Transport for London Bill Opposed Bill Committee Transcript of Evidence Tuesday 13 January 2015
MINUTES OF ORAL EVIDENCE
OPPOSED BILL COMMITTEE
TRANSPORT FOR LONDON BILL [LORDS]
Tuesday 13 January 2015
In Committee Room 17 from 2.00pm
Bill Wiggin (Chair)
Robert Flello, John Howell, Liz McInnes
Appearing in public session:
For the Bill-
Patrick Clarkson QC, Counsel
Stephen Collings, Agent for the Bill
Jonathan Cornelius, Senior Property Development Manager, Property Development, TfL (Transport for London)
Mike Binnington, Senior Principal, Commercial Finance, TfL
Emanuela Cernoia-Russo, Senior Treasury Manager, TfL
Elizabeth Martin, Principal Solicitor, Public and Regulatory Law, TfL
Petitioners against the Bill (Clause 5)-
Jocelyn Mary Bell, Petitioner
Murad Qureshi, MLA, Witness
Anabela Hardwick, Petitioner
Linda Sanders, Witness
Linda Wade, Witness
Richard Chute, Witness
Richard Osband, Petitioner
National Union of Rail, Maritime and Transport Workers (RMT)
Steve Hedley, Senior Assistant General Secretary
Gabriel Barton, Research Officer, RMT
Subject Page Number
TfL (Patrick Clarkson) 3
Jocelyn Bell 19
Anabela Hardwick 45
Richard Osband 67
RMT (Steve Hedley) 79
The Committee’s decisions and Proof of Preamble 90
Documents and references submitted by those in attendance: 93
1. CHAIR: Welcome, everybody. This is the Opposed Bill Committee for this Private Bill being promoted by Transport for London. It is our role to listen to the arguments brought before us by the promoter on the one hand and the petitioners on the other and decide to approve the Bill as it now stands, to disapprove of it entirely as need unproven, or to approve it subject to amendments. In a moment the Clerk will read the titles of the Bill and of the petitions formally, but first can I say could you turn your mobiles off or set them to stun? If there is a division in the House, the Committee will be suspended for 15 minutes, and in the case of two divisions for 20 minutes. Please can everyone speak up and clearly for the benefit of the Hansard reporters and anyone in the room who is hard of hearing? If there is a fire or other alarms, please follow the instructions that come out of the loudspeakers or from staff in the room. All right. I can start by calling the Clerk.
2. MR REID: Transport for London Bill [Lords]; petition of Jocelyn Mary Bell; petition of Anabela Hardwick; petition of Richard Osband; petition of the National Union of Rail, Maritime and Transport Workers.
3. CHAIR: I call counsel on behalf of the promoter and the agent to make the case for the Bill. Please speak to all the clauses, but no doubt you may wish to focus on clause 5, which is the only one which has been petitioned against. Mr Clarkson.
MR CLARKSON: Exactly what I propose to do.
CHAIR: Thank you.
4. MR CLARKSON: My name is Patrick Clarkson, Queen’s Counsel, instructed by Mark McConochie, Head of Public and Regulatory Law at Transport for London. As you know, Transport for London is responsible for managing the transport in London for the GLA. Just two formalities before I proceed. First, TfL has complied with the necessary procedural requirements before the Bill was published and secondly, there is compliance compatibility with the European Convention on Human Rights.
5. The Bill, as you have seen it, has four substantive clauses. They seek powers in clause 4 to allow security for borrowing. Clause 5 seeks Transport for London to be a partner of a limited partnership to carry on its powers. Clause 6 enables powers to be exercised through the mechanism of corporate or partnership subsidiaries, with the requirement that they pay tax. Last, in substantive terms, clause 7 seeks to fine-tune the powers Transport for London already has to hedge such as interest rates, exchange rates and commodity prices.
6. The purpose of the Bill generally is to enable TfL to operate and compete more efficiently with financial advantages, which has the potential to carry through for the benefit of travellers in London, residents in London and the general National Exchequer. That requires TfL to have powers to manage their estate, to be commercially productive in a reasonable way, and TfL, simply stated, wish to open up the market for investors. There is no new power for TfL to develop property. They have that already. If a development requires sale of operational land then the Secretary of State’s consent is required, and a Mayor’s consent is required to sell surplus property. I do not give you the detail by way of reference in law to that, but that is a correct statement.
7. Section 154(3)(c) of the Greater London Authority Act - this is important - provides that TfL is required to exercise its functions for the purpose of securing or facilitating the implementation of the Mayor’s Transport Strategy. The Mayor’s Transport Strategy, policy 31, provides that innovative ways of financing investment and services, including making the most of the value of transport infrastructure, will be explored. Added to this is the outcome of the Government’s spending review of 2013 - it is well known - which is the 25% reduction in operational funding from Government, with further cuts to follow. The Government’s aim for TfL is that it becomes self-funding, and so this Bill, it is hoped, will enable the delivery of immediate savings and - difficult to quantify - also long-term benefits.
8. Can I now then turn to a little more detail - if the Committee would like me to do it now, I will - of the non-contentious clauses? I do not know whether I have given you enough.
CHAIR: That is fine.
MR CLARKSON: I will not go into too much detail, but just to give you a cameo on each one, and then I will give a little bit more detail on clause 5, if I may.
CHAIR: Brevity is much appreciated in that.
MR CLARKSON: That is where I am going.
CHAIR: Thank you.
9. MR CLARKSON: Clause 4: that is new power for TfL subsidiaries to give security for monies borrowed. Section 13 of the Local Government Act 2003 restricts the granting of security for money that TfL have borrowed. A debt cannot be secured against particular assets or revenue stream, but instead must be charged indifferently on all revenues. This clause disapplies that restriction on subsidiaries charging assets, provided the Mayor has consented, and the Secretary of State’s consent will be required for the charging of property, which is not included in the schedule to the Bill. Just a quick look, if I can burden you with this. If you look at the schedule in the Bill, and this goes back to clause 4(6), "Except for the property identified in the schedule to this Act, a TfL subsidiary may not charge any property for any of the purposes mentioned in subsection 2, where the Secretary of State is -" There are a number of them and they are self-evident: road user, tolling scheme, power, sponsorship. I am just selecting a few. It is non-operational exercises that are not going to in any way compromise the primary purpose of the TfL and its operations. That is clause 4.
10. I am going to leave clause 5 and go to clause 6. This does follow from clause 5, but this extends to subsidiaries of TfL under section 156 of the GLA Act, and there is a 2000 order requiring that, where there is a potential TfL profit from a specified commercial activity, it must be undertaken by a subsidiary so the activity is taxable. If TfL currently goes into any commercial corporate activity through a subsidiary, it is taxable. That is a level playing field, so they are competing with other enterprises on an equal basis. This is to catch up, to make sure that any extension into new entities will still be a taxable entity under those orders, but of course TfL itself is exempt.
11. Last of the non-contentious - there is another one, but I am not going to take time with it - is clause 7. This is an extension of what is inelegantly called TfL’s "risk mitigation powers". There is power under section 49 of the TfL Act 2008 that enables a TfL qualifying subsidiary to enter into derivative investments hedging. This seeks to expand the list of matters to be hedged, including an index. If TfL is not a direct user, it may also hedge. An example is diesel where, say, there is a contract with a third party to provide transport services that is dependent on the price of diesel. Power would be given by this clause to cover any change in diesel cost by way of hedging insurance. There is also power for TfL to hedge its liability to meet any shortfall in pension exposure. This requires a little bit of care. This is not hedging the pension fund internally. On a triennial basis, TfL have to look at the position as to whether there is a shortfall in the pension fund. If there is a shortfall, they have to adjust and make it up. This enables them to hedge that shortfall, and it is noncontentious.
12. The last clause is a minor amendment that I am not going to trouble you with at all. It is a minor amendment to a 1999 Act where there is a typographical error and that is not something that, with respect, the Committee should take any time on whatsoever.
13. Going back now to clause 5, may I introduce it with this information, how the Department for Transport have looked at it? They, in the other place, said they were content with the Bill as it stood and so that is solid, so to speak. The only change since then is, as you will see if you look at clause 5(2), "Transport for London may, with the consent of the Secretary of State -" That is the only change since the Department for Transport reported to the other place. Of course, that is restricting the Bill. That is that element of it.
CHAIR: But you have agreed to this, have you not?
MR CLARKSON: Yes. Yes, absolutely. Yes, Chairman.
14. MR CLARKSON: You are absolutely right. Could I, just to round it off for completeness, give you an email, which is the latest material - I need not take too much time with you, but it is important - of 3 November 2014. Could we circulate that, please? Do we have any spare copies? Thank you. I am going to ask you to look at it. Do you have one? We need one here. Starting at the top of the first page, it is reverse order in time, and you will see there - this is the Chairman’s point - "I can confirm the department is content with the amendment. Please let me know when you have a date for the Committee". I think it is important that you understand how we get there and, if you go back to 3 November, this is correspondence from those instructing me to TfL, and they thought it appropriate to tell TfL what the position is. This is Katherine, "Mr Osband, who I have described as the lead petitioner, has proposed that if clause 5 is amended to provide that TfL must always -"
15. MR OSBAND: A point of order. I am Richard Osband. I have just been mentioned by counsel. May I please have the right to question counsel at a suitable pause in his proceedings on the point he is about to make?
CHAIR: No, I do not think you can. I think the procedure is that you can only cross-examine witnesses, not counsel.
MR CLARKSON: I think he can address it in his own statement.
CHAIR: But you do get your change to say your own bit, and you should put anything in at that moment. Can you hear better, now you are sitting -
MR OSBAND: I can hear perfectly now, thank you.
CHAIR: Good. Thank you.
16. MR CLARKSON: Mr Osband, who I would describe as the lead petitioner, has proposed that if clause 5 is amended to provide that TfL must always obtain the consent of the Secretary of State whenever we wish to form, join or promote a limited partnership, then he will withdraw his petition. This is an expansion of the amendment we proposed immediately before second reading, in that the amendment would have required TfL to obtain consent only when the limited partnership was being formed, promoted or assisted for the purpose of carrying on commercial property development. TfL is content to enlarge the amendment as Mr Osband has proposed. "Could you let me know if the department is content with this amendment before we formally put it to all petitioners? Attach the wording of the amendment". Then there is consideration going backwards and forwards. For completeness, 5 November from Elizabeth Martin, "Thank you. I meant to say in my earlier email that we don’t envisage forming a limited partnership for a purpose other than commercial property development, since they are only relevant to joint ventures and there are not many options for joint ventures outside property development". The amendment is not a significant enlargement from the one previously proposed before second reading." That is the Department for Transport and where they are.
17. Now the scheme of the clause itself, and I have a suspicion the Committee is completely numerate in the concept of companies and LLPs. The short, crude point is: limited liability partnerships and companies are, of course, as I say, limited liability and there is an end stop, whereas a limited partnership about which we are speaking technically does not have a stop. I know there are those more expert in the Committee than me on this, but I am reducing it to fast simplicity. Where we are is this: a limited partnership about which we are speaking has two components: a general partner and a limited partner. A limited partner may not be involved in the management of the partnership. The general partner has unlimited liability, and a limited partner is liable to the extent of his share.
18. Can I ask you now to take up a bundle of documents that is an easy way into the points that we seek to make? It has been circulated beforehand and I believe that all the petitioners have been sent it as well. If you go to the end of the document, there are a number of appendices: A, B and C, I think. First, A. It is that document which is just a cameo of public sector joint ventures.
CHAIR: Page 73.
19. MR CLARKSON: Exactly. Thank you, sir. If you look at page 73 and run your eye down the third column, "Joint venture structure", there are a number of entries there. Actis is a limited liability partnership. Building for Business is a limited partnership, and that is undertaken by One Northeast and so on. Ditto, East Midlands Property Investment Fund, a limited partnership. English Cities Fund, limited partnership. Then down to the bottom, NorwePP, limited partnership. I am not sure how you pronounce it, but "Onedin" is how I would pronounce it, probably wrongly, development partnership, limited partnership. I need not burden you any more with that.
20. The next document is B, which gives you a comparison of the several components of the role of joint venture structures and how they compare with each other in their several activities. I do not propose to take time with that for the moment. I take you forward to G, which is direct tax issues, which also is a reference document for the moment.
21. One of the points that is raised by those who are petitioning is that there is a risk that, if TfL signs up through an SPV as a general partner in a limited partnership, they are at risk of unlimited liability. That is not something that is beyond the contemplation of the Treasury, and what the Treasury identifies is, at 2.14 on page 13, "In many cases the general partner with unlimited liability is a newly-formed limited liability company, SPV, in which the JV partners are shareholders. These shareholders effectively use this SPV as the general partner to enable them to indirectly participate in the management of the partnership while retaining limited liability status. It is vital that the SPV and not the shareholders manage the limited partnership’s activities. This creates a two-tier arrangement, which is more complicated than the other corporate entities as two agreements are needed: one JV agreement for the limited partnership and a second for the SPV limited company to manage the partnership. Limited partnerships have been structured in this two-tier way in many urban regeneration and other property development arrangements. This choice of vehicle is often driven by the tax advantages available for certain types of property investor. Tax-exempt funds generally obtain preferential tax treatment where they enter into a limited partnership, such advantages not being available with a limited liability partnership despite tax transparency of a limited company".
22. The Treasury recognises the position that there may be an SPV created to manage the limited partnership and, secondly, they recognise that there are tax advantages. That is why TfL is here. They want to be in a position to offer to the market opportunities that are available and attractive to developers and pension funds. Limited partnerships are far more attractive for pension funds than LLPs in that there is a tax exemption for limited partnerships. You have a reference, a Deloitte memo, which I am not going to invite you to read other than to go to 7, 8 and 9 of the letter. This is after the first document. This is a memo of 19 December 2014, "(7) Where a pension fund receives income or gains, in its capacity as a member of a property investment LLP, a liability would arise to income tax or capital gains tax respectively. Conversely, where a pension fund receives income or gains in its capacity as a member of an LP, the exemptions at (4) above would in general apply. This represents a disincentive from a tax perspective for pension funds to invest as members of an LLP as compared to an LP in property investment joint ventures with Transport for London".
23. I think the Committee is more than able to use general knowledge to know that pension funds are interested in things such as property development as part of a broad range of portfolios and it is certainly our approach that we consider that pension funds are co-investors who should be encouraged. That very much is a component of the justification for clause 5.
24. The petitioners’ approach - and this is compendious - is to centre on the development of the Earls Court Exhibition Centre. All I can say to the Committee at this stage is it would be surprising if the Committee was to take a great deal of time looking at the planning background of the Earls Court Exhibition Centre that has gone through due process with, as I understand it, these petitioners involved one way or another in that planning process, when the key point is limited partnerships going forward, and the Earls Court exercise is not being done by limited partnership but by limited liability partnership. If the Committee would like further explanation of that, I can do that in due course.
25. MR REID: If you want to ask any questions, it is entirely appropriate to do so.
MR CLARKSON: I will do my best, Mr Clerk. I do have a witness coming. If I cannot answer them, I shall pass the questions down to Mr Binnington, who sits on my right. He is sworn and can go straight into any questions if necessary.
26. ROBERT FLELLO: Chair, if you are happy for me to dive in with some questions. The first question was from the memo that you presented to the Committee, Mr Clarkson.
MR CLARKSON: The Deloitte memo, sir?
ROBERT FLELLO: The one that is headed, "Martin, Elizabeth" in the top left-hand corner.
MR CLARKSON: I beg your pardon. Yes. That is -
ROBERT FLELLO: The one that says, "Elizabeth, I can confirm the department is content with the amendment". That one.
MR CLARKSON: Yes.
ROBERT FLELLO: In the second part of that memo stream, "Sent 5 November 2014 at 10.01".
MR CLARKSON: Yes.
27. ROBERT FLELLO: It says, "Thank you. I meant to say in my earlier email that we don’t envisage forming a limited partnership". That strikes me as not being exclusive language. That suggests to me that, although you do not envisage, there may well be a situation where it arises. Could you perhaps explain the language used in that memo a little bit more?
28. MR CLARKSON: I think it is focusing on that the general objective is for commercial property development, as it says, "They are only relevant to joint ventures and there are not many options for joint ventures outside property development". Sir, I have on my right Mr Binnington, who is more than able to deal with this. He is a Senior Principal in TfL’s Commercial Finance Department, so if I am wrong, he will chime in, if I may put it that way.
29. MR BINNINGTON: I am happy to speak now, sir, if that is what the Committee wants. The main purpose when one would use a partnership is a joint venture arrangement and for a joint venture to work you have to have a commonality of interests; so both parties wish to develop land, obtaining the best value out of a development. In every other activity, such as our core activity, which is transport, people with whom we would contract would not automatically have the same commonality of interest as ourselves. We have a responsibility to deliver the transport. If they are a transport company, they may well be very happy to deliver transport, but they are probably doing it for different commercial reasons to ourselves. It is difficult to conceive how a joint venture arrangement, which might then lead you through either an LP, an LLP or even a limited company, is going to apply outside of property development. We do not have any situation in mind. There is no application I can think of at this moment for why we would do it, other than -
30. ROBERT FLELLO: If I may interrupt you, I just wondered why you were not using more exclusive language. It just seems that you are leaving the door ajar there in terms of using language, "We don’t envisage". I would have thought perhaps the email might have said, "We will not".
31. MR BINNINGTON: It is difficult to think prospectively about how powers might apply in the future in a world that is evolving. All I can say is, as of today, we have no intention of using those powers for anything other than commercial development.
32. ROBERT FLELLO: All right. Chair, if I may, I have a couple more, if that is okay. In terms of on page 73 and page 74, again, you pointed out, Mr Clarkson, a number of LPs that are listed there, versus limited companies, LLPs. I just wondered, looking - and it is very quick glance - down the list at some of those that are LPs. Building for Business, that is where One Northeast and UK Land Estates are both 50/50 shareholders. As you have obviously sighted this, having prayed this in aid in support of your argument, I just wondered whether you had any knowledge about whether both those particular parties to that limited partnership had equal asset values or whether one has -
33. MR CLARKSON: Sir, I do not know. This is prayed in aid really to show that the Treasury understands the approach of limited partnerships, first; and second, importantly, they understand the approach of special SPVs dealing with the general partner in the limited partnership.
34. ROBERT FLELLO: If I can just flick over on to page 74 then, it specifically sets out local government joint ventures, a section that runs from BSF down to Southwest One, and unless I am missing something, I cannot see a single LP that involves local government joint ventures. Do you happen to know why that might be the case?
35. MR CLARKSON: The jury is out slightly as to whether local authorities do or do not have powers, is the short answer. As you can see, the overt approach is that they do not.
36. ROBERT FLELLO: All right, but equally you would expect, perhaps, that local authorities might be in a similar position in terms of landholdings to TfL?
37. MR CLARKSON: They might be, yes. Yes.
38. ROBERT FLELLO: All right. Chair, if it is okay, I have a couple more questions, but I am happy to leave them to -
CHAIR: Mr Howell is in a holding pattern. I was going to call Mr Howell when you have finished.
ROBERT FLELLO: Certainly, when I am finished. All right. Just a couple more then, if I may. In the Bill itself in clause 5, "Power for TfL to formally invest in limited partnerships", it says, "join with any other person", and I could not immediately spot any limitation placed on what that other person might be. Two parts to the question: first, is there any other limitation in there? If not, was any consideration given to any form of fit and proper test so that perhaps TfL would only join with any other person who perhaps passed a fit and proper test, as the football associations require of people who own football clubs, for example. Two parts: is there a conditionality, and if not, was there any thought given to conditionality?
39. MR CLARKSON: No. No, but there is the supervision of the Secretary of State.
40. ROBERT FLELLO: Then the other question relating to that clause 5, with a limited partnership, as my understanding of the Limited Partnerships Act 1907 is perhaps a degree less than your good self, perhaps you could just clarify for me. With the two parties that form a limited partnership, if the limited partner has far more assets than the general partner in a situation where there is a problem, whose assets get called on once the general partner’s assets are exhausted?
41. MR BINNINGTON: In a limited partnership there can be multiple limited partners.
ROBERT FLELLO: Sure.
MR BINNINGTON: So, typically, they would be the landowners contributing their share into the partnership.
42. ROBERT FLELLO: Sure, but let us take a simplified example, so there are two partners. There is a limited partner, which is TfL, and a general partner, which is Rob Flello Industries, that happens to have a pen to his name - so not far off reality - and Rob Flello Industries is the general partner and goes bump and has to sell his pen. To whom do the creditors turn for the rest of the money?
43. MR BINNINGTON: They turn to the assets of the partnership.
ROBERT FLELLO: So the limited partner, in this case?
MR BINNINGTON: The limited partner might lose his assets.
ROBERT FLELLO: All right. I think that is probably enough from me for the moment. Thank you.
CHAIR: Thank you very much. All right. Mr Howell.
44. JOHN HOWELL: Can I take you right back to the beginning of where you came in, Mr Clarkson, and that is in relation to the whole purpose of this scheme, which is to achieve some savings for TfL? I appreciate they may be unquantifiable, but could you give us an indication of how much those savings are likely to be?
