Tuesday 12th April 2016
(8 years, 7 months ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Andy Slaughter (Hammersmith) (Lab)
I beg to move, That the clause be read a Second time.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to consider the following:
Amendment 1(P), page 1, (Recitals) leave out lines 6 and 7.
Amendment 9, in clause 1, page 2, line 4, leave out “two” and insert “three”.
Amendment 10, page 2, line 5, at end insert
“save as provided for in subsection (3).”
Amendment 11, page 2, line 6, at end insert
“save as provided for in subsection (3).”
Amendment 12, page 2, line 6, at end insert—
“(3) Sections 4, 5 and 6 of this Act shall not come into force until the Secretary of State has arranged for, and published the report of, a review of the—
(a) potential risks to the assets of Transport for London arising from the exercise of the relevant powers to be conferred thereby, and
(b) likely effectiveness of measures put in place by Transport for London in mitigation.”
Amendment 13, in clause 3, page 2, line 17, after “TfL”, insert
“following consultation with the Greater London Assembly, and the publication of a report of such, and”.
Amendment 14, page 2, line 19, leave out “two” and insert “three”.
Amendment 15, page 2, line 25, leave out “two” and insert “three”.
Amendment 16, in clause 4, page 2, line 37, at end insert—
“(1A) The consent of the Mayor under subsection (1) may only be granted after the Mayor has consulted, and published a report of such consultation:
(a) the Greater London Assembly,
(b) the London boroughs,
(c) the City of London,
(d) passenger representative bodies, and
(e) relevant trades unions.”
Amendment 17, page 2, line 38, leave out “all or any” and insert “no more than 25%”.
Amendment 7, page 2, line 38, leave out from “borrows” to end.
Amendment 8, page 3, line 4, leave out from “borrowed” to “indemnity”.
Amendment 18, page 3, line 13, leave out
“Except for the property identified in the Schedule to this Act”.
Amendment 19, page 3, line 15, at end insert—
“(6A) Any consent of the Secretary of State given under subsection (6) above shall be given in an order made by the Secretary of State.
(6B) A statutory instrument containing (whether alone or with other provisions) an order under subsection (6A) above shall not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(6C) An order under subsection (6A) above shall in each case include-
(a) the land registry title number or numbers of any property or properties to be charged, and
(b) a specification of the proprietor or proprietors of the charge.
(6D) The proprietor or proprietors of the charge under subsection (6C)(b) may not be a joint venture partner of Transport for London or one of its subsidiaries.”
Amendment 2(P), page 3, line 24, leave out clause 5.
Amendment 3(P), in clause 6, page 4, line 19, leave out “or a limited partnership”.
Amendment 4(P), page 4, leave out line 21 and insert “a member; or”.
Amendment 5(P), page 4, leave out lines 37 and 38.
Amendment 6(P), page 4, line 39, leave out “(c)” and insert “(b)”.
Amendment 20, in the schedule, page 6, paragraph 1, sub-paragraph (c), at end add
“subject to the Secretary of State’s satisfaction that TfL has undertaken, or caused to be undertaken, an effective risk assessment in respect of the impact on public health of such use.”
Amendment 21, page 6, paragraph 1, leave out sub-paragraph (d).
Amendment 22, page 6, paragraph 1, sub-paragraph (i), at end add
“provided such property is not located within the curtilage of a bus, rail or underground station.”
Amendment 23, page 6, paragraph 1, sub-paragraph (o), at end add
“provided such property is not located within the curtilage of a bus, rail or underground station.”
Amendment 24, page 6, line 19, paragraph 1(k), after “machines”, insert
“and other property which is exploited for commercial purposes other than within stations.”
Amendment 25, page 6, line 19, paragraph 1(k), leave out from the first "stations" to the end of the sub-paragraph.
Amendment 26, page 6, paragraph 1, leave out sub-paragraph (k).
Amendment 27, page 6, paragraph 1, leave out sub-paragraph (m).
Amendment 28, page 6, paragraph 1, leave out sub-paragraph (n).
Andy Slaughter
We have a single grouping of amendments to deal with in what might be the last outing of this interesting and important Bill, after some five and a half years of its progress through both Houses. I shall speak to the large number of amendments in my name. The remainder stand in the name of the promoters of the Bill, and no doubt the hon. Member for Harrow East (Bob Blackman) will address his reason for tabling them. I welcome the concessions that are marked by the promoters’ amendments, which may shorten considerably the length of the debate today.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
My hon. Friend will recall from our discussion in November that one of my particular concerns about the way in which Transport for London has engaged on this Bill and other property development matters related to the future of Harrow-on-the-Hill station and the access issues pertaining to it. My hon. Friend may not be aware that I have had the opportunity to meet Graeme Craig, property director of TfL. It was a helpful meeting, but it left me worrying that although TfL has plans to improve the access arrangements at Harrow-on-the-Hill station, it does not plan to put any resource into them. Is there anything in my hon. Friend’s amendments or in the remaining parts of the Bill that might help to deal with that concern, which my constituents are likely to be very worried about?
Andy Slaughter
That is a complex question—perhaps even more complex than my hon. Friend divines, despite his huge knowledge and intellect. It goes to the heart of the Bill and the fact that TfL has got itself into a sort of spiral with property developers and, as a result, does not know where it is going or where its best interests and those of its customers lie. Is its primary objective to uphold and improve its infrastructure, stock and services? Is it to compensate for the billions of pounds being withdrawn very cynically by the Chancellor, or is it going into a whole new area of operation where it will become some kind of poor man’s property developer?
I think that my hon. Friend will get the answer if he stays for the whole debate—if not, he may have to look at Hansard. My short answer to him now is that no one, not even the strongest opponents of the Bill—I include myself, the petitioners and the National Union of Rail, Maritime and Transport Workers in that bracket—would not wish TfL to maximise its income and its opportunities for development and to be able to develop on its operational and non-operational land and, in the process, improve its facilities. I hope that we have made substantial progress—although, it has been like drawing teeth over these five-plus years—but I am not sure that I can give him a full assurance that that will be the case as a consequence of this Bill.
However, I can give my hon. Friend a full assurance that from 5 May, when our right hon. Friend the Member for Tooting (Sadiq Khan) will be installed as Mayor of London, the importance of stations such as Harrow-on-the-Hill will be foremost in his mind. I have visited Harrow-on-the-Hill and know that it could do with a great deal of improvement. I know that my hon. Friend will continue to fight strongly for that.
Ruth Cadbury (Brentford and Isleworth) (Lab)
Surely the purpose of TfL is to provide the best, most efficient and most cost-efficient transport services for this great city of London. Is it not therefore right that it uses its assets in the best way to achieve that aim? Does my hon. Friend think that this Bill will achieve that objective in such a way that we can have confidence that TfL can use its resources to best effect to achieve its core aim?
Andy Slaughter
My hon. Friend is absolutely right. Certainly, my amendments—I will go through them one by one—are designed to improve the Bill in the way she suggests. I will add a slight rider to what she says, however, because I think that TfL, as a public authority, has a slighter wider duty. We see that in the way it has disposed of assets in a cavalier fashion, entered into inappropriate deals with property developers and—perhaps most worrying of all in the context of the Bill—set out at this stage to say that its future priority, perhaps understandably, given the amount of money it is losing to the Treasury, will be to maximise the commercial opportunity of the land it holds. That sounds fine, if the money is going to subsidise fare payers. However, if it produces the type of development that is harmful to the London economy as a whole, and to Londoners—for example, by excluding affordable housing from its prime sites—then I think it needs to be brought up short. The problem is that TfL is trying to do several things at once. Yes, I am sure that it is trying to do as much as it can to subsidise its operations, but at the same time it is taking very risky steps in the deals it is doing with property developers. Part of that will be cured by the withdrawal of clause 5, but not all of it.
Mr Gareth Thomas
I take my hon. Friend back to Harrow-on-the-Hill station, because it is clear that TfL will have to go higher in any housing development, potentially reducing the amount of affordable housing, in order to pay for the access works required. Does he not think that it would be better if TfL, using the funding it currently has for making stations accessible, matched the funding that Harrow Council is willing to put into those access requirements, rather than just building ever higher blocks of housing to pay for it?
Andy Slaughter
I am always pleased to be taken back to Harrow-on-the-Hill station, although my hon. Friend normally cons me into going there for canvassing sessions that tend to go on for four or five hours. He is absolutely right that there has to be a balancing act between the needs of the travelling public and whatever development TfL is doing, and I think TfL has abdicated its wider responsibility in trying to get that balance right.
Mr Thomas
Moving on from Harrow-on-the-Hill station, will my hon. Friend deal with the concern that he and many others of us alluded to last November regarding the so-called tax-efficient limited liability partnership model that TfL wanted to use for its property developments? Can he shed any light on how TfL’s plans have changed in relation to that vehicle in the light of the obviously devastating disclosures in the Panama papers?
Andy Slaughter
A lot of the credit must go to Lord Dubs, who obtained a substantial concession in the other place when clause 5 was withdrawn. The chronology is that that preceded the Panama papers, but I suspect that TfL is breathing a sigh of relief, given that its proposals may have come under even more scrutiny had the clause remained in the Bill. I wait with interest to hear what the promoters say about the reasons for the withdrawal of clause 5. Personally, I am just glad that it is has been withdrawn, although I am puzzled they appeared prepared to die in a ditch for it over a period of years and then, following the debate in the main Chamber and the revival motions in the other place, decided to give in gracefully. What their reasoning was for doing that, I am still not quite sure, but I am grateful that it happened.
