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House of Lords

Monday, 12 September 2011.

2.30 pm

Prayers-read by the Lord Bishop of Hereford.

Public Libraries: Closures


2.36 pm

Asked By Lord Borrie

Baroness Rawlings: My Lords, DCMS officials have had discussions with local council officers from Gloucestershire, Lewisham, Somerset, Brent and the Isle of Wight. They have considered the relevant evidence and circumstances. DCMS officials will continue to monitor changes to these and other library services carefully.

Lord Borrie: I would like to think that the heart of the noble Baroness was in the right place but she has not actually indicated whether, for example, she agrees with me that public libraries are a vital asset for education and recreational purposes. Local authorities should regard them as of great importance, because being local is the essence of the thing. As the author Alan Bennett said the other day, it is no good people having a library if they have to go on an expedition in order to access the books. Does the noble Baroness agree that the public libraries Act imposes a statutory duty on the Secretary of State-and therefore, I suggest, Ministers and not just officials-to ensure that local authorities provide an effective and efficient library service?

Baroness Rawlings: My Lords, yes, I read that piece by Alan Bennett, which was absolutely right. The public libraries Act 1964, which the noble Lord, Lord Borrie, mentions, does say that there is a public duty to keep comprehensive and efficient libraries open. Of course, we know how important libraries are because we have the wonderful Library-even though it is private-here in the House of Lords, which is a treasured privilege. Most people understand that libraries are special places and not just facilities. They provide access to considerable electronic information as well as books.

Lord Peston: My Lords-

Baroness Gardner of Parkes: I think it is our side; the Question came from the noble Lord's side. Can the Minister tell me how many libraries are threatened by closure?

Baroness Rawlings: My noble friend Lady Gardner asks a very good question. Detailed data about the library sector are published annually. Local authorities

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are in the process of consulting. However, the DCMS monitors proposals as well as any changes that are made to library services from information it has gathered via correspondence and media coverage and from relevant bodies such as the Museums, Libraries and Archives Council.

Lord Peston: My Lords, despite the folly of the Government's economic policies, we are still a very rich country. Can the noble Baroness explain why we are considering closing any libraries at all since, when most of us were young, we got our education in libraries?

Baroness Rawlings: My Lords, the closure of any libraries is a local authority matter. The Secretary of State has the privilege of inquiring into the situation, which is constantly under review. Each case is different and, while some libraries are closing, he is fulfilling his statutory duties.

Baroness Bakewell: My Lords-

Lord Tope: My Lords, it is the turn of this side next. I declare my interest as executive councillor responsible for the public library service in the London Borough of Sutton, where no libraries have been proposed for closure. Would the Minister agree that public libraries are an extremely important community resource? In any discussions with library authorities and local authorities, will she urge them first to consider what other facilities can be provided in public libraries? Indeed, will she urge them to consider whether public libraries can be located in other facilities and their services extended far beyond simply the loan of books? These measures should be realised so that libraries are used far more effectively, as a first consideration, as a proper community resource.

Baroness Rawlings: Yet again, I agree with my noble friend Lord Tope. Libraries are a very important resource and could be used for other facilities. Every authority in England is required to provide a comprehensive and efficient library service under the Public Libraries and Museums Act, but it is for each authority to determine at local level how much it spends on libraries and how it manages to deliver that service to meet the needs of its library users, bearing in mind the resources available.

Baroness Bakewell: My Lords, in a recent campaign run by the Evening Standard in London, Nick Clegg declared his absolute support, issuing a rallying cry to parents to read to their children more often. I wonder whether the Minister and the Government realise and appreciate that you cannot read books without libraries. Perhaps there is a division in the coalition on this.

Baroness Rawlings: The noble Baroness, Lady Bakewell, makes a very good point. This is exactly where the big society philosophy is relevant-

Noble Lords: Oh!

Baroness Rawlings: The needs of the community are at the heart of library service provision. We hope that the big society will give citizens more of a role in

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determining the shape of public service and what it delivers. The ability of libraries to reach out and be involved with communities means that they have a vital role in delivering the big society. The noble Baroness is absolutely right about the importance of reading to children. That is one area that Her Royal Highness the Duchess of Cornwall has been promoting extensively.

Lord Brooke of Sutton Mandeville: My Lords, as our local library in rural Wiltshire is now significantly kept open by volunteers, would my noble friend like to say something about volunteering?

Baroness Rawlings: My noble friend Lord Brooke raises a valid point, which is very topical at the moment. Over the past 10 years we have seen an increase in the number of people volunteering in libraries. Volunteers regularly help to deliver homework clubs for schoolchildren. They contribute to projects, they digitise items in library collections and they provide buddy support for people new to using computers. It is important to remember that authorities remain accountable to their communities for the changes they make, and that includes the use of volunteers.

Lord Howarth of Newport: My Lords-

The Lord Bishop of Hereford: My Lords, the point was made earlier about the need occasionally for other premises where libraries are being closed. We have in Hereford diocese an excellent example, of a library in a church tower. A lift, loos and other facilities are provided. If local authorities have to relocate libraries that are under threat of closure, I would be grateful if the Government would give them every encouragement to look at partnerships in a whole range of ways, including with the churches.

Baroness Rawlings: My Lords, the right reverend Prelate makes an extremely good point, which I look forward to taking back to the department.

Airports: Heathrow


2.44 pm

Asked By Lord Spicer

Earl Attlee: My Lords, last month the Department for Transport published its UK aviation forecasts to support the development of a new policy framework for UK aviation, which supports economic growth and addresses aviation's environmental impacts. It is forecast that Heathrow will have 85 million terminal passengers in 2030 compared with 65.7 million in 2010. The department does not forecast demand for airports outside the UK.

Lord Spicer: My Lords, when I was Minister for Aviation, Heathrow was the number one international airport in the world and Gatwick was number four,

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and together they provided the international crossroads and hub for the whole world. Does my noble friend share my concern-based, if for no other reason, on economic growth-that the pre-eminence of Heathrow should now be challenged by the likes of Schiphol and Frankfurt because of the capacity constraints that have been set on it?

Earl Attlee: My Lords, I understand the point that the noble Lord makes, but there are also airports in the Far East which will probably overtake Heathrow eventually. We want to see a successful and competitive aviation industry which supports economic growth and addresses aviation's environmental impact. Aviation should be able to grow, but to do so it must play its part in delivering our environmental goals and protecting the quality of life of local communities.

Lord Soley: Is not the answer to the Question of the noble Lord, Lord Spicer, really that, in future, South American flights will go to Madrid, Indian and Chinese flights will go to Frankfurt and Schiphol and the rest will go to Paris? If the Government are determined to advertise that Britain is closed for business, I can hardly think of a better deterrent than the current aviation policy, with the possible exception of the reintroduction of biplanes.

Earl Attlee: My Lords, the noble Lord will understand that we cannot arrange for every flight coming into Europe to land at Heathrow.

Baroness Kramer: My Lords, the Minister will be aware of the recent report by Airport Watch, which demonstrates that Heathrow and London dwarf every European rival in number of flights to the world's main business destinations. Therefore, would he agree that in order to keep its place, Heathrow should focus on how it treats its passengers and perhaps the UK Border Agency could change its policy so that people with non-UK passports can get through in less than one and a half hours, which was true at terminal 3 two weeks ago?

Earl Attlee: My noble friend makes extremely important points which were all picked up by the South East Airports Taskforce. She mentioned the UK Border Agency. We are aware of scope for improvement and UKBA is working on that. She will also be aware of other things that will be happening as a result of the South East Airports Taskforce's work, which will improve the experience for passengers.

Lord Berkeley: My Lords, would it not be better if we concentrated on service quality at airports and did not go for the busiest? Is the Minister aware that Beijing is soon to have another runway, which will give it a total of 120 million passengers a year, and would it not be much better for the environment if we concentrated policy in this country on the medium and shorter-term passengers being able to travel by high-speed rail and ordinary rail?

Earl Attlee: My Lords, the general thrust of what the noble Lord says is very good. Interestingly, I went to Gatwick airport last week and saw the effort being put towards improving the passenger experience. No doubt I shall be going to Heathrow shortly.

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Lord Dixon-Smith: My Lords, the present situation in our airports was predicted 45 years ago, I think. There was a very reasonable proposal to put an airport in the Thames estuary, which would remove the constraints that are inevitable anywhere west of London. Perhaps my noble friend might care to comment on that possibility, as it is being raised again. At least, if that strategic decision were taken, there would be the possibility of a long-term solution.

Earl Attlee: My Lords, we welcome all these suggestions. The mayor's input and suggestions will be considered alongside the many other contributions to the debate about our future airport aviation policy.

Lord Palmer: My Lords, could the noble Earl try to persuade his colleagues in the Treasury to look again at this terrible problem of air passenger duty, which is one of the reasons that Heathrow has lost its premier slot in the world?

Earl Attlee: My Lords, the noble Lord will know that air passenger duty is under review. However, it is a matter for the Treasury, as well as the Department for Transport. We are giving it careful consideration and will make an announcement in due course.

Lord Mawhinney: My noble friend has already made it clear that this Government have made their decision about Heathrow. However, this Government also talk about the need for economic growth as well as environmental sustainability. If the next Government and those after also believe in economic growth, would my noble friend recommend that they build a third runway at Heathrow or a new airport in the estuary?

Earl Attlee: My Lords, I do not think it is an either/or decision.

Lord Davies of Oldham: What is the Government's transport policy really meant to contribute to economic growth? On rail, it seems a question of asking passengers to pay more; on roads they cut the funding that subsidises the cameras that keep our roads safe; and on aviation they have taken the negative decision against the third runway. What exactly are the Government's plans for the aviation industry to make a contribution to economic growth?

Earl Attlee: My Lords, we will have to wait and see when the aviation policy framework document is published next year as a draft.

NHS: Cost-effectiveness


2.51 pm

Asked By Baroness Thornton

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): My Lords, the department welcomes the report to which the noble

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Baroness refers, and recognises the significant gains in health achieved by the National Health Service since 1979. However, its evidence is limited and does not support broad generalisations on NHS cost-effectiveness. The NHS can still make major improvements to the health of the nation and must continue to respond to pressures from an ageing population, new technology and rising patient expectations.

Baroness Thornton: My Lords, I thank the Minister for that Answer. The Government seek to justify the hugely risky reforms of the NHS by saying that our NHS is not fit for purpose in a variety of ways, including not being cost-effective. We all know that improvements can be made-there is no doubt about that at all-but how does the Minister reconcile that with yet another authoritative report in the Royal Society of Medicine journal which says, among other things, that in terms of cost-effectiveness-that is, economic input versus clinical output-the UK NHS is one of the most cost-effective in the world, particularly in reducing mortality rates, and that among other systems, the US healthcare system is one of the least cost-effective?

Earl Howe: My Lords, I must point out one thing about this report: it does not make any claims for how cost-effective our health system was at any given point in time. What it does is measure the improvement in mortality over a period and then assess the cost-effectiveness of that improvement, which is a very different thing. Yes, the NHS has made great strides in improving mortality rates, but that is the only metric that the report deals with. It completely ignores other measures of quality. It is also completely silent about anything that happened after 2005, so recent years are not covered.

Lord Clement-Jones: Is not the really difficult and vital context in which we find ourselves at the moment the fact that we need significantly to improve productivity in the NHS in line with the so-called Nicholson challenge, which was endorsed by both this Government and the previous one? Can the Minister remind us of the record under the previous Government and tell us what he expects to be the outcome of the current health reforms?

Earl Howe: I am grateful to my noble friend. A Written Answer was published in Hansard recently that tracked the changes in productivity of the NHS between 1996 and 2008. He will know if he read it that there was a decrease in productivity over that period of around 3.1 per cent. The pressures on the NHS are increasing. In order for it to respond to the needs of the future, including an ageing population and the cost of new technologies, it needs to adapt to new ways of working that reduce cost pressures while delivering improved outcomes. The measures that are before Parliament seek to do just that.

Baroness Farrington of Ribbleton: My Lords, can the Minister give an example of any major reorganisation and restructuring that has not cost more money and

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put the brakes on improvements in the service that were being made, particularly when the Government bringing in to the system such major changes comprise two parties that said that there would be no major reorganisation of the National Health Service were they to be in government?

Earl Howe: I commend to the noble Baroness the impact assessment that we published on the Bill. It shows clearly that, over the next 10 years, the savings that we will bring about will dwarf the cost of making the changes that we propose.

