongly promote.

May I pass on to some basic points. The noble Lord, Lord Underhill, quite fairly quoted from speeches which I made in the course of the debates on the 1969 Act. The interesting point, as the courts have revealed, is that it is just as possible to point to other comments which lead one to a totally opposite conclusion. The brutal truth is that the 1969 Bill was designed to appeal to a Labour-controlled Greater London Council which was positively enthusiastic about a high level of subsidy and that halfway through it had to be amended to make it acceptable to a Conservative-controlled Greater London Council—ably led, if I may say so, by the noble Lord, Lord Plummer—which was rightly suspicious of the whole concept and which was determined, above all else, not to get itself encumbered with an open-ended, ever increasing deficit. So the whole concept of the legislation changed in mid-air. if ever there were an argument against party political control of large, complex undertakings, the 1969 Act provides that argument.

To run briefly over what happened, as I saw it—and I know as much about these problems as anybody else in the House, because I created as much of these problems as anybody else in the House—in 1968 I was invited by the then Prime Minister to transfer from the Ministry of Power, after the completion of the Steel Bill, to the Ministry of Transport where I was to take charge of the 1968 Transport Bill from Mrs. Castle. I explained to the Prime Minister that I knew very little about the Transport Bill, that what little I did understand I disagreed with and that I would far rather stay at the Ministry of Power. As many noble Lords are aware, as always happens on these occasions I became Minister of Transport about an hour and a half later.

This is not the time to discuss once again the 1968 Transport Bill, other than to say that some of the key elements in the Bill led Mrs. Castle, logically as she saw it, to the 1969 London Transport Bill. Having created the passenger transport authorities and executives in the major conurbations, she was convinced, particularly since the creation of the new Greater London Council in 1965, that it would be totally illogical to have every conurbation in the country in charge of its own transport system with the exception of the biggest transport system and the biggest conurbation in the entire country. I am sure that she would not normally nominate me to speak on her behalf and I have not asked her permission, but I think that was her logic and one can see how it led to the separate 1969 Bill. She felt that control over London Transport should be transferred from central government to the new local authority.

For reasons which I will come to, I believed that was a fundamental mistake. Indeed, I felt so strongly about the 1969 London Transport Bill that I went with a paper to the full Cabinet and asked my colleagues to allow me to withdraw the Bill. Looking back, I am not surprised that they refused. In 1967, the Government and the then Labour-controlled Greater London Council had reached agreement in principle. Although political control of the council had passed to the Conservative Party under the leadership of the noble Lord, Lord Plummer, negotiations were still continuing. But there was, as I said at the beginning, a fundamental difference which followed that change. The difference was that Mr. Plummer, as he then was, recognised very clearly the enormous dangers of accepting the enormous financial obligations of the London Transport Board. I remember quite clearly, and I have recently checked my memory, that he said over and over again, "I accept that it may be necessary to subsidise on the capital account but I will never be a party to an open ended subsidy on the revenue account". That was a fundamentally different view of the same Bill.

If I may say so to noble Lords, (outsiders may regard it as cynical though others here will recognise the inevitability of it) the fact is that in the course of the Committee stage I was speaking to two audiences. I was trying to persuade the Government supporters to continue in support of the Bill and I was trying to persuade the noble Lord, Lord Plummer, kindly to take it off the hands of the Treasury, who were delighted. They were as delighted to get rid of it as the Labour GLC had been to receive it. The argument then was not about transport policy but about how to get rid of this element of public expenditure by central Government and put it on to the back of the local authority. Quite why we wanted to do that I do not know, because we have shown no greater historical ability more ably to control local government expenditure than we control central government expenditure.

We argued all the way through on that basis and in the event there was a capital reconstruction. Assets worth £270 million were transferred for £27 million to the local authority, and the £27 million was in turn split with the National Bus Company. Again this was the danger. Eyes were fixed on the capital account. But it is the revenue account which is the danger every time in a transport undertaking. As I have already said, the Treasury were delighted to see the last of this monster. I consoled myself with the thought which the noble Lord, Lord Underhill, pointed out, that local electoral considerations would exert sufficient pressures to prevent irresponsible financial policies in respect of London Transport. That was a fundamental error. It is probably too wide a subject to discuss at the moment, but, in my view, local elections have very little to do with local issues. It can be quite fairly said that no one in London had any excuse for being in doubt as to what the policies would be in relation to London Transport if Mr. Livingstone and his colleagues came to power. But, of course, people did not vote in local elections for Mr. Livingstone and his colleagues; they voted the way they did because they did not like the Conservative Government. They did not vote about London Transport. This was the fundamental mistake in my view; that the one control we thought would be there—local elections—in reality does not apply for those reasons.

The result was that Londoners found themselves faced with a financial disaster which, even if the policy had not been reversed by the courts, would rapidly have reached a level which could not possibly have been supported by the London ratepayers alone. I believe it was just sheer chance that the courts intervened when they did. If one extrapolates the rate of loss forward, it is inconceivable that ratepayers could have paid it. Many ratepayers under our strange system are not necessarily wealthy people and the hardships were very real indeed—all the more so for those who suffered very large rate increases to pay out of relatively small incomes and who did not use London Transport services for which they were being charged through the rates.

I have no doubt that London Transport will always require very substantial financial support. I know of no rail passenger transport system anywhere in the world which breaks even. There are many reasons for that. That is even more so in the case of a system which depends on and is operated largely for commuter traffic because there is no way in which a complex, expensive organisation of that size can cover itself when it is only operating efficiently for probably five hours out of 24. This is one of the key reasons why no commuter system will ever make money or wash its face. But because a socially necessary service cannot provide a convential commercial return, that does not mean that it should not be run on conventional commercial criteria. Indeed, I believe that the strictness of the commercial criteria is all the more essential when one is dealing with what is essentially a socially necessary but non-profit making service than it is with a business making money but which occasionally loses some, because things can run away with you the moment you see such a service as a bottomless bucket into which you just keep on putting pennies.