To that extent, the issue, which was of concern to the large number of Members who attended the last debate here, has gone away, but not entirely, as my hon. Friend will see when I talk about clause 4, which still tempts TfL—if I can put it that way—to enter into relationships with companies that may have a dubious past, present or future. Amendment 7 and consequential amendment 8 are designed to remove that temptation.
Mr Thomas
Before my hon. Friend turns to his proposed amendments, may I take him back again to our debate last November? There was substantial concern among Labour Members about the lack of commitment shown by the TfL management to building a significant amount of affordable housing in any large housing development. I understand that TfL is seeking to move on from that position—I am thinking of a particular site that my hon. Friend knows very well. Has he received confirmation that TfL is now more committed to affordable housing?
Andy Slaughter
Like my hon. Friend, I recently had a lengthy meeting with Graeme Craig and other TfL lawyers and senior managers. The reasonable assurance that I was given was that no firm decisions would be taken on any of the London sites—save for one, which is in the constituency of my hon. Friend the Member for Eltham (Clive Efford)—until after the mayoral election, which I think is right.
London Members in particular were concerned that TfL was being disingenuous. It was saying in the free pages it gets in the Metro paper that part of its development strategy was to build affordable housing, but the reality was that it planned to build no affordable housing whatsoever on its prime sites in zones 1 and 2. It said that there might be elements in zones 3, 4, 5 and 6, but that was simply not satisfactory. Let us consider the issue after the mayoral election. It is clearly a matter for each individual planning application, but I would hope that Labour councillors in London would look askance at any proposal that did not include affordable housing.
One of the first three sites proposed was in Parsons Green, which is not quite in my constituency, but it is in my borough. That application has been withdrawn and is being rethought, because the proposals were either not sufficient or not the right type of affordable housing. We know that “affordable housing” is now a term of art and that, when used by this Government, it usually means housing that is affordable to nobody who is not on a seven-figure income.
Let me turn to the amendments standing in my name. I am very grateful for the substantial support I have received from a number of people at the National Union of Rail, Maritime and Transport Workers in preparing the amendments and, indeed, throughout the whole Bill process. They have been extremely assiduous in providing their expertise, obtaining counsel’s opinion and providing briefings on the Bill. The three public petitioners—Richard Osband, Jos Bell and Anabela Hardwick—not only contributed to that important part of the process, but have been stalwarts in scrutinising the Bill and providing briefings on it. Many Members, not just members of the RMT and London MPs, have also shown an interest; when we last debated the Bill, there were 20 to 30 Members present. I am grateful to my hon. Friends the Members for Harrow West (Mr Thomas) and for Brentford and Isleworth (Ruth Cadbury), who will get a special TfL Bill badge for being here tonight.
Mr Thomas
A further concern that was aired when we last debated the Bill in November was that the advisory board that TfL had set up to help it with its property development contained no significant social housing providers. Does my hon. Friend sense that TfL has now changed its position and that it is now balancing out the interests of those hard and fast traditional developers with the need for proper social housing to be part of the mix on the sites overseen by the Mayor and TfL?
Andy Slaughter
I am not aware that that has happened. To give TfL the benefit of the doubt, it, like many in London, awaits the outcome of the mayoral election and will take its lead from that. Although I strongly anticipate that my right hon. Friend the Member for Tooting will be the Mayor—so, I believe, do the bookmakers, who have started paying out on him—I do not think, whoever wins the mayoral election, that we could be worse off than we are at the moment with a Mayor who has set his face against affordable housing. He, and the people he has appointed to be his agents in the matter, have cynically allowed the term “affordable housing” to become more abused than used.
Mr Thomas
I intervene again on my hon. Friend to suggest that he might want to use at least a portion of his speech on the amendments to encourage the promoter of the Bill to take back from the debate the concern that TfL has no social housing providers in its property development group. That needs to change. When my right hon. Friend the Member for Tooting (Sadiq Khan) is elected, we might be able to go directly to him. Perhaps we can encourage the hon. Member for Harrow East (Bob Blackman) to use the influence he has on TfL in the drafting of the Bill in that regard now.
Andy Slaughter
I entirely agree. My hon. Friend has made the point very well, and I cannot add anything to it. I intended to say one or two things about housing, but I think I will say them on Third Reading. They relate more to the general principles of the Bill and TfL’s approach to the Bill than to the amendments that we are dealing with.
Mr Thomas
My hon. Friend has a modest style, but may I encourage him to say two further things on the question of whether social housing providers are invited to sit on TfL’s property board? First, will he urge my hon. Friend the Member for Cambridge (Daniel Zeichner) to encourage TfL to listen to our concerns about the absence of a social housing provider? Secondly, will he encourage the Minister to use his influence with TfL to persuade it to put social housing providers at the top of its property development work and on to its property development advisory group?
Andy Slaughter
I absolutely concur with that. I suspect that, like me, my hon. Friend finds housing to be the single biggest issue in his constituency at the moment. We have reached a ludicrous stage in London whereby in many constituencies, including his and mine, it is simply impossible and unaffordable for anybody—not just those who have low incomes or average means, but those who are earning good wages—to access property of any kind. That applies to private rented, owner occupied and even what is cynically called affordable housing. That position has been exacerbated by Government policy and by some local authorities in London over a number of years.
It will take a long time to turn the situation around. It is possible, but it is difficult, and one of the quickest ways to do it is by the use of public land. TfL, as it constantly tells us, is one of the major public landowners in London. There are many others. I have the Old Oak and Park Royal Development Corporation in my constituency, and 70% of that land—the largest regeneration site in the UK—is owned by Network Rail. It will shortly be owned by the OPDC. It is not just TfL that owns land; Government Departments also do so. That is the most immediate and instant solution to the problem, which I suspect Members from all parts of the House would admit of. Even Members who represent constituencies outside London probably have experience of the London property market and know that the situation cannot be allowed to continue.
Even with its current budget constraints, it is wrong for TfL to say, “Nothing to do with us, guv; we are just a railway company.” Of course it is primarily a railway company, and of course its job is primarily to make sure that we have a safe, secure and efficient railway that has capacity. That is a difficult enough task, but TfL cannot abdicate its responsibility, and it certainly should not be making the situation worse by engaging in development that involves no affordable housing.
Mr Thomas
My hon. Friend is right to say that housing is a huge issue in my constituency, as it clearly is in many constituencies across London. Like him, I want the public land that TfL has available to be used to create more affordable housing in particular, as well as housing units more generally. Does he accept that TfL needs to take into account a further consideration, which is the character and conservation needs of the space in which such public land will be available? In that context, I think of Harrow on the Hill—not Harrow-on-the-Hill station, but the area in my constituency. Any large TfL blocks of flats will still need to allow local people to see the iconic views of Harrow on the Hill. It is crucial to preserve the character of such areas.
Andy Slaughter
That is right. I am afraid that almost every planning application for residential development I now see ignores all the basic principles and tenets of building on a human scale, with sufficient amenity space and in such a way that impossible constraints are not imposed on existing neighbourhoods in terms of congestion, overlooking and environmental pollution, while also almost entirely excluding social infrastructure, such as hospitals and schools.
This is not the way London was built. Ironically, in the Victorian era—when the railways were built, and the suburbs expanded along those routes—we had far less town planning than we do now, but they somehow managed to build liveable communities, with all such factors. The combination of greed on the part of the developers and desperation on the part of much of the public sector means that we are now building monstrosities that nobody will want to live in.
Ruth Cadbury
To make another observation, if I may, about liveable communities, TfL owns a lot of shopfronts and high street properties. Is it not beholden on TfL, when it develops properties, to give some consideration to the kind of uses that such retail frontages are put to so that we ensure that they provide a usable range of businesses and services for the communities living in the new flats, which will of course include a significant proportion of affordable units?
Andy Slaughter
That is another very good point. I am afraid that it is another one on which TfL does not have a terribly good record. In Brixton market or Shepherd’s Bush market, which I am very familiar with, there are many historical amenities, including retail areas—they have been there for decades, if not, in some cases, for centuries—of which TfL has been the custodian, that are now under threat. Again, that is simply because the bottom line always has to take precedence.
Such an approach is often self-defeating, because we end up building a white elephant. The best example I can give is the Hammersmith Broadway. TfL pressed ahead with that development some 30 years ago. Nobody wanted it, and it ruined the town centre, as we thought, for the foreseeable future. However, we have now found out that there are plans to pull the whole thing down and start again. Even within its own rather limited and pedestrian view, which is to make the maximum capital out of it, such an approach often does not work. We must have schemes that actually work—work with existing communities, and work in terms of long-term commercial prospects—rather than something that looks as though it will provide a quick subsidy for the sort of works at Harrow on the Hill that were mentioned by my hon. Friend the Member for Harrow West.
Let me press on. I am almost the last man standing in this debate—not quite, because I have had the assistance of my hon. Friend and of my hon. Friend the Member for Brentford and Isleworth, who have a particular interest in this matter—but it has had a glorious number of supporters so far. I see that the shadow Chancellor has joined us on the Front Bench. I will spare his blushes, but I was just about to pay tribute to what he and the Leader of the Opposition have done. They have really cracked the whip on the Bill. If he has looked at the amendment paper, he will have spotted that I have filched quite a large number of his amendments to propose myself. I would not have done that if they were not excellent in their own right. I will not speak to them at great length.