Lord Patel: Does the Minister agree that improving the quality of healthcare will lead to higher costs?

Earl Howe: No, I do not. There are plenty of examples of quality costing less because the system gets it right first time. We see this time and again, for example in the Quit programme. The simplest example is that if we can treat patients correctly in hospital and keep them in for the shortest amount of time, we save a great deal of money.

Lord McColl of Dulwich: My Lords, on the subject of cost-effectiveness, does my noble friend agree that we are in the middle of the most serious epidemic to afflict this country for 100 years-namely the obesity epidemic? The cure is free: you just have to eat less. Why does the Department of Health insist that exercise is important in this equation?

Earl Howe: My Lords, the department takes its cue from NICE. I am sure that my noble friend will agree that exercise is never irrelevant to the question of obesity. I think that my noble friend's difficulty centres on how relevant it is in relation to reducing calorie intake. No doubt the debate on that will continue.

Baroness Pitkeathley: My Lords, does the noble Earl agree that no system of health, particularly with an ageing population, can be effective and efficient unless we also provide the best possible social care to link with it?

Earl Howe: I agree with the noble Baroness. One of the aims of our reforms is to integrate health and social care in a much more seamless way. There is another element to our reforms, which may have escaped noble Lords' notice. It is our wish to bear down on health inequalities in a much more systematic way than we have done hitherto. Both health and social care have a part to play in that.

Lord Tugendhat: My Lords, I declare an interest as chairman of the Imperial College Healthcare NHS Trust. Does my noble friend not agree that whenever an international organisation such as the OECD or the IMF has good words to say about the conduct of the British economy, the Chancellor of the Exchequer always welcomes them and uses them as an argument to support the Government's economic policy? Would it not be helpful, when other organisations have good words to say about the NHS, for the Government to welcome them with equal fervour? Of course the NHS

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can improve and must modernise and move with the times; but when significant institutions such as the Commonwealth Fund in America, and the one that has just been quoted, have good words to say about the NHS, surely the Minister should be less carping.

Earl Howe: My Lords, in my opening words I said that we welcomed the report. I stressed that we fully acknowledge the improvements that have been made by the NHS over the past few years, which the report highlights. However, it is limited in its scope. The difficulty with all these reports is comparing like with like, particularly with different health systems. I am not decrying the work that went into the report, but I will say that perhaps some OECD reports take us closer to how well the UK's health system is performing in relation to those of other countries.

Baroness Williams of Crosby: My Lords, will the Government take a larger look at the scope and permanence of the NHS's success in recent years? Does the Minister agree that a key factor is the share of GDP devoted to the NHS and the results that it produces? The NHS has consistently produced better results with a much lower share of GDP than some comparative health services, including that of the United States.

Earl Howe: My noble friend is right. There is also another measure that counts-not just the percentage share of GDP, but the absolute amount of money in the health budget that goes into our NHS. As she will know, the amounts of money have increased substantially over recent years. That produces a rather different ratio from the one in the report referred to in the Question.

Autism: Personal Independence Payments


3 pm

Asked By Lord Touhig

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): My Lords, it is too early to identify what the impact of the personal independence payment will be, as we are still developing the new assessment criteria. We are determined that the personal independence payment will be fairer than the disability living allowance, taking better account of the impact of mental, cognitive and intellectual impairments. The inclusion of activities around communication, planning and following a journey will help assess the impact of autistic spectrum disorders on individuals' lives.

Lord Touhig: I thank the Minister for his very helpful reply. Is he aware that the way in which the draft assessment criteria for the new personal independence payments are framed, coupled with the

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20 per cent cut in spending and a focus on those with the greatest personal care needs, could mean that many people with autism will lose the lifeline currently provided by the existing disability living allowance? Will the Minister say how the Government will ensure that this vulnerable group of people will continue to get the much needed financial support required to give them a good quality of life?

Lord Freud: My Lords, first, I must reinforce the point which I know I have made in the Chamber before; when people talk about cuts, they mean cuts on projections. The actual payments are essentially being held flat in real terms. We have looked at the initial assessments and are currently revising them in the light of our experience and after speaking to many groups, including the National Autistic Society, in order to refine the assessment. We will publish that and our findings in the next couple of months.

Lord Wigley: My Lords, we will all have received numerous representations in the context of the Welfare Reform Bill, which is coming up, from people who are most concerned about the loss or potential loss of the disability living allowance. Will he give an assurance that when this Bill comes into Committee, the Government will seriously consider accepting amendments in order to try to safeguard some of these most vulnerable people and not steamroller the savings that they intend to get from this Bill at the expense of the most vulnerable in our society?

Lord Freud: My Lords, there is no intention of steamrollering people. In fact, one of the things about the personal independence payment is that it is designed to be far more effectively focused at the people who need support, particularly those with learning disabilities and so on. I can absolutely assure noble Lords right around the House that during the process of this Bill I will listen very carefully to people and that good ideas will be gratefully received.

Lord Addington: My Lords, can the Minister give us an assurance that when we go through any form of assessment or process, a great effort is made to get the right information about the individual conditional set of problems? Much of the historical problem here is the fact that if a person did not fit the particular slot or the interviewer did not have enough information, they did not have the freedom-or were not encouraged-to go and find out the best answer.

Lord Freud: My noble friend makes the very good point that there has been continual disappointment in that area of assessment. We are beginning to learn how to do that better. Professor Harrington, in the context of a different assessment-the WCA-is pointing us in the right direction in getting information and support for people when they are being assessed.

Lord Rix: My Lords, what assurance can the Minister give that problems similar to those that have arisen on work capability assessments will not arise on PIP assessments, particularly in the light of people who take these assessments with a learning disability?

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Lord Freud: My Lords, clearly this is a different assessment that measures different things. However, we are learning lessons from the WCA, and noble Lords will know that we are making considerable changes to it to make sure that it works as effectively as possible. We also expect to make sure that the personal independence payment is focused on the needs of the individual. The assessment is much more appropriate than the DLA assessment, which is, frankly, subjective and inconsistent and relies much too much on self-assessment.

Lord Kinnock: Would the Minister like to give further attention to the first reply he gave to my noble friend Lord Touhig to the effect that the cuts are cuts in projections and spending is flat? Does that take account of the fact that we now live with the reality of a 5 per cent inflation rate?

Lord Freud: Yes, my Lords. I made absolutely clear in that response that I was talking in real terms, so it takes account of inflation.

Lord McKenzie of Luton: My Lords, the Minister said that he is in listening mode with the Welfare Reform Bill and is eager to learn lessons. Can he tell me what lessons he will learn from today's IFS report, which states that when the tax and benefit programme of this Government is analysed the poorest 30 per cent of people are bearing the brunt?

Lord Freud: My Lords, this is a serious recession, and the IFS emphasised how it will impact. One thing we will discuss as we go through the Welfare Reform Bill is the way in which we direct a lot of resource precisely to the poorest people. On a like-for-like basis, the universal credit injects something over £4 billion extra a year to the poorest people, against the current benefit system.

Company Remuneration Bill [HL]

First Reading

3.07 pm

A Bill to make provision about companies' remuneration policies.

The Bill was introduced by Lord Gavron, read a first time and ordered to be printed.

London Olympic Games and Paralympic Games (Amendment) Bill

First Reading

The Bill was brought from the Commons, read a first time and ordered to be printed.

International Renewable Energy Agency (Legal Capacities) Order 2011

Link to the Grand Committee Debate

Motion to Approve

3.08 pm

Moved By Lord Wallace of Saltaire

12 Sep 2011 : Column 505

Motion agreed.

Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) (Amendment) Order 2011

Link to the Grand Committee Debate

Motion to Approve

3.08 pm

Moved By Lord De Mauley

Motion agreed.

Localism Bill

Bill Main Page
Copy of the Bill Vol 1
Copy of the Bill Vol 2
Explanatory Notes

Report (3rd Day)

3.09 pm

Clause 184 : Designation of Mayoral development areas

Amendment 96

Moved by Lord Jenkin of Roding

96: Clause 184, page 174, line 14, after "Assembly" insert "or those London borough councils whose borough contains any part of the designated area"

Lord Jenkin of Roding: My Lords, the noble Lord, Lord McKenzie, has very kindly added his name to this amendment, tabled in my name. With this group of amendments, we turn to the subject of the mayoral development corporations in London.

Anybody with experience of development corporations, such as the London Docklands Development Corporation and other development corporations outside London, will recognise their hugely important role in urban regeneration in often very run-down areas. One essential characteristic that led to the success of these development corporations, not least the LDDC, was the provision that they had to be planning authorities and therefore had full authority over planning in their areas. In the 1980s this enabled my noble friend Lord Heseltine and my noble and learned friend Lord Howe of Aberavon to trigger what we must all agree has been the most amazing regeneration of what was then the almost derelict area of London docks. My role came later, as Secretary of State for the Environment, and with my late friend Nicholas Ridley, then Secretary of State for Transport, we were responsible for promoting both London City Airport and the Docklands Light Railway. These have transformed the Docklands area and indeed much of east London. Therefore, it is no surprise that the Mayor of London, Boris Johnson, supported by the Greater London Assembly, has persuaded the Government to include mayoral development corporations in the Bill. This is what Chapter 2 of Part 7 of the Bill

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is all about. As with all those who are concerned with the development and future of London, I warmly welcome most of this chapter but I have a few points to make.

I note in passing that the origin of this suggestion related to the Olympic legacy, for which these clauses will be of great value, but if it had been confined to the Olympic legacy, that would have made the Bill a hybrid bill. Therefore, the Government very wisely accepted that this proposal for development corporations in London should cover the whole of the area. Of course, they may not be confined to single boroughs, and indeed one of the attractions is that they could well cover an area that extends over more than one borough. The combination of this and the fact that they will be planning authorities in their own right has caused some anxieties on the part of the 33 London boroughs and the City of London. I remind the House that I have declared an interest at each stage that I am a joint president of London Councils.

There are two issues: first, whether the London boroughs should be represented on the mayoral development corporation boards, committees and sub-committees; secondly, what appears to be in the Bill an inadequate consultation of the boroughs on the formation and operation of a mayoral development corporation. I tabled the amendments in this group and I very much welcome the support of the Official Opposition in the name of the noble Lord, Lord McKenzie.

3.15 pm

My noble friends on the Front Bench have gone quite a long way to meet our concerns, and I will turn to that in a moment. The boroughs have these concerns because they are acutely sensitive to the possibility that there may be a conflict of interest between the ambitions of this, or indeed a future, mayor and the borough councils in which the mayor might propose an MDC. Councils have in most cases developed their local plans, and many will have secured much local support for those plans. If a proposed MDC failed to take proper account of those plans, or indeed cut right across them, this could give rise to serious disagreements. That is why this Bill needs to include measures hopefully to avoid this as far as possible, or to be able to deal with it if it should arise.

I will take the two points in turn. With regard to representation, our Amendment 98, which states that an MDC board should have at least one elected member from each council affected, seems to us to make an unanswerable point. Happily, my noble friend, with her Amendment 97, has met this point very satisfactorily, so when it comes to moving the amendments, I will not need to move Amendment 98. But Amendment 97 does not go quite far enough. A few moments ago I mentioned not only membership of the board, but also of the committees and sub-committees of the board, and as yet there is no provision to ensure borough representation on these. That is what my Amendment 101 is about: first, that there should be at least one elected borough representative on every committee and sub-committee; and, secondly, that if it is concerned with planning functions, it must draw half its membership from the London boroughs

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concerned. Why cannot this, too, be accepted by Ministers? Borough councils are responsible, elected bodies, which have a very real interest in what goes on in their areas. I would have thought that representation on the committees and sub-committees is an entirely reasonable thing to ask for.

It is so important that there should be wide consultation and a proper follow-up of the consultation. In the Bill, it is stated that when designating an area and when exercising the MDC planning functions, the mayor has to consult a wide range of bodies, including the Greater London Assembly and the London boroughs. That, of course, is very welcome. However, in the event that comments are made by the Greater London Assembly, if the mayor disagrees he has to make a statement explaining why he disagrees with the Assembly. When one looks at the consultation for the boroughs, one sees that there is no such obligation. He does not actually have to make a statement explaining why he differs from the boroughs, and in my view, I cannot see why these should not be given equal weight. I had this amendment down before the recess, and I received a letter from my noble friend Lady Hanham, who suggested that should a borough's representations to the mayor not have been properly considered, it will have the option of escalating its concerns to the London Assembly.