MR CLARKSON: I cannot, but this will.
45. MR BINNINGTON: It is very difficult to quantify what the savings may be in the future. It depends whom we are partnering with as to whether the use of a limited partnership or a limited liability partnership is a benefit for them. It is quite evident to us that, where we are seeking to involve the investment of a pension fund, there are clear tax advantages for them if we have the powers to do a joint venture through a partnership, through a limited partnership specifically. How much that will save is going to depend on the scale of the investments. We are a very substantial landowner in London. We do have some significant plans to develop land in and around our stations. They will be worth hundreds of millions of pounds but, in order to develop them out, we need development partners and we need investors. I cannot give a figure, but I would expect it to be multiple millions.
46. JOHN HOWELL: I would not expect you to be able to give the figure for the overall quantum of the savings, but can you give me an example of a particular project and the savings that might come out of it?
47. MR BINNINGTON: Could I address that to my colleague, who might know Earls Court in detail?
MR CORNELIUS: Yes. Earls Court is obviously slightly different.
MR CLARKSON: Mr Cornelius, this is. Yes. Go on.
MR CORNELIUS: Do you want me to introduce myself?
MR CLARKSON: No, no. You are Senior Property Development Manager, Property Development, Transport for London.
MR CORNELIUS: I think if the limited partnership was applied to Earls Court, which it is not, going forward as a limited partnership, then there would be potential savings immediately on the transfer of land into the vehicle for both parties and, in the case of TfL, that is quite significant.
48. JOHN HOWELL: You say, "Quite significant". I am looking for a rough figure for how much it is worth.
49. MR CORNELIUS: An approximate figure of the saving for TfL is approximately £7 million.
50. ROBERT FLELLO: Just on the back of that question, Chair, if I may, why is that? What is the reasoning behind that saving?
51. MR CORNELIUS: It is an SDLT saving, so it is the stamp duty land tax on transferring the land in.
52. ROBERT FLELLO: All right. From TfL’s point of view, they do not have to pay, basically, the stamp duty tax?
53. MR CORNELIUS: No. There is a saving. There is still a payment on stamp duty land tax, but it is not as great.
ROBERT FLELLO: It is at a reduced level. All right. Chair, if I may, just -
CHAIR: You keep going. I will stop you when I have had enough.
54. ROBERT FLELLO: All right. A question that I forgot to ask a moment or two ago, so my apologies. In terms of attracting pension funds in, which is part of the argument, Mr Clarkson, I think you have used a couple of times.
MR CLARKSON: Yes.
ROBERT FLELLO: Forgive me, my constituency is way away from here in Stoke-on-Trent. We do have difficulty getting developers to buy land and invest into Stoke-on-Trent. Is there a problem in London that you need to attract pension funds in to be developers in London? Is it so difficult to find developers that you need to make it more attractive?
55. MR CLARKSON: I think I can give you a broad answer, and I will ask the witnesses to follow. I think the picture is that TfL is a landowner in London and there are a number of landowners in London. Development can be an attractive investment for pension funds. TfL want to be in a position where they can compete for the funds of those pension funds. If they are attractive, then the pension fund will be interested and the deal will be better for TfL on their estate. That is a simple expression, but if the witnesses want to elaborate on that, I shall give them the opportunity to.
MR BINNINGTON: I could not put it better myself.
56. ROBERT FLELLO: Perhaps if I can push you to elaborate a little bit more. What you are saying is that in terms of the developers that are out there looking for sites in London, it is a competition to attract those developers, and at the moment TfL feels that it is losing out in terms of those developers?
57. MR CLARKSON: Yes. They cannot attract pension funds in the same way as you or I could, sir, on our development site, because we are not constrained.
58. ROBERT FLELLO: Okay, but in terms of ultimately whether it is pension funds or whether it is an oligarch from somewhere, surely the point is whether you can attract developers, not whether or not you can attract a specific type of developer.
59. MR CLARKSON: No, an "investor" is the better word.
ROBERT FLELLO: A particular type of investor.
MR CLARKSON: Yes.
60. ROBERT FLELLO: Presumably it would be a developer because you are on about being the limited partner part, which does not take an active interest in the development.
61. MR BINNINGTON: We would not be actively developing the property ourselves. It would be done by a development company, potentially under contract from the partnership itself. Maybe not even the general partner would be the developer.
62. ROBERT FLELLO: But going back to my substantive point, in terms of attracting the investor - I will use that language - without these measures, TfL is struggling to find investors. Is that right?
63. MR BINNINGTON: If there were two identical pieces of land next to each other, one owned by the private sector who can offer whichever vehicle for investment and TfL who cannot, an investor is obviously going to look towards the land that can give them the greatest advantage, and at the moment that is not TfL’s.
64. MR OSBAND: A point of order. Can I cross-examine the witness on that point?
CHAIR: You may cross-examine witnesses but you may not cross-examine counsel.
MR OSBAND: Yes. If I can cross-examine Mr Binnington --
CHAIR: You can certainly ask him a question.
MR OSBAND: Yes. Is it not true that -
MR CLARKSON: I do not know that the member has finished.
ROBERT FLELLO: Yes, I had, actually. That was my last question, so I am quite happy on that, yes.
CHAIR: You did raise a point of order, and I have answered the point of order, so if you let me take it from here, I would be most grateful.
MR CLARKSON: Sorry.
CHAIR: Have you finished?
ROBERT FLELLO: I have indeed, yes.
CHAIR: And have you finished?
MR CLARKSON: Yes.
CHAIR: All right. Then you may ask your question.
65. MR OSBAND: Thank you. Is it not true that the public sector has an alternative to a limited partnership to get best value for its land, and that its form of contract is the public sector, including local authorities’ great flexibility, with many options and permutations, when dealing with either pension funds or indeed independent limited partnerships separate from itself, and that is a contract that was designed exactly to allow the public sector to get best value for its land, and that is a conditional land sale agreement? A conditional land sale agreement was used by the London Borough of Hammersmith and Fulham in its part of the Earls Court deal with Capital & Counties Properties PLC. They were quite happy for their limited partnership, which was quite separate from the London Borough of Hammersmith and Fulham, to enter into a conditional land sale agreement with the borough. You had the borough on the one side and a limited partnership on the other, and the borough was not a partner in the limited partnership. Conditional land sale agreements, I was told by a very senior lawyer, are ideal for -
MR CLARKSON: Is there a question?
MR OSBAND: Yes. That is the question. Why can’t you be content with using a conditional land sale agreement?
CHAIR: It is not a question for you, Mr Clarkson, I am afraid.
MR CLARKSON: No, it is not, but my witness is waiting to answer, but -
CHAIR: Go on.
66. MR BINNINGTON: TfL has used conditional land sales in many instances in the past, and that is a good way of realising value from a land sale when you are disposing of it in its entirety and you are not going to have a future interest in that landholding. That can give you some development profit share through overage provisions. It does not, however, entitle you to a future involvement in potential upside that the development might generate in the long term, and it also, if it were an outright sale, would mean that we would not have an ongoing income stream, and an ongoing income stream is an important part of helping to ensure that TfL can become independent and self-funding out into the future.
67. CHAIR: Sorry, Mr Osband. I allowed you come and sit further forward so you could hear better. I think you have had your question. We are going to hear from you completely and, if necessary, we can ask TfL to come back and answer any difficult questions. It is worth saying to everybody the purpose of this is for my colleagues here to be able to hear all the evidence, and obviously what I would like to achieve today is for everybody to have said everything they felt necessary. Forgive me if I cut you a bit short, but this is not a ding-dong. This is an opportunity to get evidence on the record. If that is it, if you have finished, Mr Clarkson, I will move on.
68. MR CLARKSON: Sir, may I just deal with one aspect, asking the Committee if they have had enough on the question of unlimited liability in a limited partnership? If you are comfortable with the way I have opened it, in explaining it via the Treasury document, then I need not ask Mr Binnington to expand on it further. If you would like a little further explanation -
69. CHAIR: I will just put one question to you of my own. From what we have heard today, with regard to the Earls Court development, without clause 5 of this Bill you would proceed anyway, would you not?
70. MR CLARKSON: There is a reason for that, and I will get them to explain it.
CHAIR: Just a yes or no will be fine.
MR CORNELIUS: Yes, we will.
71. CHAIR: Yes, you will. Therefore, the purpose of clause 5 is to save some money and to make things easier. Have I understood correctly?
72. MR CORNELIUS: Yes, but clause 5 is not for Earls Court.
CHAIR: That is the point I wanted you -
MR CORNELIUS: It is to give flexibility for the future. Yes.
CHAIR: Thank you very much. Is there anything else you would like to add?
73. MR CLARKSON: No, Chairman, except the witnesses are here. I am still presenting my case. Technically, if you want more material from them, they are both here. Otherwise I will shut up.
74. CHAIR: Thank you very much indeed. That is most generous of you. All right. I am going to call Jocelyn Bell to present her petition. Mrs Bell, are you going to speak before your witness or afterwards? You can only speak once. The Clerk has whispered in my ear that he recommends you speak after your witness, just to make sure you have tidied up, but if you wish to speak first you are free to do so.
75. MRS BELL: All right. I have a written presentation, and I do not know if I give these to you to give out.
MR CLARKSON: Would you like one of my people to go back?
CHAIR: Yes. If you would like to take a back seat for a while, that would be most -
MR CLARKSON: If I might stay here, Chairman, if everybody else can go, because I may be cross-examining.
CHAIR: Mrs Bell, do not worry. When you are ready. There is no pressure.
MRS BELL: I shall go first -
CHAIR: Very well.
76. MRS BELL: Then Murad, as Assembly Member, can pick up technicalities that I may not, as a relatively layperson, be familiar with. I hope you now each have a copy of that. I can supply that in electronic form afterwards, which I think would be important because it has some links in. We were not, unfortunately, given the index references to this morning, so I can put those in afterwards and send them in electronically.
77. CHAIR: I am sure you will be fine. Just do what you have to.
MRS BELL: For your own convenience, not mine, particularly.
CHAIR: Thank you.
MRS BELL: You have my petition. You have my presentation. You have references to documents, some of which I believe are being supplied in hard copy. I will go through this document rather than just the petition.
78. Sir, as I said at the beginning, thank you very much for giving me the opportunity. I am extremely pleased you have enabled me to do so. I am not an expert in transport matters. I have never worked in construction, but I have worked with construction organisations and I have worked in regeneration. That is part of my background, but, because it is a petition that is a personal petition, obviously I need to explain why I particularly, myself, feel strongly about the issues.
79. Air quality is part and parcel of a situation we find ourselves in within London particularly, but nationally. I myself have a certain amount of lung neuroimmune damage because I was exposed to toxic gases in 2006 at the workplace - which was great! My own recorded oxygen levels - not so much recently because I have had treatment on the wonderful NHS - have sometimes shown a significant reduction in saturation, retention and utilisation when air quality is poor and on occasion resulting in hypoxia and loss of consciousness, needing urgent treatment. I also have specific concerns for family members because we have a family history of asthma, even though I did not suffer from it myself until I was gassed in 2006.
80. I also have concerns with respect to the nature of developments that may ensure from this Bill, namely with clause 5, and the manner in which they may be implemented. I also have concerns about the increasing lack of affordable homes because we are talking about developers working in partnership and potentially with having the majority holding in those partnerships with TfL. The developer will, therefore, have the dominant voice in these arrangements, which does concern me and I will explain more about why.
81. Just additional background stuff: I am an Expert Patient, I am a member of the Royal Society of Public Health, and Senior Associate of the Royal Society of Medicine, and also Chair of SHA London. I do deal with that as medical and the NHS pretty much constantly.
82. With the evidence I have prepared, the fundamental questions I have sought to address are - and we have heard a rationale from the QC to my right here - why seek to block effective public scrutiny and accountability where the affairs of a public body are concerned? Can we trust TfL to act responsibly, i.e. in line with other pertinent legislation relating to the issues, if clause 5 is enacted? Can we trust any developer with whom TfL may choose to do business to act responsibly, particularly when much of this arrangement will be under cover from public scrutiny and based upon past track record, and we have examples that we will bring to the table. Can we trust both parties to act in the public interest if clause 5 is enacted, fundamentally?
83. With respect to air quality, first, the key cause of pollutants that are in part resultant from large-scale construction works and resultant traffic congestion, which are strongly implicated in clause 5. Nitrogen dioxide, - not nitrous oxide, PM10s and PM2.5s are the main pollutant substances. PM10s, when they go high up the scale - and there is a nought to ten scale which I have included in this document - at 7-plus and we are looking at a serious situation where people have to stay indoors if they have respiratory problems, both of which increase when there is a concentration of construction works, as I have said. I have a personal example. I was going to an appointment. This is about three years ago. It was an appointment at Guy’s Hospital. I came out next to the Shard. The building works pretty much poleaxed me. I tottered into Guy’s and I was not able to do the tests, which were lung function tests, and they said, "You can’t do this today. You are not fit". They gave me some advice on how to manage around those situations. Obviously, it was avoidance, but also perhaps purchase surgical masks. I said, "This is not an ideal way to live. It really isn’t". I have a personal experience of how construction works have immediately affected me and my quality of life.
84. CHAIR: Can I just ask you: that is any construction work, is it not?
85. MRS BELL: It would be, but obviously I am not asking that no construction work should take place, as you will see in the document. We have a dearth of affordable housing, and again I drill down into that later in the document.
CHAIR: Okay. Sorry. I just wanted to be clear.
MRS BELL: It is unaccountable, unscrutinised, untransparent construction projects and programmes where the public does not have a say. That is what I am mostly concerned about with this clause.
86. Other substances, including asbestos, will be explored by one of the other witnesses, so I do not want to take that point too far with respect to those other substances. These environmental risks and impacts are described in detail in the article "Risk assessment", which you each have a hard copy of now, which I authored. We are using the Earls Court example partly because Peter Hendy himself hooked it into a particular piece of correspondence, which I think you have a copy of, and, for obvious reasons, it is the track record of TfL dealing with an organisation of the type that are likely to be hooked into arrangements under clause 5. Earls Court is a case study.
87. Let me go into evidence. Clean Air in London offers many points of reference, and I have given you the Clean Air in London website link, and I can provide some hard copy PDFs of that as well, as well as electronic links. The founder and director of Clean Air in London, Simon Birkett, sends his apologies. He is away on holiday, otherwise he would have come as a witness. It is a voluntary organisation that campaigns to achieve, urgently and sustainably, full compliance with World Health Organisation guidelines for air quality throughout London and elsewhere, and it is very well known that London and the UK are missing those levels in quite a drastic way.
88. On his website Mr Birkett says, "Traffic is a major cause of air pollution in London, which in turn causes thousands of premature deaths every year", and we know it is the region of about 4,500 premature deaths and perhaps more, especially if we bring in the issue of cancers that are now known to be caused particularly by diesel fumes. We have a key point of evidence here, so that by 4 January 2015, Oxford Street had already breached its nitrogen dioxide hourly limit value for the whole year; Putney High Street, by 5 January, and Brixton close behind, so this is a London-wide problem. We need to assess what is contributing to that and turn the tide. It is an urgent public health issue.
89. Meanwhile, we have the conundrum whereby DEFRA is attempting to scrap monitoring, which would mean the Mayor’s own ULEZ, the low emission zones project, will not be monitored either. We could have more development, more construction, more pollutants, and yet the means of measuring those vital statistics are being taken away. Again, I have put another link there and when you get the electronic version you will be able to go into that.
90. The Public Health England website provides a framework where it describes the fraction of mortality directly attributable to particulate air pollution. We have an average across London of 6.6; up to 7.7 in Westminster; Hammersmith and Fulham, which we have already mentioned is a borough that is pertinent to the argument, 7.2; down to 5.6 in Bromley. We have annual pollution maps, which have been compiled by Kings College London, and they give a basic explanation of why some people are more sensitive to air pollution than others, and it also states that those not impacted with serious manifestations at a young age can also be subject to long-term effects. Those who have sustained lung damage or similar conditions for whatever reason are also adversely affected, and all of these groups are advised to remain indoors when it goes above 7 on the air quality Richter scale, if you like.
91. As I said, diesel is known to be particularly toxic and more so when traffic is queuing. Of course, the more construction we have in the city - you talk to the cabbies. They go mad about how they have to wait and queue and queue where there are large-scale construction works. I have spoken to London cab drivers who are particularly worried about the plans for Earls Court and how much more congestion that is going to cause. They also say they very much regret the enforcement of diesel engines in their vehicles by the Mayor, and that is causing them some significant financial concerns because they have invested a lot of money in their vehicles and they now know they are driving around vehicles that are detrimental to their health.
92. CHAIR: Can I draw you back to clause 5, though?
MRS BELL: Yes.
CHAIR: While I rather agree with you about pollution, I am not sure that this is actually -
MRS BELL: But, with respect, the reason I am focusing -
CHAIR: That is what I want from you.
93. MRS BELL: - on it is because we are looking at clause 5 as - it is a gateway, is it not? We are looking to see how much the public is going to understand, is going to know, how much public accountability colleagues at TfL are going to offer the public, with or without clause 5. With clause 5, we have a less-than-transparent process, and that puts it mildly. It gives developers the upper hand. You will see in the Earls Court risk assessment residents really desperately, deeply concerned about air quality levels that are going to ensue with this large-scale construction site of over 70 acres in their locality. That has gone through with a rather more transparent process than is described in clause 5. You have a couple of documents, which I know Richard Osband is going to explain further, where you will see that the origins of developing Earls Court were taken way off the public’s eyeline, and in terms of elected members’ eyelines even, other than a few selected friends. That, frankly, is not acceptable and air quality is a massive issue for London. Construction is part and parcel of that.
94. The London Ambulance Service, as I have also documented in here, I go to their consultation events, and they cited one area of concern as to why they have experienced so many delays and why, frankly, the London Ambulance Service is in crisis, and there are many reasons for it. One reason they said was because of the excessive amount of construction work that is going on in London that is blocking their ambulances because the traffic is so bad. You will see, I have noted in here, when they addressed Mayor Johnson about that he literally sucked his cheeks in and out and sucked on his pen and did not have a response when they asked him how traffic congestion could be reduced. I cannot separate out traffic congestion, air quality and pollutants from construction works from this because there is no guarantee under clause 5 at all that public safety is going to be adhered to.
95. We already have some huge construction projects in London, some of which are detrimental to the locality. I have addressed this on the premise of health, so this is not just about air quality. This is about mental health and stress and acute episodes for people trying to get hospital in an ambulance that has got bunged up. There are many reasons why there are health implications to clause 5 going through. With my background, that is my particular focus. Likewise with access to affordable housing, because we know - again, witness colleagues are going to talk about that more - that the plans for Earls Court as a case study example are detrimental to those who want to remain in a locality or, indeed, buy in London. You will see I have noted that in my own family my youngest son and his partner work in London and they are not able to afford a property in London. Their first child is expected in June. They are going to have to move out of London. My eldest son did manage to purchase a property in London before everything went haywire. So I have a vested interest in this in terms of wanting my family to be in my area.
96. I have lived in many areas of the country, but I understand London has a very particular economy. At the same time, this is a model that could then be taken out of London. This is not just a narrow geographical view. This is a view that is broader and legally should be seen as broader, I do believe.
97. I have produced information here. You will see that Nicky Gavron has written - and I have included that in here - about her concerns for children’s wellbeing. We know; the evidence is absolutely there. Jonathan Grigg from King’s College has clearly defined how risky bad air quality is to the wellbeing of children growing. The UN Convention on the Rights of the Child is very clear on where children have every right to grow up in a healthy environment, that they have the right to the best possible health, and that they have a standard of living that is good enough to meet their physical, social and mental needs.
98. Chaotic development, land grab, whatever you want to call it, that is creating these huge great tower block developments against the wishes of local communities in London will be part and parcel of what TfL will do under this clause 5. That has to be a primary concern. I have included the Care Act because we are in an environment where we know that it is very difficult for families to get proper care packages. The sicker the community, the more stress there will be on NHS services, on emergency services, and on care providers. I have described where patients with respiratory crises fall into a particular category, which is category red 1 or category red 2, which is the most serious.
99. We bung up the area with construction; more backed-up traffic with diesel fumes; people’s health will go down; they will need more ambulances; ambulances get stuck; you have a vicious circle. Simon Birkett again comes up with some useful information. Even the London Ambulance Service themselves have said the impact of poor air quality in London is a concern for their own staff. This has to be a priority for London in terms of where our air quality is going.
100. I also note that the Mayor - whoever they are, whether it is Mayor Johnson who we have now or the future Mayor - is also chair of TfL. We have a bit of a strange arrangement there, one where I would posit there is a bit of a lack of objectivity there.
101. Going through the Earls Court report - and I am not going to go through it page by page - I have cited key examples in there for you in this so you will be able to flag the pages. You will see the impact on local and national business has massively been hammered by the removal of the Earls Court Exhibition Centres and Karim Halwagi, who is the chief executive of the Association of Event Organisers, who worked with us, is quoted in there. My youngest son worked at the exhibition centres. He works in sound and lighting, so he worked on some music concerts and some exhibitions. That affects him because it affects his income.