John McDonnell (Hayes and Harlington) (Lab)
Would my hon. Friend like to comment on the drafting quality of the amendments?
Andy Slaughter
They are much better than I could have done. They could not be improved upon by the Clerks, so they get 10 out of 10, not just for their eloquence and presentation but for their content.
If I may, I will deal with the consolidated amendments in three parts, and will come to the promoter’s amendments last of all. In a moment, I will look at two amendments in particular, amendment 7 and amendment 8, which is consequential on amendment 7. I will be looking for a response from the promoter on those. They contain a serious and, to some extent, new point. To show my hand at this stage, amendment 7 is the one amendment I am thinking of pressing to a vote. I am only thinking of doing so, however—it will depend on what the Front-Bench spokesperson and the promoter say. I will explain my logic in a moment.
I will go through the rest of the amendments at some speed. A few might be probing, but they are mainly what we might call improving amendments. They try to make sure that the Bill’s deficiencies—it is rather hasty and secretive, and tries to provoke unwise decisions that have not had proper consideration—can be mitigated in some way. I ask the promoter and the Government to look at them in the spirit in which they have been tabled. I am not very hopeful, because when that same point was made in the first part of Report, in March 2015—my hon. Friend the Member for Hayes and Harlington (John McDonnell) was proposing the amendments at that stage—the promoter said he was not going to accept any of them, which I thought was a little churlish. They are genuinely intended to be improving. Let me explain what I mean by that.
I will start with new clause 1. That measure is slightly different. It flushes out one of the problems that we thought we had got rid of with TfL, but I am now not sure that we have. In its enthusiasm to sell off its assets to the highest bidder and to maximise commercial return, TfL sometimes ends up selling off land that it needs now or might need in future. That is slightly counterproductive, because with London property, when it is gone, it is gone. Any public authority that tries to buy back land that has been used from a commercial developer—even if, as in this case, that might be a joint partner—will find the price very high. The developer knows that the railway will absolutely need that piece of land so it will be treated as a ransom strip.
New clause 1 says:
“TfL, or any subsidiary of TfL, shall not lease land to third parties which…has been used in the preceding 10 years…has been considered by TfL in the preceding 10 years as suitable, or…is adjacent to land in use or in use in the preceding 10 years, for the provision or maintenance of transport services for passengers.”
Let me give one example, a very big one and probably the one that the promoter thinks I am going to give: Lillie Bridge depot.
Lillie Bridge depot is one third of the Earls Court and West Kensington opportunity development. As is the case for many others, much of my interest in the Bill has been engendered by that very development, which, until Old Oak and Park Royal comes onstream, is the biggest in London. It is a multibillion pound scheme. It consists of three parts, two of which are, or were, owned in their entirety by TfL. I will not talk about this now; I will talk about it on Third Reading. The way that part one of the scheme has been handled—admittedly under the existing rules, because the Bill has not been passed into law—has been so disastrous and cataclysmic for my constituents and the wider London economy that it bodes very badly for what may come forward.
It could be even worse from TfL’s point of view, because Lillie Bridge depot, the second part of the site—the two or three parts are roughly the same size, between 20 and 25 acres each—is a working depot for TfL. It employs about 550 people. It has stabling for District line trains, and major manufacturing and workshop areas. To all intents and purposes, it is an essential part of the operation of TfL. Unfortunately, the view put forward by TfL’s property division is that it can all go. I have a letter here from Graeme Craig, whom I referred to earlier, from 26 March 2014. It says:
“TfL is committed to bringing forward the development of LBD”—
Lillie Bridge depot—
“in accordance with the approved masterplan or such updated planning permissions as may be approved by the Council. TfL is not able to commit at this stage to how and with whom the development of LBD is to be delivered if it is proved feasible to do so. However, given the establishment of JVCo to develop Earls Court Village and ECP’s control of other interests, it would make commercial sense in due course for both parties to fully explore the potential benefits which could arise should we combine our respective remaining land interests.”
That was a scandalous letter to write and I am pleased to say that Mr Craig gave me an assurance that no deal has been, or would be, entered into with Capco for the development of the Lillie Bridge depot before the mayoral election. What has happened in that area is on the basis of no ownership of that portion of land and on the basis of a masterplan devised by Capco itself. TfL, in a very craven way, just decided to give up the land and develop it with Capco without looking at any other possibilities.
Obviously, there is now a delay. Even TfL has to admit that a fully operational depot of that kind, with all the facilities in situ that I have talked about, cannot be closed down overnight. It is talking about not developing it for about another five years, but it is certainly looking to sign agreements to do so in advance. That is exactly the type of mischief that new clause 1 is designed to prevent.
It is not only because of the points made earlier by my hon. Friend the Member for Harrow West that we need to worry about what type of development is going to go on TfL land; we need to worry about what is going to happen with current usage, either in the case of Lillie Bridge where there is current transport usage, or if there is a potential transport usage. This is absolutely recognised in the HS2 Bill, where HS2 is able to compulsorily purchase, acquire and protect land ancillary to the line, stations or other essential infrastructure that is being developed—for good reason.
Whatever we think of HS2, we cannot allow major infrastructure projects and essential lifelines of the transport system to be put at risk by private development in this way. I therefore ask, without a great deal of hope or expectation, for support for new clause 1. Even if there is not to be support in that way, I still ask for a clear statement of policy from the sponsor on behalf of TfL as to how it intends to protect the operational benefits of TfL. This is not a pious or notional idea. TfL is going into the property development game big time. It is looking at thousands of acres of land across London with transport or ancillary transport uses—by definition, most of its non-operational land is adjacent to its operational land—in a way that I do not believe it is prepared for and that would be a quantum leap in how it operates. All we are saying is that there needs to be safeguards. We need to ensure that it does not shoot itself, or the travelling public, in the foot by giving away, tying up or otherwise compromising land in that way, which, I am afraid, is exactly what has happened in the past.
Ruth Cadbury
My hon. Friend makes a strong point about the risk of taking land out of operational use or losing land that could be put into operational use should transport demands change. Would it not therefore be appropriate to undertake a fully transparent assessment of all TfL’s land prior to any deals being done by the private sector that might take land out of operational use?
Andy Slaughter
I am grateful for that intervention, because transparency is very important here. We have asked several times for a terrier of TfL property so we can know exactly what sites are owned and where they are. I certainly think that all London MPs should be entitled to know what sites reside in their own constituencies. That is the first point: we need to know what we are dealing with here. I agree entirely.
Subsections (2) and (3) of new clause 1 would introduce what is a theme in other amendments: the need to consult. We need to consult the public, who fund TfL through their taxes and fares, and the responsible elected bodies—the GLA and the London boroughs—before these decisions are taken. It is absolutely the case that TfL, in the past, certainly before it came under the Mayor’s control, behaved like a medieval baron. It was extraordinarily unaccountable. There is nothing as unaccountable as a public body with no democratic accountability. At least one can sit down with private sector organisations, talk to them and reach a deal. When dealing with organisations such as TfL, as was, or the NHS, as is, one often finds oneself intruding on the privacy of these organisations. Despite their being fully funded by the taxpayer, they have no mechanism for such engagement, which takes us back to the point made by my hon. Friend the hon. Member for Harrow West about ensuring that the boards of these organisations have proper representation of the public and other interests. I therefore say in new clause 1 that the public, as well as the London boroughs and the GLA, should be consulted before contracts for development are entered into.
Part of the role of the Mayor should be to ensure that that democratic element is put in train. I have to say I have not seen any sign of that under the current Mayor. I have found that TfL’s decision making has been just as opaque, and I am hoping we will see a sea change in that. I believe that all public bodies, irrespective of their primary function, have a wider public duty. With local authorities, that is generally accepted. Indeed, there is now legislation saying that they have a community role and function to look after the general interest of their communities, as well as specific individual functions. We have moved a long way from the Nicholas Ridley days of their meeting once a year and handing out contracts. Similarly, other public bodies have a wider role. At the end of the day, such public bodies are taxpayer funded and have a responsibility to the communities in which they reside. We require private developers, through the community infrastructure levy and section 106 agreements, to make a contribution in that way, and I believe that public bodies should equally make a contribution. That is what I am asking for.
That theme is continued in my amendments 9 to 16, which I will deal with more briefly. I feel that this is rather a pinched Bill that wants to do things in a hurry. Whenever steps are to be taken, they are taken within two months, but I think three months would be the normal and more appropriate period of time. I am not sure where the two-month period has come from.
So far as amendments 9, 10, 11 and 12 are concerned, the Bill grants TfL substantial new powers. It is right to say that the two major operative clauses have now been dropped. The first, dropped at a relatively early stage in the House of Lords, was a scandalous attempt to get land sales done without any oversight by the Secretary of State or anyone else. The other is the clause being dropped today, which would have allowed these rather dubious property ventures to be entered into. However, there is still quite a lot of substance here, and we are right to look critically at what the Bill says in those respects.