I have to say, with great respect, that is just not good enough. Of course, for the most part, the boroughs have a very good relationship with the Greater London Assembly. But I do not think that it is appropriate that borough concerns, which have been the subject of consultation, should be addressed only if taken through the representatives of the regional government. The boroughs have a legitimate and distinct voice, and this should not be crowded out. Amendment 96 relates to MDC designation; it would ensure that following any comments by a London borough council on a proposed designation, if it contains any part of the proposed MDC and if the mayor did not accept, he would have to publish a statement of his reasons for non-acceptance. Amendment 103, which relates to the MDC planning functions, would also ensure that if the mayor did not accept the borough's view, he would have to publish a statement for non-acceptance. As he has to do that for the assembly, why should he not do so for the boroughs? My amendments simply put the boroughs on an equal footing to the London Assembly.

We believe that these amendments are wholly reasonable, should be uncontroversial and are entirely in keeping with the legitimate role that the London boroughs have in representing and shaping their communities. These are very reasonable amendments. I beg to move.

Lord McKenzie of Luton: My Lords, as the noble Lord, Lord Jenkin, has indicated, we are pleased to put our name to these amendments. We thank the Government for responding to at least one of the amendments, which means that the noble Lord will not have to introduce that one. The issues, as the noble Lord has explained, seem to be extremely straightforward and clear-cut. The consultation simply seeks for London boroughs parity with what happens to the London Assembly and for them not to have to go through the indirect route for the reasons that the noble Lord has

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explained and to make sure that there is fair representation. The Government have recognised that there should be representation for the boroughs on MDC boards. It seems a natural and reasonable extension to that that there should be representation on committees and sub-committees. Having said that, I fully support the amendments tabled by the noble Lord.

Lord Palmer of Childs Hill: My Lords, as regards the mayoral development areas, reference is made to consultation with a number of bodies, including the Greater London Authority or local councils. But consultation is different in the minds of different people. In local government, we have seen many consultations, the results of which have been ignored. It worries one that a London borough may be only one part of the decision-making process and may only be consulted.

In particular, the government amendment refers to local borough councils having a "relevant" interest if the mayoral development area in any way impinges on the area of that local borough. The boundaries of London boroughs do not fit neatly into developments. For example, the Brent Cross development, which was built more than 30 years ago, is expanding, with which I agree. It is right on the borders of the boroughs of Barnet, Camden, Brent and Harrow. It seems to me that when this situation arises in the future, "relevant" local authorities should be those that have an interest and are affected by the proposed mayoral development areas, and not only those where the mayoral development area would be situated within that local borough. I invite the Minister to consider whether the word "relevant" is correct in this case and whether adjoining local boroughs should also be in some way incorporated in this Bill.

Lord Campbell of Alloway: My Lords, I support my noble friend's amendment as a requisite safeguard for the flexibility of the London boroughs; that is, flexibility being within their remit and for their discharge.

Lord True: My Lords, I declare an interest as leader of a London borough. I thank my noble friend the Minister for the moves that have been made to address some of the legitimate concerns put forward at the previous stage. Having said that, my noble friend Lord Jenkin of Roding eloquently put the case for further consideration of some of the minor details-some of which are not so minor-in clarifying how this will work. Rightly or wrongly, there is suspicion among leaders of London boroughs about the risk of the mayor imposing policies on areas of London. Further safeguards and assurances would be desirable in that respect.

The other brief point I wish to make is that, as my noble friend Lord Jenkin said, recourse to the London Assembly, with all great respect to that body, is not a fully local response. In the Bill we already have to contend with the fact that regional government is continuing in London and that the local element of the Bill is somewhat deficient in London. Geographically elected members of the London Assembly represent quite large areas-less local than London boroughs-and are less urgently concerned through wards with local

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affairs. The London Assembly Members who are elected under proportional systems do not have that kind of local connection.

I hope that my noble friend, in considering the amendment of the noble Lord, Lord Jenkin, will tell us that he will be able to consider further the noble Lord's points before the next stage.

Earl Attlee: My Lords, this group of amendments addresses concerns raised about borough councils' representation on an MDC's board and committees. I am grateful for all noble Lord's contributions. We have thought carefully about this and have tabled government amendments.

Amendment 97 would ensure that a borough council, including for this purpose the Common Council of the City of London, whose area forms part of an MDC, will have an automatic seat on the board by requiring that the mayor must exercise his power to appoint members to the MDC so as to secure that the members of an MDC include at least one elected member of each relevant council. Such appointments will still be subject to the same safeguards as other appointments. Amendment 99 would allow the mayor to remove a borough council member from an MDC's board if that member ceases to be a borough member and the mayor wishes to appoint another member of that borough in the original member's place. Amendment 102 is a consequential amendment to rules about the validity of proceedings and simply ensures that the absence of at least one elected member of each affected borough council will not affect the validity of an MDC's proceedings.

Amendment 100 removes the stipulation that the majority of members of a committee or sub-committee of an MDC must be members of the MDC. These are significant concessions. My noble friends have suggested in Amendment 98 that one-sixth of the members must be from the boroughs, but that is not necessary. For example, with the proposed Olympic Park Legacy Corporation the four borough members would be likely to constitute rather more than one-sixth of the board. On that basis I ask my noble friends to withdraw their amendment. The House may recall the amendment the noble Baroness, Lady Grey-Thompson, tabled for Committee, which was not debated. That sought to provide that an MDC's committees and sub-committees should not, as is currently the case, require a majority of MDC members. I am delighted to say that we have brought forward Amendment 100, which secures the aims of the noble Baroness.

Amendment 101, tabled by my noble friend Lord Jenkin of Roding and the noble Lord, Lord McKenzie, also relates to membership of committees and sub-committees but seeks to prescribe membership. It states that there should be at least one elected borough representative on both committees and sub-committees from those boroughs whose areas are affected by a designated mayoral development area, and, where those committees are concerned with planning, that at least half of the membership should comprise representatives from affected boroughs. I hope the House will agree that the existing provisions regarding committees and sub-committees, bolstered by Amendment 100, will

12 Sep 2011 : Column 510

give an MDC maximum flexibility over the make-up of its committees and sub-committees. I hope that deals with the point raised by my noble friend Lord Campbell of Alloway. For example, an MDC will be able to appoint one or more relevant borough council members to its planning committee and, should it wish to do so, have a majority of non-MDC members on that committee.

I turn now to Amendments 96 and 103 which address a borough's comments on, first, the proposed designation of a mayoral development area and, secondly, designation of an MPC as the local planning authority. It is clearly right that an affected borough council must be consulted on both these issues, just as it is right to offer the opportunity to the London Assembly, relevant Members of the other place and other statutory consultees as the Bill provides. It is also the case that the mayor will be obliged to consult affected borough councils and other statutory consultees were he to propose that an MDC should offer business rate discounts. The Bill provides that, should comments be made by the London Assembly and the mayor not accept those comments, he is obliged to publish a statement giving reasons for that non-acceptance. Amendments 96 and 103 would extend that requirement to comments of the borough councils. However, there is no need to do this. As I have said, an affected borough council must be consulted by the mayor, so it could make its views known to him by that route. But a borough council could also make representations to its London Assembly constituency member who, in turn, could feed those views to the Assembly as a whole, as a result of which the Assembly could, if it wished, relay those representations and any of its own to the mayor. I suggest that this is a sufficient level of scrutiny.

I would ask noble Lords to withdraw their amendments and accept Amendments 97, 99, 100 and 102 in their place.

3.30 pm

Lord Jenkin of Roding: My Lords, I am grateful for the care with which my noble friend has replied to the amendments, but I have to say that I am concerned at what he said towards the end of his remarks about the London boroughs having to put their views to Assembly members who, in turn, will put them to the mayor. That is not a proper or, indeed, a dignified treatment of independent elected authorities which have made substantial comments on the mayor's plans. I really am quite disappointed about that.

I understand the point made by my noble friend on the question of representation, and in particular on the question of numbers. What we are asking for is that they should at least have representation on committees and sub-committees, but all my noble friend has been able to say so far is that it would give maximum flexibility if this were not in the Bill because there is nothing to prevent the mayor making sure that there are such representatives. However, it does not oblige him to do so; the Bill merely says that this can be done. So I have to say that I am a bit disappointed.

I hope that my noble friend will be prepared to look at this again between now and Third Reading. I have to tell him that the boroughs feel strongly about the

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issue, and I am grateful to my noble friends Lord True and Lord Palmer of Childs Hill for what they said on the issue. The boroughs are concerned because while at the moment no other mayoral development corporations are planned beyond the Olympic Park Legacy Corporation, there will be, so we need to guard against the possibility of there being a serious conflict of interest, and the Bill ought to provide a proper machinery for dealing with that. I hope that I have convinced the House that this is the not the case at the moment.

Obviously I am not going to divide the House, but it does seem to me that I am entitled to ask my noble friend to have another look at this between now and Third Reading, which we shall not have for some weeks yet so there is plenty of time. I beg leave to withdraw the amendment.

Amendment 96 withdrawn.

Schedule 21 : Mayoral development corporations

Amendment 97

Moved by Baroness Hanham

97: Schedule 21, page 399, line 6, at end insert-

"(1A) The Mayor must, subject to sub-paragraph (3), exercise the Mayor's power under sub-paragraph (1) so as to secure that the members of an MDC include at least one elected member of each relevant London council.

(1B) For the purposes of this Schedule-

(a) "London council" means a London borough council or the Common Council of the City of London, and

(b) a London council is "relevant" in relation to an MDC if any part of the MDC's area is within the council's area."

Amendment 97 agreed.

Amendment 98 not moved.

Amendments 99 and 100

Moved by Baroness Hanham

99: Schedule 21, page 399, line 39, after "Act)," insert-

"(ca) the member has since being appointed ceased to be an elected member of a relevant London council and the Mayor wishes to appoint an elected member of that council to be a member of the MDC in the member's place,"

100: Schedule 21, page 401, line 2, leave out from "MDC" to end of line 3

Amendments 99 and 100 agreed.

Amendment 101 not moved.

Amendment 102

Moved by Baroness Hanham

102: Schedule 21, page 401, line 27, after "it," insert-

"(ba) its members not including at least one elected member of each relevant London council,"

Amendment 102 agreed.

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Clause 189 : Functions in relation to Town and Country Planning

Amendment 103 not moved.

Schedule 22 : Mayoral development corporations: consequential and other amendments

Amendment 104

Moved by Lord Taylor of Holbeach

104: Schedule 22, page 402, line 22, at end insert-

"Local Authorities (Goods and Services) Act 1970 (c. 39)

1A In section 1(4) of the Local Authorities (Goods and Services Act) 1970 (supply of goods and services by local authorities: interpretation) in the definition of "local authority" after "(joint waste authorities)" insert ", a Mayoral development corporation"."

Lord Taylor of Holbeach: My Lords, I shall begin by speaking to government Amendment 107, which is also in the group.

The government amendment seeks to enable the greatest sharing of back-office services across the GLA group. The mayor has an ambitious shared services programme for the GLA group utilising existing powers under the Greater London Authority Act 1999, which enables the GLA and its functional bodies to share administrative, professional and technical services with each other.

We are conscious that there are several legislative gaps in the existing legislation, with a number of bodies in the GLA's ambit not covered, potentially restricting further opportunities for savings and efficiencies. That is why, following discussions with the mayor, we introduce the new amendment as part of the London reform package to extend the powers to three further statutory entities; namely, the Commissioner for the Metropolitan Police, the London Transport Users' Committee and the London Pensions Fund Authority.

The amendment also gives the Secretary of State the power to add other persons or bodies performing public functions in London, other than wholly national bodies, to the list of entities covered by Section 401A, following consultation with the relevant person or body. This will allow the inclusion of unique bodies such as the Lee Valley Regional Park Authority or the Museum of London, if there is an appetite in London for their inclusion. We will be discussing further the extent of any order with the GLA, the boroughs and other relevant partners over the autumn.

Finally, Amendment 104 amends Schedule 22 to classify a mayoral development corporation as a local authority for the purposes of the Local Authorities (Goods and Services) Act 1970. This will allow a mayoral development corporation to share administrative services and supply goods to local authorities on the same basis as other functional bodies, again in support of the mayor's shared service agenda. I therefore beg to move.