102. I am sorry to say, and I think we are going to hear more of this, that there were reported intimidations of small business owners by Capco. This again is a core part of what we need to look at. What is the behaviour of these developers that TfL is working in partnership with or planning to? How do they behave to the local people? How do they behave to London? Do they care? The intimidation of small business owners has been documented by the journalist Dave Hill, so I am not just coming up with some hypothesis. It is in the public domain and some of those business owners who were intimidated by Capco came to me asking for help because it was affecting their health. One lady had a heart attack as a result and had to leave the country to get care with the rest of her family. Now, that is not acceptable in any way, shape or form. It is just not. Again, it is a matter of concern for the public’s health. I have noted the family in the risk assessment who that happened to, which is on page 40.
103. CHAIR: Because you are under privilege, one should try to steer clear of accusing too much.
104. MS BELL: Okay, yes. I was not quite sure how to put it as evidence because it is evidence. How about alleged, will that do? Was that better?
105. CHAIR: It is on the record now, but I think we will keep moving on, shall we?
106. MS BELL: It is a concern as to how developers behave. That hopefully is an appropriate way of putting it. The loss of housing and lack of affordable social housing properties is all becoming endemic. I explained earlier - I will not repeat that - that my youngest son and his partner are finding it difficult.
107. Page 24, loss of cultural resources, which again I have put in my petition. It is about wellbeing, health, mental health, and basically retaining London’s fantastic culture. Developers come in who do not care about this type of stuff. Again, that has been written about. I think it was in the Standard a couple of weeks ago that London’s cultural heritage is under risk. In terms of the Tower of London, I think it is at risk of losing its international status as a building of note because of all the other buildings that are encroaching on it.
108. CHAIR: Would you like to wrap up now and then we will call your witness, because obviously we would like to hear from him?
109. MS BELL: Yes. Going through, you will see that I have noted for your convenience in the risk assessment the key points. I have also written here about mental health strategies and the charity Mind as a point of reference, so you can see that. I had asked another witness, which I do need to tell you about. Dr Hugh Ellis of the Town and Country Planning Association would have come along, but he is already booked to do something else because it was such short notice. He would have come, he really would. He leads the Planning and Climate Change Coalition among other notable work. He has co-authored "Planning out Poverty" in 2013 and now works on the TCPA-led EU project on spatial planning and energy called SPECIAL. He has very particular and relevant points to make about this situation and I would like to refer you to those in the document.
110. I also for your convenience in the document - and I will not speak about every one of them - put down each of the key points of reference from the GLA documents: "Improving the Health of Londoners" with foreword by Sir Peter Hendy, the role of transport in health, the action plan, and the main health impacts that can be improved by effective transport policy, which includes mental health, air quality reference, reducing noise reference, the whole street approach reference, which includes mental wellbeing, personal resilience, stress and social isolation. The TfL planning obligations of 2014, which is responsible for advising on the transport implications, will propose major applications to the Mayor. That also cross-references with the original documents that we have put down on the table showing where the original limited company arrangements were coming from with the Jersey option, which Richard is going to speak about.
111. There is also the Mayoral Community Infrastructure Levy of 2012, which is a means of securing hopefully £300 million. This actually is put at risk by implementing a secret minority partner model as laid down in clause 5 and, as such, risk and potential costs and loss. Why such risk and potential loss and cost to Londoners? Why is TfL leaving itself open to exploitation by unscrupulous developers? The TfL code of conduct I have included as well. That includes objectivity, honesty, accountability, leadership and openness.
112. CHAIR: If you could give us one last minute now.
113. MS BELL: This is at least legal obligations with reference and I would say that this shows demonstrable conflicts of interest. We have the GLA extracts and the GLA Act here - I think Murad is the best person to speak to about that - and also the housing strategy that was adopted in 2014.
CHAIR: Okay. Thank you very much.
MS BELL: I rest my case with saying why is TfL pursuing something that is in conflict with a great raft of its other responsibilities and is not in the public interest. Thank you.
114. CHAIR: You have done a great deal of work. We are very grateful to have heard from you and now we will call your witness if you would not mind, Murad Qureshi.
115. MR QURESHI: Thank you, Chair. I am Murad Qureshi, a London Assembly Member. I have been an Assembly Member for over 10 years now. My concerns on clause 5 of the TfL Bill are threefold: first, transparency of TfL as a public body; secondly, the housing impact as a member of the GLA group; and, thirdly - and to some extent I will be going over Ms Bell’s ground - environmental context in light of the latest information on air quality in central London.
116. I return to the first matter. TfL’s plans for redevelopment of Earls Court have caused concern at the London Assembly. TfL owns the freeholds of the Earls Court 1 and 2 Exhibition Centres and the adjoining Lillie Bridge Depot. TfL, while owning the freeholds, will own 37% of the new entity with Capco owning the majority, 63%. The Transport Committee last February commented on the lack of transparency in TfL decision making on Earls Court by highlighting the TfL board agenda papers on the joint venture with Capco did not provide various pieces of information, including, first, the correspondence with Government in relation to the section 106 consent required; secondly, the property advice from Cushman & Wakefield; and, finally, tax advice from PricewaterhouseCoopers.
117. TfL has not given the Assembly access to contract and other detailed information because of commercial sensitivities, to use their language. However, TfL also reports that it remains committed to transparency and, therefore, intends to publish a comprehensive summary of the full agreement with Capco alongside the agreement itself in due course.
118. Following several years of pressure, it took another Freedom of Information request from the Committee - this is the Budget Committee - before TfL agreed to publish its advice to the Mayor on its annual fare increases. Much of TfL’s investment decision making is done behind closed doors and it could do more to open up. For example, TfL should have more discussion in public sessions of board meetings and should really publish summaries of private sessions when these are required for commercial confidentiality.
119. CHAIR: I am sorry, I do want you to focus on clause 5. It is no good attacking TfL for us. We are only able to focus on this piece of legislation.
120. MR QURESHI: I have said that my concerns are focused on clause 5. I will make all three of the points briefly. I am accustomed to making my points in five minutes and not saying more than three points.
121. The concerns about the value for fare and taxpayers of TfL’s joint venture with Capco have also been raised, with Graeme Craig, the director of commercial development at TfL, saying that the joint venture reflects TfL’s, "New approach of retaining and investing in our assets across London, working in partnership with leading developers like Capco, which will deliver real, long-term value for fare and taxpayers". However, given that TfL is the minority shareholder, it will not have much control over profits and how they are used and hence will have little control over future income streams.
122. Only last week, transparency was raised again by the Budget and Performance Committee as TfL is generally regarded as the least transparent part of the GLA Group. The Assembly’s Budget and Performance Committee had also made a Freedom of Information request in July to obtain historic information of TfL’s planned investment programme after TfL refused to provide it. In December last year, TfL launched a public consultation process to help develop its approach to transparency saying, "Our presumption is that all information should be made publicly available ... unless there are legitimate reasons why not - for example, disproportionate costs, personal data or information which would harm our ability to maximise value for money for fare and taxpayers".
123. It is not clear who is responsible for this initiative, TfL or the Deputy Mayor’s team, or what levers TfL’s senior management will have to bring about real change across the organisation so that this does not become a superficial exercise. It is also not clear how TfL intends to measure its own transparency so it can assess the impact of its own strategy, let alone those that we may expect of them.
124. Coming to my second point, housing impact as a member of the GLA group, it is well known that the West Kensington and Gibbs Green Estate will be demolished with the proposals. They are a well-established, close-knit estate of high quality, modernised flats and spacious houses with gardens. The site currently holds 760 homes. The GLA office has publicly admitted that it was not necessary to demolish the estate in the initial redevelopment plan, but they were included at the insistence of the previous administration at the London Borough of Hammersmith and Fulham.
125. The new development will not have one single new social housing unit. It will be approximately 7,500 units, including 760 replacement units to replace those lost at West Kensington and Gibbs Green, but the replacement units will not be like for like. Rather, they will be based on a formula of needs plus one bedroom and concerns over phasing may mean new units are not available when people need to move. There are 740 intermediate homes, but it is not clear when these will be available and probably at unaffordable rents, which can come up to 80% of market rents. There are 6,000 homes for sale at market rents. Only 22% of units will be affordable, far short of the targets of 50% in both local authorities that cover the development. The Mayor’s plan puts the annual affordable housing target at 17,000, which equates to about 42% of the total housing target of 42,000. You can argue that as a body in the GLA family TfL should feel an obligation to help achieve these targets.
126. The final point: environmental context in light of the latest information on the extent of poor air quality in central London. I should point out TfL has their own documents here. They are "Improving the Health of Londoners - Transport Action Plan 2014". We have the acceptance on page 22 that poor air quality affects the health of every person in London, yet the problem is far worse than acknowledged by them. I remember when I first joined the Assembly it was about 1,000 premature deaths in February 2008. It is more like 7,500 premature deaths annually now if you go by the latest figures that have been released since the issue of this action plan by TfL.
127. We began, as Ms Bell said, with breaches in Oxford Street and Putney High Street even before the working week began. It is quite clear it would have been predominantly the bus and taxis along Oxford Street that probably triggered those breaches. It has also been highlighted the adverse impact on the development of young people’s lungs if their schools and their homes are near major roads.
128. What they have forgotten here entirely is the impact of major developments like Earls Court in one of the major hotspots, central London. It is not just Earls Court. We have potentially High Speed 2 in Euston. We have Old Oak Common in the northern end of Hammersmith and Fulham. That is just on the west-north side of London. I certainly feel that they should at least be looking at environmental impact assessments of such major developments like Earls Court in London across the whole of the city and particularly of those in the pipeline that we know of already. TfL are a key part of keeping Londoners healthy and safe and they are legally obliged to do so. The secret nature of clause 5 puts this at considerable risk and I would argue should not be part of the legislation.
129. CHAIR: Thank you very much. Thank you both for your efforts and work. We are most grateful. The procedure now allows my colleagues on the Committee to ask you questions, but also for you to be cross-examined as the witness. Gentlemen, ladies, if you have any questions.
MR OSBAND: I was going to say do you want to do cross-examining first and then ask questions?
CHAIR: Well, if you have any pressing questions you get priority.
MR OSBAND: I will come in after cross-examination.
CHAIR: All right. Mr Clarkson, if you want to ask any questions you are most welcome.
130. MR CLARKSON: Yes, just a few questions. May I make it plain I am going to put my main cross-examination questions to one witness and not to them all? If you will bear with me, Mr Qureshi is the first one and so I will deal with him first. Mr Qureshi, first of all, please, is it your petitioner’s case that there should be a moratorium on development in London?
131. MR QURESHI: That is not being suggested at all.
132. MR CLARKSON: No. So it is inevitable that development should take place?
133. MR QURESHI: We have developments all the time going through local authorities and being referred to the GLA right across greater London.
134. MR CLARKSON: Any development is going to have some of the characteristics you have identified with the Committee this morning, air quality, traffic and the like?
135. MR QURESHI: It needs to be measured is the key contention here and I am not sure that is being done.
136. MR CLARKSON: We will come to that.
137. MR QURESHI: Well, I have come to that already and I have suggested that with TfL’s knowledge across the GLA group and their access to City Hall, I do not think it is too much to expect them to have a considered view on the net impact of all the developments in the pipeline.
138. MR CLARKSON: Postulate this. Postulate that TfL do not go into a development partnership of whatever nature but they sell. All right? They sell a plot. That can be bought by anybody, can it not?
139. CHAIR: This is a committee of the House of Commons, not a court, so treat him gently, please.
MR CLARKSON: I am sorry. I am trying to keep it simple.
CHAIR: Please do.
MR CLARKSON: Just shout, "Rumpole" if you would, sir. I will be more gentle. I think Mr Qureshi as a politician is very robust.
CHAIR: I am sure he is.
140. MR CLARKSON: Going back to it, it could be sold, could it not, and anybody could buy it and develop?
141. MR QURESHI: I am actually not so sure. I think this is a very difficult site with a lot of freehold interests that have to be combined.
142. MR CLARKSON: I am talking about a notional site, not a specific site in the TfL estate.
143. MR QURESHI: As long as a public entity gets best value, yes, that is unhappily the truth.
144. MR CLARKSON: That person can develop via a vehicle, whether it is a company, a limited liability partnership, a partnership, or as an individual?
145. MR QURESHI: The important difference is this is a public body and not a private individual and it has a monopoly on transport. I just think it has obligations to us as taxpayers and residents of London that are quite different from myself or yourself owning the site or property.
146. MR CLARKSON: Yes, but just postulate this because it may help the Committee. If they are not given this power and they want to maximise value as soon as possible, they could sell, couldn’t they?
147. MR QURESHI: What I am saying is that actually -
148. MR CLARKSON: Is that a yes or a no?
149. MR QURESHI: What I am saying, clearly from what I have said, is that they actually operate in a lot of secrecy anyway. I have highlighted how that is operating. I am not sure giving that a legal sanction is going to help them or us get the best out of TfL.
150. MR CLARKSON: Could we leave aside the conspiracy theory, just a simple answer: they can sell, can’t they?
151. MR QURESHI: It will be as and when the development proposals are put together, but at the moment it is quite clear they are doing it in a great deal of secrecy without any privy to the public knowing on what basis they are doing it.
152. MR CLARKSON: Simply stated, TfL has the power to sell?
153. MR QURESHI: They will have obligations, which I think they need to meet.
154. MR CLARKSON: No, it is simple. They can sell, can’t they?
155. MR QURESHI: Well, I am not so sure, actually, that is as clear as you are suggesting. Like I said, they are not a private individual. They are not an oligarch who can come along, buy a site and then flog it. They have obligations because they have been historically a recipient of major amounts of subsidies and will probably continue to do so. They are a public service agency, so they are privy to restrictions on how they go about doing something like that, like a local authority would be.
156. MR CLARKSON: All right. Let us postulate on this basis, that the TfL have sold to an individual or whoever. What does that individual do if they want to redevelop the site?
157. MR QURESHI: In this case that we have highlighted, they are the junior partner and it is clear that all the main decisions will be made by Capco. I am not sure that they are going to be in a position to be able to determine what is done in the long term with the site.
158. MR CLARKSON: That is not really a fair summary, is it? What has to be done, doesn’t it, and the Committee know this well, first of all there has to be a planning assessment of the site by the person who is proposing to develop it? Do you agree?
159. MR QURESHI: There will be planning briefs available from the local authorities.
160. MR CLARKSON: Yes, and that planning assessment must be consistent with policy?
161. MR QURESHI: With those local authorities, yes.
162. MR CLARKSON: It must be after consultation?
163. MR QURESHI: There is the consultation period, yes.
164. MR CLARKSON: Yes, and there will be public meetings?
165. MR QURESHI: As part of the process.
166. MR CLARKSON: Yes, you know this well. There will be consultation with such as the Environment Agency, English Heritage - I am talking about a notional site - all those agencies who are careful and responsible about these matters, correct?
167. MR QURESHI: I am not here to defend the planning system if that is what you want.
168. MR CLARKSON: Well, I am. I am, so let us keep going. Do you agree with that?
169. MR QURESHI: There are processes that -
170. MR CLARKSON: Yes. Then a planning application goes in, doesn’t it?
171. MR QURESHI: Yes.
172. MR CLARKSON: The members of the relevant borough take a decision on advice from officers, on advice after consultation with agencies and possibly the Mayor, as to whether or not to grant planning permission?
173. MR QURESHI: Yes, and that is what happened in Hammersmith and Fulham and the royal borough.
174. MR CLARKSON: Then planning permission is or is not granted. If it is granted, it is subject, as the members know extremely well, to a number of conditions.
175. MR QURESHI: And in this case it is only outline.
176. MR CLARKSON: Well, there probably are conditions on the outline, yes, good. On any planning permission there would be, outlined or full. Those conditions will pick up that that has been thrown up, so to speak, via an environmental assessment and input from the several agencies, English Nature, Environment Agency, English Heritage and the like. Absolutely standard stuff, isn’t it?
177. MR QURESHI: I do not know who the statutory consultees were and whether English Heritage -
178. MR CLARKSON: I am not talking about Earls Court; I am talking about powers going forward. Every development that is achievable by TfL going forward will be subject to planning permission, planning conditions, enforcement of planning conditions, in the absolutely usual way. That is right, isn’t it?
179. MR QURESHI: There has always been a process and that is one that people are privy to.
180. MR CLARKSON: Yes, and TfL is no different, howsoever operating, to any other developer in London?
181. MR QURESHI: I beg to differ on that. I do think they are quite different. They are a public body -
182. MR CLARKSON: Having to get planning permission, they are no different?
183. MR QURESHI: The intriguing thing about all those matters that you have raised is English Heritage delisted Earls Court on the basis that the consultant client was Capco.
184. MR CLARKSON: That does not help the members understand the general approach, the planning process. As you know well, any site in London has to go through all those hoops.
185. MR QURESHI: Look, I know the distinguished members here all know their planning processes. They would have gone through this as local councillors, as parliamentarians, so I am not sure what you are driving at.
186. MR CLARKSON: Well, you see, what I want to know is how clause 5 is in any way going to interfere with the due promulgation of the planning process on every site, whether it is TfL or any other site. It is going to have no effect whatsoever, is it?
187. MR QURESHI: I beg to differ. I think the nature of its confidentiality means that what TfL have got accustomed to in recent time will be sanctified and it will be very difficult for the public to know how they have entered into all these commercial ventures, which they are justifying on the basis of future income streams to, for example, reduce fares.
188. MR CLARKSON: What does that have to do with the planning permission and conditions that can be enforced?
189. MR QURESHI: As I have said, I am not a planner. I have come here as a London Assembly Member who is on particular committees. Planning processes are duly done by the local authorities and those involved at City Hall to advise whether the Mayor intervenes or not.
190. My concern here is principally the transparency of decision-making at TfL. I have highlighted to you how I think they have a very chequered history on this, and that if you give them this ability, I do not think it is going to help us make sure TfL is accountable not just to the public but to themselves on many fronts, as well as developments like this and future proposals on critical issues for Londoners like housing and the quality of their lives.
191. MR CLARKSON: Just a couple more points. On that notional planning commission, the amount of affordable housing on any given development, whether it is by Transport for London or you or I developing a site in London, the decision on the amount of affordable housing comes, does it not, from the planning authority?
192. MR QURESHI: As I have said, on both sides of the development, on both the boroughs, the Royal Borough of Kensington and Chelsea and Hammersmith and Fulham, the development does not achieve the affordable levels and it is not clear what contributions it will make to the Mayor’s –
193. MR CLARKSON: The decision on the affordable housing comes from the planning authorities, does it not?
194. MR QURESHI: As I have said, I am not here in the planning context to defend the planning context.
195. MR CLARKSON: Well, what is the answer to that?
196. MR QURESHI: I am here to highlight the transparency of TfL decision-making.
197. MR CLARKSON: So what is the answer to that then? It comes from the planning authorities, right? Okay, you nod. Then just as a general point –
CHAIR: Not too general, please.
MR CLARKSON: Well, it is. It is because it is the air quality point, Chairman.
MR CLARKSON: I am sorry, I can hear somebody talking. It is the air quality point. The Mayor and TfL are committed, aren’t they, to emission zones, to try to improve?
198. MR QURESHI: That is an interesting point you raise. That is true. The Ultra Low Emission Zone, its consultation ended last Friday, but interestingly enough, the Earls Court site would have been outside of their proposal, just.
199. MR CLARKSON: All right. So it is in their remit to be concerned about it?
200. MR QURESHI: Yes, that is why I highlighted their own internal reports.
201. MR CLARKSON: One of the characteristics of improving air quality management is good traffic circulation, isn’t it?
202. MR QURESHI: That is part of it, yes.
203. MR CLARKSON: One of the characteristics of good traffic circulation is efficient roads, well-maintained roads and the like?
204. MR QURESHI: That is one part of it.
205. MR CLARKSON: That costs money, doesn’t it?
206. MR QURESHI: Like anything.
207. MR CLARKSON: So if it be that TfL are efficient in the management of their estate, that improves their financial position; that has the potential, doesn’t it, to contribute to an improvement of air quality? Do you agree?
208. MR QURESHI: Quite honestly, the biggest thing they could do to improve air quality around there is deal with the gyratory around Earls Court, but that is outside this development.
209. MR CLARKSON: I am not talking about Earls Court. This is not a clause 5 directed to Earls Court, you understand. I am making a general point –
210. MR QURESHI: I think there are some clear lessons that we should learn from it. That is why I keep emphasising it.
211. MR CLARKSON: Okay. Just answer that as a general point: a properly-funded TfL is likely to be more efficient in air quality management?
212. MR QURESHI: I would like to think that, but it depends on their priorities.
CHAIR: We are going to wind up about 4 pm.
213. MR CLARKSON: I am silenced.
214. CHAIR: I am most grateful. I am sorry, you may not, as a petitioner, question at this stage. You will get your chance to speak.
215. On behalf of all of us, thank you very much, Mrs Bell, for your evidence. If you have any questions, 4 pm, okay? I want to move on as quickly as possible, but I do want you to have your chance.