Clause 1 states that the powers given in clause 4 will come into force at the end of the period of two months, while clause 3 states that the appointed day is at the end of that same two-month period. I see nothing wrong with three months. I am sure that the promoter will enlighten me if there is a particularly good reason for having two rather than the more common three months. I also say—this is provided for in amendment 12—that none of these provisions should come into force until there has been
“a review of the…potential risks to the assets of Transport for London arising from the exercise of the relevant powers…and…likely effectiveness of measures put in place by Transport for London in mitigation.”
Some may say that this is rather belt and braces, but I tabled this amendment because of experience. My experience is that TfL has not always behaved with the degree of probity or reserve that is necessary, and has got itself into a mess; later I shall quote the National Union of Rail, Maritime and Transport Workers, who put it in slightly less polite language than that. It is a case of once bitten, twice shy. Where a public body does not have a good track record on consulting and making the right decisions on matters outside its core remit, and where it proposes a massive expansion in the work it does, we are entitled to ask first for a longer pause for proper assessments and reviews, and for consultation. Amendment 16 is relevant here. I am not asking for consultation not with every Tom, Dick and Harry, but with those who have a legitimate interest as the elected representatives of the people of London.
I shall say no more on that. I shall not dwell on those amendments any further. They are improving amendments. They do nothing more than that, and I say the same about amendment 19, which adds to clause 4. It simply sets out in more detail what should happen when consent is given by the Secretary of State under the clause. It says that there should be a proper process, and that it should be dealt with through a statutory instrument.
Amendments 7 and 8 relate to what I shall call my major residual concern; most of my concerns about the Bill have been dealt with. Let me be clear that nobody—no Labour Member in the hall of fame of those who have worked on the Bill—doubts the need for TfL to be as solvent as possible, or to subsidise fares as far as possible. In proposing amendments to clause 4(2), we are not suggesting that it should not be open to TfL—this is a major change in the Bill—to use its property as security for money that it borrows. The idea is essentially to enable TfL to borrow cheaply. It has the power to borrow at present, but it does not have the power to secure that borrowing against its substantial assets, and I see no reason why it should not be able to do so. However, I do think that the phrase
“Those things are the charging by a TfL subsidiary of all or any of its property as security for money which it borrows”
goes a little bit too far, although it may be simply a term of art. That is why, in amendment 17, I have proposed the substitution of the words “no more than 25%” for the words “all or any”. That is still a substantial proportion of TfL’s property, and I should have thought that such sums would be at least sufficient to fund anything that it could be required to do. The Minister may say that the Government do not intend to allow TfL to mortgage its entire estate, but I think that a little clarity would be advisable.
The main purpose of amendments 7 and 8 is to ensure that, while TfL is permitted to borrow against its own property for the purpose of legitimate investment opportunities, it is not allowed to borrow for the purpose of providing guarantees or indemnities for third parties. The reason for that is, I should have thought, pretty obvious. While debating this Bill, we have engaged in long discussions about TfL’s conduct in the context of its new-found policy of joint venture with its private sector partners. I do not, in principle, oppose that new policy. The logic of it is that, rather than disposing of assets, TfL will acquire a capital sum that could be invested to give a return. It will embark on a joint venture with a development partner of some kind, and will then have both a retained stake in the land and a revenue stream from its development. I see nothing wrong with that, and it seems to fit better into the picture in which TfL needs such a revenue stream more than ever before. Our objection is to the type of partner and the type of deal with which TfL has been involved.
However, the same logic could be applied to TfL’s borrowing. Borrowing for its own purposes and its own uses against its assets is one thing, but borrowing in order to guarantee or indemnify a third party strikes me as completely different. I should like reassurance from the Bill’s sponsor before deciding whether the issue should be put to a vote. In explaining why I say that, I must return to the experience of Earls Court. Not only is it the experience that is most familiar to me, but it is a massive project.
A deal was done whereby a piece of land wholly owned, freehold, by TfL, with some leasehold interests—in some cases quite short leasehold interests—is held by its development partner, Capco. That has been converted into a joint venture. TfL is the minority stakeholder, with 37%, and therefore does not have a controlling interest in what happens to the land. The joint venture company’s purchase price of the TfL land, with the Capco leasehold interest, appears to be substantially below the market price—perhaps by as much as a factor of three, if we compare the price paid, £335 million, with the current valuation of the asset by Capco, which is in excess of £1 billion. Moreover, it is being paid for by the interest-free loan from TfL. Where is the risk, and where is the cost to the private sector partner?
Let us remember that the private sector partner is not the international property company Capco; it is, in that hallowed phrase so often used by the petitioners, and particularly by Mr Osband, a £2 company based in Jersey with no other assets, and which could disappear off the face of the earth, leaving TfL to pick up any liabilities at the end of the day. I and many others were worried that that was the type of property deal that TfL was entering into, and we hope that that worry will now be removed, certainly for any new ventures, by the withdrawal of clause 5. However, such arrangements remain a possibility in relation to how the secured borrowing by TfL would be put to work.
The Minister of State, Department for Transport (Mr Robert Goodwill)
I reiterate that the Department supports TfL’s commercial programme. We want TfL to maximise its unique position to ensure that its assets generate revenues to their greatest potential. Giving TfL greater financial flexibility will provide it with the opportunity to run its business in a more efficient way, to the benefit of taxpayers and fare payers. For those reasons, the Government continue to support the Bill and do not support the amendments tabled by the hon. Member for Hammersmith (Andy Slaughter), which would generally have the effect of watering down the Bill.
Ruth Cadbury
That aim is creditable, but my hon. Friend the Member for Hammersmith (Andy Slaughter) gave a number of examples of where he has concerns about TfL’s ability to negotiate effectively and to make the best of its opportunities. The Opposition have some concerns about the private sector’s ability to pull the wool over the eyes of public sector bodies—even those as large and experienced as TfL.
Mr Goodwill
I thank the hon. Lady for that intervention. I may be a bit old-fashioned, but I quite like a principle called democracy. London has devolution of power, democratically elected Mayors and other democratically elected members around the city. Giving people the power to make decisions is something that we should do around the country. We should trust the people to elect the right individuals and then trust them to make the right decisions.
Andy Slaughter
I take slight exception to the term “watered down”. I could have gone on longer, but I thought I had explained pretty fully that this is about not watering down but strengthening the Bill—putting in exactly those democratic elements that the Minister says he wants. I ask him to explain in detail why he objects to the majority of the amendments standing in my name, which simply do what he says: give a surer footing to the Bill.
Separately, on my important amendment 7 and what the Minister says about that, I should say that watering down has been done already by TfL, which has withdrawn the two substantive clauses to the Bill.
Mr Goodwill
Her Majesty’s Government believe that, rather than strengthening the Bill, the hon. Gentleman’s amendments have the effect of watering down the Bill’s provisions or making it more difficult for TfL to use them.
I also note the amendments tabled by my hon. Friend the Member for Harrow East (Bob Blackman) to remove clause 5. The clause would have enabled TfL to join with others in setting up limited partnerships. However, it had been amended, following scrutiny of the Bill by the Opposed Private Bill Committee, to provide that the Secretary of State must consent to the formation of the limited partnership by way of an order debated by both Houses. Given the burden that that would have placed on both Parliament and my Department, and the fact that it would have made it difficult in practice for TfL to enter into any limited partnerships, we support the principle of these amendments. I understand why they have been tabled and support them, perhaps slightly reluctantly.
We have already spent a lot of time talking about these amendments—indeed, we have spent a lot of time talking about this Bill altogether. I will therefore quickly conclude my remarks so that we can make progress.
Daniel Zeichner (Cambridge) (Lab)
I think it is fair to say that this Bill has had an arduous journey through both Houses; a petition to introduce it was presented to Parliament on 29 November 2010. Plenty of people have aged during its passing—some of us visibly. One who has not is my hon. Friend the Member for Hammersmith (Andy Slaughter); I pay tribute to him as he has clearly improved the Bill during these lengthy discussions. I also pay tribute to my hon. Friends the Members for Harrow West (Mr Thomas) and for Brentford and Isleworth (Ruth Cadbury) for their contributions tonight.
Let me take a little time to deal with the amendments that my hon. Friend the Member for Hammersmith has tabled, as they deserve detailed responses. New clause 1 would ensure that neither TfL nor any subsidiary of TfL would be able to
“lease land to third parties which:
(a) has been used in the preceding 10 years,
(b) has been considered by TfL in the preceding 10 years as suitable, or
(c) is adjacent to land in use or in use in the preceding 10 years,
for the provision or maintenance of transport services for passengers.”
That would safeguard significant, useful land from being leased to developers for private profit at the expense of public transport passengers—those who rely on London’s transport system in their everyday lives. However, it would not prevent land from being sold; TfL already holds the power to do that.
The new clause would also compel TfL, or any subsidiary of TfL, to carry out “a public consultation” before entering into a contract involving the development of land for anything other than the provision or maintenance of transport services for passengers. A process of consultation before using TfL’s land for anything besides transport services is very important, to make sure that local communities have their views and voices heard. The development of land should come from the bottom up, rather than the top down, and with the backing of local people. One need only look at the Earls Court development, for which TfL leased out its assets, to see why my hon. Friend believes that prior consultation before lease and development is so important.
