§ 2.57 p.m.
§ Lord Trefgarne
My Lords, I rise to move that this Bill be now read a second time. The origins of this Bill are to be found in two recent documents, the House of Commons Select Committee Report of 1982 on Transport in London and the Government's White Paper of July last year on public transport in London. One message emerged quite clearly from these documents. It was that the arrangements for the political and financial control of London's public transport, established in the 1960s, have not worked well. The Select Committee concluded that a better deal was needed for the passenger in London and that the responsibility for public transport in London should be removed from the Greater London Council.
The two documents differed, however, over who should take control of public transport in London. The Select Committee wanted what it called a Metropolitan Transport Authority, with responsibilities extending over the whole field of transport in London, including roads and traffic management as well as public transport. This was an interesting and radical idea. The Government considered it very carefully, but eventually concluded that it simply would not work. They believed it would reproduce many of the undesirable features of the present system, and that the proposed body would sit awkwardly between the Government, on the one hand, and the London local authorities, on the other. Above all, they believed that the body chosen to run London Transport would have a big enough task to do without taking on the whole of London's other transport problems as well.
By any standards, London Transport is big business. It has an annual turnover of £850 million; assets (as far as they can be valued at all) of the order of £2 billion; and it employs about 57,000 staff (almost as many as the Royal Navy). In 1970, the year in which the GLC took control of London Transport, the size of the undertaking was much the same as it is now, in terms of the number of staff employed. Yet there is one huge difference between then and the present day. London Transport then made little or no call on public subsidy. Admittedly there was a substantial write-off 465 of capital debt at the time of the transfer. Indeed, this was one of the conditions laid down by the GLC for the support of the 1969 Act. They very sensibly wished to take over a concern which was financially viable. The transfer took place under those conditions. Indeed, there were no revenue subsidies from the GLC to the London Transport Executive until 1974.
By contrast, this year the GLC are planning to pay revenue subsidies to London Transport of £190 million and total grants, including capital grant, of around £350 million. If we add to this figure support to British Rail services as well, the total subsidy to public transport in the capital is probably in excess of £500 million. So when we say that London's public transport is "of national importance" (and the Select Committee said that too) we mean it in two senses—first, in the obvious sense that adequate and efficient public transport is vital for the economy and well-being of the capital city and, by implication, for the nation as a whole, but secondly in that the public subsidies involved are so massive that they become a significant item of public expenditure in themselves.
Of course public transport subsidies are now taken for granted, and some level of subsidy is likely to be with us for some time. Subsidies to public transport undertakings became widespread in the 1970s. This reflected the steady decline in the numbers of passengers with the rise of car ownership, and the rapid rise in costs especially in this country in the mid-1970s.
Yet, when all is said and done, no one can be satisfied with the performance of London Transport over this period. Since 1970, costs per vehicle mile, for example, rose in real terms by more than two-thirds for the buses and by about 50 per cent. for the Underground. The unit costs of bus engineering have increased many times in cash terms and more than doubled in real terms since 1973. While passenger demand has declined over this period by about a quarter, both capacity in terms of vehicle miles and manpower have remained about the same. In other words, they have gone on running the buses and trains regardless.
During the passage of the 1969 Act through your Lordships' House—and that was the Act that among other things transferred responsibility for London Transport from the Government to the GLC—my noble friend Lord Nugent of Guildford said:My advice to the GLC is to shun like the plague a subsidy on current account. I believe nothing is more demoralising and weakening to management than a subsidy on current account."—[Official Report, 10/6/69; col. 543.]Those were prophetic words indeed. If the overriding aim is always to keep fares down and service levels up, whatever the pattern of demand, then there will never be the right incentives to improve management efficiency. In the end it is the taxpayer and ratepayers who have to pick up the Bill. And that is exactly what has happened.
These financial realities behind London Transport's performance have been a cause of mounting anxiety to successive Governments. But the other main factor leading to the Bill before us today has to do with an important aspect of public transport in London as a whole. That is the question of the relationship between 466 the services provided for London by British Rail and those provided by London Transport.