216. LIZ MCINNES: Yes. I have just one question, and that is just to clarify: do you feel that clause 5 will somehow allow the developer to bypass the natural planning process?
217. MRS BELL: We have evidence that the natural planning process is not always utilised in the correct way, I think, with respect to Earls Court. I am sorry I spoke when you were speaking earlier.
218. I also have an example of the Lewisham Council and the Convoys Wharf development, which has been rumbling along for about 13 years; nothing to do with TfL. However, because Lewisham Council were standing out for social housing and real affordable housing – because affordable is of course is 80% of market value, and if the market is £1 million or £2 million or £3 million per penthouse, then your affordable is not really affordable – Lewisham Council were wanting to do something down there and also reduce the height of the building. The Mayor went over to China and came back and spoke to the developer over there when he was on a visit and came back and said to Lewisham Council, "Sorry, I am taking the whole thing off you".
219. So it is not always the case that the local authority is in a position to – or minded to – look after the needs of local people. Funding and finances are a difficulty for everybody these days, so we do not know what the priority is going to be at that particular point. We do not know whether an unscrupulous developer – such of the sort that are not seemingly involved in Convoys Wharf and Earls Court – will try and manipulate the situation to their own advantage and to the disadvantage of TfL. I feel this clause puts TfL on the back foot with a lot of its responsibility, which is what I have set out in the document.
LIZ MCINNES: Okay, thank you.
220. ROBERT FLELLO: Just on the back of that, Ms Clarkson questioned you, Mr Qureshi, at some length about the planning system, but is your understanding – and I appreciate you did not come here to speak on the planning system; however, that is where you have been drawn into – that when it comes to the planning system we have in this country, all the cards pretty much are held by the developer, because if the developer does not like the result the first time round, they have a right of appeal, and if they do not like the result the second time round, they have a right to repeal and ultimately all the way through, whereas if the community does not like the result the first time round, it is tough. Is that your understanding of the –
221. MR QURESHI: I could not have put it better.
222. ROBERT FLELLO: Okay, thank you. A couple more questions, if I may. I am conscious I have eight minutes and the clock is ticking, so if I could have succinct responses to my non-succinct questions, I would be grateful.
223. The position around TfL being a local government body, is that part of your concern, that because we are talking about effectively a local government body that the standards expected of them should be far higher than a private individual? Have I understood correctly that point that you were trying to make there?
224. MR QURESHI: Indeed, and I think given their position as well across the whole of London, out of the GLA group financially they are probably the most solvent and the one that takes the most subsidies as well. Some would even suggest that it affects places like Stoke as well.
225. ROBERT FLELLO: Okay. Again, in terms of their role being to implement transport strategy, to manage transport services across London, again, have I understood, Ms Bell and Mr Qureshi, that part of your concerns are that they should be focusing on getting transport moving so there is not an air quality issue, cutting down the number of vehicles necessarily at any one time in London, working on building sites and generally getting traffic flowing, not focusing on property development? Again, have I understood that as being a point you are trying to make?
226. MR QURESHI: Indeed. That is their first and foremost function and I think they should strictly stick to that. I do not think the experience that we have seen is that they are particularly good at property development. If you look at Earls Court, I am surprised they have ended up being a junior partner there.
227. ROBERT FLELLO: Okay. A couple of final points: again, in terms of the document that is here – and I probably will not be able to turn it up quickly enough, so I will not try –again, is your concern, as I understood it from your evidence, that because TfL have so many pieces of land across London that it puts them in a position where if they are going to become property developers rather than transport strategy implementers, the concern is that they have such a huge portfolio of land, that could be quite damaging to London in the sense of how that land is developed?
228. MR QURESHI: I think the critical thing is that, yes, they have a huge portfolio of land. If we have this clause passed, it will be done largely in secrecy, with very little information going to the public domain. I think that scrutiny is required, whether it be us Assembly Members, parliamentarians or residents’ groups or campaigners. I think this clause will dangerously limit the ability – as we already have very limited abilities – to make sure TfL are accountable as and when they do these developments.
229. ROBERT FLELLO: Just a final couple points in the five minutes left available, dealing specifically with clause 5, looking specifically at clause 5. Again, that is the point there about joining with any other person, the point I put to Mr Clarkson earlier, and you have mentioned a particular developer in connection with Earls Court; I will not repeat the particular concerns that have been voiced already. Again, do you think there should be some sort of fit and proper test around who should or should not be forming into a partnership with TfL? Is that something that – if I have understood again the evidence you have given so far –
230. MR QURESHI: That certainly is a consideration. For example, the company I have mentioned, if you are not able to, Capco, does have a chequered history if you look at what they are doing on Convent Garden. I can vouch for a lot of businesses there.
231. ROBERT FLELLO: We will move away from specific companies. Let’s just talk generally in terms – yes.
232. MR QURESHI: Okay. Yes, I think it would be useful, because many of the companies that potentially are going to be future developers with TfL will have a track record in London and I think they should be held to account on that as well as how will they do in the future.
233. ROBERT FLELLO: My final point then is again in terms of TfL being the limited partner and having vast assets and potentially another person being the day to day partner, if you like, the general partner, with perhaps very limited assets, is that one of your concerns as well, or have I misunderstood what you have said earlier?
234. MR QURESHI: Indeed.
235. MRS BELL: Yes, absolutely.
236. MR QURESHI: Yes. I am not sure TfL know the nature of some of these deals that they are getting themselves into. You just have to look, aside from the joint venture that they have entered into, at other deals with Barclays, with Emirates. It always seems to me that when they done the proposals for the bikes and for the cable car, they have come out the worst; when they said they were not going to put in public money, they have ended up having to, and considerable amounts.
237. ROBERT FLELLO: That is really helpful.
238. CHAIR: But if they are currently not doing a very good job and they are asking to do it differently, why shouldn’t we be encouraging that, which is what clause 5 is meant to do?
239. MR QURESHI: It will encourage them to do it in secrecy. That is the problem I think we have. Me and you will not have any idea of what they have learnt, for example, from those examples I have mentioned. I would like to think they have learnt something and that subsequently they will make amends for the public subsidies going into these schemes.
240. ROBERT FLELLO: Chair, on the back of your question, if I can just ask, so you would be happy with clause 5 if it was not talking about limited partnership, so if it was talking about limited liability partnerships or companies – maybe "happy" is perhaps not the right word, but you would be more comfortable?
ROBERT FLELLO: Happier, thank you.
241. MR QURESHI: I have to confess, I am not fully au fait with the legal complexities of the nature of the entities, but I just think the general point to be raised here is if TfL had an outstanding track record of being publicly accountable with all the information and what have you, I would feel more relaxed, but I am feeling very nervous and I suspect I reflect many of my Assembly Members as well, who have had experiences where just getting basic information like the numbers of usage on bus stops and Tube stations have been an ordeal for longer than it should have been.
CHAIR: I will just give Mr Clarkson the last word and then we will stop.
242. MR CLARKSON: It is just really to help Mr Flello: there may be some misunderstanding. They have all those powers now, save to do it as a –
ROBERT FLELLO: To use LLPs and companies, yes.
MR CLARKSON: Yes. I beg your pardon. I misunderstood, I thought you –
ROBERT FLELLO: Yes. No, I was just trying to clarify whether – yes, perhaps I phrased my question not quite accurately. You are right to correct that, thank you.
243. CHAIR: Unless there are any more questions from colleagues, thank you both very much indeed, thank you all, and we now move on.
244. I am now going to call Anabela Hardwick to present her petition. Ms Hardwick, are you going to speak before your witness or afterwards? You may only speak once.
MS HARDWICK: I am going to speak –
CHAIR: Straight away, clearly.
MS HARDWICK: I would like some advice on that, if I may, because basically what I was hoping to do was to go through my petition as briefly as possible and call in at key points a witness to highlight that, because they can add value more than I can.
CHAIR: I think if you would like to do that, if you could be quick. I would like to break at 5 pm.
MS HARDWICK: 5 pm. No, absolutely, no problem.
CHAIR: I want you to have a chance to do it as best you can.
MS HARDWICK: Thank you very much.
CHAIR: If you would like to do it that way, that is fine.
MS HARDWICK: Yes, please, because I feel that has sequence. Yes, lovely.
CHAIR: Yes. No, we want you to have your say.
MS HARDWICK: Do I call you Mr Wiggin, Chair?
CHAIR: You can call me whatever you like.
MR FLELLO: As long as it is polite.
CHAIR: But I remind the Committee once again, utmost politeness is appreciated.
MS HARDWICK: Yes, okay. All right, thank you.
CHAIR: "Hey you" is probably not. If your witnesses want to come and sit next to you, we will get their name tags out there, and then away we go.
MS HARDWICK: Thank you very much, that is very kind.
CHAIR: Snuggle up to Mr Clarkson.
245. MS HARDWICK: Thank you very much. First of all, I would like to thank the Opposed Bill Committee and Parliament for the opportunity to come here today to speak to yourselves. I would like to give you a little bit about my background. I think first of all I would like to say that even as a student, I was never a member of a political party; I have never been a member of a political party; I am not a trade union member; I am not a member of any secret society of Freemasons or anything like that. What you see is what you get, so I am here purely as a local resident that has great concerns about what is happening on her doorstep and could potentially be happening across London, and in fact not just across London. Mr Flello mentioned earlier about the fact that his constituency is Stoke-on-Trent. The things that are happening in London here are starting to happen in other parts of the country, which I shall mention later.
246. I would like to kick off, if I may – if I am allowed permission to stand – one of my documents is an aerial photograph. I think it is important to put in context the area that I am using not just as a case study, but as a live study, if you like, because I feel this is a real opportunity for the Committee members to have an actual example that is live now and you can extrapolate whichever way you want the things that are happening here that might happen in the future.
247. I think using Earls Court as an example is not because I have a particular gripe, it is because I have experience of living here next to the Exhibition Centre, being on the ground as an ordinary citizen, having to attend planning meetings and going to see the Mayor at the London Assembly, having gone through a process of coming to Parliament, so I am trying to basically say that it is important for me to use Earls Court as an example, because I feel that is how I can add value to my petition.
248. In my aerial photograph, which I took from the internet, you will see the massive Earls Court 1 and Earls Court 2 Exhibition Centre. Am I allowed to ask if any of you have ever been to Earls Court to attend an event?
249. CHAIR: I think just keep going, yes.
250. MS HARDWICK: Okay, great. Next door to the Earls Court Exhibition Centre, you have the very big Lillie Bridge Depot and you also have here at the bottom – and this will be among your pack of papers - the 22 acres of the West Kensington and Gibbs Green Estates. I just wanted to put it into context, as I think a picture paints a thousand words.
251. If I look at my petition, I will kick off with that: my background is that I have an MBA from Warwick. I worked in the music industry for many years and looked after the royalties of well-known international artists. I currently have my own business in marketing services. I have attended exhibitions at Earls Court; I have exhibited at Olympia. I am very passionate about small businesses and passionate about where my taxpayers’ money goes to, and that is me, basically.
252. I would like to go to, if I may, my point 5.3. My statement here, my petition, is to do with air quality, as has been previously mentioned. I do suffer from allergies to dust. I know that London obviously is not the ideal place to live if you have allergies, but it is a place where I can find work and it is a place that I enjoy living in. I would like to point out here that TfL, obviously as a public body, has made a decision on its lands and properties that will increase air pollution in an area that already exceeds recommended EU limits. This is contrary to London Plan policy 7.14c, which states that developments should be at least air quality neutral and not lead to further deterioration to existing poor air quality, particularly as this location is already designated as an air quality management area. In my petition, I refer to a letter that Darren Johnson has written to Mayor Boris Johnson precisely on this air quality issue in that area.
253. I would like to bring in here, if I may, an event that happened, which I personally found rather shocking. As I say, I am speaking as a resident. In Kensington and Chelsea, we had a public meeting to do with the demolition and waste management plans for the Exhibition Centre. If you imagine, these are huge structures. The Earls Court one is full of asbestos from top to bottom, so it is a very important issue for local people. Kensington and Chelsea had a public meeting; it was in front of councillors and residents could present petitions. There was a vote and the demolition and waste management plans were passed through, five to four in favour, with one abstention.
254. Obviously I disagreed with that. I think that the plans are very flawed, but there was hope that under the new administration in Hammersmith and Fulham, when this went to the local authority there, that residents could have their say. There was a public meeting for 8 October, which was publicised. People, local residents, were asked to make comments on the plans. We found out that the meeting had been postponed, and then I rang up on 3 October and spoke to a planning officer and asked, "When is the meeting going to take place?" and I was told that the meeting had already taken place on 29 September. I was absolutely shocked and horrified and asked, "How can this be?" The planning officer said the decision came from the top of the council. It was basically the council abdicated its powers to the planners and they met behind closed doors, so there was not an elected official in sight, there wasn’t a chance for our petitions, if people had petitions, to be heard on this very important issue. That is why I said earlier that I do not belong to any party. As a resident, I have gone to a Tory borough planning meeting, I have gone to a Labour meeting. Well, I haven’t, actually.
255. MR FLELLO: That is the problem.
256. MS HARDWICK: Basically, my point is that coming here is just another part in that process. But I would like to bring in, if I may, my first witness, Linda Sanders, to speak to you on this particular paragraph.
257. MS SANDERS: Thank you. I am a special needs teacher, and so I feel a little bit like I am in special need here. I am a resident on West Kensington Estate. There are two estates that are next to each other, which are in the shadows of Earls Court 1 and 2 and the other part called Gibbs Green. We were alarmed to know that we had the possibility of losing our home because Earls Court 1 and 2 were going to be sold off and then demolished. It occurred to me, in layman’s terms, that they peeked over the fence and said, "What is that over there? Oh, it is 760 homes. Why don’t you have that as well?"
258. It does affect me. It affects me in that I have been on this massive journey, trying to understand more about how things work, which is usually outside of my normal daily work and my normal sphere. I have done things: for example, I link into what Anabela has just told you. We were upset that Kensington and Chelsea on their side with Earls Court 1 had decided that they were not going to worry too much about the waste management, so we thought, "We are going to make sure we do not get that same problem happening over the wall here in Hammersmith and Fulham". As a concerned resident, I raised a little online petition and we had to abort it because the meeting had taken place before it was advertised, so where we were waiting and trying to accumulate some interest and make more ordinary people aware, then we lost that chance.
259. There was a letter that was directed to the council that was received in time, and it was one of six, apparently. It is just a shame that it was not taken into consideration, that that letter represented all of the people who live in my area, so that is 760 homes.
260. CHAIR: That was the council that ignored it, was it?
261. MS SANDERS: Yes, that is right. The deal here for me is that I know we are no different to a lot of other places around London that are subject to demolition, but we are part of what could be the biggest regeneration in London ever outside of China – this is apparently something I have heard – and it concerned me that so many people are affected by this massive destruction of decent property, particularly from a residential point of view. There is nothing wrong with my house; there is nothing wrong with the flats that are on the estate; there is nothing wrong with the public areas, we have maintained them nicely, the council have even looked after them for us. On a personal level, that is where I come as a witness.
262. CHAIR: Thank you very much indeed. We will keep going, because that does not necessarily pertain to clause 5 and I am worried there is going to be a vote shortly, so Anabela, back to you.
263. MS HARDWICK: Okay, thank you. My next point, 5.4, is about the asbestos in Earls Court 1. It opened for business in 1937. I would like to bring in here my next witness, who is Linda Wade, and Linda, if you could –
264. MS WADE: Thank you very much. My name is Linda Wade. I am an Earls Court ward councillor. I am also chair of the Earls Court Area Action Group, and I have lived in the area for many years. I am concerned about the implementation of clause 5 in the context that I do not think that TfL has the experience or expertise to enter into large-scale developments that are so complex that even quite a learned person on the planning committee in Kensington and Chelsea said, "The problem between an opportunity area, whether you have an area action plan, all these different planning legislations which can come together as a piece, that this site, being 77 acres, is one of the largest developments you are going to see in London".
265. It is an extraordinarily complex piece of land, and my issue with TfL having this right is that you have to look at sites on a site by site basis. If you are looking at three garages in Sidcup, that is a possibility for development, but when you are looking at such a large estate, where you have 22 acres in Kensington and Chelsea, 22 acres of affordable rented housing in the West Kensington and Gibbs Green Estate and you have approximately 15 acres of the Lillie Bridge Depot, my concerns are there is a poor track record of TfL when they go into joint business enterprises. I think that TfL, because of its nature of being the principal road and transport provider in London, should be concentrating on its core business rather than initiate a project that will cause additional problems.
266. If I go to the traffic management plans that were put forward – and remember, these are things that TfL would have provided the figures for – the traffic management plan incorporated roads that were previously not evaluated in the original consultation, as they were not immediately adjacent to the opportunity area. These plans have reduced the amount of access points to the site to three. Due to the construction sites, two of the positions will be placed to other developments, so I can see that there might be a problem of goods inwards.
267. The marshalling yard for the construction traffic will be along the M4, and with five to 10 HGV lorries per hour and no space on Warwick Road for vehicles to stand if bunching occurs. There is no calculation in their figures of how many white good ancillary vehicles will be associated with the development. There is Saturday working, with the red routes suspended along Warwick Road for weekends for residents to park, which already reduces the flow of traffic to one lane. A comprehensive condition survey conducted of Warwick Road by TfL has been undertaken. The initial results indicate the further investigation of at least three unknown areas is going to be required.
268. In a recent Freedom of Information Act request, there were 484 instances of night-time working on a strategic road network owned by TfL over the last five years, and with the additional pressure of five to 10 HGV movements per hour on a road that is already experiencing problems.
269. CHAIR: Clause 5, rather.
270. MS WADE: No, but what I am trying to demonstrate is if TfL has the right to enter into joint partnerships with developers of such large scale without the expertise or experience, they are condoning or permitting or complicit to a series of things that will contribute to poor health. Also, I am illustrating this because this is an area that I know very well – and you know, because you live in Fulham – and that if you go down Earls Court Road, you can have a gridlock. If you are going to have additional traffic, which was never considered in the outline planning consent, which comes in at the last minute under reserved matters, where it is a very limited possibility for people to object, this is not transparent, it is not clever planning, because it is not just one development, it is a series of developments that has an effect on everybody else.
271. ROBERT FLELLO: Councillor, is it okay if I just chip in there, because I just wanted clarification on a point as well? Are you also saying that effectively there is a conflict of interest there, that if TfL had just sold the land and were not party to the –
MS WADE: The point is it is an extraordinarily complex –
ROBERT FLELLO: Sorry, I will just finish the question. If TfL had just sold the land and were then sort of sitting back from it, so it is an external developer who has come along and wants to do all these things, TfL’s role then in terms of saying, "You cannot go at this time of day; you cannot do it then" is not conflicted, if you like. Is your concern then that there is a conflict as well?
272. MS WADE: I think there is a conflict of interest on a number of different levels of this, yes.
273. CHAIR: Ms Wade, if I stop you, there is a Division now. The Committee will suspend itself for 15 minutes and we will come back. If you would like to carry on, we will come back straight to you. If you want to have a cup of tea, if you are very quick, we will go and vote and we will be back here at exactly 4.35 pm.
274. CHAIR: We were with Linda. Linda Wade, over to you.
275. MS WADE: All right. The other element where TfL is particularly key is over the LUT station’s capacity. Earls Court is a listed building with limited opportunities to expand. The developers are proposing to recommission the tunnel from the site to the mezzanine floor. This will increase the capacity of entry to the station but not the station’s capacity. The mitigations proposed are the opening up of some stairs from the mezzanine floor to the District Line platform but no improvements can be made to increase access to the Piccadilly platforms at present served by one up and one down escalator. Improvements to the Piccadilly Line are scheduled in 2028. Figures provided by TfL - these were the most recent ones that I could get - for 2012 indicate that weekday entries were approximately 30,000; exits 29,000 and there were over 60,000 interchange travellers.
276. In the submission based on TfL’s figures there is an undervaluation of the passenger traffic, quoted as low as about 9,000 for existing weekday use and projected figures from 2021 ranging from 10,500 to 12,500. This would be done over five stages. It has been said that with the closure of the exhibition centre there will be fewer exits and entrances, but this does not take into account the estimated figures for this site as well as the developments north of Cromwell Road, which indicate that there will be an increase of the local population of approximately 35,000 and 7,000 workers. This would, therefore, have a direct impact on the ability of Earls Court to function.
277. It is already identified by passengers as being unsafe, particularly on the Piccadilly Line, and this would, therefore, require access treatment to the station as per an Ideal Home exhibition, which is approximately 48,000, or a football match. It is a station that is already considered by residents to be dangerous at peak time. A study by TfL established there would be seat capacity between 7.00 am and 10.00 am of approximately 40%, but I suspect that they included areas going out of London rather than the platforms that have the peak capacity and they did not appear to take into account the impact on the onward stations of the rest of the District Line or the Piccadilly Line.