Let me turn to clauses 3 and 4. An insertion to subsection (1) of clause 4 that the consent of the Mayor may be granted to a subsidiary of TfL only after the Mayor has consulted, and published a report of such consultation with, a variety of bodies, including the London Assembly and the London boroughs, is surely welcome. Discussion and collaboration with a range of stakeholders will ensure that a balance between public and private interest is retained. Similarly, the insertion into clause 3 that TfL must consult the Greater London Assembly and publish the report provides greater accountability and transparency. That is important, although we must also beware that the measures imposed on TfL do not become draconian.
A balance must be struck between scrutiny and freedom, and while TfL must act in the public interest, it should also not be restricted more unfairly than other public and private sector bodies. We are sympathetic to the aims of my hon. Friend the Member for Hammersmith. He, along with other Members, has campaigned tirelessly to ensure that this Bill provides the best outcome for Londoners. We are grateful that these amendments will give Ministers and the Bill promoter the opportunity to discuss further provisions in the Bill and to alleviate any remaining concerns, and I welcome their thoughts on that.
Let me turn now to the vexed question of the removal of clause 5, which I understand will happen and which we advocated. Undoubtedly, it was the most controversial element in the Bill, which in our view would have risked TfL entering into opaque limited partnerships. It is quite understandable that, although the clause has been withdrawn, some of my hon. Friends still have reservations about certain elements of this Bill, which is why they have a continuing desire to tweak its text—not least because of the bitter experience of the Earls Court development, to which frequent reference has been made tonight.
With TfL potentially morphing into the role of property developer, I quite understand why my hon. Friends remain concerned and seek reassurance on how new powers will be used. Even without clause 5, these are still significant changes, with significant implications for local councils and communities as TfL comes to exercise these new powers. However, we are pleased that, following the strong objections from Labour Members expressed in previous debates, clause 5 is to be withdrawn.
I must also mention the context against which this Bill has come to fruition. Transport for London recently said that, from 2019, its objective is to cover all of the operational costs of running the tube and bus networks in London through non-Department for Transport grant sources of income. It says:
“We have planned for some time to achieve operational breakeven by running our business more effectively and efficiently.”
That operational independence—for want of a better word—is happening far sooner than anticipated. TfL says that its overall income is being reduced by £2.8 billion over the period to 2020-21. Its resource grant from central Government, worth around £700 million annually, will be completely wiped out by the end of the decade. I would like to stop momentarily and point out, as I have done previously, that this means that London will be the only major European city transport network that will operate without an operational subsidy from Government. The Campaign for Better Transport put it succinctly:
“Almost nobody anywhere in the world runs a sizable public transport network without”
subsidies.
It could well be said that this Conservative Government are cold-shouldering our capital’s transport system. TfL is keen to limit the damage.
Mr Goodwill
The hon. Gentleman is talking about subsidies from the Government. Does he not agree that these are subsidies from taxpayers? They are paying for the subsidies.
Daniel Zeichner
That is a fine distinction. Most of us understand that the reason we pay our taxes is for exactly the kind of high quality transport system that a capital city such as London needs, and it is a huge risk that this Government are taking. The Government are forcing TfL to limit the damage, and they are using ingenious means and utilising existing assets to do so. The Budget indicates that there will be a move towards the full retention of business rates by local authorities, and we welcome the ability of local councils to have control over funding, but this is uncharted territory and we should be in no doubt about the risks to our transport system in London—risks that are a direct consequence of the political choices of this Government.
We want TfL to be modernised and to become a highly efficient public sector organisation. TfL has been making savings, some very difficult and controversial, but in its annual budget in 2014, TfL said that it is
“becoming progressively more difficult to achieve this without compromising our core services.”
This pattern of cuts is visible not just in the capital, but across the country. Cuts to local authority budgets have been extreme, leading the Local Government Association to point out that even if councils stopped filling in potholes, maintaining parks, closed all children’s centres, libraries, museums, leisure centres and turned off every street light they would not have saved enough money to plug the financial black hole they face by 2020. Department for Transport resource funding has been cut by 37%, from £2.6 billion in 2015-16 to £1.8 billion in 2019-20, representing a real terms decline of 71% since 2009-10.
Let us consider the fact that last year a record 8.6 million people were living in London. By 2030, that figure is predicted to reach 10 million. That is the pressure under which TfL finds itself. We are not ideologically opposed to TfL’s maximising the value of its assets to increase the revenue seized by the Treasury. They do what they have to do, and using resources efficiently is important to keep our capital city running.
On Second Reading, my hon. Friends and I expressed concern about certain measures in the Bill, including clause 5, which we have discussed. We are happy with the principle and understand the necessity of TfL’s having greater commercial freedoms, but the implications of those so-called freedoms were problematic. The controversial Earls Court development, a joint venture between TfL and the private developer Capital & Counties, set a worrying precedent for further public-private partnerships. Clause 5 would allow TfL to enter into limited partnerships with private property developers. Those partnerships are vague in legality and opaque in accountability.
I said on Second Reading that we must consider carefully the long-term impact of introducing powers to enter into those partnerships. We are reassured both by the fact that TfL has noted those concerns and by its decision to table amendments to remove clause 5 and references to limited partnerships from the Bill. It is encouraging that our opposition to that problematic part of the Bill was taken into account, and we are pleased with the outcome.
I also spoke on Second Reading about the importance of putting public needs above private profit. Property development to increase TfL’s revenue must not happen without the backing of local communities—those who are affected most directly. Those who bankroll projects should not subsequently be able to steamroller over local people. TfL is obliged to obtain the consent of the Mayor to dispose of an interest in land by sale or by granting a long-term lease. If that land is operational or has been in the previous five years, the Secretary of State for Transport must give his or her consent. It must be noted, however, that that did not prevent the unhappy saga around the developments at Earls Court from unfolding. The balance between the provision of affordable homes on the one hand, and maximising revenue to reinvest in transport, is an extremely significant and fine political judgment. We will be watching closely to ensure that proper balance is secured.
In conclusion, as clause 5 has been shelved, I think we are all hopeful that TfL can now move forward. We are keen to see how TfL uses its commercial freedoms to develop and improve the transport network that keeps our great capital city moving, but we will be watching closely to ensure that profit is used to benefit the public, and not the other way round.
Bob Blackman (Harrow East) (Con)
I support amendment 1, and consequential amendments 2 to 6, which I tabled on behalf of the promoter.
This is a private Bill promoted by Transport for London, as has been said. It was submitted to the House of Lords in November 2010, and reached this House on 4 March 2014. It took rather a long time to get through the other place. The Commons gave the Bill a Second Reading on 9 September 2014, and it was considered by an Opposed Private Bill Committee on 13 January 2015, where clause 5 was substantially amended. I shall come on to discuss that briefly.
A debate on the consideration stage took place in the last Parliament on Monday 16 March, and those of us who were Members then remember that as an epic occurrence. Many amendments were tabled, and the time allocated for debate expired before proceedings could be brought to a conclusion. Following the agreement of both Houses to the revival of the Bill in this Parliament, consideration was first proposed on 22 February 2016, but there was an objection, resulting in the need for today’s debate.
The promoter, TfL, has considered carefully the strength of feeling expressed in the previous debate in the House about clause 5. If the clause was introduced, it would allow TfL to engage in limited partnerships. TfL recognised, notwithstanding the amendments to the clause made by the Opposed Private Bill Committee, that serious concerns remained about the possible exercise of powers conferred by the clause and about the lack of transparency arrangements, which was raised by objectors. Accordingly, TfL took the decision not to press for clause 5 to stand part of the Bill. The amendment to which I am speaking would leave out that clause, and the further minor amendments grouped with it are consequential upon the removal of clause 5. I understand that that is accepted across the House.
Andy Slaughter
As I understand it, the hon. Gentleman is saying that TfL has listened to the democratic voice of this House and to the wishes of the elected representatives here. Is it as simple as that? If so, that is quite refreshing.
Bob Blackman
We have had substantial debates. The promoters listened to those debates, considered them carefully and decided that in order to ensure the passage of the Bill, rather than prolong the agony and the disputes, it would be better to withdraw the clause and demonstrate in good faith that they would not proceed with that element. That means, of course, that the Bill is substantially changed from its original form.
I shall touch on the amendments proposed by the objectors—in principle, the hon. Member for Hammersmith (Andy Slaughter). If I miss one of the amendments that he is pushing, he will no doubt intervene to clarify that. New clause 1 is substantially that which was debated on 16 March 2015. We had a very long debate on consideration at that time and it was clear that that was not going to proceed.
The present new clause would impose restrictions on the disposal of land and on the development of the land. Prior to the disposal of any land, various tests would have to be satisfied. Prior to carrying out any development other than the development of the land for rail maintenance facilities, consultation would have to be undertaken with a range of consultees, including unnamed trade unions and the London boroughs.
TfL is subject to the normal legal requirements relating to the development of land. Accordingly, prior to carrying out development of land, including for rail maintenance facilities, TfL has to undertake consultation in accordance with the rules and procedures relevant to the consenting process in question. Adding a further layer of consultation there is unnecessary. Furthermore, the process for securing consents for disposal of land is well established under section 163 of the Greater London Authority Act 1999. I believe the hon. Member for Hammersmith was a member of the Government at the time. Section 163 provides the statutory regime for the disposal of former operational land, including requirements for the Secretary of State’s consent. The promoters therefore consider that a further consenting process is neither necessary nor desirable.