Lord Berkeley: My Lords, this is a very interesting pair of amendments. Proposed new paragraph (d) in Amendment 107 is about the London Transport Users' Committee, which the Minister will be aware that Amendment 108 seeks to merge more closely into the GLA. If Amendment 108 is not carried-and I will certainly oppose it if I can be in the Chamber at the

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time-who decides whether these administrative sharing arrangements take place? If the London Transport Users' Committee remains as it is, who decides whether it should merge its administration? Can they resist a request to share or is it a matter of negotiation?

Lord McKenzie of Luton: My Lords, it seems to me that the concept of sharing back-office and administrative services is entirely reasonable and I can see the benefits that might flow from that. My noble friend raises an interesting question as to how it works and whether there is a discussion or an imposition when new bodies are brought in. I suppose I am a little surprised that there are not the general powers already available for the sharing of these functions but I support the thrust of this.

Lord Taylor of Holbeach: I assure the noble Lord that we would not be tabling amendments if the power were already in existence-no, it does not exist, which is perhaps surprising to noble Lords, but I hope that with the consent of the House it will in future. I thank the noble Lord, Lord Berkeley, for his question and I reassure him that any decision on these fronts has to be mutually agreed. This is really designed to be of advantage to both parties and for the people of London.

Amendment 104 agreed.

Independent Commission on Banking


3.41 pm

The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, I shall now repeat a Statement that has been made in another place by my right honourable friend the Chancellor of the Exchequer. The Statement is as follows:

"Mr Speaker, I should like to make a Statement on the final report of the Independent Commission on Banking. The report is an impressive piece of work-broad in scope, incisive in its analysis and clear in its recommendations. The commission has done what we asked it to do. It has come up with an answer to the question of how Britain can be the home of successful international banks that lend to families and businesses without exposing British taxpayers to the massive costs of those banks failing. Frankly, it is a question that should have been asked and answered a decade ago.

We should all thank Sir John Vickers and the other members of the commission-Clare Spottiswoode, Martin Taylor, Bill Winters and Martin Wolf-for a job well done. But this commission and this report have not come about by accident. It was set up by this coalition Government to learn the lessons of what went so catastrophically wrong: a decade long debt-fuelled boom that ended in a dramatic financial crisis, a deep recession and a debt overhang that is still holding back our economy; a regulatory system that totally failed to spot enormous imbalances building up and proved incapable of dealing with the crisis when it first broke; and, most importantly in the context of this report, huge global banks that turned out to be "too big to fail", so that taxpayers were called upon for many billions of pounds in order to prevent a financial

12 Sep 2011 : Column 514

meltdown. We still do not know, and may not know for many years, how much of that money will ever be recovered, despite irresponsible promises made at the time that not a penny would be lost.

We are fundamentally changing the system of regulation and tackling the debts but this bailout for banks is the element of the crisis that has, justifiably, caused the most anger. It is an affront both to fairness and to the very principles of a market economy. It is not available to any other sector of the economy, and nor should it be. It breaks the principle that those who take risks should face the consequences of their actions and, as a result, it played an important role in encouraging the excessive risk taking that caused this crisis.

Of course, taxpayer bailouts did not only happen in this country. An international regulatory response to the crisis is now emerging, with the new Basel rules and the anticipated new additional requirements for systemic banks, but here in Britain we cannot rely only on the international reform process to make our banking system safe. The scale of the challenge we face and the risk for our taxpayers is on a different scale from most other countries.

The balance sheet of our banking system is close to 500 per cent of our GDP, compared to just over 100 per cent in the US and around 300 per cent in Germany and France. Only Iceland, Ireland and Switzerland had larger banking systems relative to their GDP, and they have now all taken action that goes well beyond new international standards. As the report says,

This is what I have called 'the British dilemma'-how to remain a successful global centre of finance without asking taxpayers to bear unacceptable risks or put the broader economy at risk. We set up the Banking Commission to help us solve the British dilemma. Let me set out its recommendations and how we propose to respond.

The first proposal is the introduction of a ring-fence around retail banking. The Government have welcomed this recommendation in principle. As the report says,

In other words, the provision of key domestic retail banking services, such as taking deposits from individuals and small businesses or providing them with overdrafts. The central benefit of a ring-fence is not to end large universal banking groups but to make them more easily resolvable in a crisis. The costs should fall on shareholders and the wholesale debt holders, not small depositors or taxpayers. A successful ring-fence will be able to ensure the continuation of vital payment services that are crucial to preventing an economic collapse. This directly addresses the perceived implicit taxpayer guarantee which is at the heart of the too-big-to-fail problem.

The commission has also proposed a more flexible ring-fence. In terms of its scope, it says that,

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Many will see this as sensible and it will reduce inefficiencies resulting from any mismatch between customer deposits and business lending within an individual bank.

On the strength-or height, if you like-of the ring-fence, it recommends that the retail subsidiary should have what it calls 'economic independence'. In other words, it should meet regulatory requirements on a stand-alone basis and its relationships with other parts of the group should be arm's length and regulated in the same way as relationships with third parties. A great deal of detailed work will now be required to see how that principle can be put into practice.

Secondly, the commission has also made important recommendations to ensure that banks have bigger cushions to withstand losses. These are that the large retail ring-fenced banks should have equity capital of at least 10 per cent. It also recommends that retail and other activities of large UK banking groups should have primary loss-absorbing capacity of at least 17 per cent to 20 per cent, including long-term debt that can be written off, so that, unlike last time, both shareholders and bondholders bear losses, not the taxpayer. Within this, it recommends some regulatory discretion about the composition of this loss-absorbing capacity. Again, many will see that as sensible.

Thirdly, the commission recommends the introduction of depositor preference. I repeat again that the Financial Services Compensation Scheme covers 100 per cent of eligible deposits up to the new European limit of €100,000. The depositor preference proposals would bolster this scheme by ensuring that other bank creditors are subject to losses first when a bank goes bust, minimising the cost to the FSCS and ultimately to the taxpayer.

The fourth set of recommendations relates to competition in the banking sector. They have not got as much attention as the other recommendations, but they are as important to families and businesses. I agree with the commission that the best way to ensure a reliable and affordable supply of lending to our families and businesses is through competition. The collapse of banks such as Bradford & Bingley and the merger of Lloyds and HBOS, welcomed by the previous Government, mean that there is too little competition and switching bank accounts remains difficult. I welcome the recommendations to change this. On the divestment of the Lloyds branches, the commission has said that the key test should be the emergence of a strong and effective new challenger bank. I agree that that would be very much in our country's interest.

Those are the recommendations. Let me now turn to the implications for the wider economy, the implications for Britain as a global financial centre and the timetable for the Government's response. The report is clear that the right solution, implemented properly and to the right timetable, will help our economy, not hinder it. Let us remember that the mistakes made by poorly regulated banks ended up costing the economy many many billions of pounds. The commission notes that some of its recommendations could reduce the profitability of some banks' investment banking operations. That is largely because we would be removing the subsidy that comes from any perceived implicit taxpayer guarantee. We should not confuse the interests of bank shareholders

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with those of British taxpayers. It is also critical that reforms of this kind do not lead to a worsening of credit conditions in the economy. Indeed, Vickers says:

'Banks with more robust capital, together with the creation of the ring-fence, would provide a secure and stable framework for the supply of credit to businesses and households in the UK economy'.

Indeed, the commission believes that its proposals could help to rebuild the culture of relationship banking that has been so sadly lost over the past decade and would help banks understand the credit needs of their customers better.

Let me turn to the UK's role as a global centre for finance and banking. I will be very clear. This Government want Britain and the City of London to be the pre-eminent global centre for banking and finance. We want universal banks headquartered here, with all the advantages that that brings. The Vickers report explicitly addresses this issue, and for those investment banks with credible recovery plans, it has not recommended higher equity requirements than those agreed at an international level. This would mean that the global investment banking operations of UK banks can continue to be as competitive as any in the world. We will continue as a Government to keep the City as a whole internationally competitive, as was clear last week when we welcomed, with the Chinese Government, the development of the offshore renminbi market in London.

Let me end by explaining to the House how we will now take forward the commission's report. We welcome the recommendations in principle. They would require far-reaching and complex changes. John Vickers is the first to say that they cannot be delivered overnight. The detailed work will start immediately. We will consult on the costs and benefits of the most appropriate way to implement these changes. We will provide a response by the end of this year, so that there is no uncertainty hanging over the industry.

We will legislate in this Parliament to put the needed changes into law. We will consider which changes can be in the existing Financial Services Bill and which will need a new Bill, and we will discuss these changes with international partners to ensure consistency with international agreements and EU law. We will follow the advice of the independent commission and ensure that any changes to the British banking system are fully completed by 2019. This is a sensible timetable that fits with the international regime. As Vickers himself said this morning,

The question of how Britain can be the home of successful, global banks that lend to British families and businesses but do not have to be bailed out by British taxpayers should have been answered a decade ago, but it was not even asked-and that failure means this country is still paying the price for that failure. Billions of pounds have been spent and hundreds of thousands of jobs have been lost as a result. It is this Government who set up the banking commission-not just to ask the questions but to provide the answers. Today represents a decisive moment when we take a step to a new banking system that works for Britain. I commend this Statement to the House".

My Lords, that concludes the Statement.

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3.54 pm

Lord Davies of Oldham: My Lords, I am grateful to the Minister for repeating the Statement made in another place earlier this afternoon. Of course, we are grateful to all who contributed to the Vickers report, particularly the chairman. After all, this is probably the most important report to come before this Government during their time in office. Therefore, it is important that we recognise the points that the Minister made about the time necessary for full consideration of the important issues involved. However, if we have a clear anxiety about the Government's response-I recognise that it is an initial response at this stage-it concerns whether it has the urgency which the nation demands. The report proposes significant reforms to an industry that contributed substantially to a huge rise in job losses and caused great uncertainty among our fellow citizens. Hundreds of thousands are seeing their living standards decline. At the root of this is the catastrophe in the financial sector that we have lived through.

Of course, the report is concerned with the UK position, UK banks and the United Kingdom Government's response and contribution to finding a solution. However, I hope that the Minister will give greater reassurance as regards the urgency of taking the earliest possible action. I am not clear why the Government have not indicated that they look upon the financial legislation before both Houses as a vehicle for at least establishing a basic framework of the response. That would at least translate fine words into early and clear action. That is the very least that we can ask of the Government in response to a situation which has been so catastrophic for our nation.

My second point, in somewhat lower key, concerns the international dimension. Of course, we are concerned about United Kingdom legislation but it is important that the Government, particularly the Chancellor, should recognise that the solution to the financial problems which face banking in this country has to be consonant with the solutions which are put forward and engaged in by all the major economies in the world. That is why it is so important that the Chancellor should recognise the international role which he has to play in respect of the reform of the world's financial provisions, particularly regulation.

Thirdly, I hope that the Minister will not dwell too much on the past.

Noble Lords: Oh!

Lord Davies of Oldham: We all recognise that the catastrophe which occurred in 2008 was enormously detrimental to the welfare of this country. However, I hope the noble Lord will recognise that it occurred not just in this country but constituted an international financial failure. Regulation failed in the United States of America and other countries. That international dimension is crucial to finding a solution. If the Minister merely looks on this as an opportunity for point scoring and berating the previous Government, that would ill fit the present situation and the problems that we all face, to say nothing of the fact that he would have to quote chapter and verse those senior Conservative politicians who, during the build up to the events of 2007-08, warned of the impending difficulties

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and demanded tighter and more effective regulation of the City. If evidence of that kind emerges at any stage, I for one would be glad to see it. However, I would be amazed if it existed.

Today's Statement provides an opportunity to give a brief response to a fundamentally important problem. I am keeping my remarks brief confident in the fact that we shall have another opportunity to debate this matter on Thursday of this week. I hope the Government and the Minister appreciate that we shall have a greater opportunity to deploy our arguments in that debate after we have fully examined the Vickers report and the Government's initial response to it. I look forward to that debate, as I am sure does the Minister.

4 pm

Lord Sassoon: My Lords, I was never a boxer, so I have never understood the concept of leading with the chin, but I really think that we have seen the noble Lord, Lord Davies of Oldham, doing exactly that this afternoon. I am pleased that he recognises the importance of this report; but how he has nerve to stand up and tell this Government that we should be addressing the report with urgency, I simply do not know. I do not want to make cheap points this afternoon when there are much more important things to say.

Noble Lords: Oh.