278. There are a couple of things that come in together and would have been covered by the Quality Impact Assessment Study at chapter 15, Noise and Vibration, 1.199, "As deconstruction and demolition and construction activities are predicted to result in impacts ranging from negligible to moderate adverse for noise, air quality and dust emissions it is reasonable to predict there will be an adverse impact on nearby sensitive receptors for the combined effect of individual impacts. This impact will be considered to be temporary in nature", i.e. reversible, lasting for the duration of the deconstruction/demolition/construction programme. This does not reflect the fact that this is a 20-year-plus development and given the proximity of the residential properties to the site - which are not considered because an area action plan was not conducted - the figures for these noise and dust and general pollution are not taken into consideration. So, whereas with an opportunity area they can say that they are going to have negligible impact on air quality, if you happen to be immediately adjacent to two of the most polluted junctions in Europe this does not reflect the true nature of the situation.
279. We have a considerable concern with asbestos. In the demolition and waste management plan it was merely stated that a study had been undertaken but it was not made clear and it was not published. So, without detailed knowledge of the extent and kinds of asbestos in the building, it cannot be possible to make decisions on whether the methods of demolition of the building or removal are appropriate. Given the age of the building it must be assumed there are at least three types of asbestos. The developers have undertaken an asbestos report but this report has not been made public. Therefore, it is not known what kind of asbestos exists and where within the building it exists. As most of the waste that is going to be removed by site, i.e. on a TfL road, will be contaminated and through a densely populated area, without this information it is impossible to assess whether or not the waste removal schedule is appropriate.
280. CHAIR: I am sorry. This is not irrelevant but I must, as Chairman, keep drawing you back to whether or not the law changes will affect this and they will not I am afraid.
281. MS WADE: The point is that if you have TfL entering into a development with a very well-oiled machine that can employ every single expert under the sun - this is for them an £8 billion to £10 billion project. It is in their vested interest to be able to present, as any lawyer would, the best possible case scenario for their developer. The problem is that there are consequences and the clause does not seek to restrict or supervise or scrutinise any of the people that TfL plan to get into bed with. TfL have a completely different timescale. They have a different remit. They are supposed to be a London-wide provider of traffic and transport. They are not supposed to be people who have the expertise to get into large-scale developments on extraordinarily complex sites. They just don’t have it. That is not the expectation that any of us have, that TfL should deliver. This is why I am saying that TfL, in this particular arrangement, has got into bed with the developer and there are consequences on the impact on residents who live in the immediate adjacent area that have not been evaluated. I am talking 10 metres away from people’s bedroom windows. This is a 20 to 25-year project. This is not inconsiderable.
282. JOHN HOWELL: Could I ask a question? In the last session we established that TfL were able to enter into limited liability partnerships already. Do you accept that?
MS WADE: What I am saying is that -
JOHN HOWELL: No. It’s a simple question of whether they are already able to enter into limited liability partnerships or not. I think we established in the last session that they are. If they are able to do that they would enter into a limited liability partnership with the same set of developers that you are criticising now for the sorts of activities that you have described. Is that not the case?
283. MS WADE: My criticism is that TfL are not capable of scrutinising the developers that they get into -
JOHN HOWELL: That is irrelevant to this.
MS WADE: No, it is not irrelevant.
JOHN HOWELL: This is about the ability -
CHAIR: Order. Just gently, please. Everyone is entitled to their opinion.
284. JOHN HOWELL: This is about the ability of TfL to enter into a partnership with an organisation like that. What sort of partnership that is, is irrelevant to the activities of the developer.
MS WADE: So what is the primary function of TfL?
JOHN HOWELL: I am here to listen to what you have to say.
285. MS WADE: It is a question that is legitimate for residents who are going to be exposed and this is just an example. If they are permitted just to do anything without effective scrutiny, without transparency, then what about other residents in other parts of London?
286. JOHN HOWELL: But where is that scrutiny in relation to the partnership that is being described here that is not there or is there in relation to a limited liability partnership?
MS WADE: I will leave that to Richard to discuss. He knows that better than me.
CHAIR: All right. Let’s move on.
287. MS HARDWICK: Thank you. My next point is 5.5. I do think this is very important. In my opinion there is no appendix to clause 5, or to the Bill, that provides a full and comprehensive list of TfL properties/land that they wish to involve in the proposed partnerships. In a way I think we are a bit blind as to what the proposed limited partnerships would cover, to the extent of properties and land, and I think that perhaps as an amendment to the Bill - if I am allowed to say this - you request that information from TfL, which they may wish to keep confidential but I think the Committee should have sight of so you can see exactly the scope of this.
288. CHAIR: I think to help you with that: the speaker’s counsel provided me with the Act earlier and TfL are allowed to sell any of their property except for things like the railway lines. So it is by default. Is that clear? Is that helpful?
MS HARDWICK: All right. Okay.
289. MS WADE: They are developing over the lines.
290. MS HARDWICK: But they are developing over the lines; that is the case in Earls Court. That is important. All right.
291. Something that I think is equally important is not just to know about the properties and land, but I was told in a meeting with Mr Cornelius and Mr Graeme Craig on 4 July at Broadway House that there is going to be a procurement process set up so that TfL can get into partnerships, however they may be, with various developers. This might be shutting the door after the horse has bolted. I think the Committee should also find out more about this procurement process. I am not sure whether it has been publicised yet. I was told it was going to be announced in January - this month. I think that is important. Within my example there was no area action plan. There was no independent economic assessment or independent public health impact assessment study.
292. What we are looking at here, if we think of the extent of the land holdings across London and the different areas, there does not seem to be an overall consideration of how everything is interlinked. To me a limited partnership is an important vehicle, otherwise we would not be discussing it here and TfL would not have come to the Committee. I think it is a very important thing, for people to look further at the way TfL is going to do its procurement process, whether or not there will be a fit-for-purpose element, as Mr Flello mentioned, and the extent of their holdings. Obviously it can be anywhere across London and that to me, living here, is a concern.
293. If we go to 5.7, I have used the example Lillie Bridge depot and I have a statement by Andy Littlechild, who is the health and safety rep at the Lillie Bridge depot and a track worker, regarding their concerns about job losses specifically with the depot, where different departments are going to move and what will happen to the contracts there. I think it is important that we consider that what TfL is doing is going to affect their workforce, if nothing else a period of disruption. I believe you will read all our papers, so you will see the statement from Mr Littlechild and he explains the strategic importance to Transport for London of the depot and its central location is very important for the safety teams.
294. If I then go on to 5.8, this sums up my objections to clause 5. I understand that TfL intends to enter into more joint ventures similar to that with Capco and I object that clause 5 would allow limited partnerships that are subject to classified partnership agreements, have unacceptable levels of financial accountability and, therefore, are impenetrable to public scrutiny. The main point is this is a public body with tremendous responsibility across the capital and I believe that limited partnerships do not afford enough scrutiny.
295. If I go to paragraph 5.9, I object that clause 5 does not require that TfL at any time undertakes due diligence to ensure that they are entering into limited partnerships with financially sound and ethically governed partners. I have here Mr Richard Chute with an example, I believe, where one of TfL’s joint venture partners has misrepresented the economic argument for the master plan and this is a key issue, Mr Wiggin.
CHAIR: Mr Chute.
296. MR CHUTE: I am Richard Chute. TfL have entered into a joint venture partnership with a developer, Capco, in the Earls Court scheme. The practices of the developer, Capco, in the planning process are highly questionable and irregular. I am pursuing complaints against the planning authorities, the Royal Borough of Kensington and Chelsea and the London Borough of Hammersmith and Fulham, regarding the misrepresentation by their planning officers of the District Valuer Service’s reports sponsored for the developers, which underpinned the outline planning consents for the Earls Court scheme in late 2012.
297. CHAIR: Has this gone to court?
298. MR CHUTE: No. I am still with legal advisers. It is in the hands of the local government ombudsman, who is investigating.
299. MR CLARKSON: If it helps, Chairman, it would be interesting to know the timing of it. It may be out of time for a judicial review.
300. MR CHUTE: I can deal with that later.
301. MR CLARKSON: The important thing is not to exercise it here it if it is not -
302. MR CHUTE: I am not. Nothing I say here will have an impact on the judicial review. I commissioned the expert in viability analysis, Dr Richard Fordham, to look at the District Valuer Service’s report and prepare a report for me. I apologise for Dr Fordham’s absence. I just list here who Dr Fordham is. He has a degree in economics and geography -
303. MS HARDWICK: If it all right with you, Chairman, just stick to the point of his expertise related to this.
304. MR CHUTE: He has a PhD from Cambridge University. At Oxford Polytechnic he taught town planners and he ran a firm called Fordham research, which carried out a viability analyses for developers’ proposals on behalf of local authorities from 1987 to 2011. He did in fact develop a mechanism called the dynamic viability mechanism, which is used for updating section 106 agreements on affordable housing targets. It is a review mechanism that is widely used. Coincidentally it was part of the Royal Borough of Kensington and Chelsea’s core policy 2009 for this scheme. It was not implemented but it is their adopted policy.
305. The planning authorities failed to secure the required level of affordable housing under their adopted policies for this scheme. The under-provision was justified by stating that the applicant’s viability analysis demonstrated that the proposed provision was the maximum reasonable amount. Both authorities refused to disclose the District Value Service’s report dated September 2012 to the public until an information commissioner’s tribunal hearing in June 2014; recently. The District Valuer Service’s report in fact identified concerns regarding the developer’s assumptions and the officers’ report failed to adequately address the limitations of the viability study.
306. I will just put this in perspective. According to Dr Fordham’s calculations, there is a shortfall that equates to approximately 3,000 residential units, which in that area gives you a ballpark figure of about £1.5 billion. So we are not talking about a small amount. We agreed that affordable housing is the topic of the day and this is how it is being axed.
307. I will summarise, if I may, the five ways the District Valuer Service was misrepresented to the planning committee. First, it was not in fact a viability report but it was a commentary or a critique on the viability work done for the developers. In fact the existence of the District Valuer Service’s report of September 2012 was not told to the public until the chief executive revealed it to me in an email in February 2013. As far as the public and the members of the planning committee knew there was a previous DVS report. Capco ensured that the profitability of the scheme was seriously understated by a series of devices, i.e. the assumption that Capco would not develop out the scheme.
308. The District Valuer Service agreed that 10% was the minimum feasible level of affordable housing but with caveats that were not reported to the planning committees. The District Valuer Service asked for a fuller valuation of the scheme when the project was more defined. That was not implemented. The District Valuer Service called for a review mechanism to be included in the planning consent but, although this was reported to the committee, the emphasis was that the developer objected to it. That was the grounds given. In fact the District Valuer Service’s report took the quite exceptional step of printing the developer’s bullying protest letter within its report. Capco’s arguments against the review mechanism were ill founded. The DVS had requested a review mechanism. In other words, the picture presented by the District Valuer Service’s report was substantially different from how it was reported to the planning committee.
309. The District Valuer Service stated that they were refused information from the developer and what Capco was doing was bad practice. Capco’s calculations to provide analysis of joint venture proposals, which are likely to have shown a higher profit - basically the calculations revealed that they could have had a higher profit than what they claimed. Permission would not have been granted had the DVS report been published at the time of the planning committees. The public, therefore, have been hoodwinked and Capco were let off the hook.
310. I have the District Valuer Service’s report in front of me. If you would like it, Chairman, I would go through about 15 paragraphs that failed to be reported to the planning committees.
311. CHAIR: I must remind you that we are dealing with whether or not clause 5 stands as part of this Bill, not whether the planning decision or process was flawed.
312. MR CHUTE: I am just saying that TfL have laid themselves open to accusations of impropriety.
313. CHAIR: I think you have made that point very well. My impartial advice is to move on.
314. MS HARDWICK: Sticking to this subject of the DVS report, I have the minutes of the 22 May 2012 Earls Court landowners’ meeting. This was obtained through a freedom of information request. In these minutes it says at 2.5, "The process of the valuation office concluding their advice to the boroughs is the biggest programme risk to the planning applications". This was a meeting attended by Hammersmith and Fulham employees, Capital & Counties and Transport for London. Attached to this are the Earls Court landowners project board minutes of 17 July 2012. Again you have these papers. If you go to 2.3: "Despite numerous efforts by opponents of the scheme the debate has failed to escalate to a national or even a London level. Keeping the debate local remains a key part of the political strategy".
315. So we are talking about TfL, a public body, in a meeting with a developer, saying - there are no minutes here that somebody has objected to what I am now going to say - at 4.1, "The most significant recent media interest came from the BBC around the launch of the judicial review against the scheme. The BBC coverage, which had appeared online, on the radio and on the broadcast bulletins, focused on the dispute between the different community groups rather than on Capco or the landowners". My opinion here is that there has been a deliberate communication strategy that TfL have been in discussion about. Nobody here has objected to this. At 5.2 in "Community engagement", "The two community groups on the estates are both highly active at present. Both sides are taking their arguments to the media with increasing readiness. This has the beneficial side effect of making the argument resident versus resident rather than resident versus developer or resident versus council".
316. As a local resident, by looking at these minutes I can see that there is some form of communication strategy, which I find deeply cynical and which is part of discussions between TfL and the developer, and I have found that to be appalling. Part of the reason I have been quite vocal is the fact that I feel that as residents we have been kept in the dark by some of the things that TfL gets involved with and I feel that clause 5 will increase the aspect of this sort of behaviour.
317. On this clause about ethics, I realise obviously it is very difficult when you are dealing with people, business partners, you don’t know everything about them, but I do want to mention the fact that a director - and this is public record; he has been sentenced in Hong Kong - in a joint venture with Capco - this is on the Lillie Square GP Limited, registered at Capco’s headquarters in Mayfair - has been found guilty of conspiring to bribe a public official. This is a Mr Thomas Kui-Yuen Chan and in my notes I show the current appointments report for Lillie Square GP Limited. I am not sure if this gentleman has since resigned but he is still down there as a director. Regarding what Mr Flello said about fit for purpose, you are dealing with a massive amount of money, a lot of investment, and it can be difficult obviously to keep track of the people that you go into business with, but in my particular petition here I wanted to highlight that.
318. Also, as a local resident I do talk to shopkeepers: the Lillie Road traders, as the previous petitioner, Ms Bell, mentioned. I would like to expand on the fact that these are businesses that have been in the Lillie Road for a long time. They have had an agent, KLM, of EC Properties LP, come along - this is a public record. I have here; a letter from Nicky Gavron AM, to Boris Johnson. What happened was these business owners were basically given massive rent increases. They felt harassed and Nicky Gavron wrote to the Mayor on behalf of these traders. When TfL, a public body, enters into a relationship with a supplier, according to their code of ethics - they do have a code of ethics and I don’t think this sort of behaviour is acceptable. It is a matter of public record. Also, I would like to let the Committee know that it is not just traders down the Lillie Road but some local residents who own the freehold to their properties who have felt harassed and have been threatened with compulsory purchase orders. I am sure that this information will come out in due course and I think that is very important.
319. Although this here is an agent of a business, the fact is that as a business you have to look at who you employ to represent you and at the way they behave. I think this is a very sad time for the Lillie Road traders, many of whom have now gone. Basically; they have shut up shop. You have, the journalist, Dave Hill’s blog. Again you have the information here so you can see at first hand their stories.
320. I come now to the final paragraph, 5.10. This is to do with a mayoral policy or vision for the capital. I feel that there is no provision in clause 5 to ensure that TfL does not enter into the proposed limited partnerships due to political pressure to ensure particular mayoral and/or Government policy or vision for the capital, which has not been publicly discussed, scrutinised by the London Assembly or Parliament, nor voted for by the majority of Londoners.
321. I would like to make the Committee aware of the confidential briefing to the MP Helen Goodman, which you have among your papers. What you have in Earls Court is an example of something that works. It has worked for many years. Earls Court 1 and 2 as an exhibition centre represents 30% of London’s exhibition space and 16% of our nation exhibition space. This is to be demolished. There was no independent economic assessment. There was no area action plan. There was no transparent or independent procurement process as far as I am aware. How did it happen that Capco and TfL came together? Were there no other developers that could have been involved in this? I feel that the elephant in the room is the fact that here you have a part of London that works brilliantly well. You have social housing; you have people who have bought the right to their homes. You have this amazing economic powerhouse that is also part of our soft power. The exhibition industry is a highly profitable industry with no subsidies from the Government. It should be applauded much more than it is. If you would kindly read this report you can see why it is so important.
322. You also have the Lillie Bridge depot, which is a centre of manufacturing excellence. Again, when you read Andy Littlechild’s explanation of what happens in the depot you will see why it is so important. So you have something that I honestly believe in other parts of the country and perhaps in Europe would be an area that would be regenerated and developed, building on what we already have, rather than have a small coterie of unaccountable developments happening on this space. I would like to thank you all for listening to my petition today.
323. CHAIR: Thank you very much, Anabela. We now move to the questioning of witnesses. Committee, I would like to move fairly sharpish because I believe it may be in everyone’s interests if we can make our decisions today. Right, Mr Clarkson, over to you.
324. MR CLARKSON: Can I shorten it, if I may, by telling the Committee this and asking whether anybody disagrees with it? The arrangement at Earls Court, if it is of any interest to the Committee: the point was made about no independent procurement process and how they came together and the answer to that is, "Do you know?" - anybody can answer this - and the answer to that is that TfL own the freehold and Capital & Counties have the leasehold of the bit above it. That is the circumstances of it.
325. The next point, please, is can you help the Committee with this? The suggestion has been made of some improper person being involved with TfL. Is that person a partner in TfL in any scheme that TfL is involved in at Earls Court? I will put it to you that the answer is no.
326. MS WADE: Can I respond to that?
MR CLARKSON: It is a question, so yes. Please give us evidence of a partnership.
MS WADE: The opportunity area as defined is 77 acres, which runs from Cromwell Road down North End Road into Lillie Road, Old Brompton Road, Warwick Road and back up to Cromwell Road, but the opportunity area includes Lillie Square and Lillie Square is the venture that this gentleman, I believe, was putting up 50% of the capital for.
327. MR CLARKSON: Not with TfL.
328. MS WADE: It is questionable as to whether or not the opportunity area is a joint development. The opportunity area, which is what quite a lot of us have been centring on because of the impact on TfL, is a TfL and Capco development.
329. MR CLARKSON: But let us be fair. This is the TfL Bill we are bringing in. You are making rather pejorative suggestions about the competence of TfL. TfL are not partners in the Lillie Square development, are they?
330. MS WADE: They are part and parcel of the opportunity area.
331. MR CLARKSON: Well, the point is made. Just to be fair to the public officers of the United Kingdom, I think the allegation was involving somebody in Hong Kong, wasn’t it?
332. MS HARDWICK: Yes. It was a gentleman there. What I was trying to say is that when TfL go into a joint venture with a developer obviously they do not know who is involved in activities with that developer and it is something that has come out here that I think is an important point to mention.
333. MR CLARKSON: Do you appreciate that on every deal that TfL are involved in they go through due diligence research on the people they are proposing to enter into arrangements with? Do you appreciate that?
MS HARDWICK: Is that the case?
MR CLARKSON: Yes.
334. MS HARDWICK: I am glad obviously to hear that, but they can obviously only do due diligence up to a point and as Ms Wade has mentioned this is part of the opportunity area. I am just trying to bring it to clause 5, basically, that because of the lack of scrutiny in the partnerships agreement for example. You do not necessarily know what the partnerships are or what can happen, and that is why I wanted to put that point.
335. CHAIR: I have been pretty relaxed about allowing stretching of the rules but I suspect that you are only allowed to cross-examine the witnesses rather than the petitioners.
336. MR CLARKSON: I don’t want to be unfair to anybody. I take no point, Chairman. I do have one last point, which I can ask in bank in the sense that anybody can answer it, and it is this. Did they, or whoever answers the question, appreciate that TfL has power now to develop any part of its property? Did you know that?
MS WADE: Sorry. It looked as if you were going to say something else.
MR CLARKSON: I don’t care who answers it. Did you know that, Councillor?
337. MS WADE: I did know that but this particular legislation would permit a wider remit in their development arm. I am merely saying -
MR CLARKSON: How?
MS WADE: - that it is important for London as a whole that we have a transport and road system that is operational. As I said before, if it was a development over a garage in Sidcup that might be something different, but you are talking about such a complex place that has the impact of perhaps relocating the specialist Lillie Bridge depot, which would potentially compromise the safety of the transport network.
338. MR CLARKSON: You accept that TfL has the power to develop and sell any of its property, whether it is Earls Court or a garage in Lewisham now?
339. MS WADE: I would say what was different with Earls Court is the fact that it has I think four different underground lines and the West London line, so it is a site of strategic importance.
340. MR CLARKSON: But it is still within their power to develop it, isn’t it, now?
341. MR CHUTE: Under adopted policy.
342. MR CLARKSON: Under policy, yes. No. No. Under legislation.
343. MR CHUTE: Surely subject to obtaining planning consent.
344. MR CLARKSON: Well, of course, yes.
345. MR FLELLO: Just a couple of points that Mr Clarkson in his questioning has made me think about. In terms of the powers that TfL already have - and please clarify this for me - is your concern that TfL may already have all these powers and indeed has used them so far with Earls Court, but that clearly there is something different, otherwise TfL would not have bothered to bring this Bill forward because if they already had enough powers then they would not be sitting here now and that the something different that you are concerned about is basically around clause 5? Your around clause 5 are that you think they have been bad enough already with the powers they have and this will make them worse. The manuscript amendment to the version I have in front of me talks about TfL "may, with the consent of the Secretary of State" that still does not give enough overview, enough ability to scrutinise what TfL are doing, to give you comfort with this clause. Have I understood what you have said this afternoon?