Amendments 9 to 12 would lengthen the period of consultation. No solid argument seems to have been put forward by the proposer of the amendments on why that should take place. There would be a severe impact on TfL were that to take place. It would delay TfL improving its financial affairs and managing its operational undertakings, which would be detrimental to the tax-paying public and the fare-paying public. It is not clear what the impact of amendment 12 would be. It refers to a report being produced. TfL’s view is that the Bill, together with the existing processes and procedures under the 1999 Act, ensures that the exercise of the powers conferred by clause 4 will be properly exercised in discharge of statutory functions under the 1999 Act. That set of proposals is therefore unnecessary and unreasonable.
Andy Slaughter
The hon. Gentleman asks what the point is. The point is bitter experience. I bet that he could give just as many examples from his constituency as I can from mine of projects that TfL has gone into without proper risk assessment or consideration, and which have invariably wasted millions of pounds. What we are looking for here, before steps are taken, is a proper process of review; of stepping back and thinking.
Bob Blackman
Requiring the Secretary of State to go through a process of producing risk assessments and so on is clearly extremely burdensome. It is quite clear that TfL will have to carry out those functions itself in order to justify what it is seeking to do.
Amendments 7 and 8, which the hon. Gentleman pressed in particular, are new and were not considered on 16 March 2015. The clear issue here is that exercising powers under clause 4 is subject to the consent of the Mayor, when he is granting security on borrowing or acquiring companies, and the consent of the Secretary of State, in respect of core assets and revenue. I could go into a long and detailed explanation of why that would be unnecessary. The point is that these amendments would create legal uncertainty over the whole question of what the requirements would be. They would also create uncertainty about TfL and its subsidiaries exercising the necessary flexibility around assets and revenue streams.
Since the Bill was deposited—this is a very important aspect—the operational funding from central Government has been reduced, as has been said during the debates. It will now be removed entirely, but much earlier than anticipated. The Bill, including clause 4, will assist TfL in its efforts to achieve further savings and efficiencies, while at the same time upgrading transport networks, which, I remind the House, support new jobs, new homes and economic growth in London and right across the UK. I therefore hope that the hon. Gentleman will not press those amendments to a vote, because they are completely unnecessary, would create tremendous uncertainty and, indeed, would impact on TfL’s ability to generate the sorts of savings and to create the types of work that we all want to see.
Andy Slaughter
I think I want the long and detailed explanation to which the hon. Gentleman referred. What I want to know—this is not about the first part of clause 4(2), which I understand, about
“security for money which it borrows”—
is how
“the payment of which it guarantees, or in respect of which it gives an indemnity”,
first, improves TfL’s financial position, and secondly, does not create risks to TfL.
Bob Blackman
It is quite clear that the operation under clause 4(2) mirrors what TfL can do anyway under section 160 of the 1999 Act, and the scope of what a subsidiary can lawfully do by way of offering a guarantee or indemnity is not changed by this Bill whatsoever. From that perspective, the proposals to delete these references are almost irrelevant, given that the same powers exist under the 1999 Act. TfL is merely seeking to ensure that it has got this flexibility under those arrangements.
Bob Blackman
I have given way on a couple of occasions. If there is something else the hon. Gentleman wishes to raise, he will no doubt duly do so.
Most of the other proposals appear to have been put forward at consideration stage on 16 March 2015—they certainly formed a great part of the debate, but they clearly did not secure the agreement of the House. I therefore suggest that all the proposals put forward by the hon. Gentleman should be rejected and that we should end consideration stage and allow the Bill to proceed to Third Reading so that we can discuss its general merits.
Andy Slaughter
I appreciate the way the hon. Gentleman has approached the debate, but he will understand that I am a little disappointed by his response and by that of the Minister, who gave the proposals a cursory few moments. However, I am grateful to my hon. Friend the Member for Cambridge (Daniel Zeichner), who is on the Opposition Front Bench, for at least making some thoughtful comments.
It is not my fault, or that of any of the other opponents of parts of the Bill, that it has dragged on for five and a half years, and we will perhaps look at that issue on Third Reading. As I said, most of the proposals were probing or, I hope, improving proposals, and I am disappointed that they have been dealt with in a fairly cursory manner. However, I also said that I would not press them to a vote.
Let me go back to amendment 7. As I said, the powers in clause 4(2) already exist, but there is no ability to secure borrowing, or an indemnity or guarantee, against property. I asked what I thought were quite reasonable questions about that. I said that, whereas I understand the advantage of securing borrowing against property, I do not understand the benefit to TfL, the fare payer or the taxpayer of an indemnity or guarantee. I have not really received an answer on that from the Minister or the sponsor. I do not really blame the hon. Gentleman, who drew what turned out to be the short straw in being the sponsor of the Bill. TfL has serried ranks of experts in these matters—consultants, lawyers and property people—and the fact that we have not had an answer shows a certain amount of arrogance in the way this issue has been dealt with throughout.
I am not persuaded, but I am not going to push the proposals to a vote this evening. I hope, as I have said, that we have a new Mayor who will take a different view of how these matters are dealt with and how these powers are used. I agree that these issues are not at the centre of the Bill. As I have said several times, I appreciate the concessions that TfL has made. In that spirit, I am not minded to stop the Bill going forward now.
I simply think that it shows a lingering lack of candour and transparency and an attitude of “It’s none of your business how we run our railway” when those involved cannot give a simple explanation of a fairly simple, albeit technical point. However, there it is. I have made the points I want to make on the proposals, but I do not propose to put any of them to a vote tonight. I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
Amendment made: 1, page 1, (Recitals) leave out lines 6 and 7. —(Bob Blackman.)
Clause 5
Power for TfL to form and invest in limited partnerships
Amendment made: 2, page 3, line 24, leave out clause 5.—(Bob Blackman.)
Clause 6
Specified activities
Amendments made: 3, page 4, line 19, leave out “or a limited partnership”.
Amendment 4, page 4, leave out line 21 and insert “a member; or”.
Amendment 5, page 4, leave out lines 37 and 38.
Amendment 6, page 4, line 39, leave out “(c)” and insert “(b)”.—(Bob Blackman.)
Third Reading
Motion made, and Question proposed, That the Bill be now read the Third time.—(The First Deputy Chairman of Ways and Means.)
Mr Goodwill
I congratulate my hon. Friend the Member for Harrow East (Bob Blackman) on taking this Bill to Third Reading. I have listened with interest to the contributions of Members on both sides of the Chamber.
The outcome of the 2015 spending review means that TfL will need to find further savings and look to maximise its commercial income in the interests of both the taxpayer and the travelling public. That is why I welcome the principle behind the Bill. It will enable TfL to use financial practices and mechanisms to release greater value from its assets and financing arrangements. In short, it will maximise its unique position to ensure that assets generate revenues to their greatest potential. I understand from TfL that the Bill could realise in excess of £50 million in immediate benefits by improving its hedging power, enabling it to borrow money in a more cost-effective way and allowing it to make the most of its assets.
For all those reasons, the Government support the Bill and I look forward to seeing it finally receive Royal Assent.
Andy Slaughter
Well, here we are, after only five and a half years, with a Bill that is better than it was when the petition was first presented in the other place on 29 November 2010. It has had an interesting history. I suspect it will be reviewed in various civil service colleges and sixth forms in years to come—although I do not think it will give any pleasure to those who study it—as an example of how not to do a private Bill, because it really did not have to be like this.
There have been some highlights, or lowlights. There was a time when the Bill was considered by the other place to be uncontentious: it went through Committees unopposed and its Second Reading was a formality. Then, up popped an organisation called the West London Line Group, which I am pleased to say is stationed, if I can put it that way, in my constituency. It pointed out that TfL was seeking, under what was then clause 4 of the Bill, to dispose of any land it wanted without the consent of the Secretary of State. After important but cursory scrutiny, TfL backed off from that most contentious and controversial part of the Bill.
The Bill then went to sleep for a long time. There were periods of 18 months when nothing happened. I do not know why that was. I have never actually asked TfL and I am not sure it could tell me even if I did. When the Bill finally came to this House in 2014—four years into its life—things became a bit more lively, because a number of parties, which I mentioned earlier, identified that it still contained some controversial parts.
More importantly, we were beginning to see, or suspect, that there were other motives behind the Bill. I do not know what TfL knew in 2010 about how quickly its revenue stream was going to be withdrawn—I suspect that it must at least have thought that that would be the case—or whether it was contemplating some of its proposed large-scale property deals. To some extent, we owe a debt of gratitude to Capco for its aggressive exploitation of the West Kensington and Earls Court development, which has become a cause célèbre in many ways. Indeed, it will shortly be the subject of a complaint to the European Commission on state aid, because so bad was the deal that TfL got for the Earls Court exhibition centres that those who are making the complaint contend that it amounts to unlawful state aid. In other words, the subsidy and the help that TfL has given to Capco to allow it to boost its share price, boost its profits and boost its directors’ bonuses may be unlawful under European law. We will see how well that complaint fares, but the fact that it has been contemplated suggests just how little confidence and faith many of the people who have scrutinised the Bill have in TfL’s ability to get a good deal.
I said that I would mention what the RMT has said about the matter. In the press release that it put out today, it stated:
“The construction firms with which TfL plans to engage, are running rings around TfL, helping the hapless organisation offload its prime London assets at well below the market rate.
