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Lord Berkeley: Perhaps I may intervene briefly to speak to Amendment No. 225D in the names of the noble Lord, Lord, Lord Sheppard of Didgemere, and the noble Baroness, Lady Hamwee. I have listened carefully to the noble Baroness's remarks. The principles behind the amendment are certainly worth considering. It seems that the main revenue of Transport for London will be parking and road user charges. It will probably take a number of years before those can be implemented. If the proposed improvements to public transport cannot begin until the revenue starts to flow in, the carrot and stick approach that the Government have been so keen to put forward--in other words, giving people an alternative to cars--will become very difficult. There will be no improvements, in terms of bus lanes and so on, for a very long time. If we take the example of the Jubilee Line or the World Squares' proposal for Trafalgar Square and the area outside this House, we see that these projects take a great deal of time.

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I am not convinced that this amendment is necessarily the right one. However, I should like an assurance that cash will be forthcoming from some source--which must be the Government--in the interim period. The record of the past 10 years is not particularly good, especially under the previous government.

Many surveys have indicated that people who pay charges or taxes for motoring related activities would be happier to pay more if they knew that the money would be allocated to transport expenditure--it is to be hoped public transport. I hope that my noble friend the Minister will be able to say that, if the amendment is not acceptable, the Government will find some extra money to fill the gap between the revenue coming in and the need for the expenditure to begin. I look forward to my noble friend's reply.

Lord Dixon-Smith: My Lords, it is a pleasure to support Amendment No. 225D, tabled in the name of my noble friend Lord Sheppard of Didgemere and the noble Baroness, Lady Hamwee, and supported by the noble Lord, Lord Berkeley, on the Benches opposite.

We would encourage the Government to listen to the principle of Amendment No. 225D with great care, and to act upon it if at all possible. This may not be the precise amendment that is required to meet the needs of the situation. In any event, there is a particular problem in this area. We have not yet reached the point in the Bill where we might approve possible charges. However, the hypothecation period for the application of those charges is only 10 years. It might be extremely difficult to have the Greater London Authority issuing a loan instrument secured only on those revenues if there were not an assurance that that hypothecation would continue and that, let us say, the revenues raised in London and for London might be filched by a different government department for other purposes.

I have no doubt that in that situation the Government might argue that that was for the greater good. But Londoners would have some difficulty in following that argument. The Government would have even greater difficulty in persuading Londoners that it was appropriate. That obstacle exists. The time may come when we shall be able to do something about it. But from the point of view of using that revenue stream as a capital resource, the 10-year limit is a positive embarrassment.

That said, we support the principle of using that revenue stream as the base on which a capital sum might be raised for the future which would permit major improvements to London's transport system, without wishing in any way to specify what those improvements might be. My guess is that we could all think of 10 different improvements that we should like to see and believe are worth funding. Around this Committee there would probably be not 10 projects but 60--and that is being moderately unambitious.

The amendment tabled by the noble Lord, Lord Sheppard of Didgemere, of London First, has wide support from London business and commerce. That is not to say that that automatically makes it right. But it

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does mean that there is a wide degree of public assent to the principle behind the amendment. I urge it upon the Government.

With Amendment No. 224F, the noble Baroness, Lady Hamwee, is in the business of once again enunciating one of her dreams. The dream is unexceptionable; we should all love to see that ideal state. But the problem is--and the Minister will undoubtedly check me if I am wrong--that at the end of the day the Treasury stands in and is the guarantor of any debts, particularly in a capital field, on the part of a public authority--which include all local authorities and the Greater London Authority. If the Treasury stands in as guarantor, much as I regret it, the Treasury will inevitably have its finger in the pie and its say in what happens. That has to be accepted as unavoidable.

I should prefer a situation in which local authorities and the Greater London Authority stood on their own feet without the Treasury as guarantor. That would make for a much more exciting ride for local authorities. If that were the situation, local authorities would have to behave in a totally responsible way. If they did so, this country, and the world, would be much better for it. But, unfortunately, for better or worse--in this case, it is for worse--that is not the situation. I share the dream of the noble Baroness and wish that we could remove the Treasury from these matters. I would do anything to support the noble Baroness if that was the proposal. However, I do not think that such an amendment would be appropriate for this Bill. Therefore, I cannot support Amendment No. 224F, but it gives me great pleasure to support Amendment No. 225D.

Lord Ponsonby of Shulbrede: I hope that my noble friend the Minister can answer the following simple point. My understanding is that if the GLA has a good case for capital borrowing, it can apply to the Secretary of State for credit clearance. That is exactly the way in which all other local authorities operate. The noble Baroness, Lady Hamwee, did not advance a case as to why the GLA should be treated differently from any other local authority. That is the crux of the matter. The noble Lord, Lord Dixon-Smith, fantasised about greater independence being given to local authorities. We all share that fantasy. I remember that it was his party which, when in government, took away a good deal of that independence. Nevertheless, the noble Baroness must explain to the Committee why the GLA is different from other local authorities in this respect.