MS WADE: Yes.
346. MS HARDWICK: Yes, I think that is it in a nutshell, but I would like to say that I do appreciate that TfL to have budgets cuts and they have to look for funding. I understand that. I am not saying that there should not be any development at all. I am just saying that, when the developments are undertaken and the agreements are signed, personally I do not think a limited partnership should be on the table for TfL for the various reasons that have been given, but I realise that they have to find funding.
347. CHAIR: Are there any further questions? No. Well, thank you very much indeed for your evidence and we are going to move on.
348. I am going to call Richard Osband to present his petition. I would just say to everybody we have been through quite a lot of evidence. If you repeat it I will call you to order because we have heard the evidence.
MR OSBAND: Can I start?
CHAIR: Yes, please, Mr Osband.
349. MR OSBAND: Thank you. I am Richard Osband. I was going to read my petition out but, as it is on the public record, I think I will save time and take it as read. Is that okay?
CHAIR: Yes, please.
MR OSBAND: What I have given you is a short presentation of things I would like to get on to the public record. I did propose an amendment to TfL and I think they were a little upset that I haven’t just accept it, since they followed my suggestions, but I hope to address the reasons why I have not accepted it in the present form in my paper. It doesn’t mean that I do not think the amendment was helpful. I do. I just don’t think it goes far enough. I only believe in one thing and that is the facts as I see them and I also, having as a layman looked at the Bill - I have given you marked-up copies of the Bill showing how the Bill affects the Greater London Authority Act and when I looked through the marked-up Bill I just thought, as a layman, that there were drafting problems and I noted that counsel for RMT also think there are serious problems with the legal wording of the Bill.
350. Now, the second part of my presentation may be a little dry but it is just my observations that I saw when I looked through the GLA Act and I think we all, as laypeople, should be able to look at the law of the land and see what we see and make our comments accordingly. I would say it is pretty poor show that legislation.gov.uk, the Government’s own website, holds out of date versions of the law. I know ignorance of the law is no excuse for not obeying the law, but when the law is not accurate on the Government’s own website it is a dire state of affairs. If Westlaw, who have been providing up-to-date versions of the law to Transport for London, can get it right and can afford to get it right, I would have thought Her Majesty’s Government should get it right as well. So I just wanted to make that general point.
351. Anyway, I will get on with my presentation on the proposed amendment and my locus standi, and my locus standi is that of somebody that owns a freehold home absolutely adjacent the development. This may be a little dry but I just want to get it on the record. The proposed amendment to 156(1)(a) adds "with the consent of the Secretary of State added in hand on the filled-up Bill". The proposed amendment is silent as to whether the consent would be granted by means of a consent order, which is a statutory instrument, or in writing. Transport for London would have the choice and would be likely to opt for consent in writing. An order is a statutory instrument, which would be tabled properly in Parliament and MPs would have the right to object to it. Public notice would have to be given and I would have the right to ask my MP to object to the new statutory instrument being passed into law and to seek a judicial review on many grounds after the statutory instrument becomes law. Secretary of State consent in writing is in secret.
352. Please note in the documents I have provided is an email chain between me and Transport for London’s general counsel, the last email dated 22 December 2014, enclosing an up-to-date version of section 163 of the Greater London Authority Act - and, as I said before, the version of section 163 on the legislation.gov.uk website is out of date - and also sending to me a copy of the letter noting the Secretary of State’s Section 163 of the Greater London Authority Act approval for the Earls Court project leases, together with Transport for London’s application letter. I have provided the email application letter and Secretary of State’s approval-in-writing to the Committee as proof of the difficulty of getting a copy of Secretary of State consent in writing out of Transport for London.
353. By way of contrast only, I have provided the Committee with a copy of statutory instrument 2000/2128: Transport for London (Disposal of Lots Road Power Station) (Consent) 2000, so that the Committee can be in no doubt as to the difference between consent in writing and consent by order. Chalk and cheese - nothing like each other.
354. In order to extract the consent in writing from Transport for London I had to look at the two new leases, separate new leases for EC1 and EC2, and explain to Transport for London why section 163 consent was needed both for the EC1 lease and the EC2 lease and demand confirmation that consent was granted or if Transport for London may have been in default. It is my opinion that Transport for London are in default to the need to get 163 consent in writing for the EC1 lease, although they got it for the EC2 lease.
355. It should be noted that the Transport for London Bill sought to remove the need for 163 consent altogether and this clause was defeated by an earlier petition to the House of Lords. Had the need for 163 consent been removed by the Bill, Transport for London would have been able to self-certify whether land was needed for operational use. The Office of Rail Regulation - ORR as it is known - performs the vital function of certification where the land is required for operational use for Network Rail through a public consultation and publishes the consultation in full on its website. The Department of Transport for London, a branch of the Department of Transport, provides a similar function to the ORR for Transport for London but in secret as required by section 163. It is remarkable the extent to which Transport for London wanted to go through this Bill to put itself at risk by self-certification to get control of this land for properly development.
356. If Secretary of State consent under the proposed 156(1)(a) were to be in writing, that is in secret, and not by order then the Earls Court Development Agreements could be amended in secret with no opportunity for me to object - I would not even know that it was happening - to allow a limited partnership to become the developer of the land next to my home with the risk that the development would then be undertaken by a limited partnership, which by its nature has no covenant strength, since the covenant strength is that of the general partner, which can clone itself into a new company or companies by appointing a new general partner and then resigning. The new general partner could be domiciled anywhere in the world under the terms intrinsically part of any secret partnership agreement and then I say, "See the template partnership agreement that I have provided".
357. The secrecy of limited partnership agreements is confirmed by Councillor Guy Vincent, formerly senior partner of Bircham Dyson Bell, before he resigned from BDB to concentrate full-time on reviewing the property development contracts entered into by the London Borough of Hammersmith and Fulham under the Tories. In his email to me on 18 December 2014, which I have provided to the Committee, he says, "At your request", that is at my request, "I have been finding out whether LBHF had sight of the partnership agreement between the members of the limited partnership that became the development vehicle for the Earls Court project". That is the part of the project on the freehold owned by the London Borough of Hammersmith and Fulham, and myself as a freeholder as it happens.
358. "By the nature of such a document it is confidential" - and this is an expert. This is a guy who is a corporate lawyer and a past senior partner of one of our largest firms. "By the nature of such a document it is confidential", that is the partnership agreement, "and not publicly available. My investigations show that neither the London Borough of Hammersmith and Fulham or their professional advisors saw this document." The professional advisors were their lawyers and their accountants. Neither saw the documents. They didn’t know. They didn’t have a clue who they were signing up with and one thing I want to say about limited partnerships, because they are secret, is that they are a two-horse race. They are both a Trojan horse, because you don’t know who is inside them eventually - it could be these dodgy characters from Hong Kong, it could be anybody eventually - and it is a stalking horse because it may start looking perfectly innocent and then down the line these dodgy characters suddenly emerge as partners.
359. If the development is to go ahead next to my home it is reasonable for me to expect a substantial and transparent covenant to undertake it to mitigate the health and safety risk to my health and that of my wife. That is why I believe the other petitioners are totally correct in drawing attention to the health risks, because the problem is: do you want a tuppenny-ha’penny entity dealing with these massive projects that have huge potential health consequences if they go wrong or do you want an entity that you can sue if, God forbid, something disastrous happens? I say you want something substantial to sue and in a limited partnership you don’t have it. Now, getting back to my text - that of my wife, of a cowboy developer, that is a tuppenny-ha’penny company, cutting costs to maximise profits because he has nothing to lose but the bank’s money and a bit of seed capital.
360. There is also a risk of blight to the value of my freehold home of having a freehold home next to derelict land that could be subject to legal disputes and become a political football for years if a development goes bust. Actually, it has been a political football for years. I still can’t sell my home because we still don’t know the outcome. There was one deal with me under the Tories. There is another deal in the wings under Labour. This whole thing started in 2009 and I still can’t sell my home. So it is a political football. These are politically motivated developments. Okay, they have to happen. No problem, but let’s get a good covenant; somebody you can sue to be the eventual developer.
361. There is no way that consent by way of letter is sufficient. The amendment needs to be improved so that Secretary of State consent is only by way of consent order, which is a statutory instrument. I am not against some sort of mitigation. My legal analysis of the Bill, which follows, makes it clear that the integrity of the GLA Act would be best served by having clause 5 removed. My considered advice to the Opposed Bill Committee is to remove clause 5 and, very much as a second best, to make sure Secretary of State consent is by way of a proper consent order.
362. Now, on the legal wording of clause 5, I am not a lawyer, but I had a go. I marked up the GLA Act and I had a look at it and I am just going to read it out. I am sure RMT, who have been informed by counsel’s opinion, will make a much better go of this but I am going to read it out anyway for the record, even if the -
363. MR CLARKSON: Can I just interrupt to help, if may? We have the clause 157 with the proposed Bill amendments in it. It might help if the Committee had that in front of them. Has that been circulated?
364. MR OSBAND: Yes. TfL have circulated it, yes.
365. MR CLARKSON: You have had it, have you, Mr Osband?
366. MR OSBAND: I have had it but I did my own mark up anyway. It was only after I did my mark up and submitted it to the Committee that TfL did theirs. In the document I have also cut and pasted from my mark up because it is absolutely vital that this is not a self-contained Bill. This is a Bill that amends the Greater London Authority Act. You need to see the words that don’t really mean much when you look at the Bill in the context of the GLA Act. This is just my layman’s go at having a look at it and seeing what I see.
367. I am going to read this quite quickly because it is a bit dry, "There are specific problems with the drafting of clause 5 in the Bill and I have provided in my document pack marked-up copies of the relevant sections, which show the new insertions into the Greater London Authority Act 1999 in red with deletions struck out. Not being a legal person, a registered limited partnership may not carry on any activities at all, let alone any activities that Transport for London has power to carry on. The general partner of a limited partnership, being a legal person - that is a person like you or me - or a company or a limited liability partnership could carry on activities but not a limited partnership itself". It does not exist, not really, "A limited partnership so registered for the purpose of carrying on any activities which Transport for London has the power to carry on is an absolutely absurd concept".
368. How it appears in the Bill I don’t know, "A limited partnership can only act by means of its general partner and the Transport for London Bill does not spell this out. To make sense of clause 5 you would have to change ‘(b) promote and assist or join with any other person in promoting and assisting a limited partnership so registered’ to ‘(b) promote and assist or join with any other person in promoting and assisting a general partner of a limited partnership so registered’". Not the partnership itself but the general partner, which is the entity that can act. A limited partnership can’t do anything. Only a general partner can do something, carry out an activity. So, the insertion of ‘a general partner of a’, being my suggested change to make sense to make sense of clause 5.
369. The new clause 156(1)(a) provides as follows, "When (a) Transport for London may, with the consent of the Secretary of State", and we have added "with the consent of the Secretary of State" and I want that further mitigated by saying it should be by means of order not by means of writing, "(a) join with any other person in forming a limited partnership registered as such under the Limited Partnership Act 1907 by becoming a partner, whether limited or general, within the meaning of the Act to the limited partnership, and (b) promote and assist or join with any other person in promoting and assisting a limited partnership so registered for the purpose of carrying on any activities which Transport for London have power to carry on".
370. The amended clause 156(5) - additions in red - provides as follows, "Where (a) a company or partnership has been formed in the exercise of the powers conferred by subsection (1) or (1)(a) above, whether by Transport for London alone or by Transport for London jointly with some other person, or (b) Transport for London has entered into an agreement with any person in exercise of its powers under subsection (2) or (3) above, Transport for London may enter into arrangements with that company, partnership", here we have the partnership again, "or person for the transfer from Transport for London to that company, partnership or person in such manner and on such terms, including payments by any other parties to the arrangements to any of the other parties as may be provided for by the arrangements of any property rights or liabilities of Transport for London relevant to the purpose for which the company or partnership was formed, as the case may be, for the performance by that person of its obligations under the agreement".
371. Well, you called it a partnership in one line and then in the next you are saying "to the performance by that person". Person is not partnership, certainly not a limited partnership.
372. The amended 156(5) is incapable of being obeyed. A partnership is not a person like you or me, so how can "relevant to the purpose for which the company or partnership was formed, as the case may be, to the performance by that person of its obligations under the agreement" make any sense since the partnership cannot be that person; certainly not a limited partnership. Transport for London may not enter into arrangements with that partnership since a partnership is incapable of entering arrangements. A partnership cannot enter arrangements because it is not a legal person. If it were not a limited partnership, it would be the partners collectively that could enter as individuals. With a limited partnership it is through the general partner.
373. The amended 157(1) provides as follows, "Restriction on exercise of certain powers except through a company. (1) The Secretary of State may by order made with the consent of the Treasury provide that Transport for London shall not carry on such activities as are specified in the order except through (a) a limited liability partnership", a new insertion, "or a limited partnership", there we go again, a non-person, "which is a subsidiary of Transport for London but not Transport for London, is respectively a member or partner; or (b) which is registered under the Companies Act 2006 and limited by shares or limited by a guarantee and which is (i) a subsidiary of Transport for London; or (ii) a company which Transport for London formed, or joined with others in forming, by virtue of section 156(1) above and which does not fall within paragraph (a) above".
374. 157(1) does not restrict the holding company, Transport for London, from carrying on any activities except through the undertakings defined in 157". I call those "the 157 undertakings", Unless those 157 undertakings carry on activities specified in the Secretary of State order, which is a statutory instrument, the statutory instrument - and this is where clause 6 links in with clause 5; you can’t totally ignore clause 6 - is SI 2000/1548 - you all have it in your packs certainly from me and in part from Transport for London - the Transport for London Specified Activities Order 2000, which, as amended by the Bill, provides its new paragraph 3 as follows, "(3) Transport for London shall not carry on any specified activity except through (a) a limited liability partnership of which a subsidiary of Transport for London, but not Transport for London, is a member; (b) a limited partnership of which a subsidiary of Transport for London, but not Transport for London, is a partner; (c) a company which is registered under the Companies Act 2006 and limited by shares or limited by guarantee and which is (i) a subsidiary of Transport for London; or (ii) a company which Transport for London formed or joined with others in forming by virtue of section 156(i) of the 1999 Act and which does not fall within subparagraph (i) of this paragraph".
375. A limited partnership cannot be a 157 undertaking and cannot carry out activities since it is not a legal person. Likewise, a limited partnership cannot be an undertaking for the purpose of 3(b), Statutory Instrument 2000/1548. This is 15(2), which I am going to come on to later, of section 29 of schedule 11. Please remember 15(2) of section 29 of schedule 11 because you will see later that is actually the power of Transport for London to carry out property developments and that is a very important clause. Section 29 of schedule 11 provides, "If Transport for London engages, either directly or through a subsidiary, in any activities authorised by paragraph 11", that is the right, by the way, to form a taxi business, which I don’t think we need to worry about, "or 15(2) or (3) above, it shall, in carrying on those activities, act as if it were a company engaged in a commercial enterprise", remember those words, "or, as the case may be, shall exercise its control over that subsidiary so as to ensure that the subsidiary, in carrying on those activities, acts as a company so engaged".
376. A company mind you, "If it is lawful for Transport for London to carry on activities authorised by 15(2) or (3), which is the activity of property development, by means of a subsidiary undertaking which is a partner of a limited partnership then Transport for London will be in default of section 9 of schedule 11 since Transport for London’s subsidiary undertaking, which is a general partner or limited partner, cannot carry on activities as if it were a company in a commercial enterprises since the subsidiary undertaking is bound by the partnership agreement". This is the secret partnership agreement that I mentioned earlier, which takes the sovereignty of decision making outside of TfL, "Transport for London cannot, as required by section 29, ensure that the subsidiary, in carrying on those activities", that is property development, "acts as a company so engaged", because it has lost control of them once it goes into a limited partnership; totally lost control.
377. Paragraph 15(2) of schedule 11 is the function that allows Transport for London to develop its land. 15(2) provides, "Transport for London may in particular (a) develop for use by other persons land belonging to Transport for London which is not required for the purpose of the discharge by Transport for London of any of its functions; and (b) where the use of Transport for London’s land for the purposes of the discharge of any of its functions can be combined with its use by any other persons, develop the land by constructing or adapting buildings on it for use wholly or partly for other persons with a view to disposal of any right or interest in the land or, as the case may be, the buildings or part of the buildings after the development is carried out".
378. So you have two scenarios. It can develop land that is no longer required for the carrying out of its functions or it can be a kind of hybrid under (b) where it can be combined, as you have in Earls Court. You are rebuilding parts of Earls Court for stabling for the train services and other parts of it will be developable. That is all fine under this schedule 11, 15(2), "A limited partnership cannot act as if it were a company as required by section 29 of schedule 11, because a company is a legal person with self-sufficient covenant strength", a limited partnership is not and has no self-sufficient covenant strength, "of a general partner which can be replaced according to the rules of a secret partnership agreement".
379. This is a very important point because I am going to suggest one further mitigation as a minimum. Personally I would strike it altogether, Schedule 11, paragraph 15(2) - this is the property development function is not, as I originally thought until a few days ago when I actually read it - and you have to read these things in marked-up form - a specified activity under statutory instrument 2000/1548 and, therefore, the Greater London Authority Act, section 157(1)(a) and 157(1)(b) would not apply to property development and the Bill as presently drafted will enable Transport for London directly - that is itself, the holding company, the main Transport for London, not by means of a subsidiary - to enter a limited partnership as general or limited partner. The Bill enables TfL to bust itself by assuming intentionally or unintentionally general partner and limited liability. This would not be expedient; not at all.
380. You can say, "Well, they wouldn’t, would they?" They wouldn’t, no, but then if you look at - RMT are going to deal with this - the counsel’s advice, there is something called vertical liability that I am not an expert on. I always thought, if you have a limited company performing something for you then you, as the holding company, are not responsible, are you? You are protected. The company is liable but not the parent company itself or the holding company. If a subsidiary undertaking goes bust and has debts I probably would be all right, wouldn’t I? RMT are going to present this case and, as I say, I don’t really know the ins and outs, but there is a concept here of vertical liability; that if the company is set up in the wrong way or is a sham company then TfL could end up with unlimited liability and I would suggest the fact that schedule 11, paragraph 15(2) is not a specified activity under statutory instrument 2000, making it clear that property development has to go through a subsidiary, this opens the channel of vertical liability. You do not have that protection that you could turn around and say, "Well, there is no way TfL itself could property develop". Yes, it can. I suggest when RMT speak that you look very closely at this concept of vertical liability.
381. I think that is it for now, but if there are any questions or any thoughts. The other thing I am not sure about is, when Mr Flello asked about who would pay the bills, I think TfL answered, "Well, don’t worry". If the limited partnership is wound up or if it goes bust or if it is insolvent could the Inland Revenue get its hands on some of the assets?" I know we have two former HMRC tax inspectors with us as members of the Committee today, so I was very pleased to see this. Would the Government get its money if it was owed tax by a limited partnership or the general partner of a limited partnership? I think you could whistle for it. I do not think you have a hope in hell of getting it; not a hope in hell.
382. I do think the previous petitioners had absolutely solid stuff that they gave to the Committee and the point is it is not only how a limited partnership works with TfL. It is its face to the public. It is its responsibility for public health. I would not want Richard Osband Limited or Robert Flello Limited or any minor company taking on the Earls Court development as a limited partner. I would not want this demolition being handled by a limited partnership with all the asbestos you have heard about and whatever, but which is the company in Transport for London and which is the entity that, under the demolition contract, has responsibility to remove all this asbestos? It is the limited partnership or the general partner of the limited partnership, so they have already done. They already have exposed me and here is my locus standi.
383. I am going to potentially get this asbestos dust. If I get asbestos poisoning, okay, I can sue the joint venture company but then what guarantees does the joint venture company itself from the asbestos removal company, which is this kind of limited partnership entity. There are already very substantial health risks through not having a proper covenant. There is a covenant but it is the general partner and we all know that the general partner is set up to have - and all the documents say that - a £2 company or a £5 company and there is nothing to sue if anything goes wrong. I do think that all the previous petitioners have been absolutely spot on in drawing the attention of the Committee to risks to the public of having poor covenants involved in carrying out major infrastructure works. I would not let a corner shop, and I am in the property business, to a limited partnership acting through a GP; no way. That is all I wanted to say.
384. CHAIR: Thank you very much indeed. Because you have no witnesses, we do not do questioning.
MR OSBAND: Okay.
CHAIR: But, given that we have been given quite a lot of legal advice - and Mr Osband has worked extremely hard on that - perhaps when you have the chance to sum up you will be able to address some of those.
MR OSBAND: I will deal with it in closing.