This vast, complex industry cannot be run as the part-time interest of local councillors. Indeed, it is a nonsense to regard London Transport (this is the reason why I find myself unable to support the noble Lord, Lord Underhill) as a local issue in the same category as libraries, swimming pools, parks or open spaces. As other noble Lords have said, the London commuter area stretches, for a very large number of people, to a distance of 50 miles from London. It cannot be viewed in the same way as the West Midlands conurbation or Glasgow. It is a national undertaking. Most of those commuters come to work in establishments and undertakings which are of a national or even international nature. They are not working in London shops but in Government offices of the nation, in banks, in financial institutions, and in the head offices of large British and international companies. It is an international city, and a very expensive international city too. Why, in heavens name, should a low-paid manual worker in Wandsworth subsidise the travel expenses of a highly-paid executive living in Woking? There seems to be no sense in that in terms of equity. Why should people who travel five miles to work subsidise people who travel 50 miles to work? Why indeed, particularly when those people who are travelling 50 miles do so because they find it more pleasant to live 50 miles out of London and can afford to live 50 miles out. In my view, there is no argument in logic for this concept.

I accept that in funding transport one needs to look at the total sum. I accept that there is a cost of congestion. I accept there is a cost of road accidents. I accept that there is the involvement of the tourist industry. But every single one of these things is a national cost and not a local cost in that sense. We tried a very expensive experiment with a major national asset. I conclude it is high time that the financial responsibility for this crucial element in what is the nation's economic life was transferred back to where it belongs, to national government, because it can only be seen as part of the nation's economic life, and because it is neither realistic nor fair to expect the people of London to carry this burden.

6.6 p.m.

Lord Pitt of Hampstead

My Lords, I am glad that I am able to follow the noble Lord, Lord Marsh, and I must thank him for making the case that the Government should be subsidising London Transport to a much greater extent than they are prepared to do. I agree with the noble Lord that London Transport should not have been transferred to the Greater London Council and should have remained under central Government control—or better still, that there should he a London Transport executive or undertaking covering not only London Transport but the London section of British Rail also. I believe that all these proposals are right.

However, that is not the position from which we are starting. The position we have is that the Greater London Council has policy and management obligations to London Transport. I agree with the noble Lord, Lord Mottistone, that the relevant section is Section 1. We have always thought that the relevant section was Section 1 and that this section not only gave the Greater London Council responsibility for policies but also the power to do something about these policies. It is only since the judges have stated that that is not so that we now have to do something.

It is all very well to say that some ratepayers benefit and that some do not; that some ratepayers benefit more than others; that some ratepayers are burdened more than others. The truth is that one cannot consider London Transport merely in terms of the bus and Underground services. One cannot consider it in isolation from the rest of the travel situation in London. London is a city to which people have to travel to work; to which people travel for entertainment; to which people come from abroad. Therefore, the question of how one arranges for people to travel around London is of the utmost importance.

They travel by many means. Some people walk and one must make provision for walking—that is what pavements are all about. Some people travel on bicycles, and if more and more people travel by bicycles, provision will have to be made to accommodate them. Some people travel by motorbike; I regard that form of travel as very dangerous but, nevertheless, people do travel by motorbikes. Some people travel by taxis and some by car, while others travel by bus and the Underground. It is obvious, and it has always been obvious, that the more people one can persuade to use buses and the Underground the better it will be for London in terms of travelling. There would be less congestion. There would be less need to build new roads. The logic of constricting London Transport in the way we are now bent on doing is that we cannot build more roads because we have already exhausted all the controls we can apply on cars coming into London, except one, which so far everybody has run away from, and that is supplementary licensing. Unless we are going to impose supplementary licensing for people who drive cars into London we have now exhausted the controls we can apply to those people driving cars into London and therefore we have to build more roads.

Roads are expensive, to central Government and to the ratepayers. Let us not minimise the point. When we are talking about what it costs to subsidise buses or Underground let us also talk about the cost of building more roads so that more people can use their cars. It is in that context that we must look at the whole system of London transport.

Of course, the question of low fares is a controversial one. I am not prepared to go into that debate at the moment. I personally think that it is as important that the services be satisfactory as that the fares be low, probably more important, but both procedures are necessary. You are required both to provide an efficient service and to provide a reasonably cheap service.

In terms of the cheap service, Lord Underhill was right in the way in which he presented the figure. The thing that matters to the person who has to make a choice as to whether he travels by bus or by car is what it costs. And of course Lord Mottistone is right; later on he will find that he was shortsighted in terms of the way in which he estimated his cost. The traveller will start by saying, "It will cost me X to travel by car and it will cost me X plus Y to travel by bus or underground", and he will travel by car. Therefore, in assessing what you charge those travelling by bus or Underground you have to bear in mind the possibility that if the charge is too high they will travel by car, create more congestion, and you find yourself in the position where you have to think in terms of new roads with all that that means. I cannot allow the debate to go in the way it is going, and has gone, where everyone discusses the problem of London transport in isolation, in terms of merely a question of what it costs to run the buses and tubes and what it costs people in terms of fares and ratepayers in terms of rates. There is a lot more to it than that.

It is the Government's job to see that the whole issue is viewed in perspective. So far—let us be honest with each other—the Government have signally failed; they have been so anxious to make political capital out of the fact that the judges give the present Greater London Council a knock on its knuckles. They have failed to appreciate the serious issue, but we are dealing with a serious issue and we must deal with it seriously. We must consider how best we are going to provide the sort of transport within this city which will enable people to go about their work, to go about their entertainment or anything else, so that they can get about in this city with the minimum amount of inconvenience.