Over the years, these two great transport networks, the trains on the one hand and the buses and tubes on the other, which between them account for some 7 million journeys each working day, have been planned and operated almost entirely separately. There are different fare structures; and different investment criteria. The facilities for passengers when they move between the different modes leave much to be desired. Attempts have been made over the years to establish some measure of co-ordination between the two systems, but with only modest success. The overriding obstacle to progress has been the fact that the two systems are answerable to different political masters and operate within totally different financial regimes. Under these conditions the framework for joint action and joint achievement is simply not there.
The Bill, in Clause 2, imposes duties on LRT and British Rail to co-operate with each other. In fact, the 1969 Act imposed similar duties. The difference now is that the organisational framework will exist under which these arrangements can flourish. My right honourable friend has already announced that he proposes, as soon as the Bill becomes law, to establish liaison arrangements between the Department of Transport, LRT and British Rail, which he personally will supervise.
In the Government's view, the matters I have mentioned constitute good and sufficient reasons for the broad proposals in the Bill before your Lordships. Let me emphasise this by correcting one misconception which has given rise to much debate. This Bill has nothing to do with proposals currently being discussed in another place for the abolition of the GLC. I can assure your Lordships that decisions leading up to the introduction of this Bill were taken before, and independently of, the decisions on abolition. As I have endeavoured to make clear, they are based on arguments about transport policy. The inescapable conclusion to which the Government came when they examined the problems I have outlined was that the Government must themselves take back control of London Transport.
I will not deny that recent events concerning the GLC and London Transport may have confirmed the Government in the rightness of their decision. But that is essentially a different matter.
I believe that the GLC has been extraordinarily provocative, to put it no stronger, in the steps it has recently taken to pack the LT Board with its political nominees, quite contrary to the advice from the chairman, whom it itself appointed; and in the expensive propaganda campaign it has been waging to combat the Government's proposals in this Bill. I suppose we should be politically naive if we expected the GLC to announce, on banners strung up on County Hall (just as they announce most other things), how much they look forward to handing London Transport back to the Government.
However, there are more serious matters to discuss, and I should like to turn to a matter which has commanded much attention both inside and outside Parliament, particularly from opponents of the Bill.
467 Clause 1, with Schedule 1, transfers control of London Transport from the GLC to the Secretary of State and renames it London Regional Transport. In other words, the legal persona of London Transport will not change but its name and constitution will. More importantly, a nationalised industry will be created (or recreated) with a board appointed by the Secretary of State. Critics of the Bill have claimed that Londoners will thereby, at a stroke, be deprived of a say in their public transport: that local democratic accountability will disappear under the new arrange-ments. But your Lordships will find that as a basis for serious criticism this argument does not stand up to scrutiny. If, as I have said, London Transport is of national importance, then it is reasonable that its accountability should be to a national body. LRT will be accountable to the Secretary of State and through him to Parliament, like the board of any other nationalised industry.
What is in fact achieved under the Bill is thus the substitution of one kind of accountability for another. At the same time, the regional nature of LRT is recognised many times over in the Bill. My noble friend Lord Lucas will be referring in his wind-up to the framework of planning and consultation included in the Bill. For the present I would just refer to the very considerable influence that the 84 London Members of Parliament will wield on behalf of their constituents' interest in their public transport. It is unlikely to be a less assiduous interest than that taken by the existing 92 members of the GLC.
The GLC are fond of claiming that only they can legitimately represent their ratepayers' interests. Yet, in many ways, Londoners have been offered a false prospectus. Everyone would like to be offered the opportunity of lower fares, all other things being equal. But all other things are never equal. Every 1 per cent. taken off the fares adds about £4 million to the rates bill. Yet these arithmetical facts of life are obscured in the complexities of local government finance. Indeed, it is one of the merits of this Bill that it substitutes for the present local financing of public transport a greatly simplified system, set out in Clauses 13 and 14, in which the ratepayers' contribution to their public transport costs is expressed as a simple percentage of the subsidy. This will be set out in an annual ratepayer levy order subject to the affirmative resolution procedure in another place.
Furthermore, let us not forget in any discussion of local democratic accountability that 62 per cent. of the rate burden in London is borne by the business sector, who have no say at all as voters in the actions of their local government.
There is another aspect of accountability that I must mention. It is one which perhaps most people have in mind when they think of their public transport services. I refer to the consumer aspect and the importance of having an effective body to represent the interests of passengers in relation to the performance of the services provided. This is a vital complement to the accountability of the board for the general stewardship of the business.