Lord Sassoon: Well, should I or not? Perhaps I will. This is important because it exemplifies what this Government are doing and what the previous Government did not do. There were 18 months between the collapse of Lehman Brothers and the general election in which work such as that which we commissioned could have been commissioned by the previous Government. There were two and a half years after the appalling events following the collapse of Northern Rock in which the previous Government could have looked at the structure of banking, but they did nothing. There were more than 10 years in which they presided over the debt-fuelled boom that led to this disaster that we are now mopping up. So I really do not think that we need lectures about urgency on the follow-up. We are taking the timetable suggested by the independent commission, and that will be our guide.

I apologise if my droning on with a 2,000-word Statement means that not every sentence or paragraph can be picked up. However, as the noble Lord asked about the use of the existing Financial Services Bill and the international dimension, I remind him that both points are addressed in the same paragraph of my right honourable friend's Statement, which I will read out again:

"We will consider which changes can be in the existing Financial Services Bill and which will need a new Bill, and we will discuss these changes with international partners to ensure consistency with international agreements and EU law".

So I completely agree with the noble Lord, Lord Davies of Oldham, on these two points, which is why my right honourable friend has addressed them in his Statement. I look forward to any more constructive thoughts that he and his noble friends may be able to come up with as we go forward discussing these very important matters.

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4.03 pm

Lord Newby: My Lords, on these Benches we welcome the report and the Government's response to it. We also welcome the degree of urgency with which the noble Lord, Lord Davies of Oldham, wishes the report to be implemented, not least because some of us had to put up with withering scorn from the Labour Benches during the previous Parliament when we suggested exactly the proposals that are now in this report.

The report says that while the full implementation of the proposals might take a number of years, there is much to be gained by moving quickly to set the framework in place so that the banks know what they are up against. The Minister has already mentioned that the Government will look at the extent to which the financial services Bill might be a vehicle for doing that. As we now have a Joint Select Committee on the Bill, of which I have the privilege to be a member under the chairmanship of Peter Lilley MP, would he accept that this offers Parliament a golden opportunity to take evidence quickly on the principal issues that the Vickers report raises and to move with some determination? I am sure that the vast bulk of rule-making that will be required to implement this series of proposals will not need primary legislation but will need FSA regulation or secondary regulation, and that the legislative framework in primary legislation should be relatively short and straightforward.

Lord Sassoon: I am very grateful to my noble friend. We will work as hard and as fast as we can now to take forward consideration of the detail. As I have stressed, we have accepted the recommendations of the report in principle, but there is a lot of potential devil in the detail and we need to do a full cost-benefit assessment. Indeed, we need to work through what would be appropriate to introduce into the financial services Bill and what would need a stand-alone Bill. I have no idea how the committee may want to proceed, but it now has the Vickers report in front of it and we will get on with sorting out all these issues as quickly as possible. However, we should not underestimate the amount of work for officials and the amount of consultation needed to get the detail right.

Lord Barnett: I welcome the Statement and I note that, in its recommendations, the commission talked about the short-term report being dealt with as soon as possible, although it would take until 2019 to deal with the full action that needs to be taken. I would like to clarify this with the noble Lord. He talked about some of the points and he repeated part of the long Statement about what will happen, but could he clarify how soon he expects the banks to be in a position to do the kind of reform recommended in this report, which is so strongly supported by the Chancellor? Is not the real current danger that, if the eurozone banks collapse, as, regretfully, seems all too likely-recently the Chancellor said that that would not just be disastrous for Europe but for us as well-we could be bailing out banks long before 2019, whether we are in the eurozone or not and we may have to bail some out in the very near future? How would that fit

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in with the reform in the short term that will enable the actions which are strongly recommended by the report to be carried out?

Lord Sassoon: I am grateful to the noble Lord, Lord Barnett, for welcoming the Statement. Clearly, there is a series of different sorts of recommendations in the report. Some of them relate to ring-fencing and the adequacy of capital, where the date of 2019 fits in with the move to implementation of Basel III. So there is a clear logic for making sure that the construct that we are putting in place here is targeted at the same date as the related international recommendations in the same area. On the other hand, of course there are recommendations in areas such as competition, connected, for example, with the ongoing disposal of Lloyds branches, where the timetable is rather different and where the commission, quite rightly, is looking to see action on a shorter timescale. We need to look at the pacing of some of the reforms in relation to 2019, that being the date of Basel III implementation, and others in relation to the individual merits of the case. That is the approach we will take.

Lord Higgins: This is certainly a massive and comprehensive report which is rightly welcomed by the Government. I have two questions. First, there is certainly a point of view which says that the right answer is to have complete separation of investment and retail banking. The commission has not come down in favour of that but in favour of ring-fencing. The danger is that there are loopholes in the ring-fence. Could my noble friend say in what circumstances resources might flow from one side of the ring-fence to the other, thereby continuing, albeit perhaps in a more limited form, the dangers which arise if there is a degree of connection between investment and retail banking?

Secondly, as far as timing is concerned, I understand the point my noble friend is making about Basel. However, it has also been suggested that, given the state of the economy, it would be dangerous to implement these changes too quickly, because it would inhibit the continued recovery. Would my noble friend agree that it is right to review that aspect of timing as we go along, and not set in concrete the idea that we should wait until 2019 before going ahead with the ring-fencing proposals?

Lord Sassoon: My Lords, I regret that I may fail to satisfy my noble friend Lord Higgins in my answers. On his first point about the design of the ring-fence, and whether there are loopholes, the commission has been quite clear in relation to one or two major structural elements of the ring-fence. It has recommended that discretion should be allowed to the banks as to whether the lending business to large industrial companies should be on one side of it or the other. That will be the first of a number of detailed issues that need to be looked at in the design work. I would not wish to pre-empt that work, other than noting that my noble friend's question of loopholes and how they might come about will be, I am sure, very much in the minds of those doing the detailed work.

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On the speed of implementation, I do think it is important-as it was with the Basel III work, and the European directive that flows with it-that the banking industry, taxpayers and all those who deal with the banks have a clear understanding of what the end position will be. There is a separate question as to what the appropriate implementation timetable will be. I am sure that the commissioners thought very carefully about this when they put forward the date of 2019. I repeat that-as my noble friend will know-it is the same date as the Basel implementation. I am sure they thought about that very hard.

Lord Forsyth of Drumlean: My Lords, I draw the House's attention to my entry on the register as a director of MBNK, which is seeking to establish a new bank.

I congratulate my noble friend and the Chancellor on the way in which they have gripped this difficult subject, by appointing the Vickers commission, which has done an outstanding job. Some of us may not agree with all of the report, but it is a careful and sensible analysis. Some people have argued that this will damage the competitiveness of the City of London, but does my noble friend not agree that the City of London will benefit from having certainty? The fact that the Chancellor has the courage to take this on will help with the process and help our competitiveness.

I suggest that if my noble friend is thinking of giving a Christmas present to the noble Lord, Lord Davies of Oldham, he might buy him a copy of the right honourable Alistair Darling's memoirs, in which he will find why it is not a good idea to look to the previous Government's behaviour in this area. May I remind the House that it was the previous Government who gave Sir Fred Goodwin his knighthood for services to banking?

Lord Sassoon: I am very grateful to my noble friend Lord Forsyth for welcoming this report. It is a fine piece of work that has been done under a lot of time pressure. The commissioners have developed the analysis very considerably from their interim report, and I share my noble friend's conclusion that by coming out now with these reforms to strengthen our banking system, we will place our banks and the City of London in an even better position to compete globally, as the Government want them to be able to do.

Lord Elystan-Morgan: My Lords, I appreciate that it is wholly necessary that there should be an effective firewall between retail and wholesale banking, and that the detail of that remains to be determined. However, perhaps the Minister will accept that the seriousness of the situation is illustrated in this way. Section 6 of the Theft Act 1968 defines theft as occurring in circumstances where a person uses the property of another as if that property were his to dispose of, irrespective of the rights of the other. In that way, the revelations of 2008 show quite clearly that in many instances there was moral theft, if not actual legal left.

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Lord Sassoon: I am certainly no lawyer, so whether there was legal theft I will leave to lawyers to sort out. On the question of moral theft, I look to the Bishops' Benches for guidance. The noble Lord makes the serious point that these events were deeply shocking and needed the sort of serious response that the Government and the commission have given. That is why we will drive through the recommendations that we accepted in principle today.

Baroness Ford: My Lords, I have a slight disagreement with the noble Lord, Lord Higgins. I particularly welcome the flexibility around the ring-fence, which is a very intelligent response to the dilemma of separation that clearly reflects the reality of modern Treasury management. That is greatly to be welcomed. However, given that a huge component of the problems that we have experienced concerns the misallocation and mispricing of risk, and the failure of regulation, will the Minister say whether, in line with the changes that the commission set out today and that Basel III will introduce, the Government have any proposals for further strengthening the regulatory framework in this country? Banking systems in other countries such as Canada did not fail. I declare an interest: I worked for a Canadian bank in that period. One of the distinguishing features of the Canadian system was the strength of regulation. Are there any plans for further strengthening the regulatory framework in this country?

Lord Sassoon: I am grateful to the noble Baroness for pointing out the good sense with which the commission addressed the question of the ring-fence. Clearly it has thought about the arguments that have been put over recent months. In respect of the failure of regulation, on which I completely agree with her, the overhaul of the regulatory structure, which is coming forward in the financial services Bill, is very significant. It puts the primary responsibility for looking at the risk in the entire system where it ought to be: that is, with the central bank. That is a fundamental change. The new Financial Policy Committee of the Bank of England is up in effective shadow mode, ahead of the legislation going through. It is able to address-and is addressing-risk issues as we speak, and I am sure that it will take note of whether there is anything further in the report that it ought to pick up on.

Baroness Kramer: My Lords, I join others in welcoming the Government's enthusiastic acceptance of the report, and particularly of ring-fencing, which is much harder to erode than changes in regulation. However, I am sure that the Minister will agree that those who have suffered the most from the failure of the banks and the depth of the economic crisis that followed have been among the most vulnerable and disadvantaged, along with the smallest businesses. Would he be willing, as he looks to introduce a new bank that will provide more high street competition, to encourage banking services that will address the micro and the very small business, and which will reach out to the economically disadvantaged, who currently get a basic bank account offered with ill grace and very few services?

Lord Sassoon: I am grateful to my noble friend Lady Kramer for bringing us back to one of the constituencies most affected by the state of our banking

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system. That is why I welcome the discussion in the report about issues concerning the ability of individuals to switch accounts. There are important recommendations about the Lloyds Bank disposals, which make the point that this is not just a numbers game, of counting the branches that must be disposed of, but about creating another competitor out there. Therefore the report addresses critical aspects of the challenges that she poses, but in addition-whether it is looking at mutual models, credit unions or all the other aspects of a rich and varied banking system-there are significant other channels which the Government continue to address.

Lord Flight: My Lords, I draw attention to my entry in the register indicating that I am a director of Metro Bank, one of the new banks.

I would like to make three points while generally welcoming the recommendations. First, I remember over 10 years ago, following what I believed then to be the mistaken collapse of Barings, talking to the then Governor of the Bank of England about changes to the lender-of-last-resort doctrine, which had stood this country's banking system in very good order for nearly 100 years. It changed by it being said that it was available only to larger banks, walking straight into the moral hazard problem whereby very large banks were of the belief that they could not be allowed to fail, which was the case, and smaller banks were not able-if there were a banking run-to get lender-of-last-resort support. That is why a whole lot of them wound up. It is very important in achieving competition that, broadly, the lender-of-last-resort doctrine is restored to what it was.

Secondly, I am slightly worried that increasing banks' capital may be brought forward too quickly. I draw noble Lords' attention to the very convincing writings of Professor Tim Congdon to the effect that if we increase capital requirements very speedily, we will end up shrinking the money supply, which is the last thing we want to do when the country is trying to struggle its way out of recession.

Finally, one banking system, Lebanon's, escaped all the problems because the governor of the central bank of Lebanon had the wisdom to spot what was coming, to warn the banks and to keep them out of it. There is nothing more important than having a really good central bank governor who actually knows what is going on and blows the whistle in good time.

Lord Sassoon: All I can say is that my noble friend Lord Flight makes three important and interesting observations which we need to dwell on as we take all this work forward.

Baroness Noakes: I declare my interest, as recorded in the register, in particular as a director of the Royal Bank of Scotland, although my views are and always have been entirely my own.