As things are at the moment, we barely keep a day ahead of grinding to a halt. At the moment, by what are called traffic control measures—that is, you make a one-way street today or prevent a right-hand turn tomorrow—we have managed to keep ahead of grinding to a halt; by controlling the costs of people coming into London through parking restrictions, the cost of parking and so on, we have managed to impose some control. The question of supplementary licensing has been on the table for a long time and everybody has run away from it. It may well have to be faced. In the final analysis the question is how public transport fits into the scheme of things, and it is there the costs come in; what do you demand of those who use it in order to encourage them to use it. That is of the utmost importance.

Now we come to the Bill. I am not going to pretend that the Bill goes far enough, but it does help. It does indicate that the Greater London Council, in planning its transport policy, in discussing what should be done, can consider with the London Transport Executive what grant is necessary for revenue purposes and can make such a grant. That is what this Bill is enabling it to do and that is right. I know that Lord Plummer will say no, as he always said, capital grants, yes, revenue grants, no. It is quite a sensible stand to take. But even before the end of his regime we had moved from not merely making capital grants but also making revenue grants. The fact remains that when we eventually have to decide how to provide this service which is required we cannot just think merely of making capital grants; all of us who have anything to do with it know that revenue grants also are necessary.

If there is the problem of open-ended grant—I do not want to take time to argue that—that is where the control needs to be. My own view is that central and local government should always be in a position where they can together discuss and agree on levels of grants for these purposes. The problem we have had is that central Government merely wanted to run away from their responsibility in making their fair contribution to the running of London.

6.18 p.m.

Baroness Denington

My Lords, I apologise to your Lordships for inflicting on you one more speech beyond the list which is in your hands. I had not thought to be here today, but since I am I feel I must make my contribution to this discussion. It will be perfectly plain from all that has been said—and I was fascinated to listen to the speech of the noble Lord, Lord Marsh, because I was on the council at the time when he was acting in his governmental capacity, and I remember the whole story, as does the noble Lord, Lord Plummer—that we are discussing a very difficult and, to my mind, national matter. I know we are talking about London Transport, but London, as we know, is the capital city, and the health of the capital city is a national matter. I think we are talking about the health of the capital city, and it is from that standpoint, and not from a political standpoint at all, that I want to talk.

The noble Lord, Lord Pitt, has mentioned, as have others, the traffic problem. The congestion problem in London is acute. Those of us who were on the old LCC and then the GLC, have lived with it for a long time. It is a matter of grave importance to the capital city that, somehow or other—and we have not found that it is for want of thinking or trying—we must find an answer to the congestion problem.

We have thought of supplementary licensing. How on earth do we enforce supplementary licensing? Can we have a blockade or a filter point on every road that comes into London and then have periodical checks? We could check every day, but even if we had periodical checks we would have a queue five miles long of vehicles waiting to come into London while we did the checking. That would be quite unacceptable. There has been talk of road pricing—it does not work. We have looked at everything. There has been talk of trying to have essential users only coming into London and trying to restrict the parking spaces under the office blocks which were built in the 1950s and 1960s when local government was insisting on having vast parking spaces. Now it does not want them at all because if people have parking spaces they drive in and congest the streets.

I was a member for a time—and it was a quite fascinating experience—of the South East Economic Planning Council. The industrialists who sat on the council pressed on us over and over again the enormous costs for industry of congestion, and particularly congestion in London. The council was pressing the Government—and if it were in existence it would still be pressing the Government—to get the M.25 built; it is still only built in bits and not yet finished. In my view the M.25, desirable as it is, will not do very much to reduce congestion in Central London because it is too far out. It is the third ring of a concept of two inner rings, neither of which are being built. We are going to get only the third ring and so it will not do that much to help Central London.

There is now very great concern about the loss of population from London. There is equal concern about the loss of jobs from London and the loss of industry and offices from London. I was concerned in the 1960s with decentralisation from London. Indeed, I was chairman of the New and Expanding Towns Committee of the GLC. Why did industry go out? It is perfectly true that it went out because when it wanted to build new factories it wanted green field sites which were easier to build on. The land was cheap and it could build a one-storey or at most a two-storey building very much more cheaply than in London. But the other reason why industry was driven out was that it wanted to escape the congestion of Central London, and not just Central London, but London generally, because of the on-costs of congestion. Industry went out because its employees arrived late at work. It said that it lost production time because of the difficulty of public transport. This is all information that came to me from the industrialists who moved. Employees arrived tired and worn out and suffered from ill-health because they were waiting for the bus that never came—and the bus never came not because London Transport did not want to run a decent service but because of the congestion. Again we come back to congestion.

Why did the people go out so willingly? Sometimes we hear that they were driven out. That is not true at all. Everybody who went, chose to go, and they went again because they were sick of conditions in London—sick of waiting for buses. They were only too glad to go. They also went out for a house and a garden because they did not want the flats that were being built in London.

So we come back to the fact that we have to get rid of London congestion. If London is to flourish and if we are not to see the essential Central London institutions—the banking institutions, the financial institutions and the international institutions—moving out, something has to be done about congestion and also about London fares, because 80 per cent. of the workers in Central London in these important international and banking institutions travel by public transport. While fares are going up and up, I think that we shall find that people will not bring in their cars, because they cannot bring in their cars, the streets cannot be widened. I need not go over that argument because your Lordships know that the streets cannot be widened. So I think that, in the end, unless we do something, the institutions will move out. To me this is a national matter. It concerns London deeply and it concerns London government deeply, whatever its political persuasion.