It will not have escaped your Lordships that the Bill contains, in Clauses 40 and 41, proposals for greatly 468 strengthening the voice of the consumer in the field of London's public transport services. Under these proposals, the existing consumer bodies for London Transport and British Rail services in London will be effectively merged. There are to be statutory arrangements for consultation between LRT and the new consumer body, the London Regional Passengers' Committee. This is another manifestation of the Government's wish to see better co-ordination of the two sets of services. This committee will be able to pay particular attention to the interaction between the different systems and should be a major force for their improvement.
I do not propose to go systematically through the Bill. There will be ample time for scrutiny of the more significant clauses of the Bill as we move to the Committee stage. I have already mentioned some of these, notably Clause 1, which establishes LRT under its new constitution, and Clause 2, which lays down the general duty of LRT.
I would also single out Clause 3, which, among other matters, provides a general power in subsection (2) for LRT to secure public transport services by entering into contractual arrangements with independent operators. These agreements under Clause 3(2) are an important part of the Government's objectives for LRT. They should be understood together with the duty set out in Clause 6 under which LRT will be required to invite tenders for the provision of services by outside contractors where it makes economic sense to do so.
Clauses 12 to 24 set out the financial régime under which LRT will operate. Most of these provisions are the standard ones applying to nationalised industries, except that Clauses 13 and 14, as already mentioned, are concerned with the ratepayers' levy.
There are those who have argued that the Government should not take over control of London Transport themselves and at the same time demand a contribution to its financing from London's ratepayers. But not to do so would put London's ratepayers in an overwhelmingly favourable position compared with ratepayers elsewhere in the country. It would be quite indefensible. Clause 13 sets a maximum ratepayers' contribution of two-thirds of the total subsidy to LRT. My right honourable friend has already said that he hopes that this proportion will be able to be reduced as LRT's need for subsidy is itself reduced.
Clauses 36 to 39 form Part II of the Bill. They provide reserve powers—which will lapse unless activated by order within eight years of the appointed day—to make LRT the grant-paying authority to British Rail for its London services, in place of the Secretary of State. This would represent a radical approach to the problem of the closer integration of London's main public transport networks. It would not be without substantial administrative problems. For this reason we look to the liaison arrangements which my right honourable friend has proposed to achieve the better co-ordination needed between LRT and BR. But the powers in Part II of the Bill will be there if needed.
I come finally to an aspect of the Bill which has perhaps taken up more time in another place than any 469 other. I refer to the subject of concessionary travel for elderly and disabled people, which is provided for in Clauses 49 to 52.
Let me say at once that the Government have always recognised the very great value which pensioners and others in London and elsewhere place on the availability to them of concessionary travel. The existence of these concessions means enhanced mobility for a great many people in London and in the other conurbations of this country. It means that such people are not cut off, as they otherwise might be, from friends and relatives and from taking part in the life of the city generally. Concessionary travel schemes provide a means of enriching the lives of many people who do not have access to private transport or who find that the cost of fares is too much of a burden on their limited budgets.
At the same time we must not forget that successive Governments have taken the view that the responsibility and financing of concessionary fares schemes is properly a matter for local discretion. In London and most of the conurbations, the local authorities have in recent years provided generous concessionary schemes involving largely free travel on public transport for those eligible. As fares have risen in real terms, so of course have the cost of these concessions. This year the GLC will be paying some £65 million for the cost of its scheme.
The Government hope very much that the London boroughs will get together and agree a joint scheme when they take over responsibility for concessionary fares from the GLC. They will be able to do this under the powers in Clause 49 of the Bill, which largely re-enacts existing powers.
At the same time the Government do not seek to minimise the problems faced by the London boroughs in securing a unanimous view about the future of these schemes some two years before such decisions have to be taken. In particular, it is difficult for anyone to know the effect on such expenditure of the rate support grant arrangements as they will apply post-abolition. The Government have accordingly included in the Bill, at Clauses 50 to 52, a statutory concessionary fares scheme which will automatically come into operation if, at any time after LRT has come into existence, a uniform voluntary scheme is not in place. I will not go into the details of these clauses now, except to say that the scheme provides free off-peak travel on LRT services for pensioners and disabled people and free travel at all times for the blind. (It is clearly more sensible to restrict a statutory scheme to operate at off-peak times, rather than compel the boroughs to finance free travel at times when the buses and trains are crowded with travellers to work and few pensioners want to travel anyway).