My noble friend the Minister will be aware that there remain concerns, not least from organisations such as the CBI, about the impact of these proposals on the availability and cost of lending to smaller businesses. There are also concerns about the impact of the proposals on the strength of our financial

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services industry, which is and will remain a significant contributor to the economy. I therefore welcome the emphasis in my right honourable friend the Chancellor's statement on cost-benefit analysis being carried out before implementation. Will my noble friend say a little more about when this cost-benefit analysis will be undertaken?

Lord Sassoon: I am grateful to my noble friend Lady Noakes. We will get on with all the consideration of the detailed recommendations and the cost-benefit analysis as soon as possible. I cannot be more specific than that, but as my right honourable friend said, it may be that some things can be brought forward for the financial services Bill, which is an indication of the speed with which we will go at this.

Localism Bill

Bill Main Page
Copy of the Bill Vol 1
Copy of the Bill Vol 2
Explanatory Notes

Report (3rd Day) (Continued)

4.25 pm

Clause 210 : Delegation of functions by Ministers to the Mayor

Amendment 105

Moved by Lord Taylor of Holbeach

105: Clause 210, page 188, line 27, at end insert-

"(3A) Before making or varying a delegation under subsection (1) above, a Minister of the Crown must consult-

(a) each London borough council,

(b) the Common Council, and

(c) the Assembly."

Lord Taylor of Holbeach: My Lords, Ministers already have the power to delegate functions to the mayor and the London Development Agency under the Regional Development Agencies Act 1998. We believe that it is right that Ministers continue to have such a power once the LDA is abolished. Through the London reforms in this Bill, the GLA will be gaining significant new powers and responsibilities, including activities from the LDA, enabling London itself to meet the strategic challenges facing the capital.

There may be instances in future where it makes sense for the mayor to play an active role in the delivery of national programmes, through a power of delegation, to ensure that these programmes can be better tailored to London's specific circumstances. However, we are conscious of the concerns expressed in the other place about this power and the risk that it could marginalise the role of London boroughs, and of the amendments tabled in Committee by my noble friends Lord True and Lord Jenkin, which we did not have time to discuss. In response to these concerns, we are proposing through government Amendment 105 to require a Minister to consult London boroughs and the London Assembly before the use of this power to delegate functions. This will ensure an opportunity for debate and dialogue within London about the appropriateness of any proposed delegation of a ministerial function to the mayor prior to the delegation being made.

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Amendment 106, which was tabled by my noble friend Lord True, would go further than this by requiring a Minister to consult boroughs specifically about whether the function could be more appropriately and effectively conducted at a more local level and then to lay a Statement before Parliament if boroughs believe that they are better placed than the mayor to undertake the function. While I fully understand my noble friend's reasoning, I do not believe that such detailed stipulation is necessary. It should be readily apparent from the statutory consultation whether boroughs have concerns about the mayor exercising a function that they are better placed to undertake. If the function was of sufficient importance, one could see Members of both Houses wanting to raise the issue with the relevant Minister.

I reassure my noble friend that this Government have striven to ensure broad consensus between the mayor, the Assembly and the boroughs about the future direction of London's governance and, if I may say so, it is exemplified by the reforms in this Bill. We will continue to do so in future. It is vital that both tiers of London government-the GLA and the boroughs-fully accept each other's democratic mandate and remit and that there is consensus about any use of this power. I therefore ask my noble friend not to move his Amendment 106 in favour of the Government's Amendment 105, which I beg to move.

Lord True: My Lords, as the Minister said, I have Amendment 106 in this group. I listened very carefully to what he said and I have had the opportunity of talking about this matter with my noble friend Lady Hanham. None the less, I must press him a little because, as he acknowledged in his remarks, we discussed the matter contained in this amendment earlier today: it is the localist deficit that remains in London as a result of this legislation. I of course acknowledge the good relations between the mayor, the boroughs and the other London institutions, but these good relations are not fixed for all time. My amendment addresses future arrangements and future occasions on which the Government may decide that they wish to delegate functions. I believe that, where possible, a truly localist Government would wish to delegate those functions to the most local level practical and in London, in many cases, that will be London boroughs, although we have heard many times in these debates that Ministers would like powers to be delegated even below the level of boroughs and principal authorities.

4.30 pm

Looking to the future, I am disappointed that there is not a slightly warmer recognition of the possibility that functions could be delegated to London boroughs. I have a further reason for saying this, which is that when functions are delegated to the mayor they have an unfortunate habit of getting stuck. I have referred to a number of examples in previous debates in Committee. I need only mention the battles that various London boroughs have been waging for years with Transport for London to be given the right to manage their own high streets. Does any delegation come? It does not.

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My amendment refers to future arrangements. It would have been better had the Government gone a little further in undertaking to act on the presumption that, where possible, delegation should be localist-that is, to the boroughs-and that, when that is not the case, they themselves will take the responsibility of making clear why there should not be that ultimate, localist solution. Everybody else in this Bill has to explain their behaviour. If local authorities do not wish to have a neighbourhood forum or neighbourhood planning, they have to explain why they do not want to delegate. Why should the Government not explain why they are not prepared to delegate functions to a lower level? It is potentially a missed opportunity.

I will reflect on what my noble friend has said very carefully, but perhaps I could press him a little further in clarifying the reasons. I welcome Amendment 105 and it is all very well that the Minister must consult borough councils, but I believe there should be more public accountability. Perhaps a Statement laid before Parliament is not the right approach but the Government should publicly hold themselves to account to explain why, if they decide to delegate functions in future, they have not delegated them to the boroughs. Perhaps in his response the Minister will be able to explain, or say whether he would be prepared to go a little further-not necessarily on the face of the Bill-in giving undertakings in that area.

Lord Beecham: My Lords, I hesitate to trespass on to the territory of the capital but I have a good deal of sympathy with the points made by the noble Lord, Lord True. He argues powerfully for greater involvement by the London boroughs and for procedure that would facilitate that and indeed put the onus on the Government to prove their case in terms of delegation.

However, another aspect should be taken into account. The amendment speaks of a requirement to consult,

There is, of course, a cross-London body of councils, London Councils. In addition to the individual approaches, which obviously make sense, I would have thought it would be useful for London Councils to express a view as an organisation. The noble Lord is nodding his assent to that. Obviously it would be possible to garner the views of the 30-odd London boroughs, but seeking the view of London Councils itself might facilitate a better dialogue across the capital and, I hope, influence the outcome in directions that might not otherwise arise through separate consultations and responses. I wonder whether, if nothing else is done, London Councils could be added to the list of three given in Amendment 105.

Lord Jenkin of Roding: My Lords, I would like to respond to that briefly. London Councils has made it very clear from the beginning of this Bill that it has been unhappy with the extent to which the regional authority in London-namely, the mayor and the London Assembly-seems to have been more successful in securing powers and opportunities than have London boroughs. Maybe that is their fault, but the fact of the matter is that the point made by my noble friend Lord True is shared by London boroughs as a whole. There

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needs to be a better balance between the mayor and the boroughs on these sorts of matters. As I have said before, the boroughs are responsible elected authorities and deserve to have a proper consideration on these matters. I hope that the Minister will feel able to give further consideration to this point. Here is another case where the mayor's lobbying seems to have been more effective than that of the London boroughs. I am not sure whether that is right or justified, but that seems to be what has happened.

Lord McKenzie of Luton: My Lords, as we have heard, the government amendment requires consultation before there is any delegation or variation of a delegation of ministerial powers to the Mayor of London. This consultation must take place with each London borough, the Common Council of the City of London, and the Assembly. The noble Lord, Lord True, requires consultation on whether the function could be more appropriately conducted at borough level and, if a majority thinks so, an explanation has to be given to Parliament. We obviously support the consultation and the government amendment, but there is no specific guidance in the amendment as to what might result from such consultation. There is no specific requirement to publish the results, produce a response or indeed report to Parliament. Could the Minister give us some more details about these matters? If, for example, the consultation were to be overwhelmingly hostile to the concept, would it still proceed? Can he give us an idea of the type of eligible functions likely to be involved in the sort of delegation contemplated?

The amendment tabled by the noble Lord, Lord True, with which, like my noble friend Lord Beecham, I have some sympathy, raises an interesting point about the role of London boroughs and their equivalents under the so-called Core Cities amendments, which we will shortly come to. Should it be accepted at any stage that the boroughs-one or all of them-would be a better destination for such delegation, and what powers in the Bill would allow that to happen?

Lord Taylor of Holbeach: My Lords, I am grateful to the noble Lord for bringing all these points to bear on what is actually quite a difficult balancing act, and I think noble Lords will agree. I am not a London person, but I come from a two-tier authority. I live in a county council area and in a district council area, and the responsibilities between those two councils are usually clearly defined by statute. I think the governance of London is more involved. The Government's policy intention is to try to keep an even balance between the democratic mandate which is vested in the mayor and the London Assembly and the democratic mandate which is vested in the London boroughs. I am sure all noble Lords will agree that keeping that balance right is not easy.

Much of the talk has been about how the consultation might go and the consequences of a consultation where perhaps the proposals do not meet with consensus. These are reasonable challenges. The noble Lord, Lord Beecham, asked whether the joint council body for London would be consulted. It is a matter of fact that it would be consulted; I do not know it is a statutory body as such, but it is clearly a body that would be validly consulted. This would not, however, avoid

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proper consultation with the individual boroughs. It is very important to place on record that these government amendments seek to enshrine the role of the boroughs themselves. Indeed, they are coloured by the amendment of my noble friend Lord True, which seeks to go further in protecting the interests of the boroughs. I understand that.

I was asked how Parliament would be able to challenge any decisions that might be made in this area. In reality, Ministers are accountable to Parliament and I cannot imagine a decision considered by any noble Lord to be totally unfair or irrational to go unchallenged, either by question or even debate in this House, let alone down the other end where quite a large number of Members represent London constituencies.

Lord Beecham: Does the process envisage delegation being made by order or is it outside that process? If it is by order, would it be by affirmative resolution or by a negative procedure?

Lord Taylor of Holbeach: While I await the answer to that part of the process, perhaps I may continue with the process of consultation. It is important to get this on the record too. The consultation exercise will have to be appropriate to the matter in question. The problem with being too prescriptive about the nature of the consultation is that it does not have room for more flexible responses. Consultation should not be a tick-box exercise. It is a proper dialogue. It should not really be about whether it has majority support or not but about what is right, and consensus should be sought across the boroughs and London in the interests of the people of London. In the end, the governance of London is not for the benefit of the mayor, the Assembly or the London boroughs; it is for the people who live there.

In response to my noble friend's challenging question, the process is outside the statutory instrument process. It is purely an administrative function. However, the decision is still capable of being challenged in Parliament, as I have said, if it is seen to be perverse. There are no immediate plans to use this power, but it is envisaged that it could be used to delegate the administration of some of the national programmes that may be produced on the horizon. That is why it is important to have this capacity and a process whereby there can be discussions across London as to where a national programme might be best delivered.

My noble friend Lord True castigated us, in the nicest possible way, as he would, for not recognising that the Localism Bill is the place where, by empowering local boroughs, we would enhance localism within London. The role of the boroughs is clearly laid down by statute, and they are a very important part of London's governance. However, London is an exceptional place-it is the capital city of the country-and a number of services are effectively organised across London. The power to delegate arises only when the Secretary of State considers that the functions can be exercised appropriately by the mayor. We say that this provides the sort of comfort which my noble friend seeks. In effect, only a Minister exercising his powers under this clause can do this.

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I hope that my noble friend will feel free to withdraw his amendment. I believe that the Government have got the balance on this issue just about right.

Lord McKenzie of Luton: Should it be decided at some stage that a delegation of ministerial functions to a borough or a group of boroughs is a preferred route, does the structure of the Bill permit that?

4.45 pm

Lord Taylor of Holbeach: Yes, indeed it does. Functions may well be legislated for in the future that are borough-based and not a matter for the GLA or the mayor.

Lord Jenkin of Roding: Can my noble friend point-I am sorry; this may be an unfair question-to a provision under which the mayor can delegate functions to the boroughs? I am not sure that that provision is in the Bill. I am sorry; I perhaps should have given notice of this.

Lord Taylor of Holbeach: I thought the noble Lord, Lord McKenzie, was asking me whether, in future legislation, responsibilities could be delegated to boroughs.