We have no confidence in TfL to be able to secure a fair price for its land—and our concerns are borne out by its dreadful governance failures in relation to the development of Earls Court”
and:
“There is a fresh financial crisis brewing—meaning that there is an increased risk of corporate defaults—especially in the over-leveraged property sector.”
I pause to say that Capco is now discounting its luxury properties by about 20%, according to press reports last week. The press release continued:
“TfL is entering the property development game at precisely the wrong moment and in precisely the wrong way”.
That is how RMT put it. I might have chosen different words, but I cannot disagree with those sentiments. Those were real fears about the way in which TfL was, in a completely new way but across the board in relation to its assets, turning 5,700 acres of land into development sites.
As we found out, the whole thing was about money, specifically the Chancellor’s decision to withdraw £2.8 billion of Revenue funding from TfL over the next five years. That has led TfL, as I described in the earlier debate, to indulge in what I believe are risky, dubious and foolish interventions in the property market, which have allowed developers to use whatever vehicles they like with the support of a public sector organisation. It really stuck in the craw that the House was going to pass legislation that would have enabled those sorts of deals and developments to be done. It is good that the clause that contained those provisions was withdrawn in the other place and clause 5 has been withdrawn today.
If anybody does not believe me, I am happy to take any hon. Members to the Earls Court site, where they will be able to see the huge disruption that has been caused to a whole neighbourhood of London by dust, noise, the removal of asbestos, the threat to the security of residents and property, and the way in which the interests of small business, whole estates of people and small streets are being overridden. TfL has no control over that any longer, because it is just a sleeping partner. It is now a minority stakeholder in the land that it used to own, which it sold off at an undervalue, with loans that it guaranteed at nil interest rate. That cannot give us any confidence that if TfL had been allowed the powers that clause 5 would have given it, it would have used them in any proper way.
I am pleased that we have reached this stage, and I was pleased to hear the hon. Member for Harrow East (Bob Blackman) say that TfL has, belatedly, properly responded to the concerns that have been expressed not only in this House but in the other place. I am glad, therefore, that the Bill, as the hon. Gentleman candidly admitted, bears no resemblance to the one that was introduced five and a half years ago. Not only have five and a half years and a lot of debating time elapsed, but we have ended up with something that is a mere shadow of what it was before.
There is a remaining concern that I do not feel has been addressed. I did not press it to a vote. I do not think I would have won the vote if I had—I say that rather churlishly—judging by what happened on a previous occasion, when the payroll vote all came in to vote. I am sorry if I have again kept them away from their dinner tonight. As I said a few moments ago, I worry that there is still that continuing arrogance. Those at TfL say, “We know best”, but they do not know best. They do not have a track record of doing this. In some ways, I would not expect them to have that. They are mainly transport people and they are running a railway—and quite a lot of the time, they do a good job of running a railway—but they are now getting into bed with some of the biggest property sharks and some of the least appropriate people to develop London. I am afraid that the way in which they are doing so really is a case of the lamb trying to lie down with the wolves.
I am worried about that for the future. I suspect that it will not worry me so much once we know the outcome of the mayoral election. Nevertheless, the Bill still indicates things—including in clause 4, which we have just debated in relation to amendment 7, that will still allow TfL to guarantee and indemnify third parties, and to secure those guarantees and indemnities against their own assets—that TfL should not be in the business of doing.
When we started to debate the Bill a couple hours ago, my hon. Friend the Member for Harrow West (Mr Thomas) raised some very important points, which I said I would address on Third Reading, in relation to the sort of developments we can expect on TfL land. What is the purpose of the Bill? We now know—we did not know it, although TfL may have done, back in 2010—that it is mainly about making up for lost revenue. It is mainly about TfL being deprived of billions of pounds of revenue by the Chancellor. However, it is also about the type of city we will live in in London, because TfL is one of the largest public sector landowners and it is seeking to develop many of its sites. I have mentioned some in my own constituency or borough, such as in Parsons Green and Earls Court, and others may well be brought forward in the future. We do not know the list of developments, even though several hundred major sites are on it. One of the first things that the new Mayor could do is to publish that list and make sure that all MPs take an interest in it. I suspect that there would be substantial interest among London MPs from all parties when the list becomes available.
TfL has a wider responsibility. It should not just keep fares as low as possible, although that is important, and run an efficient railway, but ensure, as custodian of the largest part of the public realm in London, that it deals with that properly. It has a fantastic history: some TfL stations are among the best architectural buildings in London. The pride that ran all through the Victorian era and into the inter-war period—in the 1930s, there were developments of lines and stations out to the suburbs—is a fantastic credit to London and this country. It would be a terrible shame if, in the 21st century, TfL decided to build, through the variety of investment vehicles that we are tonight giving it permission to use, not just hideous overdevelopments and monstrosities, but non-functional buildings that do us no credit whatsoever either architecturally or in terms of use.
Increasingly, that is we are seeing with the sort of development partnerships into which TfL is going. When I looked at the short list of development partners that TfL has brought out I shuddered because they are exactly the same companies that are ruining the borough I live in with their riverside developments, their tall, faceless towers and the things from their pattern books that show no architectural merit whatsoever. Such developments minimise the proportion of affordable housing and the amount of amenity space, and they do not provide any social benefit at all. Unfortunately, hard-pressed local authorities—as the planning authorities, this falls back on them—which are cutting their budgets by up to 50%, are in no position to deal with that.
This is a David and Goliath battle. It is not City Hall or the town hall that holds all the cards—the bureaucrat and Big Brother. The developers hold all the cards. They can afford the people who can make the viability assessments that they want, as well as the surveyors, architects, lawyers, consultants and accountants to run rings around TfL and the boroughs to get the developments that they want.
Ruth Cadbury
I thank my hon. Friend for his work on the Bill and what he has achieved—in particular, the removal of one specific clause. He rightly raises concerns about the planning system and how TfL’s potential private sector partners could run rings around local authorities. Is it not true that the situation will be even worse if the Housing and Planning Bill is passed, as the Government are, in effect, removing and reducing the power of local authorities to intervene actively in planning applications and decisions?
Andy Slaughter
I am very grateful to my hon. Friend. She makes two very good points about the Housing and Planning Bill. One is its anti-localist feel, as it takes planning authority away from the boroughs. The other is what that Bill is doing to housing. It is not just the case that the Government, and the coalition Government before them, have been negligent. They have been actively supporting unaffordable housing and diminishing the role of affordable housing in London.
That is very clear in the Housing and Planning Bill, in which we have not just the sale of housing association properties, but the subsidising of those sales by the sale of council properties. I have had direct experience of this problem. My borough is the only one in which, under Conservative control, the quantum of social housing actually decreased over a period of years. It did not go up at all; it went down, through demolitions, sales and other matters of that kind. That is exactly what we are seeing. The situation is getting worse. The point that I made earlier—I hope my hon. Friend agrees with it—is that we have to build more affordable housing, social housing and shared ownership housing, and more private rented housing that is affordable, especially for young people. We also need genuine low-cost home ownership.
That should be being delivered through a Bill such as this one, because TfL has that responsibility as a major public landholder in London. But it is not being delivered. The type of investment vehicles promoted through the Bill and the type of partners that will be selected will simply mean we see more of what we call safe deposit flats being built.
TfL may ask what it can do, given that its money is being taken away by the Government and it has to pull as much money as it possibly can from commercial developments. I have already explained why I think that is a short-sighted view, which may not achieve even its short-term objective of making TfL a lot of money. The luxury property market may also be in trouble.
We need sustainable development, in town centres and around stations in particular. We need car-free development, for people of all income levels and from all backgrounds. Those are the people who make our city work. Of course, if those people are able to live in zones 1, 2 and 3, they will not be clogging up the tubes and buses, as they will be nearer to where they work. TfL already has major capacity problems, and is making a rod for its own back by helping with the process of social cleansing and pushing people out of London.
This Bill should be about Londoners’ housing and environment; it should promote air quality and alternative means of travel to the car. It should also be about having an efficient and effective transport system. It is not about any of those things, but about promoting dodgy investment vehicles with dodgy investment partners to maximise the gain for private sector development companies without their taking any risk, as that risk will instead be loaded on to the public sector, in the person of TfL. That is why we have opposed the Bill so strongly, over the past two years in particular, but also before then.
I am glad that TfL, the sponsor and possibly even the Government have listened. I suspect we have succeeded in modifying 90% of what we wanted to modify. It just did not have to be like this. When I met TfL two or three weeks ago, I said “Do you really want to go through another long debate like this in Parliament? Why don’t you hold this back until the new Mayor gets elected? I bet you could agree something that we could all agree on within half an hour.” I am afraid it did not take that in the spirit in which it was intended and it wished to press ahead. Well, it has got its Bill now. I suspect it wasted a very large sum of fare payers’ money on all its experts to get it through, which it did not need to do. I suspect it is not at all happy with the result. I hope it has had an object lesson in how Parliament works. We will not put up with the pig in a poke that the Bill was in its original form.
There are some good provisions in the Bill, but almost by definition we have not discussed them because they are unexceptional and have general support. There are still one or two bad things in the Bill. The Bill has had an unhappy history. I hope that at the very least TfL will learn two lessons: how to approach bringing Private Bills to this House and to the other place; and that we will continue to scrutinise how it does deals and how it tries to develop its property portfolio. TfL has to do this not only in its own interests as an organisation, but in the interests of the fare payer and the taxpayer, and in the interests of Londoners as a whole.