However, even when the statutory scheme is in operation, individual boroughs will be able, if they wish, to purchase additional concessions from LRT, or even from British Rail, including travel during the peak if they so wish. This is the first time that a specific concessionary fares scheme will have been embodied in statute. As I have implied, the Government believe that this is justified in the unique circumstances of London.
470 The Bill before your Lordships is a substantial measure of 66 clauses and seven schedules. Over and above the many detailed provisions necessary in a Bill of this kind, the Bill as a whole has a simple purpose and a simple message. The purpose is to provide a balance in the provision of public transport in London—a balance lacking in recent years between the interests of the users of the system, the London passengers, and the interests of those who finance it, the ratepayers and the taxpayers. My Lords, I beg to move.
My Lords, may I ask the noble Lord a question before he sits down? Clause 1 mentions "the appointed day". Does he have any idea when the appointed day is expected to be?
§ Lord Trefgarne
My Lords, if I may say so, that is a point which might be well dealt with by my noble friend when he comes to wind up.
§ Moved, That the Bill be now read a second time.—(Lord Trefgarne.)
§ 3.17 p.m.
§ Lord Underhill
My Lords, a very good description of this Bill was given by a Member (not of my political party) in the other House when he said that it was ill-timed, wrongly conceived and a recipe for muddle, meanness and ministerial incompetence, to which I would add that it is yet one further step which this Government are taking to take away power from local councils and also to remove local accountability. We now have Ministers talking glibly about nationalising London's transport. I must make this comment: how cynical that seems from a Government who time and time again have done their utmost to damage public industries! I find it very difficult to recognise Mr. Nicholas Ridley as a convert to public ownership.
I appreciate the tone in which the noble Lord, Lord Trefgarne, has introduced this Bill. Any fair person looking at the Secretary of State's speech at Second Reading in the other place will appreciate that he made some highly coloured and politically emotive utterances which seemed to justify at least his reason for this Bill.
Ministers have referred to a mandate. I should like to remind noble Lords that electors in the GLC elections voted for transport policies which have been carried out by the Greater London Council. Those policies were not only prominently featured in its manifesto but were emphasised time and time again throughout that election. A survey in December 1983 showed that 90 per cent. of Londoners want the GLC to retain control of London's transport. The Secretary of State has said that the GLC was mixing up commercial and political matters. He appears to discount the fact that how best to meet the problems of transport is a political matter requiring political decisions.
It has been said that the Bill marks the end of an unsuccessful 14 years' experiment. Very selective extracts have been taken of the House of Commons Select Committee which considered transport in London. We have had, particularly from the secretary of State, a supposed account of the record of London 471 Transport from 1970. No one would deny that there are some weaknesses and imperfections but I could give a contrary account of development, progress and improvements achieved by London Transport with the Greater London Council.
Noble Lords should remind themselves as to why a co-ordinated transport organisation was brought into being in 1933. London transport was a mess. I lived in one of the suburbs just outside the LCC area. The first passenger transport board took over 170 rail, bus, tram, trolley-bus and coach undertakings. We should not forget that part.
Reference is made time and time again by Ministers, particularly the Secretary of State, to the percentage of support given from public funds for transport in London. It has been emphasised in many debates from all quarters of the House that it is recognised that public transport in capital cities requires public financial support. It has also been stressed that London receives public transport at a lower level of public support than do most capitals in the western world. In fact the London Transport Executive, in a report on the Government's proposals, states that the Executive still believes that there is a strong case for higher levels of support, since the protected expenditure level is at present significantly below that which would be justified in benefit cost terms. It is rather ironic that only in March it was stated that in Paris—where the transport system has the state as a major shareholder—responsibility for its Metro suburban railways and bus services is to be transferred to local government with the board consisting exclusively of elected regional councillors. They are transferring it from the state to elected regional councillors.
Reference is made to the amount of present public support by the GLC. A figure of £190 million was given for this year. The Secretary of State has fixed the protected expenditure level for that year at £125 million. That is a difference of some £65 million. I will not go into the details but the Secretary of State has in the other place given details of where he can see cost cutting. An emphasis was made on the one-person operator system being blocked by the GLC. Impartial opinion would say that great progress has been made in developing one-person operator bus services on the outside of Greater London. My area is practically all one-person operated. But when I hear a responsible Minister talking about one-person operator buses in service in Central London, then he must have taken leave of his senses. That is one glib comment that has been made. The buses would just delay traffic and add to congestion.