However, I beg the Government not to regard this for one single moment as a political matter. It started as a political matter with Bromley. Bromley has always hated the GLC, whether it is Tory or Labour. Bromley never wanted to be integrated in the local government reorganisation. That is where this matter started. But for goodness sake! I hope that everyone who is concerned with this vital problem will rise above politics and see that something must be done. Whether it be the Bill before the House today, or whether the Government come up with something else, I wish that the noble Lord, Lord Beltwin, if he does not like what is in front of him now, would get up and say, "We shall take it away but will come back with something". If only the noble Lord, Lord Bellwin, would say that, it would be a step along the road to a solution. What the solution is, I do not know. It needs someone very, very wise to find it.

6.27 p.m.

Lord Plummer of St. Marylebone

My Lords, I should like to rise and support the words of my noble friend Lord Mottistone. Indeed, I support, wholeheartedly what the noble Lord, Lord Marsh, has said. At the time of our negotiations, which I must say I enjoyed very much, I was urged to accept a 75 per cent. write-off of London Transport's debt. But I pursued the matter with some opposition from the noble Lord, Lord Marsh, to the point where we got 100 per cent. I do not think that that was, in fact, a very clever thing to do, because it brings me to the point that local government, and indeed, the very efficient local government officers, are not really trained by reason of their profession to deal with a commercial undertaking. On the night when the noble Lord, Lord Marsh, and I finally agreed terms, I remember saying that I thought we ought to have a very much greater write-off than the 100 per cent. which in fact we got, and that was because it was not being looked at as a commercial undertaking, but was merely being looked at with the eyes of local government.

The trouble is that London Transport is looked upon as a rather nice new toy which the councillors can play with because it is rather like playing with trains. It is a much more serious matter than that. Indeed, I agree with the noble Baroness, Lady Denington, that it is a national matter and it is a very difficult national problem which affects the whole of the health of this great city conurbation.

I am very concerned, as I know the noble Baroness was at the time, with the problem of the low paid worker in London. The noble Baroness, Lady Denington, mentioned the new and expanding towns policy and how industry was asked to move out to the new towns. But I must challenge her on one point, which is, of course, that they went not only because they wanted a greenfield site, but because they were paid out for the site on which they were already in London and they took it with both hands. Very often those sites were turned into housing estates. Consequently there are a large number of low-paid workers who still have to move across London to get to their jobs, and they cannot be expected to do so if we have a very high fares policy.

How shall we deal with this? I firmly stick to my point of view that once you are on revenue subsidies, you are on a slippery slope and you cannot climb back up that slope. If you can stick to capital subsidy—and I agree that it is very difficult to do so—you have a measure of control over what you are expending. If you once get on to revenue subsidy you no longer have any control over the money that you are handling. I must say that the policies at County Hall at the moment cannot reassure us that they know what they are doing.

There are three parties involved in the subsidy to London Transport. There is the rarepayer; there is the taxpayer; and there is the rarepayer. All of them contribute very large sums indeed to the undertaking. All of this is bound up with another very large transport undertaking which works in the capital, and that is British Rail, where the subsidy very largely is provided by the Government. It seems to me that if you are to have a centralised transport policy in London, in view of the way in which the whole undertaking has been handled in the past year, I agree with the noble Lord, Lord Marsh, that it would be better to put it back into Government hands.

Lord Tordoff

My Lords, I hestiate to interject, but this seems a little difficult coming from a Government supporter. What will he do if the Government will not take it into their hands? Will London be simply left to rot?

Lord Plummer of St. Marylebone

My Lords, I think that recent events may well persuade the Government that in the control of subsidies they may well be advised to take it back into their hands in order to see that the money is well spent. I should mention that in the days when Mrs. Castle was persuading the GLC to take over London Transport she offered an alternative which was a passenger transport authority. That, would have had the power to precept on the ratepayer, but the ratepayer would have had no recourse as to the amount that the PTA asked. We thought that this would merely create what I would call another ILEA in London, and would be the worst of all worlds. Therefore, very reluctantly indeed, with the pistol at our heads, we proceeded with the negotiations to take it over.

What it really amounts to is that there must be a reasonable balance between what the taxpayer pays and what the farepayer pays. Recently that has become so distorted that many firms are now leaving London and going off to places like Swindon, Bristol, Bournemouth, Milton Keynes and Peterborough as fast as they can. Indeed, it is quite clear that a low fare and high rates subsidy is causing a vast amount of unemployment in London, which is the reverse of what was expected. I hope that this whole matter will be reconsidered on a high level, and I fear that this amendment Bill which is before us today will not be of great help.

6.36 p.m.

Lord Ponsonby of Shulbrede

My Lords, I rise to speak in this debate following two former chairmen and one leader of the GLC, so I fear that perhaps in some ways the debate is becoming slightly incestuous. In introducing this Bill my noble friend Lord Underhill has highlighted the problems of London Transport. His Bill, of course, enables us to restore to the GLC the powers which we all thought it had prior to the Law Lords' judgment.

I myself have been concerned with the problems of transport in London for a number of years, particularly during a period when I was chairman of the Central Area Board of the GLC, at a time when the noble Baroness, Lady Denington, was chairman of the Transport Committee of that council. As she rightly pointed out to us—it has always been a concern of the GLC—the vitality of central London is a matter of great importance to the nation as a whole because on this depends the success of London as a business centre and depends the convenience of its inhabitants moving about London, and for all these things to happen it is essential that traffic flows freely in the central areas.