Lord McKenzie of Luton: I have obviously not been clear enough. I was asking whether, if at some point in the future it were decided to delegate responsibilities to a London borough, the Bill, or any other piece of existing legislation, provides authority for that. I think my question is the same as that of the noble Lord, Lord Jenkin: does the Bill permit that delegation now or at some stage in the future?

Lord Taylor of Holbeach: Is the noble Lord asking whether this can work the other way around and that powers that are currently vested in the mayor should be delegated to the boroughs?

Lord McKenzie of Luton: I am sorry; we are getting into a Committee-type exchange. No, it was just that, as I understand it, the Bill permits ministerial functions to be delegated to the mayor, subject now to the consultation that the amendment is focused on. The noble Lord, Lord True, was asking about delegation not to the mayor but to London boroughs. I think the Minister responded that that was not being contemplated. My question is: if the decision were taken tomorrow that it would be more appropriate to delegate some functions from Ministers to London boroughs, does the Bill permit that? Is that in accordance with the Bill?

Lord Taylor of Holbeach: The simple answer is no, it is not in the Bill.

Amendment 105 agreed.

Amendment 106 not moved.

Amendment 107

Moved by Lord Taylor of Holbeach

107: After Clause 216, insert the following new Clause-

"Sharing of administrative etc services by London Authorities

(1) Section 401A of the Greater London Authority Act 1999 (sharing of administrative etc services by the Greater London Authority and functional bodies) is amended as follows.

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(2) In subsection (1) (definition of "constituent body")-

(a) for "constituent body" substitute "relevant London authority", and

(b) at the end of paragraph (b) insert ",

(c) the London Pensions Fund Authority,

(d) the London Transport Users' Committee,

(e) the Commissioner of Police of the Metropolis, and

(f) such person or body falling within subsection (1A) as the Secretary of State may specify by order."

(3) After that subsection insert-

"(1A) A person or body falls within this subsection if the person or body exercises functions of a public nature in relation only to-

(a) Greater London,

(b) a part of Greater London, or

(c) a part of England including Greater London or a part of Greater London."

(4) In subsection (2) (power of constituent bodies to enter into arrangements for provision of administrative etc services), for "constituent bodies" substitute "relevant London authorities".

(5) In subsection (3) (arrangements may include discharge of functions by one constituent body on behalf of another)-

(a) for "constituent bodies" substitute "relevant London authorities", and

(b) for "constituent body" substitute "relevant London authority".

(6) In subsection (4) (power of constituent bodies to form joint committees) for "constituent bodies" substitute "relevant London authorities".

(7) In subsection (5) (joint committee to be treated as separate from constituent bodies for purposes of section)-

(a) for "constituent body" substitute "relevant London authority", and

(b) for "constituent bodies" substitute "relevant London authorities".

(8) After subsection (6) insert-

"(6A) The Secretary of State must consult a person or body before making an order under subsection (1)(f) specifying that person or body."

(9) In section 420(8) of that Act (orders subject to annulment) after the entry for section 395 insert "401A(1)(f);"."

Amendment 107 agreed.

Amendment 108

Moved by Lord Tope

108: After Clause 217, insert the following new Clause-

"London Transport Users' Committee

(1) On the day appointed for the commencement of this subsection, the body corporate known as the London Transport Users' Committee that was established under section 247 of the Greater London Authority Act 1999 (as amended) shall cease to exist.

(2) All statutory powers, duties and responsibilities of the London Transport Users' Committee shall on the day appointed for the commencement of this subsection vest and devolve in the Greater London Authority and are to be exercised by the London Assembly.

(3) Any appointment to the London Transport Users' Committee in pursuance of section 247 of the Greater London Authority Act 1999 (as amended) shall cease to have effect and section 247 of that Act (as amended) shall cease to have effect from the commencement of this subsection.

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(4) References in enactments, instruments and other documents to London Transport Users' Committee shall have effect from the commencement of this subsection as references to the London Assembly.

(5) Section 251 of and Schedule 18 to the Greater London Authority Act 1999 (as amended) shall cease to have effect from the commencement of this subsection.

(6) Section 248 of the Greater London Authority Act 1999 (as amended) shall be amended by omitting the words "Authority or" in subsection (1)(a) and by omitting the words "or the Authority" in subsection (3)(b).

(7) Section 249 of the Greater London Authority Act 1999 (as amended) shall be amended by omitting subsection (3).

(8) Section 250 of the Greater London Authority Act 1999 (as amended) shall be amended by omitting subsection (1)(a), the words "the Assembly and" in subsection (2) and the words "the Assembly" in subsection (3).

(9) Section 252A of the Greater London Authority Act 1999 (as amended) shall be amended by substituting the words "the Committee" for the words "the London Transport Users' Committee" in subsection (2)(a).

(10) Section 252B of the Greater London Authority Act 1999 (as amended) shall be amended by omitting the words "the London Assembly" in subsection (1)(b)."

Lord Tope: Amendment 108 would transfer the purpose and functions of the London Transport Users' Committee, which operates under the name London TravelWatch and is the body responsible for passenger representation within London, to the London Assembly. The amendment originates from a review conducted last year by the London Assembly, which showed that such a transfer of functions would save up to £1 million per annum of taxpayers' money. The findings of that review were accepted by all four political parties on the London Assembly. The amendment is therefore supported by all the parties in the London Assembly, the Mayor of London and London Councils, which represents not only the political parties but all 32 London boroughs and the City of London. London TravelWatch was established under the original GLA Act, the purpose of which was to devolve powers and responsibilities to London. That all those elements in London are wholly behind this measure, which saves a significant amount of public money, ought in itself to be enough to persuade the Government to comply with the wishes of London's elected representatives.

However, I understand that the Government have some concerns. Indeed, during the Recess I had a letter in the name of the noble Baroness the Minister. Let me try to address some of the concerns set out there. Quite rightly, there is a concern to ensure that passenger interests in London are effectively and properly represented by a genuinely independent body. As many of us know, whatever else it is, the structure of London government is unique. The London Assembly is solely a scrutiny body. It has no executive or regulatory powers at all; its function is to scrutinise and hold to account not only the mayor but also the functional bodies. I speak as a member of the London Assembly's transport committee for some years and I do not think it will surprise anyone to learn that a substantial part of that committee's work is holding Transport for London and, to a lesser extent, other transport operators in London, to account. It does so very independently because it has no responsibility for TfL-indeed, exactly the opposite. Its members are directly elected by Londoners, as distinct from the members of London

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TravelWatch, who do an extremely good job but are appointed by the London Assembly. The budget for London Transport-I am sorry, London TravelWatch-is provided by the London Assembly, so again it cannot be argued that the assembly is in some way less independent than the body it appoints and whose budget it provides.

I am sure that again it will come as no surprise to noble Lords to learn that a substantial part of the casework of most London Assembly members, particularly those representing constituencies, is on transport-related issues since they relate to anyone who has to live, work or travel in London. Of course a lot of work for members arises from that, and they are in touch with their constituents on transport issues. Making them officially the passenger representative body can only enhance that and join up the two sides.

The argument was also put that nothing had been said about the workload of the casework. That was because the purpose of this amendment is simply to transfer the function. However, I am sure that if the function were transferred, the wherewithal to carry out that function would follow it. It is not for me to say, but I would assume and expect that the current staff in London Transport-I mean London TravelWatch; I keep making the same mistake-would very likely transfer across under TUPE regulations. That would be a matter for discussion, should this happen. However, without doubt the London Assembly will need to have the capacity to carry out the necessary casework.

Finally, I make a point for serious consideration by the Government. If changes are to be made to London TravelWatch, we need to remember that it was set up under the Greater London Authority Act 1999 and that primary legislation will be needed to change that. I suspect that we will not see this or any other Government introducing a London TravelWatch Bill in the near future so some other vehicle will need to be found in order to make whatever the changes may be. I think, and dare I say I hope, that that may be some way off. Therefore the opportunity arises in this Bill to carry out the wishes of all of London's elected representatives, to save a substantial amount of public money-more necessary than ever at the present time-and, I would venture to suggest, to provide a strong, independent, directly elected and directly accountable passenger representative body. I beg to move.

Lord Faulkner of Worcester: My Lords, I am sure the House is grateful to the noble Lord, Lord Tope, for moving this amendment and giving us an opportunity to discuss the case of passenger representation in London. However, it may not surprise him to know that I take considerable exception to the case that he, the mayor and the Greater London Assembly are putting forward because I think it is fundamentally flawed. I am aware that it has come about as a result of the review of London TravelWatch carried out last year by the GLA, which did indeed recommend that it be wound up and its functions folded into the assembly. However, that process was seriously flawed. The assembly consulted a number of stakeholders, but then completely ignored what they said. For example, the Association of Train Operating Companies, ATOC, has written to me and said:

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"We firmly believe that the functions of a consumer watchdog, in providing impartial casework and research support, and facilitating the resolution of individual complaints with train companies should be demonstrably independent, not under direct political control.

Assembly Members are keen to point out that taking on London TravelWatch's activities will help them to provide greater scrutiny of the mayor's and GLA's activities. However, we believe the priority for London TravelWatch should be handling disputes from individual passengers as a consumer champion and undertaking independent research, not being sidetracked on to issues of political or electoral interest to Assembly Members. Passengers will not benefit if London TravelWatch becomes merely a means for point-scoring".

The assembly's review claims-and the noble Lord, Lord Tope, has referred to this-that there is scope for substantial savings. The review is vague about where those savings will come from. There does not appear to be any reference to transitional costs or to the cost of the GLA accommodating the staff, although the noble Lord, Lord Tope, did say that a TUPE arrangement may apply, which would undoubtedly have an impact on whatever savings may be possible.

London TravelWatch itself has demonstrated that it can cut its budget by 25 per cent over the next two years, while staying completely independent from politicians and concentrating on its core functions of appeals casework, and policy and investigation. There is a huge danger that the present multimodal work on behalf of the travelling public who use buses, the underground, the Docklands Light Railway, Tramlink, taxis, Dial-a-Ride, and National Rail in and around London would be fragmented if this amendment were adopted. It makes no sense to separate London TravelWatch's rail-related work from its work covering other modes. An example is its excellent, recent report on incomplete Oyster pay, which affects everyone who uses public transport in and around London.

I conclude with one further point: the GLA does not speak for those who are not resident in London. Seventy per cent of all rail journeys begin, end, or pass through London and London TravelWatch's remit extends far beyond the boundaries of Greater London, and includes large chunks of Essex, Hertfordshire, Bedfordshire, Buckinghamshire, Surrey and Kent, and it is from there that passengers travel into London for work or leisure purposes.

This is a really bad idea, which would lead Londoners to be disadvantaged compared with those outside London, who have independent representation on Passenger Focus, looking after their needs, whether they are rail or bus passengers. It is that independence that is important, and that is why I hope the Government will resist this amendment.

Lord Jenkin of Roding: My Lords, my noble friend Lord Tope moved the amendment comprehensively and I only want to make two points. The first point, which has been referred to by those who have already spoken in the debate, is that the September 2010 report by the London Assembly was a very substantial document indeed. It was not entered upon lightly and inadvisably. Despite what we have just heard, it was conducted with great thoroughness and we then came to the conclusion that there was no point, if you have an elected assembly already, in having a second,

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different body dealing with transport. It was a serious piece of work and the degree of support which my noble friend Lord Tope has indicated is sufficient evidence of that.

My second point is that all local authorities are under stringent spending pressures. Here is a proposal which could save up to £1 million a year for London. In the present circumstances, it is rather unwise not to accept that that is something which should be considered very seriously indeed. I understand the points made by the noble Lord, Lord Faulkner, and the case that has been made by London TravelWatch. At the same time, there is here a formidable piece of work. It will save £1 million and the proposals in the report should be accepted. I therefore put my name to this amendment in order to give the House a chance to make that change.

5 pm

Baroness Kramer: My Lords, I had not intended to speak on this amendment, but I feel that I must reply to the noble Lord, Lord Faulkner of Worcester. Like many here, I have great regard for the individuals at London TravelWatch and the work that they do. However, the very citation from ATOC carries its own message that, of all the groups in London, the train operating companies would prefer the body which they find they can more easily ignore to the one that they must take seriously. That is entirely in character with the functioning of the TOCs and ATOC. It is precisely to have a much bigger impact on behalf of passengers that it makes sense to make this move from TravelWatch, integrating it into the GLA.