Bob Blackman
It is a pleasure to rise at what I hope will be the end of a very long journey. The purpose of the Bill is to provide TfL with additional powers, so it can meet its business needs more flexibly and take advantage of more efficient arrangements for the stewardship of its financial affairs. TfL has identified various opportunities for maximising the value of its assets. They can only be realised if TfL acquires the new statutory powers or if the restrictions on the exercise of its current powers are removed.
This has been mentioned before, but let me put it on the record: TfL is one of the biggest landowners in London, with 5,700 acres of land. Clearly, there is a pipeline of some 300 sites, with 50,000 new homes to be provided in London. We know above all else that in London, the capital city of this country and one of the major cities of the world—if not the major city in the world—we need to provide more new homes and to keep people moving to create investment for the opportunities for jobs and for a better quality of life for everyone. The Bill enables TfL to play its part. It is clear that from October 2015 we already have 75 sites that will generate 10,000 new homes over the next two years. Two thirds of them, contrary to what the hon. Member for Hammersmith (Andy Slaughter) said, will be in zones 1 and 2. It is not true to say that sites are not being provided for new homes for Londoners and for people who want to make London their home.
Bob Blackman
I will make a bit of progress and then maybe give way. The hon. Gentleman has had plenty of opportunities to put his own perspective and spin. I want to set the record straight.
Four sites in particular have been invested in recently by TfL: 360 homes at Nine Elms tube station, with 25% affordable; 55 homes in the Fenwick Estate near Clapham North tube station, of which 100% are affordable; the development at Northwood is only 20% affordable housing, but TfL has respected local demand to invest in a brand new tube station with step-free access; and at Parsons Green TfL has submitted a scheme with 40% affordable homes, which it has now withdrawn to allow further time for consultation with local businesses and residents. It is clear that TfL is responding to the request and demand for additional housing to be provided in the capital.
The Bill contains only three substantive clauses but is of great importance to TfL because it will enable it to deliver much better value for money for the fare payer and taxpaying public. The growth in London is relentless and driving up demand for services. The tube has record ridership year on year and our roads are also under great pressure. To keep London working and growing, TfL has to invest just to keep the assets in good repair, modernise the rail and road networks and improve reliability. The reality is that all its revenue is reinvested in TfL projects, be it on the roads or rail. Clearly, the issue that will be debated in the run-up to 5 May is how we keep that revenue stream increasing and ensure a fair balance between the taxpayer and the fare payer.
TfL’s £11 billion capital funding settlement from the Government runs from 2015-16 to 2020-21—the life of the Parliament—and includes a total of £5.8 billion in investment grant, £1.4 billion in general grant from the Department for Transport and, crucially, £3.8 billion in borrowing powers. That allows TfL to invest £1.7 billion a year to modernise the road and rail networks. The Circle, District, Hammersmith and City and Metropolitan lines will be the next four tube lines to be upgraded. I would have thought the hon. Member for Hammersmith would welcome that, seeing as his constituents use those lines, as do mine—I think, in particular, of the Metropolitan line.
Bob Blackman
No, the hon. Gentleman has had plenty of time to put his point of view.
From 2019, TfL’s objective will be to cover all the operational costs of running the tube and bus networks through non-DfT grant sources of income. It plans to do this over an extended period by running the business more effectively and efficiently. The continuous savings programme has generated a 15% reduction in costs. Following the November spending review, TfL has had to accelerate and build upon that because, as has been alluded to, its overall income is set to reduce by £2.8 billion over the period to 2020-21. The Bill will provide TfL with additional powers to run its business more flexibly and take advantage of more efficient and economic financial arrangements. This will allow TfL to maximise the value of assets, bear down on fares and deliver significantly better value for money to the public.
The first of the substantive clauses, clause 4, will allow TfL’s subsidiaries to borrow and grant security over assets and revenue streams. We have had a long debate about this issue in relation to the amendments. The powers will allow TfL to access cheaper finance for projects and to structure security so that a creditor has recourse only against subsidiary borrowing. TfL will be able to purchase subsidiary companies that already have secured debt without having to engage in costly loan restructures. Very importantly, the Secretary of State’s consent is required if core assets are to be offered as security, and the Mayor must consent to all other arrangements.
Where TfL owns more than 50% of a joint venture, clause 4 will enable TfL’s subsidiary to incur debt using the assets of the subsidiary as security. That does not advantage or disadvantage a private partner involved in the joint venture, as the increased value of the assets will be brought about with the greater flexibility in clause 4 and will be shared by TfL and the private sector partner, in accordance with the terms agreed between the parties.
Clause 5 has now been removed. Clause 6 seeks to expand the type of entities through which TfL’s commercial activities must be undertaken. TfL is currently required to undertake its profit-making activities through a company limited by shares that is either a subsidiary or a joint venture. The clause amends this restriction to give TfL the option of using any type of entities that TfL has the power to form, in addition to a company limited by shares. TfL would be able to use a company limited by guarantee or a limited liability partnership. Importantly, clause 6 preserves the policy that TfL must undertake commercial activities through a taxable entity by requiring that the subsidiary be a member of a limited liability partnership. Clause 6 will enable TfL to conduct its affairs more flexibly and net the maximum value from the assets.
Clause 7 amends TfL’s hedging power, responding to changes in the way that financial institutions hedge risk away from specific commodity trading to trading by indices—as, for example, in the use of an oil price index, as opposed to a barrel of Brent crude oil. It also gives TfL the capacity to enter into a derivative investment when TfL is exposed to a risk by virtue of contractual arrangements for the provision by others of public passenger transport services—for example, if there were movements in fuel prices, it would allow TfL to hedge the costs. Clause 7 also clarifies that TfL may use its hedging powers in respect of its liability to any pension fund. It is not proposed that TfL enter into any derivative investments on behalf of the TfL pension funds, but TfL will be able to hedge its contribution risk to the fund.
Given the benefit to TfL pension fund members, some of whom will be members of RMT, the hon. Member for Hayes and Harlington (John McDonnell), who is no longer in his place, acknowledged the merits of clause 7 on Second Reading. Once again, I find it hard to see the logic of the hon. Member for Hammersmith’s continuing to block the Bill. It seems that my hon. Friends and hon. Gentlemen have misconceptions about the scope of the Bill, but, contrary to assertions made on Second Reading and elsewhere, the Bill does not give TfL any new powers to sell or develop its land. TfL has had those powers since it was created in 2000, and it is not seeking to enlarge them in any way. Neither can TfL act autonomously when it wishes to dispose of its interests in its land, including when granting a long-term lease. TfL must obtain the consent of the Mayor to sell surplus land, and if that land is operational land or has been operational land in the last five years, the Secretary of State must give his or her consent.
Some colleagues suggested on Second Reading that TfL’s track record shows that it is not competent enough to be given greater powers and that it should focus on its core function of providing transport services rather than delving into joint venture projects with developers. It cannot be disputed that TfL serves more customers more efficiently and more reliably than at any point in its history. Providing public passenger transport will always be TfL’s main focus. The powers it seeks in the Bill will not detract from its discharge of those functions, and the discrete scope of the Bill should be taken as indicative of a change in TfL’s priorities.
The Bill will, however, give TfL greater opportunity to secure sustainable income from its assets, rather than a one-off capital receipt from their disposal. Very importantly, that is to adopt a long-term strategy to the management of its property estate, which will allow TfL to maximise the value of its assets and deliver better value for money to the public.
I am somewhat confused because it would appear that the hon. Member for Hammersmith is so lacking in confidence in his candidate for the mayoralty that he would seek to block this Bill in order to get him there. I am looking forward to my hon. Friend the Member for Richmond Park (Zac Goldsmith) assuming his place as Mayor of London on 6 May, and we can look forward to this Bill helping him to deliver more homes, more jobs and better and safer transport for the people of London.
Daniel Zeichner
You will be pleased to hear, Madam Deputy Speaker, that I do not intend to repeat the substantial points I made in my earlier contribution—[Interruption.] That is no doubt the biggest cheer of the night. There is always a but, however, and I shall reiterate one or two minor points. Let me first put on record the thanks of Labour Members for the sterling efforts of our hon. Friend the Member for Hammersmith (Andy Slaughter), who has staged a heroic fight over many months and years on this issue. As a consequence, we end up with a better Bill.
Let me return to my earlier point: the pressure on TfL is clearly a consequence of the substantial cut in support from the Government in the recent Budget. That has caused a significant shift in the way in which TfL operates. I hear what others have said about its capacity to use resources well and make the best possible use of its assets, and we hope that their confidence is justified, but we also share the misgivings expressed by my hon. Friends about some of the potential bedfellows whom TfL may seek out. This becomes a much wider and more complicated debate about the role of public authorities such as TfL at a time when so many people in our city are experiencing such acute housing problems. Labour Members, certainly, feel that TfL’s most important role is to keep our capital working and moving successfully.
Nevertheless, we have a better Bill, not least because of the withdrawal of clause 5, which, in our view, would have led us down a dangerous route. On the basis that we have secured some improvements, let us end the evening on a positive note. We hope that TfL will be able to take the opportunities that some Members have described, although we ourselves still have some reservations.
Question put and agreed to.
Bill accordingly read the Third time and passed, with amendments.