385. CHAIR: Thank you so much. I call Steve Hedley on behalf of the RMT to present that body’s petition. Thank you, Mr Osband.
386. Mr Hedley.
387. MR HEDLEY: Thank you, Chair. We have given you a written opinion from our solicitor, who is a specialist in corporate structure, and we did seek such a person because we thought it was important to explore the avenue of unlimited liability and would this be mitigated in this Bill; could they, if something went wrong with one of these projects, seek redress from TfL and, if so, how much money would TfL be likely to cough up. The opinion we were given was quite unambiguous. I am not going to refer you to it all because it is a matter of record but point 16, which is on page 4, I will just read out for the record, "As such, TfL takes either a role as a general partner or performs such a role even though it is designated and registered as a limited partner. It will incur unlimited liability for the debts of any limited partnership joint venture. The only limitations to such liability would be for the value or limit of the claim - liability in each case and that TfL is itself a corporate body such that liability cannot extend beyond the values of its assets. The latter point is of no real comfort given that the liability in these circumstances would extend to the value of TfL, the very issue that the RMT is concerned by".
388. Basically what it is saying there is if you formed one of these limited partnerships - and there is a question that Mr Osband expounded on at length, the legality of that anyway: if a limited partnership could be a person and, therefore, could act legally in this, but we are taking the overview. If you did go ahead with this then the company TfL, because their main business is transport and not property development, even if they set up a limited partnership, the money could be traced back. If something went wrong with that partnership the money could be traced back to the parent company, which is TfL, and TfL could be held responsible for the entire amount, especially when we look at some of the partners that are on show here that have set up £1 companies in the Channel Islands. If something goes wrong with one of these property developments - if, for example, asbestos is released into the atmosphere and a lot of people are putting in claims - they are not going to be able to satisfy those claims by claiming it from this company registered in the Channel Islands that has £1 or £5 in the bank, so they would naturally go to TfL and that is something that worries us.
389. We understand that TfL are under pressure from the Government to cut their budgets and we understand they are tempted by a quick fix, which is through the property developers, but I have to say that our experience is that while property development was in in Central London no property developers seem to have been deterred from going into Earls Court and that was not a limited partnership arrangement. What it does mean is that you will be tempting property developers in who want a quick fix and do not want to pay tax in the United Kingdom, who register these companies in the Channel Islands and do not want to pay money into the British Exchequer. I think as a public body TfL, if not having a legal duty, certainly have a moral duty to ensure that any money that is made out of this is paid into the British Exchequer. It is the taxpayer footing the bill for TfL after all.
390. There are a few points that we want to make. Obviously, if I understand you, we are not producing witnesses, so you can question us, but the lawyer is available to clarify any of the points that he has put forward in his written submission. He is available either on the phone now or he will answer them by email or in writing afterwards.
391. We not opposed at all to an in-house building programme from TfL. What we are concerned about is that this might undermine the provision for transport. We have an exponential rise of the number of people in London and the number of people forecast to come in and use the tube and we believe it is going to be absolutely essential that the buildings and infrastructure that are there and the land adjacent to that are going to be used for the purposes of transport. We have already had property transferred to the developers that are currently used for transport services and that is specifically the stabling void at Earls Court, so we have an interest in that. We think that TfL’s interaction with private companies must be transparent and ethical and I think, again, Mr Osband explained why that is not the case in limited partnerships. It does have to be either transparent or ethical, as we have seen.
392. TfL’s recent involvement in the development at Earls Court was via a company based in the Channel Islands, which I have already mentioned. If there is a test and people are scrutinised for them to be a fit and proper person to take part in these limited partnerships, how did this company slip through the net? If there is a test it is obviously not stringent enough if we are gambling the TfL money, which is public money, on a company that obviously is registered in the Channel Islands, which does not have the facilities to pay any liability when it is registered for £5. We think this is a high-risk venture with TfL. In effect it is gambling with the money because they will pick up the tab in any case if the partnership goes bust.
393. We think they are trying to enter these limited partnerships for the purpose of attracting, in the short term, property developers, especially foreign investors, who want to avoid paying tax here and who want to maximise the profit. Again, I will make the point that most of these TfL sites are in prime sites beside tube stations in Central London. They should have absolutely no problem whatsoever in getting investors to invest in that land and development. To buy a flat or a house in Earls Court or the surrounding area or near any tube station is not going to be a difficult thing to do. The only reason they are trying to do this is they can make more cash out of it by avoiding tax and the developers will also avoid tax. That is the only reason they are trying to push this limited partnership model.
394. The TfL have amended their Bill to include a provision from the Secretary of State would have to approve engaging in a limited partnership. This is welcome. It recognises that there are particular risks with this model, but I do not think it goes far enough, as has already been pointed out and I do not want to repeat. We do not have any examples of local authorities, for example, using this limited partnership. They have opted for limited liability partnerships. If TfL wanted to press ahead with this - they already have the power to set up these limited liability partnerships - why don’t they do that, because then they are not risking the public’s money in a cavalier fashion? They already have the power to do that. Why is there a need to bring in this Bill, especially clause 5, which gives them the ability to set up limited partnerships?
395. A limited partner cannot participate in the management or the business of the partnership business. If a limited partner does participate in the management of the partnership of the business either directly or indirectly he will be liable for all the debts and obligations of the limited partnership while that participation continues. This is based on 6 and 6.1 of the 1907 Act. In this situation liability would extend to the entire value of TfL. TfL will retain an interest in the land and it is interested in transfers of property developers. As a freeholder of the land, as the operator of a site in use for transport facilities, it could easily be found to be involved in the management and partnership business and this is exactly the point that the property developers will be making if anything does go wrong because how can they be said not to be involved in the management when, by the nature of the business, they will have restrictions on who can enter that land and at what times they can enter that land. So TfL are leaving themselves open for massive liabilities up to the entire value of TfL if they pursue this.
396. Even if TfL were to set up a subsidiary company, it may retain liability through a concept known as vertical liability. This is quite a technical thing, but if it said up a subsidiary somebody suing TfL could follow that up the chain. They could say, "Well, you have set up this subsidiary company. It is not your main area of business". It is a term known as piercing the corporate veil. They have said, "Well, you set this up. It is not in your actual power to set this up. This company has exceeded the power of TfL and the legal obligations of TfL. Therefore, we can not only sue that company but, if that company does not have the assets to cover it, we can sue TfL as well". This was the advice that we have been given by our solicitor.
397. Basically the advice is that TfL would be acting outside its powers in any arrangement via a subsidiary company and this could be found to be a sham. This will allow claimants to look behind the corporate veil structure and sue TfL to the limit of the total assets of TfL. It is a massive gamble. If you have limited liability partnerships already at the minute, what is the point in having this offer to gamble recklessly with taxpayers’ money?
398. I have to say, TfL’s involvement in the past with private companies is very troubling. If you look at the tube with the public private partnership that was part of a company called Metronet, which was a conglomerate of people like Amec, Amey and Tarmac, none of these companies picked up the bill when Metronet went bust but the taxpayer picked up the bill through TfL to the tune of £8 billion. When another subsidiary, Tube Lines, went bust there was not sufficient attention paid to the contracts that the parent companies involved in Tube Lines picked up the bill. Again, that was picked up by the taxpayer. So TfL do not have a good history and they do not have a good record in these investments and in ensuring that public money is thoroughly safeguarded. While the operator of London Underground remained publicly owned, the maintenance and, crucially, the rails programme fell into private hands and basically the private companies avoided all responsibility and that came back to the taxpayer.
399. It is our view that clause 5 of this Bill - and this is supported by a lawyer’s opinion - will leave TfL open beyond limited liability and therefore the taxpayer, because TfL is a public body, is open beyond limited liability. We think that the clause should be removed from the Bill as TfL already, through limited liability partnerships, participate in this sort of action.
400. One final thing, if we took a contrary position and everything turned out the way TfL envisages it happening, we would find it very difficult, as a trade union, to negotiate for our members in sites like Lillie Bridge. This is going completely contrary to the arguments we have been putting forward so far, but if it worked out in the opposite direction TfL could say, "Look, we are in a limited partnership. We are not the controlling partner in this. Property Developments is the controlling partner". In specialist depots like Lillie Bridge that are absolutely essential to the running of central London in particular and the District Line and Piccadilly Line, we could see encroachments on the existing infrastructure there and any proposed expansion that we might need to do in the future to take in increased numbers. That is a possibility as well.
CHAIR: Mr Hedley, thank you very much indeed. Are there any questions for Mr Hedley? Otherwise we will move on to the next phase.
401. MR CLARKSON: Could I just clear up something? I have been passed a note. I missed it because I was looking at something else, so I say this in all innocence. I think it has just been said by Mr Hedley that Tube Lines went bust. Tube Lines did not go bust. TfL bought it and it was solvent at the time. Amey was a shareholder of Tube Lines, not Metronet. You may have heard that, but I am afraid I did not pick it up.
CHAIR: Well, you have a chance to put that on the record.
MR HEDLEY: Can I add?
402. CHAIR: No, you can’t. You jumped the gun there because I am about to call counsel on behalf of the promoter and the agent to reply to the petitioners and to sum up in relation to the whole Bill. I take this opportunity to remind counsel in summing up that the onus is on the promoter to prove the need for the rest of the Bill. The rest of the Bill seems fine so you need to prove the need for clause 5. One of the questions that I hope you will have a chance to cover is: is the consent in the Bill envisaged as per partnership or could it be a general power? You may choose to come to that at the end, but that is what we want to hear about.
403. MR CLARKSON: I have a view on that, but I hope somebody will pass me a note to make sure what I say is correct.
CHAIR: It might be helpful to get that ahead of the game.
MR CLARKSON: Yes. Thank you.
404. CHAIR: If you would like to sum up, that would be most helpful.
405. MR CLARKSON: Yes, Chairman. If I can do it in a way that tries to assist the Committee as much as possible by way of doing it in reverse order, because those matters that are fresh in the Committee’s minds will perhaps be more easily answered more shortly.
406. One has to be careful about the counsel’s opinion point, if I can call it that, that is put forward by Mr Hedley because, of course, that is only one counsel’s opinion in the sense that it does not have the opportunity to be formally challenged, discussed and debated in front of you. That is not a criticism of any substance. The point I would make is that what counsel is saying is that if there is a limited partnership with a general partner and a limited partner, the general partner is susceptible of unlimited liability. That may technically be right but it is not a reality. You do not need to hear from me on that because you can take into account the Treasury’s approach at 2.15 that recognises an SPV approach that allows vehicles to be created that do limit the liability of the general partner. The position ends up that that point is closed off.
407. CHAIR: Just to be that clear, you create a special purpose vehicle in order to limit the liability of the limited partnership?
408. MR CLARKSON: Yes, to manage the general -
CHAIR: The risk.
MR CLARKSON: Yes, exactly and the general partner element of the limited partnership.
409. CHAIR: So you create a limited amount of risk.
410. MR CLARKSON: Yes, through a second tier. As it is described by the Treasury, it is the second tier, "More complicated than other corporate entities as two agreements are needed, one JV agreement for the limited partnership and a second for the SPV limited company to manage the partnership". That is at 2.14 of the Treasury note.
411. The second point from RMT is the vertical liability. The point is being made that you have that limitation that the Chairman has just mentioned and there is a notional potential for vertical liability back to those who have created the company, or the SPV; let’s put it in neutral terms. As I understand it, Mr Hedley said only in circumstances where it has exceeded the power. The power is with TfL to enter into such arrangements and the approbation of the Treasury shows that those sorts of arrangements are appropriate. The corporate veil would not be lifted, there would not be a vertical liability, and so TfL exposure is not of any concern on that basis. Again, when one is looking at it in any way in the worst case scenario: what is the exposure of TfL if it was a general exposure and not covered by a SPV? It would be local. It would be local to the development exercise and it would not be a general nationwide liability or anything like that. It would be local to the consequences of the development if they were in some way found to be unacceptable.
412. The next point in response to RMT is the rather pejorative suggestion that this is in some way a device to avoid tax. Well, not so. TfL will always pay tax in these circumstances. But I do postulate this, and this is a rhetorical question: is it a reasonable approach for an RMT pension fund or any pension fund to seek to place itself in a position that allows it to maximise its revenue for its pensioners by taking advantage of the tax concessions there are for pension funds, or should they always be in a position where they should pay up?
413. ROBERT FLELLO: Mr Clarkson, that is a very interesting question that you put there, but can I just clarify, because I may have misheard, being distracted as I was by just reading 2.15 that says that the choice of vehicle is often driven by the tax advantages that are available. You have drawn my attention to 2.14 and the use of the SPV and I notice then that it talks about the choice of vehicle is often driven by tax advantages. But I may have misheard when you said that looking at limited partnerships was not necessarily about the tax angle on it, and yet I seem to remember one of your witnesses -
414. MR CLARKSON: I didn’t say that.
415. ROBERT FLELLO: I am glad you have clarified, because I seem to remember one of your witnesses saying on the Earls Court deal that £7 million could have been saved by avoiding stamp duty at a higher rate. So, just to clarify your point on tax.
416. MR CLARKSON: That is just stamp duty, but TfL pays other tax.
417. ROBERT FLELLO: I am sure it does. I may have misunderstood, but I thought the point you were trying to make was that this was not necessarily about avoiding tax. This was for other purposes.
418. MR CLARKSON: Not from TfL in the sense that the pension funds can avoid tax. That is the only distinction I am seeking to make.
419. ROBERT FLELLO: Apologies, I am still not quite clear. I thought your witness was quite categorical that from a TfL point of view by using an LP it has the ability to save TfL £7 million.
420. MR CLARKSON: That is on stamp duty on the transfer.
421. ROBERT FLELLO: Sure, but it is still a tax.
422. MR CLARKSON: Yes, of course it is. I don’t think we are comparing apples with pears. The pension funds’ advantages are much broader.
423. ROBERT FLELLO: So the investors’ tax position is the one you are concerned about and the fact that TfL would save £7 million is kind of a nice little bonus.
424. MR CLARKSON: Yes, exactly. The whole point of this exercise, and I hope the Honourable Member has understood it, is to place TfL in a position where they are market attractive. Market attractive means that a whole range of investors can be involved, not least pension funds to who it is very attractive because if it is a limited liability partnership they are taxable but if it is a limited partnership they are not. That is fundamental. That is very important.
425. ROBERT FLELLO: I have understood, because by drawing my attention to 2.14 about the two-tier arrangements and the further complication of using SPVs, you were leading me then on to the choice of vehicle is often driven by the tax advantages available for certain types of property investor.
426. MR CLARKSON: Yes, and pension funds.
427. ROBERT FLELLO: So it is all about making it as attractive as possible for the potential investor?
428. MR CLARKSON: Particularly because we see pension funds as good investors, and I am sure they are good investors. They are huge investors in property and, as you see, as Deloittes have told you, it is tax advantageous to be a member of an LP as opposed to an LLP.
ROBERT FLELLO: I interrupted your flow.
MR CLARKSON: That is all right. It is helpful, if I may say so. I think that is all I have to say for Mr Hedley. It is consent per partnership, to answer the Chairman’s question. I thought it was but, thank you.
429. May I go to Mr Osband’s paper? The only way I can answer this is to ask you to have, if you would, his paper in front of you. There are four headline points. It may be also useful for you to have in front of you our updated version of clause 5 that is before you with the amendments in two colours. The green amendment is the amendment carried over from the other place and the red amendment is the amendment proposed here. The only red amendment is the consent of the Secretary of State. Mr Osband wants the consent of the Secretary of State not to be done by written consent but to be done by order. Originally in the Act, there was a requirement I think it was that consent for sale had to be given via the order process. Things matured and went forward to the GLA Act of 2007 that amended that and said that the consent should be by writing, and we say this is consistent with that and appropriate in that form. It is not appropriate to go back to the more complex approach that was the product of the previous legislation that has now been changed.
430. Point 2 requires you to go to page 2 of Mr Osband’s submission. I am using what we have had today. I do not know if all the Committee have that. It is the last paragraph, and I can deal with it quite simply, "A limited partnership so registered for the purpose of carrying on any activities which Transport for London has the power to carry on is an absurd concept".
431. Just keep that in your minds if you would and go back to the general powers in the draft I have just given to you with the green and red on it. The concept of, "For the purpose of carrying on any activities which Transport for London has the power to carry on" is not just a follow-on from, "A limited partnership so registered". It is qualifying the whole of clause 1A, just as there is a similar term qualifying the underlying 156(1), "Assist, or join with any other person in forming, promoting and assisting a company, for the purpose of carrying on any activities". So the sentence that has been lifted is not really an accurate approach on the form of the Bill and 1A(a) and (b) are what the Secretary of State is going to consent to, "Joining with any other person in forming a limited partnership", et cetera, and "promote or assist", et cetera, "for the purpose of carrying on any activities that TfL has power to carry on". So I leave that.
432. Forward two pages where you see at the bottom of the page a paragraph beginning "section 29 of schedule 11". I hope the Committee has that. He quotes from it and I will read it. I will just make sure it is right as I go through it, "Transport for London engages, either directly or through a subsidiary, in any activities authorised by paragraph 11 or 15(2)". That is vehicles for hire and land. "It shall, in carrying on those activities, act as if it were a company engaged in a commercial enterprise or, as the case may be, shall exercise its control over that subsidiary so as to ensure that subsidiary in carrying out those activities acts as a company so engaged".
433. Earlier on - and you need not have a copy of it but it is a matter of relevance - is schedule 11, paragraph 25, "For the purposes of discharging any of its functions, Transport for London may subscribe for or acquire any securities of a body corporate". There is understood in the schedule the concept of a body corporate and here, in paragraph 29 of schedule 11, the concept of a company. What is required is TfL in those circumstances should act "as if". That is a steer towards TfL conducting itself in a way that may make a profit, so it defends TfL making a profit as if it were a company. All that does is allows TfL to undertake its activities in a company manner. That is all it is.
434. The last point is the last paragraph, "Schedule 11, paragraph 15(2), is not a specified activity under statutory instrument 2000". No it is not but in 15(1), which is the basis of that paragraph, "Transport for London may develop its land in such a manner as it thinks fit", that is a specified activity, so the point is not, with respect, a good one.
435. I move from that, if I may, unless I can help anymore. I do not think there is any need for me to emphasise any more, other than briefly to say that TfL may now develop and sell its land. If it is operational land the Secretary of State is involved; if it is surplus land the Mayor is involved. But there is power now and so any suggestion that Earls Court, for example, is something that is inappropriate is just simply not right. They can do it already.
436. May I deal with the concept of fit and proper person and remind you of section 156, of which you have the amended version in front of you, the underlying public general legislation that we are seeking to amend, "Transport for London may form, promote and assist with any other person". So it is not confined to a fit and proper person.
437. Next, it is inevitable and obvious common sense that any contract for the sale of land or development contract is going to be subject to due diligence in the usual way, so a fit and proper person concept is perhaps redundant. It is extremely difficult to define, because I have no doubt whatsoever in a subject test most people will say that the counsel for the promoter was not a fit and proper person, but that may not be wholly fair. There is no objective test, but rest assured that there is always supervision by the board that has lay members on it and so the TfL board is also supervisory of this in any event. We do not suggest that it is appropriate to introduce fit and proper person because in any event it would look extremely odd set against the underlying section 156(1).
438. The last point I would make, if I may, and it is just running through - I am not going to go into any detail - the headline approach of the point that I put, I hope not unfairly, in cross-examination: the planning system qualifies everything that TfL will do as a limited partnership, a limited liability partnership or a full corporate structure. They are no different to an individual developer, any company, any partnership. They are no different in that they have to seek planning approval and they have to comply with the planning condition section 106 agreements arising. It is not unusual, of course, and Honourable Members will know this, for a highway authority and a planning authority to be under the same umbrella. That happens in unitary authorities all over the country and it works. We say it is wholly appropriate that this should be treated as the planning test, the planning constraint that means TfL are not unconstrained, backed up by enforcement procedure, backed up by judicial review if necessary.
439. I say with some diffidence that Earls Court is not really relevant, because that is going forward on a different basis in any event. It may be that there are concerns with the residents. They have all had an opportunity in the planning system to state their view. They may have concerns with the decisions that were taken, but it is not fair to say on Earls Court that it is genuinely an objection to it being a limited partnership, having limited partnership powers granted by clause 5. Of course TfL are running transport in London but they also have a very substantial estate that they have an opportunity and power now already to regenerate. Regeneration is the sine qua non of every approach in London at the moment because there is a dire shortage of development land and a dire shortage of housing. Matters such as affordable housing are for the planning authorities to impose. At the end of the day, what is achieved is an opportunity via clause 5 for more commercially beneficial terms to be achieved by TfL on sites unspecified so that TfL, their travellers, Londoners, can be advantaged financially and the Government objectives as to reducing the burden on the Exchequer can be achieved.
440. That is all I have to say unless there are any questions. Thank you very much.
CHAIR: Thank you very much. Are there any questions from the Committee?
ROBERT FLELLO: I think we have heard enough.
441. CHAIR: That is splendid. In that case, the Committee will now go into private session to consider the cases it has heard. I will ask that the parties and members of the public do now withdraw but with my grateful thanks for the hard work you have all put in and for the orderly way we have all behaved. Thank you very much.