I may have misheard the noble Lord, Lord Faulkner, but he seemed to suggest that, if there was that integration into the GLA, there would be a fracturing of the transport voice. Yet the GLA is already holding TfL rigorously to account. I was on the board of Transport for London and I can tell your Lordships which body it was afraid of-it was very much the GLA. It is the ability of that body to pound away on behalf of the passenger that would be gained by this shift, so I support this amendment.

Lord Whitty: My Lords, I hope that the Government's reservations, to which the noble Lord, Lord Tope, referred, are indeed strong. This needs to be rejected. I do not want to repeat everything that my noble friend Lord Faulkner said but I would go for the fundamental point. The noble Lord, Lord Taylor, since he is a battle-scarred veteran of the Public Bodies Bill, will probably recall my advocacy of separate representation for the consumer interest in publicly provided bodies and in those which are regulated publicly. The Government wisely backed off from including in lists various bodies, including Passenger Focus, which could have been abolished, while for those that they are going to change they have provided an alternative but still independent body, either in another quango or in the third sector. It is a central provision of public services or those that are regarded as public utilities in this country that we have a separate consumer organisation. That applied when we set up the nationalised industries, when we privatised and liberalised those industries and when we passed the Greater London Authority Act to set up that body. It should continue to apply.

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I suppose that I should apply two past interests here, both as a consumer champion as chair of Consumer Focus and as the Minister who, as the noble Lord, Lord Tope, will recall, brought the Greater London Authority Bill through this House. He will also recall that it was the second longest non-financial Bill ever-the absolutely longest, the Government of India Bill in 1935, was never implemented. The implementation of the Greater London Authority Act has left some problems but I do not believe that this is one of them.

It is important that we retain the distinction between the provider, and those who oversee the provider, and the consumer interest. The mayor is responsible for the provision and the London authority for overseeing that provision. In that sense, they are not much different from a private sector board as regards their consumers, so I am afraid that it does not impress me that all parties on the Greater London Assembly welcome and support this move. It is no more impressive to me than if there was a unanimous vote on the board of Thames Water to say that it wished to abolish the Consumer Council for Water, or that Michael O'Leary and the board of Ryanair said that they wished to abolish the Air Transport Users Council or-to go back to my past interests-that the boards of British Gas or npower should say that they wished to abolish Consumer Focus and any successor powers.

We must distinguish between the role of a consumer interest representative and those who are providing, or are part of the governance structure of those who provide, a service. Indeed, in London, predecessor bodies to this go back to the private company of London Transport, through the nationalisation process, through the GLC, through the abolition of the GLC, into the establishment of TfL and through to the London authority and the 1999 Bill. That was sensible. London Assembly members may well have reservations about aspects of this and may well feel that some changes need to be made-that might be right-but this clause does not say that, nor does it say that there should be some rationalisation between the London authority and Passenger Focus.

It might be conceivable that the transfer of this body into Passenger Focus was a rational move; I do not personally think so, but it would still provide an independent consumer voice focus. Actually, however, for the reasons that my noble friend points out, London is unique in this response. London is the only city in this country where the vast majority of people go to work by public transport. TfL has responsibilities way beyond the bus and train area-for roads, taxis and so on. As has also been pointed out, people outside London, and therefore with no voice in the election of GLA members, have an interest in this. So there is no principled argument that would call for the abolition of this body. I would be prepared to consider, and I suspect that the Government would be prepared to consider, something less than that, which allowed for easier changes, but the straight abolition of an independent consumer voice in the most complex, most difficult and in many respects most integrated transport system in the whole country would be a seriously retrograde move and I hope that the Minister will soundly reject it.

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Lord Kennedy of Southwark: My Lords, Amendment 108, moved by the noble Lord, Lord Tope, is an interesting amendment, on which I look forward to the response of the noble Earl. As a Londoner, I always thought that the London Transport Users' Committee did quite a good job standing up for Londoners and, as my noble friend Lord Whitty said, for people travelling through London who have no vote in the GLA or any other elections in London. Having proper GLA input into what goes on in London transport is obviously very important. It has not happened in the past and that is very regrettable. What worries me, though, is where people will go to have their voice heard if this body is abolished. I know that the body is appointed by the London authority. I have some concerns, as a south Londoner, that there is very little experience of south London on the board. That needs to be addressed in the next round of appointments. One member may have been to Putney once or twice, but there is very little involvement in south London.

Another thing that worries me is the performance of London Underground. Noble Lords may not be aware that since April this year performance statistics have ceased to be published, so we have no idea what is going on in London Underground. I think we all know that it is getting worse, for sure, and this is something that needs to be addressed by both the users committee and the London authority pressing the mayor to release those figures again and to say why they have been stopped.

In conclusion, I am not against reform at all, but we need to hear more about how this will improve the situation. We in London all find that things are getting much worse, so we need to hear more about improvements. This may be something for the future, but not now.

Lord McKenzie of Luton: My Lords, I should explain that our official Front Bench position is that we support the amendment, which means that, should it be put to a vote, I, at least, will be obliged to vote in favour. I am not sure how many of my colleagues behind me would follow me into the same Lobby. Our position was formulated because of strong support from the GLA, but I take it as implicit in my mandate that supporting the amendment would be conditional on the Government being able to answer a lot of the very robust challenges that have come, particularly, from this side of the House during this debate.

My noble friend Lord Whitty spoke about the importance of preserving a strong consumer interest. Points were also made by my noble friend Lord Faulkner about whether this will benefit passengers, some of whom do not live in London and are not London voters. Indeed, it covers rail travel from such places as Luton. If we were to separate rail from other modes of travel, how would that work? I understand the thrust of the movers of the amendment, but these are questions that need to be satisfied before it could proceed. Perhaps in responding the Government can confirm that there was overwhelming support for the proposition among transport operators and rail user groups. Will the Government let us know, for the record, whether any alternatives to transfer to the GLA have been considered and on what basis they were rejected?

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The Government have acknowledged the considerable amount of casework undertaken by London TravelWatch and are presumably satisfied that this could be handled under the proposed new arrangements. The London Assembly review of TravelWatch, to which the noble Lord, Lord Jenkin, spoke, recommended that the reorganisation be folded into the assembly but with rail functions distributed between the assembly and the national independent passenger watchdog Passenger Focus. Have the Government undertaken an analysis and will they support that as an appropriate way forward?

I look forward to the Minister's reply and hope that he can dig me out of my dilemma on this issue. Powerful issues have been raised that need to be answered before the proposition can and should proceed, much as we love the thrust of it. In particular, there is a mood that the status quo should not necessarily be accepted. There may be ways in which it can be improved and cost savings may be generated. I would be interested in the Minister's views on that as well.

Earl Attlee: My Lords, Amendment 108 would abolish the London Transport Users' Committee and transfer its functions to the London Assembly. My officials assured me that this would be an easy amendment to deal with-even I would be able to deal with it. The reality is that I find myself in the middle of a pretty vigorous debate. On the other hand, the noble Lord, Lord McKenzie of Luton, also finds himself in an interesting position.

I regret we did not have time to discuss this amendment in Committee when it was tabled by the noble Lords. As my noble friend Lady Hanham indicated in her subsequent letter, the Government believe that it is inappropriate-at this stage through this Bill-for the London Transport Users' Committee, which is the independent transport users watchdog for London, to be transferred to the London Assembly.

Among other things, the committee undertakes an important and impartial complaints ombudsman role on behalf of London transport users in and around London, and it is vital that any change to the current arrangements ensures that complaints continue to be dealt with in a genuinely independent manner. In particular, there is an EU requirement which mandates the designation of an independent body for complaints for rail transport users. So there is an important question that needs to be resolved about how far the assembly can be sufficiently independent for the purposes of this EU legislation, given its party-political membership, its role in scrutinising the work of the mayor and TfL and its influence over the strategic direction of transport policy in London-especially when this Bill will allow it to reject the mayor's transport strategy.

Indeed, if the Government had proposed such an amendment, there would have been concerns from many noble Lords about the lack of independent safeguards in the legislation. Therefore, as we have heard from our debate this evening, there are still some important questions that need to be resolved before we can consider legislating for any new

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arrangements. The noble Lord, Lord McKenzie of Luton, asked me a few more and I do not know the answers, which is why we cannot support the amendments.

However, as I am sure that noble Lords will agree, it is entirely right during a time of fiscal constraint for the London Assembly to consider ways to achieve best value for taxpayers' money from the London Travel Users' Committee that it oversees. The Department for Transport has already undertaken a review of Passenger Focus, the national rail passenger watchdog, which will deliver significant savings, and DfT will work with the committee, the assembly and other partners to explore ways to deliver an efficient and effective ombudsman function for London transport users.

On this basis, I hope that the noble Lord will withdraw his amendment.

5.15 pm

Lord Tope: My Lords, I am grateful to my noble friends for their unqualified support for this amendment.

Noble Lords: Oh!

Lord Tope: I think that I am grateful to the noble Lord, Lord McKenzie, for his more measured support for the amendment. I am less grateful to him for tempting me to call a vote just to see what happens. We will have to see about that. I am grateful to the noble Lord, Lord Faulkner, for putting the case from London TravelWatch. I have seen its briefing. It is not surprising that the body which is proposed for abolition is less keen on its own abolition. That is entirely understandable. I hope that I did not say or imply that there is something wrong with the way in which it does its job. Indeed, the noble Lord, Lord Whitty, gave us a brief history of it all. Back in the 1970s, I was a member of its predecessor body. I am grateful to the noble Lord for reminding us of the many happy hours that we spent discussing the GLA Act, as it became.

A number of points have been made, and I am not going to spend a long time answering them all. We are referring to the abolition of London TravelWatch. Let us be clear: the body that we are talking about may be subsumed in the London Assembly but we are certainly not talking about abolishing the function and representative role of the passenger interest. It is very important that we understand there is no suggestion of that. On the contrary, there is a belief, perhaps not shared by all, that that passenger interest would be enhanced by being represented by people who have been elected. I accept that they are not elected by everybody who ever travels on transport within London; I do not think that will ever be the case. However, I am a little puzzled that members of the Labour Party should say that, because a body is popularly elected, it is therefore not independent. I find that a rather strange argument and one that is difficult to follow. I made very clear-I know this from my eight years' experience of serving on the London Assembly-that this is an independent body. It has no executive functions and does not always love the mayor. None of the members always loves the mayor, whoever the mayor may be. It has no executive responsibility at all for

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TfL. Indeed, an enormous amount of its time is taken up questioning-sometimes vigorously, as my noble friend Lady Kramer said-and calling to account the principal transport provider within London and, indeed, the train operating companies that appear for questioning. Therefore, there is a vigorous representation of passenger interest on the part of those people whom most of the passengers-but not all-will have elected as their representatives.

The noble Lord, Lord Kennedy, referred to himself as a south Londoner. I am more south London than him, certainly in geographical terms, but I share his interest in that regard. That situation would be corrected if it were the London Assembly because, whatever I personally may think of the inadequate electoral system by which that body is elected, it represents the whole of London.

Tempting though the suggestion of the noble Lord, Lord McKenzie, is, I will not press the amendment to a Division. The Minister need not comment on this point now but I believe that discussions are going on about introducing changes regarding greater involvement with Passenger Focus. I hope the Government will ensure to the best of their ability that the London Assembly-I mean the London Assembly, not the GLA, which might well mean the mayor instead-is directly involved in all those discussions. I beg leave to withdraw the amendment.

Amendment 108 withdrawn.

Amendment 109

Moved by Baroness Kramer

109: After Clause 217, insert the following new Clause-

"Transport for London: Rail Authority for London

(1) Section 196 of the Greater London Authority Act 1999 (power of Greater London Authority to give instructions or guidance to Franchising Director) is amended as follows.

(2) In subsection (1), for "The Authority may give instructions or guidance to" substitute "Transport for London shall be".

(3) Omit subsections (2) to (4).

(4) In subsection (5)-

(a) in the opening words, omit from "give" to the end;

(b) in paragraph (a), for "prevent or seriously hinder him from complying" substitute "fail to comply";

(c) omit paragraph (b) (but not the "or" following it).

(5) In subsection (6), for "the Authority" (in both places) substitute "Transport for London".

(6) In subsection (7), for "instructions or guidance may be given" substitute "the Franchising Director shall act".

(7) In subsection (8), for "the Authority" (in both places) substitute "Transport for London".

(8) Omit subsection (9).

(9) For the title substitute "Transport for London to be the Franchising Director"."

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