As we have been reminded in this short debate by various speakers, the changes in policy towards London Transport have varied and changed over the years. Of course, this has very much coincided with the increasing problems brought about by the ever increasing number of people in and outside London who own cars. As the noble Baroness pointed out, it is curious to think that up until the early 1960s people were positively encouraged to bring their cars into central London by the fact that at that time those building new offices were encouraged—indeed, compelled—to provide a proportion of car parking spaces for their employees underneath the office blocks which they were building. As we know all too well, after a period of time this policy was seen to have been folly. The effect of it, of course, was that in the early 1960s congestion was slowing down the average speed for each bus journey, and as it slowed down fares had to increase further in order to help London Transport meet its bills.

We then moved into the period when parking restrictions were introduced, but the downward spiral of bus usage continued, and fares and congestion continued to grow. Then in the late 1960s more measures were introduced, with some success, in order to get the buses moving again, and priorities were established in the form of bus lanes further to increase the speed with which they managed to move around the capital.

These measures met with some success and were, for a time, helped by the hike in petrol prices which occurred at the time of the Six-Day War. Inevitably, the successes from these particular measures were limited and other ways of solving the capital's traffic problems had to be examined. In particular, it was seen that groups of users should be persuaded to change their mode of conveyance into central London, and the obvious candidate for such a change was the commuter who basically is somebody who brings his car into Central London, parks it, and does not use it again until he returns home in the evening.

Having tried the various measures which I have described and various noble Lords have spoken to, the Greater London Council eventually saw that there were two extreme solutions to these particular problems. The problem of solving it with a carrot or solving it with a stick. The carrot, the positive encouragement for people to use public transport; the stick, to stop commuters bringing their cars into Central London.

Both my noble friends Lady Denington and Lord Pitt have mentioned the question of the supplementary licence fee and the cordon proposal which would stop people from coming into Central London without going through a checkpoint, and would cause great congestion on the perimeter of that area. This has recently been highlighted in the press. This solution would not be one which would be acceptable to Londoners as a whole. This particular solution, which was highlighted in the press recently, was rejected by the Transport Committee chaired by my noble friend Lady Denington some seven or eight years ago.

It can be seen that the only solution to London's traffic problems is a carrot solution, a positive solution to encourage people to use public transport in Central London. As the noble Lord, Lord Underhill, pointed out in moving the Second Reading of his Bill, the cheap fares policy in a sense added proof to the ideas behind this particular solution by the fact that immediately it was introduced there was a 10 per cent. increase in the usage of public transport in Central London. As the noble Lord, Lord Underhill, pointed out and was underlined by the noble Lord, Lord Tordoff, since the increases have come in, that increase which had been experienced has been followed by a decrease of approximately 17 per cent. in usage.

Unfortunately, this experiment lasted for a very short time. However, it had the unique effect of providing that a solution along these lines could help solve some of London's serious congestion problems. Also, we have been able—and this has been highlighted in the press a number of times recently—to make a comparison of cheap fare systems and the amount of subsidy paid to other metropolitan systems throughout the world. Indeed, these surveys have shown that the level of subsidy being paid in the transport system under the "fare's fair" policy was no more or no less than the average subsidy being paid to other metropolitan city transport systems. As the noble Lord, Lord Marsh, reminded us no commuter system in the world pays its way.

There may well be arguments about how fares should be subsidised. The noble Lord, Lord Mottistone, in his contribution queried the fact that certain groups received the advantage of cheap fares. He came to the support particularly of the commercial ratepayer. One always ought to realise when one is making the sort of comment that the noble Lord, Lord Mottistone, made that what one is actually talking about is a transfer. He compared his own personal situation of how he was paying more on rates and he got it back through cheaper fares. If one is thinking about commercial employers, or perhaps the shopkeeper is the best example, the shopkeeper would have to charge more for the goods he sells, albeit fractionally but the person who buys from him will have received the advantage of the cheaper fare to reach the particular shop concerned. Likewise, one can say with regard to offices and commerce as a whole that the employees of particular firms will have received the advantage of the cheap fares, and no doubt that could be reflected in the rate of wages paid at the end of the day. These are fractional, but if one thinks of it in total, this is exactly what has happened.

Lord Mottistone

My Lords, might I intervene before the noble Lord moves on? It is fractional so far as the individual goods being sold are concerned; maybe it is fractional if you can persuade people to take less wages if your company is not doing well—that is rare; but it is not fractional when you are paying the rates as a commercial ratepayer.

Lord Ponsonby of Shulbrede

My Lords, it is fractional if it is broken down. I should like to take the noble Lords, Lord Mottistone and Lord Tordoff, off on another point. I am afraid this is a hobbyhorse of mine. They both raised the red herring about the tourists not paying sufficient tax, and raised the question of a tourist tax. One always feels compelled to remind people who raise this point that the tourist, through the VAT which he pays on his hotel bill and the VAT which he may pay in other ways, produces many millions of pounds of tax revenue each year for the Government. That should not be forgotten.

Returning to London Transport, what we have so far as London Transport is concerned, basically, is that more of their total income is coming from subsidy and less from fares. As we have seen, for a metropolis this appears to be a more effective way of apportioning the total amount of money needed in order to run an effective transport system in a metropolitan area.

How a subsidy to London Transport should be paid has been raised by a number of noble Lords. Lord Underhill's Bill provides a stop-gap solution to this problem. It returns the GLC to the position in which it was before the Law Lords' ruling. But, as several noble Lords have hinted, this may not necessarily be the right and ultimate solution to London's traffic problems. The noble Lord, Lord Marsh, has said that the level of subsidies should not be paid by the ratepayers alone. He in fact advocated, and he was supported by the noble Lord, Lord Plummer, that London Transport should be handed back to national government. I think indeed that my noble friend Lord Pitt of Hampstead agreed with this solution.

Lord Pitt of Hampstead

My Lords, I indicated that I would not quarrel with that solution.