Private session 6:27:01 pm - 7.19:55 pm
442. CHAIR: Apparently we have to agree the preamble. First of all, on behalf of the whole Committee, thank you all very much indeed for coming and presenting your evidence to us. We have made a decision. We have amended clause 5. The Bill has passed this stage in its journey but clause 5 has been amended so that the Secretary of State's consent is on an order under the affirmative resolution procedure, laid before both Houses in draft with potential dehybridisation measures required. What that means is that if TfL wants to go into one of these agreements, it must say who it is trying to agree with. That will be a name on the Statutory Instrument that then goes to Committee in this House. This will give, we believe, more transparency and more opportunity for accountability. That is the decision of the Committee. Order, order.
443. THE CLERK: We must have proof of the preamble.
444. CHAIR: Elizabeth Martin, is the preamble true?
MR CLARKSON: May I just pause for a moment?
CHAIR: You may.
MR CLARKSON: I am sorry. There is a logistical - would you explain it?
445. MR COLLINGS: Sorry. Stephen Collings, the Agent for the Bill. Having heard your decision, on behalf of TfL we would like an opportunity to just think about this amongst ourselves because obviously the requirement for an affirmative resolution is quite a significant requirement. We would like to think that through, if that is possible.
CHAIR: That is absolutely fine. But your preamble probably is still true?
MR COLLINGS: Yes.
446. CHAIR: Do you want to just agree this and then think about it? The Bill is going to go to its next stage now anyway, unless you withdraw it.
MR CLARKSON: I am sorry.
CHAIR: That is fine. Take your time.
447. MR CLARKSON: The difficulty with the short point on the affirmative order is it may translate back to a number of other issues that could cause complications, which I think it is only prudent for us to examine and think through. I hope that is not in any way the wrong approach. We are just trying to get it right so that, if necessary, we can explain to the Committee, "We may have to do this or that".
CHAIR: Please take your time.
448. MR HEDLEY: I do not understand what is going on here. I thought the Committee had given their decision. Are you now trying to amend that decision?
449. CHAIR: Just to clarify, the situation is the Committee has made its decision. It is a requirement that we agree the preamble. The options available to TfL are to withdraw their Bill, to have a chat about it, or to decide what they do at the next stage. It is up to them. The Committee has made its decision and that is that so I am only waiting, out of courtesy, to agree the preamble and then I am going. That has hopefully clarified.
450. MS HARDWICK: Would you, at the end, tell us what the next stage is, whether it goes to a third reading or however it works?
451. CHAIR: Yes.
452. MS HARDWICK: Thank you very much. That is most helpful.
453. CHAIR: It goes to its report stage and then third reading.
454. MR CLARKSON: Apologies. We have thought it through and I have taken instructions, and we would like the preamble approved.
455. CHAIR: Okay. Elizabeth Martin, is it true? Is the preamble true?
456. MS MARTIN: It is.
CHAIR: Thank you very much.
Documents and references submitted by those in attendance:
Jocelyn Mary Bell
Statement submitted (brief extracts – full document here).
Thank you for the opportunity to present my petition to the Private Bill Committee. I appreciate it very much. My points will be evidence based.
My own concerns regarding Clause 5 are documented in my petition – they pertain to public health and wellbeing impacts across a range of causal factors, of which all are implicated by Clause 5.
I also have specific concerns for family members because we have a family history of asthma – although I did not suffer from it until neuro-immune & lung damage in 2006.
I also have concerns with respect to the nature of developments which may ensue from this Bill and the manner in which they may be implemented; the increasing lack of affordable homes also being a key point in this context.
I have a strong background in working with the public sector – including advising on legislation.
I am an Expert Patient, a Member of the Royal Society of Public Health, Senior Associate of the Royal Society of Medicine and the Chair of SHA London. With the evidence I have prepared - the fundamental questions I have sought to address are:
1. Why seek to block effective public scrutiny and accountability where the affairs of a public body are concerned?
2. Can we trust TfL to act responsibly ie in line with other pertinent legislation relating to the issues in my petition if Clause 5 is enacted?
3. Can we trust any developer with whom TfL may choose to do business to act responsibly – particularly when much of this arrangement will be under cover from public scrutiny and based upon past track record?
4. Can we trust both parties to act in the public interest if Clause 5 is enacted?
I note the plans to appoint Public Health England personnel to work with TfL on spatial planning and other matters pertaining – even so, how can Londoners be empowered when faced with a clause which actively works in secret away from the public eye and in largely unaccountable fashion?
We have seen the evidence about the negative impact the Earls Court Masterplan has already had on the local population in W5 & W6 – which is only set to worsen – and local residents and elected representatives will speak more on that.
More of this around London will be a disaster – and also undermine the chances of the LHC report succeeding.
Building and construction works clearly have a place; and indeed there is an urgent need for housing which meets the needs of Londoners with income under circa £80k pa. But this needs to be properly managed in line with public health; including compliance with air quality standards, transport congestion and climate change legislation and the planning of affordable and well-planned housing to create sustainable and healthy communities.
TfL have a part to play in keeping Londoners healthy and safe ... indeed, as we have seen they are legally obliged to do so.
However the secret nature of Clause 5 puts this at considerable risk and should not become
part of this legislation.
Legal Note on the Transport for London Bill [Lords]
1. There are specific problems with the drafting of clause 5 in the Bill and I have provided in my document pack marked up copies of the relevant sections, which show the new insertions in to the Greater London Authority Act 1999 in red with deletions struck out.
2. Not being a legal person, a registered limited partnership may not carry on any activities at all let alone any activities which Transport for London has power to carry on. The general partner of a limited partnership, being a legal person, could carry on activities, but not a limited partnership itself.
3. "A limited partnership so registered, for the purpose of carrying on any activities which Transport for London has the power to carry on" is an absurd concept. A limited partnership can only act by means of its general partner and the Transport for London Bill does not spell this out. To make sense of clause 5 you would have to change "(b) promote and assist, or join with any other person in promoting and assisting, a limited partnership so registered" to "b) promote and assist, or join with any other person in promoting and assisting, a general partner of a limited partnership so registered", the insertion of "a general partner of a" being my suggested change to make sense of the clause 5.
4. The new clause 156 (1A) provides as follows:
(1A) Transport for London may with the consent of the Secretary of State –
(a) join with any other person in forming a limited partnership registered as such under the Limited Partnership Act 1907 (c. 24) by becoming a partner (whether limited or general within the meaning of that Act) of the limited partnership; and
(b) promote and assist, or join with any other person in promoting and assisting, a limited partnership so registered, for the purpose of carrying on any activities which Transport for London has power to carry on.
5. The amended clause 156 (5) (additions in non-italics) provides as follows:
(a) a company or partnership has been formed in the exercise of the powers conferred by subsection (1) or (1A) above (whether by Transport for London alone or by Transport for London jointly with some other person); or
(b) Transport for London has entered into an agreement with any person in exercise of its powers under subsection (2) or (3) above; Transport for London may enter into arrangements with that company, partnership or person for the transfer from Transport for London to that company, partnership or person, in such manner and on such terms (including payments by any of the parties to the arrangements to any of the other parties) as may be provided for by the arrangements, of any property, rights or liabilities of Transport for London relevant to the purpose for which the company or partnership was formed or (as the case may be) to the performance by that person of his obligations under the agreement.
6. The amended 156 (5) is incapable of being obeyed. A partnership is not a person so how can "relevant to the purpose for which the company or partnership was formed or (as the case may be) to the performance by that person of his obligations under the agreement" make any sense since a partnership cannot be "that person". Transport for London may not "enter in to arrangements" with that partnership since a partnership is incapable of entering arrangements. A partnership cannot enter arrangements because it is not a legal person.
7. The amended 157(1) provides as follows:
157.- Restriction on exercise of certain powers except through a company.
(1) The Secretary of State may by order made with the consent of the Treasury provide that
Transport for London shall not carry on such activities as are specified in the order except through:
(a) a limited liability partnership or a limited partnership of which a subsidiary of Transport for London (but not Transport for London) is respectively a member or partner; or
(b) a company which is registered under the Companies Act 2006 and limited by shares or limited by guarantee and which is-
(i) a subsidiary of Transport for London; or
(ii) a company which Transport for London formed, or joined with others in forming, by virtue of section 156 (1) above and which does not fall within sub- -paragraph (i) above.
8. [Section] 157 (1) does not restrict the holding company Transport for London from carrying on any activities except through the undertakings defined in 157 (the 157 undertakings) unless those 157 undertakings carry on activities specified in a Secretary of State order, which is a Statutory Instrument. The Statutory Instrument is SI 2000 No 1548, The Transport for London (Specified Activites) Order 2000, which, as amended by the Bill, provides its new paragraph 3 as follows:
3. Transport for London shall not carry on any specified activity except through-
(a) a limited liability partnership of which a subsidiary of Transport for London (but not Transport for London) is a member , or
(b) a limited partnership of which a subsidiary of Transport for London (but not Transport for London) is a partner, or
(c) a company which is registered under the Companies Act 2006 and limited by shares or limited by guarantee and which is-----
(i) a subsidiary of Transport for London; or
(ii) a company which Transport for London formed, or joined with others in forming, by virtue of section 156(1) of the 1999 Act and which does not fall within sub-paragraph (i) of this paragraph.
9. A Limited Partnership cannot be a 157 undertaking and cannot carry out activities since it is not a legal person. Likewise a Limited Partnership cannot be an undertaking for the purpose of 3(b) of SI 2000 No 1548.
10. Section 29 of Schedule 11 provides: "If Transport for London engages, either directly or through a subsidiary, in any activities authorized by paragraph 11 or 15(2) or (3) above, it shall in carrying on those activities act as if it were a company engaged in a commercial enterprise or (as the case may be) shall exercise its control over that subsidiary so as to ensure that the subsidiary in carrying on those activities acts as a company so engaged." If it is lawful for Transport for London to carry on activities authorized by 15 (2) or (3), which is the activity of property development, by means of a subsidiary undertaking which is a partner of a limited partnership then Transport for London will be in default of Section 29 of Schedule 11 since a Transport for London subsidiary undertaking, which is a General or Limited Partner, can not carry on activities as if it were a company engaged in a commercial enterprise since a subsidiary undertaking is bound by the Partnership Agreement. Transport for London cannot as required by Section 29, "ensure that the subsidiary in carrying on those activities [property development] acts as a company so engaged".
11. Paragraph 15(2) of Schedule 11 is the function that allows Transport for London to develop its land. 15(2) provides: "Transport for London may in particular- (a) develop for use by other persons land belonging to Transport for London which is not required for the purpose of the discharge by Transport for London of any of its functions, and (b) where the use of Transport for London’s land for the purposes of the discharge of any of its functions can be combined with its use by other persons, develop the land by constructing or adapting buildings on it for use wholly or partly for other, with a view to the disposal of any right or interest in the land or (as the case may be) the buildings or any part of the buildings after the development is carried out."
12. A Limited Partnership cannot act as if it were a company, as required by section 29 of schedule 11 because a Company is a legal person, with self sufficient covenant strength, and a Limited Partnership is not and has no self sufficient covenant strength, but the covenant strength of the General Partner which can be replaced according to the rules of a secret partnership agreement. Schedule 11 paragraph 15 (2) is not a Specified Activity under Statutory Instrument 2000 Number 1548 and therefore GLA Section 157 (1a) and 157 (1b) would not apply to property development and the Bill as presently drafted would enable Transport for London directly, not by means of a subsidiary, to enter a Limited Partnership as a General and/or Limited Partner.
13. The Bill enables TfL to bust itself by assuming intentionally or unintentionally General Partner unlimited liability. This would not be expedient.
National Union of Rail, Maritime and Transport Workers (RMT)
Statement (Legal Opinion) submitted
COUNSEL’S ADVICE ON THE RISK OF TfL ENGAGING IN A LIMITED PARTNERSHIP
1. I am asked to advise the RMT on the risk of Transport for London ("TfL") engaging in commercial ventures which clause 5 of the draft Transport for London Bill will, if passed into law, permit TfL to enter into.
2. In an email dated 10 December 2014, from James Croy, the concern of the GGC is expressed to be that Clause 5 will empower TfL to enter into arrangements with property developer that expose it to unacceptable levels of financial risk.
3. The notes of Richard Osband contain extracts from correspondence of TfL. Extracts include those from the letter of Elizabeth Martin of TfL dated 20 June 2014. In the appendix to the letter Ms Martin confirms that a classic example of use of an unincorporated joint venture is as a vehicle for construction or property development. Mr Osband cites the example of joint venture with Capital and Counties Properties Plc as a venture that the documentation shows may be converted from a limited company to a limited partnership. In the appendix to her letter dated 20 June 2014 Ms Martin sets out that reasons why a party would wish to use such a limited partnership include taxation and governance; and that a fiscal arrangement (which she terms fiscal transparency) whereby partners are taxed on their share of profits is attractive to a wider base of investors including institutional and overseas investors.
4. Ms Martin also asserts that in practice TfL’s liability would be limited because the general partner would be an entity limited that has limited liability status.
Clause 5 of the draft Transport for London Bill ("the draft Bill")
5. Clause 5 of the draft Bill will amend Section 156 and Schedule 11 of the Greater London Authority Act 1999 ("the GLA"). It will permit TfL to enter into unincorporated partnerships as limited partnerships under the Limited Partnerships Act 1907. It will permit TfL to be a limited or general partner of such a limited partnership or to promote or assist, by itself or with others, a limited partnership.
6. The limited partnership that is formed or promoted must be for the purpose of carrying on activities which TfL has power to carry on. However, in my view that does not mean that the partnership itself is limited to carrying out activities which TfL has power to carry out. Rather it must be formed for the purposes of carrying out such activities. Since it will not be subject to the same restrictions as TfL by virtue of the provisions of the GLA it will not in my view be subject to same considerations of vires as TfL or an incorporated subsidiary. The amendment does not specify that the limited partnership must limit its activities to activities that TfL may carry on. Section 164 and Paragraph 29 of Schedule 11 of the GLA1 would only apply to subsidiaries of TfL, i.e. corporate bodies wholly owned by TfL or in respect of which it has the majority rights, see Section 424 GLA and Section 1159 of the Companies Act 2006.
7. In my view provided the limited partnership is formed for the purposes of carrying on activities of TfL it will also be able to carry out wider activities in accordance with the wishes and direction of the partners.
8. Further and in any event TfL has relatively wide powers under Schedule 11 of the GLA to provide amenities and facilities (paragraphs 5 and 6); invest money or assets (paragraph 13); develop and acquire property (paragraphs 15 to 18) and lend money (paragraph 30).
9. TfL is a corporate body, section 154 of the GLA. It is subject to the ultra vires rule namely that it can only act in accordance with its permitted functions under the GLA or other 1 Para 29 provides "If Transport for London engages, either directly or through a subsidiary, in any activities authorized by paragraph 11 or 15(2) or (3) above, it shall in carrying on those activities act as if it were a company engaged in a commercial enterprise or (as the case may be) shall exercise its control over that subsidiary so as to ensure that the subsidiary in carrying on those activities acts as a company so engaged" directions of the Mayor under Sections 154 of 155 of the GLA. If it acts beyond its powers those acts are unlawful and void.
Limited Partnership and Liability
10. A limited partnership must consist of one or more general partners and one or more limited partners, see Section 4(2) of the Partnership Act 1907 ("the 1907 Act"). It must be registered as a limited partnership, see Section 5 of the 1907 Act.
11. Liability of a limited partner of a registered limited partnership, is subject to certain exceptions, limited to the amount of the partner’s capital contribution, see Section 4(2) of 1907 Act. However, the contribution must be made at the outset rather than as promise or guarantee to pay later. In MacCartaigh v. D  I.R. 73, where the limited partners did not contribute capital until some time after the date of their admission, they fell to be treated as general partners during the intervening period until the contribution was made. The rule as to contribution is an inflexible one.
12. A general partner will, like any member of an ordinary partnership, be personally liable for all the debts and obligations of the limited partnership, see Section 4(2) of the 1907 Act.
13. A limited partner may not take part in the management of the partnership business, either directly or indirectly: if he does so, he will be liable for all the debts and obligations of the limited partnership while that participation continues, see Section 6(1) of the 1907 Act. Thus a limited partner who participates in the management of the limited partnership forfeits his rights as a limited partner for the period of that management.
14. It follows that the right to manage the business of the limited partnership alone is conferred only on the general partners.
15. Although it is not possible to say with precision whether TfL will take a role as general partner or limited partner in every venture it seeks to enter into it seems unlikely, if it is making significant investment in the venture, that it will not seek a management role and input. Clause 5 of the draft permits TfL to take the role of limited or general partner.
16. As such where TfL either takes a role as general partner or performs such a role (even though it is designated and registered as a limited partner) it will incur unlimited liability for the debts of any limited partnership / joint venture. The only limitations to such liability would be the value or limit of the claim / liability in each case and that TfL is itself a corporate body such that liability cannot extend beyond the value of its assets. The latter point is of no real comfort given that liability in those circumstances would extend to the value of TfL, the very issue that the RMT is concerned by.
17. Ms Martin’s assertion that the general partners will be entities with limited liability, either a limited company or limited liability partnership, does not meet the objection of the RMT. Its objection is that Clause 5 of the draft Bill permits TfL to form or enter into limited partnerships incurring unlimited liability as set out above.
18. Further Ms Martin’s assertion may be based upon a belief that TfL can form subsidiary companies, under Section 156(1) of the GLA to perform the role of the partner, whether general or limited, in a limited partnership under Section 156 (1A) of the GLA (if amended by Clause 5 of the draft Bill). I have some doubt as to whether such an approach would be within the vires of TfL and lawful. As such for that reason or for discrete issues of vires (dependent upon the nature and scope of the joint venture), even if such a subsidiary was formed, it may also give rise to issue of vertical liability for TfL However, Ms Martin’s assertion does not address the fundamental complaint of the RMT that Clause 5 of the draft Bill permits TfL to enter into limited partnerships in which it may incur unlimited liability.
19. Similarly the addition of the words with the consent of the Secretary of State does not address the issue that Clause 5 of the draft Bill permits TfL to enter into limited partnerships in which it may incur unlimited liability. Additionally, it is self-evident that such liability will occur after the limited partnership has been formed. The proposed safeguard would provide no answer to that liability should it arise.
20. In my view Mr Osband is correct in his assertion that Clause 5 of the draft Bill permits TfL to enter into arrangements forming limited partnerships that may expose it to risk of unlimited liability. Further as set out above it is my view that is likely that the limited partnerships may undertake wider activities than those which TfL is permitted to undertake. My instructing solicitor should not hesitate to contact me should she have any further queries in respect of this matter.
2 January 2015
Old Square Chambers
On behalf of the promoter
HM Treasury Joint Ventures: guidance for public sector bodies forming joint ventures with the private sector
Memo from Deloitte, dated 19 December 2014
Examples of pension fund investing in limited partnerships
Sections 156, 157 and 164 and paragraph 14(1)(b) of Schedule 20 of the Greater London Authority Act 1999
Consolidated version of s 49 of the Transport for London Act 2008 if amended by clause 7 of the Bill
Section 13 of the Local Government Act 2003
The Limited Partnership Act 1907
Jocelyn Mary Bell
Statement presented to the Committee on 13 January 2013*
Annual returns and other documents relating to (a) Capvestco (2002-2011) and (b) EC Properties (2012-2014) and related email
MPs’ briefing from Earl’s Court Area Action Group
Report and letter to the Mayor from Darren Johnson MLA (Green Party)
Minutes of Earl’s Court Landowners Meeting, 22nd May 2012
Minutes of Earls Court Landowners Project Board, 17th July 2012
DVS (Valuation Office Agency) report on Earl’s Court Opportunity Area Development Proposal, 6 September 2012
Review of DVS2 (viability assessment of Earl’s Court regeneration scheme for RB Kensington & Chelsea), August 2014
GLA Code of Conduct for Elected Members
TFL Code of Conduct 2008
TFL Ethical Sourcing Policy
Lillie Bridge Depot Accessibility Report
EC Properties treatment of Earls Court businesses
Current Appointments Report for: LILLIE SQUARE GP LIMITED 07696132
Ms Hardwick also refers to Letter to RMT from Sir Peter Hendy, Commissioner of Transport – see 5C below
Crumbs for Londoners Darren Johnson AM report September 2013
Lillie Bridge Depot report, March 2013
Picture – Aerial view of Earls Court Exhibition Centre and Environs
Legal Note On the Transport for London Bill*
Counsel’s Opinion on Risk of TFL engaging in a limited partnership for RMT - see below
Letter to RMT from Sir Peter Hendy, Commissioner of Transport
Email exchange with Howard Carter, TfL.
Transport for London (Specified Activities) Order 2000 (No. 1548) (marked up)
Letter from DoT to TfL (consent)
Example of limited partnership agreement
Extracts from GLA Act 1999
Counsel’s Opinion on Risk of TFL engaging in a limited partnership (produced for RMT)*
*Reproduced in Section A.