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5.30 pm
London's transport system is undoubtedly in a shambles--we are able to see with our own eyes the evidence of that fact. Some months ago, I tabled a private notice question on delays on the underground between 1994-95 and 1998-99. The fact is that, in that period, delays increased by 25 per cent. or more. My own experience of travelling by bus, tube or train from Wallington to Westminster has also confirmed that delays have increased.
We have had very significant transport fare increases. Moreover, on 9 January, fares on the underground will increase by 2.5 per cent., whereas inflation is running well below that. The real fare increase, therefore, will be about 50 per cent. above inflation. Against that background, the mayor should be given all possible financial options so that he or she is able to invest the sums necessary to take our underground system from the 19th to the 21st century.
Liberal Democrat Members certainly welcome the Government's agreement that the mayor should be able to raise money in share issues--in Committee, we were pushing for such a provision--but we should also like the mayor to be given the option of issuing not only shares, but bonds. Our amendment (a) would provide the mayor with that option.
Around the world, there are many examples--New York is one--of transport systems that have been funded by bond issues. Many of the original tube lines were financed by bond issues. The mayor may need to use that financial option if the public-private partnership does not proceed--although hon. Members may not think that that is a possibility.
In a parliamentary question, I asked when the PPP contracts would be signed, and was told that they would be signed "when they are ready". That was a very helpful response, and I was pleased to hear that the contracts will not be signed before they are ready. The response continued:
What if the PPP does not prove to offer best value and fails the public sector comparative test? Hon. Members may be thinking, "Surely that couldn't happen. Surely the Government have already confirmed that the PPP will pass the public sector comparative test before contracts are signed." However, I do not believe that that is the case. In a debate earlier this year, the then Minister for Transport said:
Having outlined the reasons why the Government should take on board our modest amendment (a) to Lords amendment No. 223, I shall also speak in favour of another amendment in the group--amendment (a), tabled by the hon. Member for Hayes and Harlington (Mr. McDonnell) to Lords amendment No. 235. That amendment seems sensible to us.
In my constituency of Carshalton and Wallington there is strong demand for transport infrastructure improvements. For instance, many residents would welcome the extension of the Croydon tramlink into Carshalton and Wallington, and on to Sutton. The amendment would allow the borough of Sutton to enter into discussions with Transport for London to provide such an extension.
I urge the Government at this late hour to accept our motion to disagree with Lords amendment No. 223. They have nothing to lose, and Londoners have much to gain.
Mr. John McDonnell (Hayes and Harlington):
I shall speak to amendment (a), tabled in my name to Lords amendment No. 235. Hon. Members who served on the Standing Committee will recall--or they may not--that I tabled an amendment then that would have allowed the mayor to enter into a voluntary arrangement with the City of London corporation for a voluntary contribution towards infrastructure projects in London. That was not a duplicitous plot to undermine the financial standing of the corporation--I wish that it had been--but simply an attempt to release resources for the benefit of London, especially for transport infrastructure projects.
The amendment built upon the attempts that we have made over the past 10 years to encourage voluntary agreements between the City of London corporation and Londonwide local government and service structures overall, to provide the necessary resources for the development of infrastructure projects, especially for transport but also for environmental purposes.
My amendment would build on Lords amendment No. 235, which would enable Transport for London to enter into agreements with the common council of the City of London corporation and London boroughs for the provision of transport services, but it would also clarify the fact that the definition should include transport infrastructure projects as well.
Hon. Members representing constituencies throughout London have made clear the need for long-term investment in transport infrastructure projects. The amendment would enable the same clarity to exist in relation to the question of where the resources will come from. I note that all three contenders for selection as Labour candidate for mayor have expressed support for
the concept of "going to the City" to finance infrastructure projects in London, and within the definition of the City, I would include the City of London corporation itself.
I will have to be convinced during the debate of the reasons why the Government do not wish to accept the amendment to facilitate the issuing of bonds. I agree with those who say that we should maximise the flexibility for the new Greater London Authority, the mayor and Transport for London to draw upon a range of resources to fund transport developments in London.
I do not support the public-private partnership. I understand the arguments in favour of it that have been mobilised in the House and elsewhere, but there are elements of risk involved. Putting that to one side, however, even if the PPP were the best option for now, we would not wish to prevent a future administration from being able to draw upon other financial sources.
The amendment would provide the opportunity not only for shares to be issued but for bonds to be drawn upon. I shall need convincing of the reasons why we should rule that out in the long term. The Government may not want to support the idea now, but at some future stage it might give the mayor and the new strategic authority the necessary flexibility. We should not use the Bill to prohibit that, and if I am not convinced by the Government's reasons, I shall support the amendment in the Lobby.
Mr. Hill:
I shall deal first with amendment (a) tabled by my hon. Friend the Member for Hayes and Harlington (Mr. McDonnell) to Lords amendment No. 235. I congratulate my hon. Friend on his amendment, but I hope that I can persuade him that it is unnecessary.
Amendment No. 235 provides for the retention of the existing powers of London local authorities other than the GLA to procure additional rail services and facilities from the franchising director and train operating companies, and of local authority powers to enter into agreements with Transport for London for additional services and facilities. Those powers are currently available to London local authorities under sections 28 and 59 of the London Regional Transport Act 1984.
Amendment (a) would mean that the powers of London local authorities would include the ability to enter into agreements for transport infrastructure projects, as well as for facilities and services. Local authorities' powers under amendment No. 235 are really designed to allow them to secure services and facilities that would not otherwise be provided by Transport for London or rail operators. For example, a London borough might use those powers to arrange for additional bus services to cater for a special event. However, transport infrastructure projects are neither facilities nor services, although it is possible that a project might result in facilities or services being provided. I fear that amendment (a) confuses the idea of a project, which could require new facilities and services, with the provision of those facilities and services. Local authorities do not necessarily need powers to embark on a project, but they do need powers to do things in connection with those projects. Amendment No. 235 will give them the necessary powers.
"We have learned the lessons of rail privatisation and will not impose a politically driven timetable at the expense of ensuring that the resulting deal is right."--[Official Report, 2 November 1999; Vol. 337, c. 78.]
It is, therefore, entirely possible that the PPP will not proceed.
"I have made it clear that, in the private-public partnership, the value-for-money proposal will be the criterion against which all our proposals are tested. The Government will not implement a public-private partnership unless we are entirely satisfied that it will secure best value for the taxpayer."--[Official Report, 27 January 1999; Vol. 324, c. 413.]
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At what point will the Government be able to confirm whether the PPP secures best value? Such questions have prompted our desire to provide the mayor with the additional financial option of issuing bonds, so that he or she will have fall-back funding if the PPP proposals should fall apart.
What exactly are the Government's objections to issuing bonds? Last week, in another place, we were given an explanation for their objection. The Government said that they believed that the PPP that they are putting together would prove to be better value than bond financing. I hardly consider that a ringing endorsement of the PPP--but it is not a damning criticism of bonds, either.
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