Lord Ponsonby of Shulbrede

However, my Lords, the noble Lord, Lord Pitt of Hampstead, went on to say that it was of the utmost importance how people travelled around London, and underlined the importance how people travelled around London, and underlined the importance which I do not think was underlined by many other speakers, of having an efficient and effective system; of having a high quality of service. The question of a high quality of service can go hand in hand with the other points we have mentioned.

The noble Lord, Lord Plummer, raised the difficult question of how to ensure that money is well spent by London Transport Executive once they receive it. He reminded your Lordships that when the agreement relating to the 1969 Act came about, he rejected the possibility of a passenger transport authority, and I am sure he was right to reject that solution to the problem. The situation today, with an elected authority determining the policies of London Transport—an authority which spelt out, as my noble friend Lord Underhill pointed out, in its election address what it intended to do—gives an area of accountability.

However, I agree in some ways with my noble friend Lady Denington that the solution to the problem is not easy. I hope we shall not regard this as a political problem; it affects all Londoners and the vitality of London as a whole, and that should be of the greatest concern to us all. Lady Denington called it a national problem. I hope your Lordships will view it in that way. As I said, while the Bill is not the final solution to the problem, it is a solution which is available to us now, and I hope your Lordships will give it a Second Reading.

6.52 p.m.

Lord Bellwin

My Lords, I begin by saying that I, too, am not without some sympathy for what the noble Lord, Lord Underhill, said in moving the Second Reading of this Bill. Nevertheless, I must ask your Lordships to oppose it because I have to say that it is simply not the right way to tackle the problems of public transport in London.

Nobody could deny there are problems—very serious ones. Fares on London Transport have just doubled. I regret that as much as anyone. As has been said, transport is one of the major factors that people take into account when they decide where to live or work. They cannot change them overnight. They expect some stability. Of course, the cost of transport is liable to change, like anything else—because of world oil prices and many other factors; but people are entitled to expect that fares should not jump up and down because of the way transport is run and decisions are taken. The GLC has been responsible for running London Transport for 12 years. It is surely not without significance that for 11 of these 12 years, under both parties in County Hall, people knew where they stood; but suddenly, in the last year, all that has changed.

It is easy to say it is all due to the Law Lords and that all we need do is reverse their decision and all will be well. The GLC are trying to show that fares have doubled because they are no longer allowed to give London Transport a reasonable amount of subsidy. They have put out figures which take account of only part of the subsidy which London Transport gets. In fact, London Transport is still getting a massive amount of subsidy from taxpayers and ratepayers this year. Even leaving aside the £125 million needed to make good last year's deficit—and the noble Lord, Lord Ponsonby, said the experiment lasted only a short time; they managed to run up a £125 million deficit—they will be getting around £250 million now, nearly one-third of their total costs. Apart from last year, that proportion has remained fairly constant over the last five years. The noble Lord, Lord Pitt, said the Government should not run away from their obligations. There are those who say they should have run much faster.

Lord Pitt of Hampstead

My Lords, may I ask the Minister to compare the contribution the Government make to London Transport with the contribution they make to British Rail?

Lord Bellwin

I should have thought we were not talking about the same thing by any manner of means—

Lord Pitt of Hampstead

Why not?

Lord Bellwin

—and if the noble Lord is suggesting that there should be some dramatic reduction in the subsidy to British Rail, then that is a point of view.

Lord Pitt of Hampstead

No, my Lords; raise the contribution to London Transport.

Lord Bellwin

My Lords, why have fares doubled? To put what has happened in perspective, we need to relate the new fares to what they were before they were cut last October. In fact, they are now about one-third higher in cash terms than they were six months ago. The last increase before that was in September 1980. If the previous policy had continued, there would have had to be some increase since then to take account of increased costs. The new fare levels are in fact about 15 per cent. above what would have been needed to keep up with inflation over the last 18 months.

Many people would say that fares were already too high. London Transport has been in a spiral of increased costs, leading to increased fares, leading to a loss of passengers, lower revenue and more fares increases. There are underlying problems which cannot be solved simply by increasing subsidies if the available resources are not used effectively. I quote from a Government White Paper on Transport Policy: subsidies transfer the cost of a service from the traveller to the taxpayer or the ratepayer. And the traveller is often a taxpayer or ratepayer himself. To use subsidies to disguise from people the cost of the services they are paying for is pointless". That White Paper was published in June 1977 by the then Labour Government, and I agree with what it said.

The real problems which need to be tackled are how to tailor services to meet the changing demand for public transport, how to make it more responsive to the needs of passengers and how to make it more efficient. Over the last 10 years, the number of pas- sengers has fallen by about 20 per cent., yet London Transport still employs the same number of staff. The number of vehicle miles per employee has fallen over the past 10 years, whereas the National Bus Company and municipal bus operators have increased the number of vehicle miles per employee by about 15 per cent.

The passenger transport executives in the other conurbations have not done quite so well, but their costs are still much lower than London Transport's—by nearly £100 million a year for the number of bus miles run by London Transport. That is equivalent to half the extra revenue they will obtain from the recent fares increase. Of course I accept that London is different and that traffic congestion is much worse, and although the noble Lord, Lord Pitt, does not think so, the fact remains that fares would not be at their present level if costs had not gone up so much. One cannot simply ignore the whole point about what it costs. The policy of the present GLC administration would have made matters still worse, by running more bus miles and taking on more staff. Their policy would have cost an extra—I repeat, "extra"—£250 million this year. But there was no attempt to see how the money could be used to improve efficiency. For example, London Transport has said that to install automatic fare collection machinery would save substantial numbers of staff, but that was not part of the policy. London Transport have for many years tried without success to introduce one-man operation of tube trains.