Baroness Miller of Chilthorne Domer: Perhaps I may draw a lesson from the recent past where the Government have gone through hoops and loops to get out of a particular bind. I refer to the housing stock of many authorities. They were unable to borrow the money needed to make substantial repairs. It is not appropriate to go into the details this evening. The Minister will be aware that to get round it the Government suggested to local authorities that, rather than borrow more money, they should form local housing companies. There may be something to be said for such bodies because in that way tenants have a greater say. Primarily, however, local authorities were

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forced down that road because they were not allowed to borrow money for the repairs which everyone agreed were necessary to make capital improvements to housing stock. If we look at that lesson, we see that my noble friend's amendment should be more than a dream. Drawing on history, if we do not allow this kind of borrowing, eventually we run into problems that must be resolved in a less than appropriate manner.

Lord Whitty: I recognise the need to engage in early capital projects, particularly in the area of transport, and therefore some of the matters that lie behind the concerns of London First. I am aware that the noble Lord, Lord Sheppard of Didgemere, intends to pursue this matter at a later stage as he cannot be here tonight. Therefore, I need to place on record for any future debate--although I hope that it will not be pursued tonight--the position of the Government.

I do not regard this matter as being wholly dreamland. It is fascinating to note that in this matter the noble Baroness and the noble Lord are in the same territory. We consider it important that the GLA is not treated differently from other local authorities. I should like to distinguish between the two amendments. I take first the amendment in the name of the noble Baroness. That would give the GLA power to borrow money which would be restrained only through the guidance of the Secretary of State. The other would be specifically a loan instrument secured against revenues under the road-user charging scheme. Both cut across the Government's clear commitment that the GLA should be subject to the local government finance regime. I believe that the Members of the Committee who have spoken in support of these amendments should provide an answer to my noble friend Lord Ponsonby as to why that should be so. All local authorities use the current system of credit approval to borrow. 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.

In response to my noble friend Lord Ponsonby, the GLA and any other authority can approach the Government for borrowing to be authorised by credit approvals. Further approvals can be sought from the Secretary of State or the mayor, in so far as he has power to make allocations. There is, therefore, provision for capital expenditure to be undertaken. We have also provided for the unique nature of the GLA in two important ways: first, by creating a special system of credit approval, which recognises explicitly the particular role of the mayor to produce a capital spending plan through which he approaches the whole of capital spending priorities across all the four functional bodies; and, secondly, in the production of the plan. Clearly there is an important need for the mayor to be able to tackle many of the problems of London's crumbling infrastructure, not least in transport. It will be important that the Secretary of State is able to view positively any proposals by the mayor for investment but within the total system of local government finance as we understand it.

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It is also true, to complicate matters slightly further, that we announced in July a review of the local government capital finance system. We are looking at alternative arrangements for regulating borrowing as compared with existing arrangements which may be unnecessarily restrictive in some cases. One of the options being looked at is to allow authorities to borrow subject only to limits relating to the level of debt and to the guidance on prudent levels which underlies the noble Baroness's amendment. However, we are looking at that and a number of other options in this review. In the interim it is not appropriate that we authorise an entirely new and different regime for the GLA.

It is true that in addition to the ordinary credit approvals the GLA and the functional bodies will have a number of options to raise money to meet their capital spending needs, including transport. They could work with the private sector in relation to PFIs. Any deals which meet the PFI rules would not count against public borrowing, and such deals could be established on the basis of expected revenues. We have also made clear that those authorities with innovative local transport plans will in effect get a larger share of existing resources in the Comprehensive Spending Review settlement.

It is also open to the GLA and functional bodies, where they are clear as to the future income, to issue bonds. A bond issued by one of those bodies would count on the public sector borrowing requirement and it would need to be secured against all the revenues of the authority and not a particular identified revenue scheme. A bond issue would, frankly, be more expensive than if the Government borrowed the money. In practice, in recent years local authorities have rarely used the bond route as it is cheaper to borrow from the public works loan. Nevertheless, that option is also open to them given adequate returns for the investment.

Therefore, a number of instruments are available to the GLA even within the current regime to finance early transport and other capital projects. But the general system of local government finance must be, subject to minor modifications, the same as applies to other local authorities.

I hope that that rather lengthy explanation both indicates the principle that we are adopting in relation to the GLA and other local authorities, and that the regime is not a straitjacket but will provide and allow for a number of ways in which the GLA could raise the capital finance itself even within the current regime; and that we are looking at changes within that capital spending regime which would apply to the GLA as it would to other authorities.

9.15 p.m.

Lord Brabazon of Tara: Perhaps I may make a few comments on Amendment No. 225D which relates to the revenue stream from the parking charges and the congestion charges. In my opinion the amendment would be better if it allowed the borrowing by Transport for London rather than the authority itself. That would then ring-fence it for transport purposes.

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Are there not two precedents? I refer, first, to the changes the Government have made to local authority airport borrowing, where I gather that they freed local authority airports from the public sector borrowing requirement constraints. Is that not a precedent for Transport for London?

Secondly, a private company is being allowed to borrow large quantities of money from the market for the building of the Channel Tunnel rail link, but it is guaranteed by the Government and the company is therefore getting the money at government rates in the market which are considerably finer than they would be for a private company on its own.

Those are, I believe, precedents which would apply to Transport for London borrowing against revenue from both the items specified in the amendment: parking charges and congestion charges. Can the Minister comment on that?

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