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Baroness Thomas of Walliswood moved Amendment No. 250ZA:

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("( ) Transport for London may, with the approval of the Mayor and Assembly, borrow money for investing in transport in Greater London.")

The noble Baroness said: The amendment has a history. It was tabled by my honourable friend in another place and supported in Committee by the Conservative Members. Amendment No. 225D in the name of the noble Lord, Lord Sheppard of Didgemere, and my noble friend proposed that the GLA could issue a loan instrument secured on revenue-bringing charges and levies. When we discussed it in Committee on Monday this week, the noble Lord, Lord Brabazon of Tara, suggested that the idea might be better located in this part of the Bill. Therefore, I hope that the noble Lord and his noble friends will continue to be broadly supportive of these borrowing powers.

The purpose of Amendment No. 250ZA is straightforward; namely, to give the new functional body, Transport for London, the power to borrow money to invest in transport in London. The new functional body will have large assets and important duties to deliver, or cause to be delivered, over a wide range of transport for the people of the Greater London area.

However, the amendment raises wider issues. In response to the amendment, the Minister in another place said that under the Local Government Act, TfL is enabled to borrow. But we are worried that that will be limited by the existence of short-term borrowings. Perhaps the Minister can respond to that issue.

I should also like to hear in layman's language how the Government see Transport for London's financial autonomy. There are a number of amendments on today's Marshalled List, but I find it difficult to understand how the Government see that particular aspect of Transport for London. I beg to move.

Lord Brabazon of Tara: During our debate on Monday on Amendment No. 225D, I did not realise that the noble Baroness had tabled this amendment relating to Transport for London. I am pleased that we are together on the issue and to be reminded that it was supported by my honourable friends in another place.

We support the idea in principle. Reflecting upon my suggestion that the borrowing should be against revenue streams from congestion and parking charging, I now believe that that would be too restrictive. It should be for the lender to decide how he wants the loan to be secured. Furthermore, it must be made clear that the borrowing must be in the market, so getting away from the public sector borrowing requirement, as happened in the case of local authority airports which are now allowed to borrow outside the PSBR. The Minister said that they were commercial organisations. I hope to goodness that Transport for London will be a commercial organisation, taking over from London Transport which tries its best to be a commercial organisation.

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I do not intend to speak any longer on this issue. We shall wish to return to it at the next stage of the Bill.

Lord Clement-Jones: I support the amendment. It follows closely on Amendments Nos. 224F and 225D, which covered the GLA as a whole. However, this amendment relates only to Transport for London.

In Committee on Monday, the Minister said:

    "Their expenditure through borrowing increases public expenditure and, ultimately, exposes the Treasury. Our aim is to ensure that borrowing by the GLA is subject to the same system of control as applies in other areas".--[Official Report, 28/6/99; col. 105.] I hope that the Minister's response to this more limited amendment is more positive. The Government's argument on borrowing powers is wholly circular. Borrowing by Transport for London or the GLA is public borrowing because the Treasury says it is. That argument was used by Humpty Dumpty in Alice Through the Looking Glass who said, "When I use a word it means what I choose it to mean." It is interesting that the Treasury should be using Humpty Dumpty arguments nowadays.

The fact is that the Government, when they choose, can exclude certain types of borrowing from "public borrowing" under the PSBR. Some regional airports have been excluded, as have the new guaranteed bonds by the Channel tunnel rail link. They are not treated as coming under the PSBR. If the rules were changed, there would be no need for the complicated, expensive and, we believe, ultimately doomed proposals for PPP which we shall discuss later. I hope that the Government will take a more flexible view on the issue and consider the amendment carefully.

Lord Whitty: We covered a great deal of the ground on Monday. The central point is that Amendment No. 250ZA adds nothing to the Bill because the rest of it places TfL, as a local authority body, within the local authority finance regime. The Bill already confers powers to borrow money on TfL. Clause 96(2) makes TfL and the other functional bodies local authorities for the purposes of Part IV of the Local Government and Housing Act 1989, of which Section 46 provides that as part of the proper management of its affairs the local authority may borrow money for any purpose relevant to its functions. That remains the case in relation to TfL.

Therefore, the power to borrow money is clear. It is a question of the regime under which that borrowing takes place. We have said that TfL will be treated as a local authority. Accepting the amendment would not take TfL out of that system of regulation and, as with other local authorities, TfL's borrowing will be controlled through the issue of credit approvals.

The amount of a body's credit approvals is estimated in the capital spending plan. The assembly has a role in being consulted about that plan. The sources of funding for Transport for London will be diffuse. It will have its own ordinary revenue from fares and the GLA transport grant, which will comprise grants currently given to predecessor bodies, such as London Transport. The mayor can give TfL money from the GLA grant.

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The revenues from road user charging and workplace parking charges will accrue to TfL and it can borrow in the same way as any other local authority body.

The noble Lord, Lord Clement-Jones, said that this is a circular argument. However, this situation applies not only in this country; the Maastricht criteria effectively define borrowing by such a public body as public borrowing in all European Union countries. The PSBR is not a term that we use any more. We use the post-Maastricht terms--

Baroness Thomas of Walliswood: I apologise for interrupting the Minister in full flow. The noble Lord, Lord Brabazon of Tara, made the interesting point that if TfL was allowed to borrow in the market there was no possibility that its borrowing could be considered as contributing to the public sector borrowing requirement. It would be borrowing from the total pool of money available for lenders to lend. It would not be creating a new money source.

Lord Clement-Jones: Perhaps I might make that a "double-barrelled" question. Can the Minister explain why the Government are able to exclude from the PSBR those regional airports and, indeed, the Channel tunnel rail link?

Lord Whitty: The Channel tunnel rail link is a complicated matter which I do not propose to go into today. As regards the commercial airports, which are perhaps more directly analogous, they are effectively limited companies owned by the public sector. When I say that they operate as commercial entities, they are totally commercial entities. TfL, as a body, has both commercial and non-commercial aspects. Therefore, it is appropriate to treat it as a public body, as with many other public bodies.

This is not as constraining a regime as noble Lords seem to think. Clearly, the viability of future revenues is one of the considerations to be taken into account if TfL or any other public body applies for credit approval. Credit approval will be assessed with a view to TfL being able to deliver on all the duties imposed on it by the Bill.

The idea that taking it out of the local authority regime would give greater access to resources than the proposals we are putting forward is probably not a logical conclusion. At any rate, the amendment, if passed, would not, of itself, take TfL out of the local authority regime.

Baroness Hamwee: I accept the last point with regard to the way the clause is drafted. At this stage we are exploring the general principles. As his penultimate point, the Minister argued that this type of approach does not add to the sources of borrowing that may be available. However, we are seeking to remove the hurdle of the approval of the Secretary of State. I wonder whether the Minister can comment on that as it may be valuable for our debate at the next stage.

The noble Lord, Lord Brabazon of Tara, raised an interesting point. It is really for the lender to express a view--more than a view; a requirement--as to the

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property to be charged; that is, the assets to which the lender will look in making funds available to TfL as the borrower. Can the Minister comment on the role of the Secretary of State in blocking funds which would otherwise have been made available, as the noble Lord, Lord Brabazon of Tara suggests? It seems to me inappropriate for the Secretary of State to say, "No, you may not borrow. I accept that your lender is satisfied as to the security to be given, but I know better".

Lord Whitty: I am not entirely sure that I follow the question raised by the noble Baroness.

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