My noble friend Lord Mottistone, the noble Lord, Lord Tordoff, and others—though not the noble Lord, Lord Underhill—pointed out what I must repeat tonight; namely, that the problems of London Transport are like so much of our industry: change has been resisted for too long. I do not underrate the human problems involved; and it is not only the fault of the people who work for London Transport. These problems cannot be solved overnight. But it is totally misleading to pretend that they are all due to the wording of an Act of Parliament and that all we have to do is change the words and all will be well again.

I understand the desire of the noble Lord, Lord Underhill, to see the legitimacy of subsidy payments placed beyond doubt. I have said that the existing law allows a reasonable amount of subsidy, and the noble Lord asks, "How much is reasonable?" But that is not a problem. It has never been a problem in the past with reasonable people. The GLC is pretending that the Lords' judgment requires London Transport to break even next year. It pretends that the only choice is between its policy of doubling the amount of subsidy at the expense of the ratepayers on the one hand and no subsidy at all on the other. No other previous GLC administration took that view. No other previous GLC administration ever had to be challenged on this point. The House of Lords' judgment has not changed the law. It has not said that the subsidies given by previous administrations were unlawful. I repeat, because it must be fully understood, that the real responsibility for the present situation lies fairly, squarely, and solely with the present GLC administration.

I am not going to rise to any bait about becoming involved in the politics of the matter. The noble Lord, Lord Tordoff, and I think the noble Lord, Lord Pitt of Hampstead, and certainly the noble Baroness, Lady Denington, stressed that we should not allow politics to become part of the issue. Would that that were so. Would indeed that politics did not come into it at all; and certainly I am not going to make an issue of that tonight. But the fact is that there are those who would say that the behaviour of the present GLC administration over its fares increase has been the behaviour of people who are not concerned to take the problems as seriously as we are taking them tonight, but are simply using them—and indeed they have said so—to mount political campaigns. But I shall say no more about that now, much though I am tempted to do so.

I am sure that the majority of people must feel that these politicians should stop campaigning and drop their slogans; let us get together to find a solution to the problems. My right honourable friend the Secretary of State has had recent meetings with Mr. Livingstone, Sir Peter Masefield, the chairman of London Transport, and the unions representing London Transport workers. He has asked the GLC to consider whether the £250 million which London Transport is now receiving in subsidies is being spent wisely and whether Londoners are getting proper value from it. He has asked them to examine carefully how Londoners can get better bus and tube services with the resources likely to be available.

Officials of the Department of Transport and the GLC are undertaking a joint exercise to work out options for London Transport's budget for 1983 and to see what levels of service could be provided and how much subsidy would be required. It will then be possible to consider whether the degree of subsidy required would be legitimate and, if not, what changes in the law would be required. Here I come to the point made by both the noble Lord, Lord Tordoff, and the noble Baroness, Lady Denington. I always like to say something to please her if I can; sometimes I do, though more often I do not, I fear. However, I am sure she will be pleased to hear me say that the Government are not ruling out the possibility of further legislation.

But I must make it crystal clear that there can be no question of giving the GLC a free hand to behave irresponsibly and to place massive extra burdens on London. Whether the Bill of the noble Lord, Lord Underhill, would actually allow that, I am not quite sure. On a number of occasions he has asked me to say how much subsidy is reasonable. I have tried to cover that point. With respect, I suggest that his Bill does not give us the answer. We do not know how the courts would interpret it, and it would be wrong of me to take drafting points on a Bill of this kind. That is not the reason why I am opposing the Bill, but it illustrates the difficulties. If legislation should be needed to clarify the law, it would have to be drafted with very great care.

I conclude by referring to what is the real question. As was rightly said by my noble friend Lord Plummer of St. Marylebone and by the noble Lord, Lord Marsh (in a splendid speech), it is the level, the scale, the degree and the extent of subsidy that we are talking about. That is the issue. The noble Lord struck what was for me a very personal note when he referred to what happens in local elections. Do I not know how right he was about what happens in local elections, having been on the receiving end, and looking around the Chamber I see other noble Lords who are nodding agreement with me on that point. We have all done what we thought was a jolly good job, only to be turned out by the electorate, perhaps because our own party was in power at Westminster, and our efforts were all to no avail.

What we now need is a new approach whereby the GLC considers what services are required and what fares would make the best sense, and then decides how costs are to be met, taking full account of all reasonable economies. That cannot be achieved simply by changing the words in the legislation. In fact, there is a real risk that legislation at this stage, however well intended, would actually divert attention away from what really needs to be done while the lawyers try to work out what it means. Therefore, I hope that the noble Lord, Lord Underhill, will understand why we do not want to see the Bill go further.

7.6 p.m.

Lord Underhill

My Lords, I am sure that at this hour, after a very interesting debate, your Lordships will not expect me to speak at any length, but I should like to thank all of your Lordships who have taken part. I noticed that among those taking part were three former chairmen and a former leader of the GLC, and I should like to thank them for their contributions. I also wish to thank the noble Lord, Lord Tordoff, for his supporting words.

The noble Lord, Lord Mottistone, thought that Clause I was the important provision. That makes it clear that there should be an integrated and efficient service. The GLC, taking into account the legal opinion it has received, makes it quite clear that such a service cannot be provided unless there is a subsidy for the revenue account. Of course, it could be done quite simply if the GLC wanted to slash services and have less public transport; that could be done quite easily.

I appreciate what the noble Lord said about the commercial ratepayers. In replying to a debate it would be wrong to introduce new material, but there is considerable evidence of statements by employers in Central London that they are becoming increasingly perturbed over the difficulties facing their staff travelling into Central London, due to traffic congestion and the high cost of travel. That is what employers have stated.