When we have talked about the possible cutting of services and routes, we have been accused of scaremongering. But if there is to be this great reduction from the present public support to the PEL, which the Secretary of State has said he has fixed, then obviously some services must be at risk. We are also accused of scaremongering on the important question of concessionary fares with which the noble Minister has dealt. But let us not forget the Secretary of State has changed his view from that which he expressed so strongly at Second Reading. Then he made absolutely clear that he had no intention of removing control in this matter from the London boroughs or making new 472 legislative provision in the Bill. But as we have just heard from the Minister, new clauses were introduced at Report stage in the other place to provide for a reserve power in the event of any London borough refusing to co-operate.
As has been stressed, the GLC concessionary fares scheme is a tremendous boon to some 1 million Londoners. Let us not forget that it replaced different borough schemes with a variety of restrictions and conditions. The survey, which I have already mentioned, in December last year showed that 93 per cent. of adult Londoners support free transport for the aged and handicapped in London.
Naturally we welcome the provision for reserve power but the new clause makes absolutely clear that free travel will not apply during peak hours. The aged and disabled will be expected to finish their journeys by 4.30 p.m. and not go again until after 6.30 p.m.
§ Lord Underhill
Well, if it is not true, my Lords, when I sit down I will look at the proposals, and when my noble friend Lord Carmichael deals with it he can deal with whether or not it is true. Moreover, the Secretary of State has not denied the possibility of boroughs introducing charges for the issue of permits, nor has he denied that, in the event of there not being reserve power, there could be a position of the boroughs making other variations in conditions.
The Minister has referred today to the benefit of advice from the Select Committee on Transport in the other place. As I have already stated, some very selective extracts have been made. As he pointed out, the Government rejected the proposal for a Metropolitan transport authority for Greater London. My noble friend Lord Carmichael was a member of that committee which made that decision. He can talk more authoritatively than I on this matter when he winds up for the Opposition.
The Government decided that LRT, as has been mentioned, should be concerned only with public transport. Therefore LRT will work only in a vacuum. It will be cut off from the important aspects affecting transport, such as strategic planning, land use, traffic management, roads, et cetera. It will operate in a vacuum from those matters, whereas at present they are all taken into consideration for transport plans.
Also the Select Committee recommended that the transport authority be composed of members nominated by the Secretary of State, from the GLC, the London boroughs, the shire county district councils, who are within the area of the authority, and also the Public Transport Users' Committee for London. The Select Committee also urged that membership representing the various local councils should comprise half the total. What has the Government put in the Bill? No local council representation whatever. All members will be appointed by the Secretary of State. There will be no local council input, no accountability to people in the area and no reference to local opinions about needs.
It has been mentioned that this can be dealt with by parliamentary accountability. May I, without boring the House, read a very important part from the Fifth 473 Report of the Select Committee in the other place, dealing with this question. Paragraph 6.10 reads:The transfer of overall transport responsibility from the GLC to central Government would clearly raise questions about the future viability of the Greater London Council as a county authority, since many of its major functions would eventually disappear. More important, however, such a transfer of responsibility would be a major departure from the British tradition of local authority involvement in transport matters, and we do not believe that the transport problems of London are so acute as to justify depriving London's elected representatives, and London's electorate, of a major role in transport decision making for their area".Then it states:It is, moreover, open to question whether the House of Commons would wish to become the political authority responsible for the day-to-day problems of London's transport system or would be prepared to develop the new parliamentary procedures which would be required to fulfil that role".The Minister never referred to that. I hope, however, that noble Lords will take some notice of that important paragraph in the Select Committee report, to which the Minister has turned in justification for the Government's decision. I find also in paragraph 2.4 that we must have a solution,which does not deliver control of these vital services for Londoners and visitors into the hands of a bureaucracy completely outwith the control of London's elected representatives".That is what the Select Committee said. There is no talk of transfer to the Government.
