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Mr. McDonnell: I am happy to withdraw my amendment on the basis of a simple statement from my hon. Friend. Under the existing proposed legislation, will the mayor, the authority or Transport for London have the ability to enter into a voluntary arrangement with the City of London corporation, or a London borough, to fund a transport infrastructure project? I give the example of the City of London corporation because it proposed the idea some seven or eight years ago, and intimated that it would be willing to enter into a voluntary agreement on such projects with any new organisation or with the Government.
Mr. Hill: My hon. Friend asks whether the mayor can enter into agreements with City institutions or London local authorities for the financing of a major infrastructure project--for example, crossrail. The answer is yes, in principle. The Bill will give the mayor and Transport for London extensive powers--broadly similar to those that London Transport has now--to enter into agreements for transport purposes. Of course, much would depend on the precise form of the proposed agreements, and that would no doubt need to be looked at carefully if and when a proposal emerged.
Transport for London will of course be free to negotiate private finance initiative deals, to finance transport projects, for example, as long as they are considered off balance sheet. In other words, if sufficient risk is transferred to the private sector, the borrowing will not score against public expenditure or need credit approvals.
Mr. McDonnell:
It will take just one more sentence to satisfy me. My understanding of what my hon. Friend has said is that it will be perfectly appropriate for the new mayor and Authority, after next May's election, to approach the City of London corporation and request a voluntary agreement to fund crossrail, for example, although a more important example might involve the Central line extension to Uxbridge. Will my hon. Friend confirm that my understanding is correct?
Mr. Hill:
I think that I have answered that question already by saying yes, in principle.
The hon. Member for Carshalton and Wallington (Mr. Brake) asserted several times that, under some new arrangement, the mayor will be permitted to float shares. I wish to emphasise that the mayor will not havethat power. Although Transport for London can form
companies, it cannot sell the shares in those companies if to do so would result in the contracting out of the operations of underground trains or stations.
On amendment No. 223(a)--
Mr. Simon Hughes:
Will the Minister give way?
Mr. Hill:
The hon. Gentleman asks to intervene a little early in my explanation, and I have to note that he was not in the Chamber for the beginning of this debate.
Mr. Hughes:
I was in the Chamber, but I was somewhere else. [Interruption.] I was on another Bench. Will the Minister clarify what he said about the mayor? My understanding of the Government amendment agreed to in the Lords, to which my hon. Friend the Member for Carshalton and Wallington (Mr. Brake) referred, is that the Government were happy to accept the argument advanced by Opposition Members in Committee. That amendment appears to propose that the mayor rather than the Secretary of State would have the power to raise shares. Will the Minister confirm that that is indeed what is proposed?
Mr. Hill:
I am pleased to clarify that point. The purpose of the amendment is to transfer to the mayor the power of the Secretary of State to authorise the issue of shares by Transport for London to a person other than Transport for London or its subsidiaries. I hope that that satisfies the hon. Gentleman, and I am sorry that I did not spot him when he was hiding elsewhere in the Chamber.
The Bill already confers powers on the Greater London Authority and its functional bodies to borrow money within the existing local authority finance framework. That includes borrowing by issuing bonds, as well as borrowing through credit approvals, entering into a private finance initiative arrangement or making a case for additional funding to the Greater London Authority transport grant.
Under the current local government finance regime, a bond issued by one of those bodies would count as public borrowing. It would need to be secured against all the revenues of the authority and could not be secured against a particular revenue stream. A bond issued by a Greater London Authority body would be a more expensive way of raising money than if the Government borrowed the money themselves. In practice, local authorities rarely borrow by issuing bonds, because it is cheaper and easier to borrow from the Public Works Loans Board.
The hon. Member for Carshalton and Wallington and my hon. Friend the Member for Hayes and Harlington both asked why neither the Greater London Authority nor Transport for London might issue bonds secured normally against a revenue stream from a congestion-charging regime. The answer is that borrowing through a bond secured against the revenues from a congestion-charging regime still counts as public expenditure under the current local government finance regime.
As I have already explained, bonds must currently be secured against all the revenues of the authority and not just against one revenue stream. There would be no advantage in allowing borrowing secured against the revenue from a single project, such as a congestion- charging scheme, as it would offer lenders less security and would cost more. However, we are reviewing the
local government finance regime. In particular, we are examining the possibility of allowing local authorities to borrow, subject only to limits relating the level of debt to their future income, and the use of prudential indicators to regulate borrowing.
We plan to publish a consultation paper in the spring, following completion of the review. The Greater London Authority, along with local authorities in general, will, of course, benefit from any changes that may follow the review, although it is too early to say what those may be or when they might be put into effect.
Mr. Hughes:
I understand the Minister's argument but--and my hon. Friend the Member for Carshalton and Wallington (Mr. Brake) is more expert than I am--it may not be sufficient. The Minister that the Government plan to issue a consultation document in the spring after the review. But any decision may be made too late for the new GLA, which will be elected in May and in power from July, if it is to address what is an immediate issue. That is a defect in the Minister's argument, because the power may come too late for the GLA to act.
Mr. Hill:
Let me seek to interpret the hon. Gentleman's point. I take it that the immediate issue to which he refers is new investment in the London underground system. Let me reassure the hon. Members for Southwark, North and Bermondsey (Mr. Hughes) and for Carshalton and Wallington that good progress has been made in implementing the London Underground public-private partnership proposals since my right hon. Friend the Deputy Prime Minister announced them in March last year.
On 7 October, London Transport announced that five consortiums had pre-qualified for the infrastructure contracts, and would be invited to tender for the deep tube infrastructure contracts. Invitation to tender documents were issued on 19 October, and bids are due back by March 2000. We are confident that the scheme is going ahead and that it will be successful.
Mr. Hughes:
I understand the Government's plan, but some of us, including Conservative Members, are not happy with it. If the mayor and Assembly elected in May have different ideas about the project, does the Minister accept that the rejection the amendment would preclude the mayor and Authority from raising money in the short term by a bond issue, unless the Government had decided to change their whole policy on local government financing?
Mr. Hill:
The blunt truth is that they would be precluded in the short term. However, the Government are confident about the timetable, and that achievement of the London Underground PPP project is well on course, so that it will be delivering to London, as scheduled, in the course of 2001.
In conclusion, I hope that the hon. Member for Carshalton and Wallington will be content with my reply and will not seek to press the amendment to a Division.
Mr. Deputy Speaker:
Order. The hon. Gentleman cannot speak a second time. I was hoping that the amendment would be moved formally at a later stage. Is the hon. Gentleman seeking the leave of the House?
Mr. Brake:
With the leave of the House, Mr. Deputy Speaker. I have listened carefully to the Minister's
I am disappointed that Conservative Members have not supported us on the issue, as I do not believe that there are any reasons to restrict the mayor's flexibility unnecessarily. The mayor needs to have as many options as possible for raising funds for transport.
Lords amendment agreed to.
Lords amendments Nos. 195 to 212 agreed to [some with Special Entry].
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