I appreciate the generous remarks made by the noble Lord, Lord Marsh, about how I had referred to his statements, to which, 1 am very pleased to note, he still adheres. I am sorry that he said that he cannot support the Bill.

The important question that we must consider tonight is, what are we going to do now?—not, what are we going to do in two, three, or four years' time? We have the problem now, and until we do something the transport situation in London will remain very difficult.

The noble Lord, Lord Bellwin, extended sympathy to me, but then called upon noble Lords to oppose the Bill. If we took at face value everything that he said, we would question subsidy for British Rail and subsidy for the National Bus Company—which, perhaps I ought to remind your Lordships, is still publicly-owned; the noble Lord praised its work—and we would do away with the transport suplementary grant, which enables county councils throughout England and Wales to make grants towards public transport, and for other purposes. Of course, everyone recognises that without those subsidies there could be no transport system in this country. I was very pleased that the noble Lord, Lord Marsh, emphasised the position of public transport throughout the world.

There have been appeals not to make this a party political issue. It seems that other countries do not do that, even though they have public transport, and have subsidies far higher than ours. The subsidies to the railway system and the capital public transport system in this country are the lowest in the world. They do not seem to make party political issues out of it, and I hope we shall not make a party political issue out of this tonight.

The noble Lord said that the Government do not rule out further legislation but he will not give any free hand for the present GLC to behave irresponsibly. I emphasised in my speech that the Law Lords' ruling, which confirmed the 1955 Act on the question of fiduciary responsibility, still obtains. Therefore, even with my Bill the GLC would still have to behave responsibly.

But what is overlooked in the comments of the noble Lord, Lord Bellwin, is that the legal opinions to which referred—these are not the GLC opinions, not the London Transport opinions; these are opinions from learned counsel—say that the law must be changed, that something must be done quickly, because otherwise the existing interpretation of the law is going to make it absolutely impossible for the GLC and London Transport, as they make their plans during the next two or three months, to budget for next year. Unless the constraints on them are removed, then the budgeting will undoubtedly mean further cuts in services; and, as other noble Lords have said, cuts in services mean further congestion. Therefore, we are not considering only the benefit of the people who use public transport, we are considering employers, and we are considering everyone who benefits by the removal of traffic congestion from the streets of London.

Much as I should like to be able to ask leave to withdraw this Bill I cannot unless, frankly, the noble Lord can get up and tell me that very quickly the Government will resolve the position and clarify, the law, because all responsible opinion says that the law must be clarified and must be changed. If the noble Lord will say that the Government will do that, then I will not press this to a Division, but unless that can be done then I must ask the House to give this Bill a Second Reading.

7.12 p.m.

On Question, Whether the Bill shall be read a second time?

Their Lordships divided: Contents, 46; Not Contents, 71.

Amherst, E. Llewelyn-Davies of Hastoe, B.
Ardwick, L. McGregor of Durris, L.
Avebury, L. Noel-Baker, L.
Aylestone, L. Oram, L.
Bacon, B. Peart, L.
Banks, L. Phillips, B.
Beaumont of Whitley, L. Pitt of Hampstead, L.
Bishopston, L. Ponsonby of Shulbrede, L.
Collison, L. Rhodes, L.
David, B. Ross of Marnock, L.
Davies of Leek, L. Seear, B.
Denington, B. Stewart of Alvechurch, B.
Glenamara, L. Stewart of Fulham, L.
Gosford, E. Stone, L.
Gregson, L. Taylor of Mansfield, L.
Hampton, L. Tordoff, L.
Harris of Greenwich, L. Underhill, L. [Teller]
Howie of Troon, L. Wells-Pestell, L.
Jacques, L. [Teller] Whaddon, L.
Jeger, B. Wilson of Radcliffe, L.
Jenkins of Putney, L. Winstanley, L.
John-Mackie, L. Winterbottom, L.
Kennet, L. Wynne-Jones, L.
Airey of Abingdon, B. Home of the Hirsel, L.
Alexander of Tunis, E. Hylton-Foster, B.
Auckland, L. Inglewood, L.
Avon, E. Kinloss, Ly.
Balerno, L. Lane-Fox, B.
Bellwin, L. Lauderdale, E.
Beloff, L. Long, V.
Belstead, L. Lyell, L.
Bessborough, E. Mackay of Clashfern, L.
Broadbridge, L. Macleod of Borve, B.
Buxton of Alsa, L. Marley, L.
Campbell of Alloway, L. Marsh, L. [Teller]
Cathcart, E. Mottistone, L. [Teller]
Chelwood, L. Mountevans, L.
Cockfield, L. Murton of Lindisfarne, L.
Colville of Culross, V. Newall, L.
Colwyn, L. Onslow, E.
Cork and Orrery, E. Orkney, E.
Craigavon, V. Orr-Ewing, L.
Crathorne, L. Plummer of St. Marylebone, L.
Crawford and Balcarres, E.
Cullen of Ashbourne, L. Rankeillour, L.
Drumalbyn, L. Redesdale, L.
Ellenborough, L. Renton, L.
Elliot of Harwood, B. Romney, E.
Elton, L. St. Just, L.
Ferrers, E. Sandys, L.
Fortescue, E. Selkirk, E.
Gardner of Parkes, B. Sharpies, B.
Glanusk, L. Skelmersdale, L.
Glasgow, E. Spens, L.
Glenkinglas, L. Stodart of Leaston, L.
Gowrie, E. Swinton, E.
Grafton, D. Trenchard, V.
Hailsham of St. Marylebone, L. Windlesham, L.
Wise, L.
Harmar-Nicholls, L.

Resolved in the negative, and Motion for Second Reading disagreed to accordingly.

Bill, by leave, withdrawn.