I find also that the National Consumer Council has expressed concern at the lack of an effective role for local government. The National Consumer Council has reaffirmed the report, which it issued in 1983, that public transport should remain with local government, that it is most effective at county level and that no reason is seen why London should be an exception. Only the other day I received a letter from my home district council, the Epping Forest District Council, which is Conservative-controlled, within the area of the Essex County Council, also Conservative-controlled. I shall read a short extract.Both Essex County Council and this Council feel that there should be representation on LRT by locally elected representatives of this Council. They would be in a position to state the point of view of their area with regard to local rather than overall financial needs".That is not Labour Party opinion: it comes from a Conservative-controlled district council with the support of a Conservative-controlled county council.
Another point has been made by the London Transport Executive in its own response to the proposal. On one aspect alone it comments that,there will be some dangers of inefficiency through the potential proliferation of dealings with 33 boroughs instead of a single strategic authority",as exists at present.
Under the Transport (London) Act 1969, London Transport has a legal duty (which I paraphrase) to provide transport services that best meet the needs of London. Under the Bill, LRT will have to have due regard to the needs. Noble Lords will see that there is a considerable difference in emphasis. I would ask, "Why is this?". The noble Lord, Lord Trefgarne, has said that London Transport has gone on running buses regardless. Buses are run because there is a need, not just for profit. That is why London Transport carries on running them. Come to my area! I see elderly 474 women who want to go to the Loughton shopping centre. There are perhaps four or five of them who have no transport and who need a bus to get them there. They cannot walk. It is not a question of running buses regardless. It is a question of what are the needs, not whether there is a cost benefit.
The Bill provides that London Regional Transport shall carry out its general duty in accordance with principles approved by the Secretary of State. We heard a lot about principles in the rating debate yesterday. At Second Reading, on 13th December, Mr. Ridley said at col. 866:It will have to have regard to the objectives and principles I set for it".That ministerial view is to take the place of that of representatives of people in the various authorities. I must ask how the Secretary of State will assess the transport needs. It has to be remembered that there is no local council representation, no local council input and no local council accountability. As we have heard, the Government, while taking full responsibility, are not going to meet the cost. Two-thirds will be met by the ratepayers in the local areas concerned. But, again I remind your Lordships, there is no council represent-ation and no accountability whatever.
Also under the Bill the LRT will submit a statement of policies within a year of inception and then from time to time thereafter. But at present the GLC, like all other county councils, submits each year its transport policy and programme, popularly referred to as TPP, on which its transport supplementary grant is based. Do noble Lords recall the long discussions that we had on the 1983 Transport Act? We seem to have wasted a lot of time so far as the GLC is concerned. We spent a great deal of time discussing the question of a yearly plan to cover a three-year period. I must ask again, "Why is there this change from that arrangement under the Bill?" Surely, regular plans are essential.
The Bill also provides for the division of buses and Underground into separate companies. There is a great deal of talk from government circles of the breaking down of a monolithic structure—this at a time when there is more co-ordination between Underground and buses than London has ever seen. Let us recall the introduction recently of the travel cards covering bus and Underground jointly if desired. The demand for those cards exceeded all anticipation by both London Transport and the GLC. Yet we have in this Bill encouragement for each subsidiary to form small companies.
Another clause provides that a local council can fund additional services. The London Transport Executive has commented that if many schemes of this kind were approved by the commissioners there could be problems—and I quote:Bus routes in London have not originated on a borough basis and would not sensibly be divisible at borough boundaries".But the Bill makes it easier to transfer parts of London Transport to private operators. In fact, I gather from the noble Lord, Lord Trefgarne, that this is to be encouraged by the Minister. I should like to quote again the London Transport Executive:The danger is that non-LRT services will be attracted to the profitable routes thereby weakening LRT's income. Inevitably this will lead to reductions in services or fares increases elsewhere to meet the financial target set by the Secretary of State. Whatever 475 value there may be in competition, that which does not have to have any regard to meeting transport needs would jeopardise the ability to provide many existing services".I conclude with the last paragraph in the London Transport Executive's response:The Executive's overriding concern is the risk that the desire to increase competition will damage the highly important need for co-ordination and integration of the public transport services".So within the space of 51 years in London we shall have completed a full circle and be on the way to the unregulated free-for-all transport that existed pre-1933. During the course of the Bill, whatever else we endeavour to do, we shall try to provide for a strong local government input and to remove the exceptional powers that the Bill gives to the Secretary of State.