Local Government Finance Bill
Baroness Kramer Excerpts(13 years ago)
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Baroness Kramer
Baroness Kramer
In moving this amendment, I shall speak also to Amendments 51, 52 and 53. The amendment is in my name and that of my noble friend Lord Tope, but I hope that there is broad sentiment around many of the issues that these amendments contain.
The amendments address tax increment financing. For anyone who remains in doubt, and I know that most here are well aware, tax increment financing is simply a mechanism for using future increases in business rates generated by a project, such as new infrastructure, to finance that project in the first place. In other words, it allows a local authority to trade in future taxation income for the present benefit that will create that taxation stream.
As many noble Lords are aware, this is a mechanism commonly used in the United States, where it has provided extensively for the regeneration of communities, but it dates back to Victorian times in our own country and similar kinds of mechanisms effectively created many of our great cities. It is very British at its core. We are all delighted to see this come back into the framework of local government thinking, but we would also like to see it come into the real economy in an effective way—in fact as well as in framework and description. That is why I tabled these amendments.
Amendment 50 is relatively straightforward and effectively puts tax increment financing into the Bill. It is beyond most of us to understand why it is not there in the first place, particularly when the Chancellor in his Budget referred to TIF, its acronym, frequently and in virtually every debate uses the phrase “tax increment financing”. For the sake of clarity, for goodness’ sake let us deal with that and make sure it is in the Bill itself.
Amendment 51 goes to more substantial issues. Many of us who are concerned about local government and about the broader economy have been looking to TIF as a way to finance much needed infrastructure, particularly in the cities that are the engines of the economy. This comes at a time when the nation needs growth above all things. We are also aware—and anyone can look at today’s Financial Times—that the Government have found it exceedingly difficult to package together infrastructure financing. All of that makes TIF more important.
It is of great concern that the Chancellor has, in effect, capped large projects or TIF 2—I was not going to address TIF 1 very much—at £160 million. Indeed, the Minister will be far better aware than I am of the many applications from the core cities. She will know if there are good quality infrastructure projects that could and should be funded by TIF that exceed that £160 million figure. I do not have any insider knowledge, but I would be stunned if that were not true. A PwC study not that long ago showed that something like double that could be put in train in one year although it would take many years to work its way through. The demand and need are clearly there.
In addition, volume matters in order to create a market. I return to the point that the FT makes about the difficulty of accessing the financial markets for infrastructure finance. Numbers such as £160 million are frankly not worth the candle as far as the financial markets are concerned. To develop the expertise, achieve the understanding, get mastery over the rules and legislation and then go out and build the investor base that will buy, there is a need for a steady stream of substantial projects, not just in year one but going on year after year, to create and build up a market.
We know that the financial markets can absorb this kind of financing because they do it for the US. British banks as well as American banks do it for US cities. Continental banks are doing it for the US and the continent. In other words, there are many players, but they will not do the work, engage themselves in the process and deliver the financing if they are only going to get a trickle. They need a proper volume. On the one hand, we have projects that are positive for the economy and on the other hand we have a mechanism that can fund them and the goal of these amendments is to help the Government to bring these two together.
We recognise that behind much of the Treasury’s resistance to allowing projects beyond a cost of £160 million is the notion that TIF funding will have to be added to the numbers for the deficit. I think that that is highly questionable and many others would consider it to be so. If PFI funding was off books, then, my goodness, this funding is far more off books because you are generating a project whose cash flow returns paid for the project in the first place. It is an absolutely classic example of off-balance-sheet financing. Indeed, it is far less risky than something such as PFI, which included all kinds of variants and complications, whereas, almost by definition, TIF draws together the immediate focus of the initial investment and the tax revenue generated over the life of a project. That link is immediate and direct, whereas it was much more obtuse and diffused with PFI.
As I look at the accounting standards, I wonder whether enterprise zones are being treated differently, even though their financing mechanism is essentially identical. This is something that I do not know the answer to; we asked, but have not received an answer. Are they getting different accounting treatment? If they are, that simply underscores the point.
The amendment provides,
“that any indebtedness incurred against such amount shall not be treated as a liability of the public sector through adjustments to the Accounts and Audit Regulations made under section 27 of the Audit Commission Act 1998”.
When the Minister was kind enough to invite Members from all sides to have discussions with the Bill team about a range of issues in the Bill, I asked whether some justification could be provided for this accounting approach versus forms of accounting used for PFI and enterprise zones. I do not know whether it has been possible to develop that. I also asked whether the Government have talked to the financial markets to understand what needs to be put in place for these to run as live, rather than theoretical, projects. Going back to the FT article, we have a real problem with the gap between theory and practice, but we have an opportunity to close it in this Bill.
The other two amendments follow on quite closely. With regard to Amendment 52, perhaps someone can explain to me why we have to have a specific date on which designation takes place—the first day of a year, or whatever it is. That is completely beyond me. I think that Amendment 52 is just a bit of good sense.
Amendment 53 is another way of approaching this issue. It essentially says to the Treasury that the way to make a decision about whether to do TIF financing is to look at the individual project proposed, decide whether it is a damned good project that needs to be done and can be paid for in the way proposed, and, if it passes the various tests and criteria, authorise it. It takes away the need to set a fixed ceiling and allows the Treasury to make intelligent decisions about the projects that come before it, judging them on their individual merit. At the same time, the Treasury is in a position to look at the overall economy and public finances. That would allow an intelligent, customised approach to these kinds of projects. None of this tackles TIF 1—an area I wish the Government would look at again. However, we talked about that at Second Reading. I beg to move.
Baroness Kramer
I will just add a word because the points that the noble Earl, Lord Lytton, makes are important. One reason why we framed Amendment 53 as we did is so that the Treasury can take a look at projects. In the United States no federal approval takes place—essentially, it is the state that decides off its own bat. In the UK, we are saying to the Treasury, “We are not going to just say to local authorities, ‘Do as you will’”. The Treasury has the opportunity to come in and take a serious look and will give permission, but on a project-by-project basis.
I was on the board of Transport for London after the Jubilee line was completed. The point the noble Earl makes is the reverse one, and the Jubilee line is an ideal example. Even with overruns, the Government put in something like £3.5 billion to build it and developers walked off with something in excess of £30 billion in profit because of the increased values around the various stations, extra rents, land prices and whatever else. At least now, with the opportunity to capture increased business rates, we can get some of that money in to create the project in the first place.
In effect, what happened in London was that the money did not circulate back and the whole Jubilee line project was delayed for years until the Government thought that they could find capacity within the public accounts. It would have happened immediately, and been of great benefit to this country, if people had been looking at TIF financing structures. That is one of the reasons why they are so valuable.
The Earl of Lytton
My Lords, that was what I was trying to say in terms of the Jubilee line, so I am sorry if I gave a false impression. These things are vitally important to leverage in that sort of level of finance. My only concerns are the times we live in. If one is dealing with a development appraisal in conventional valuation terms, the process contains a high number of price-sensitive variables, so much so that my professional body, the Royal Institution of Chartered Surveyors, does not really advise using that sort of development appraisal, or residual valuation, approach for producing what it calls a regulated purpose valuation because of the inherent number of price-sensitive variables. I do not want to pour cold water on things—I simply wanted to point out that TIF is a tremendously good idea but we must make sure that the circumstances are ones in which it can robustly survive.
Baroness Hanham
My Lords, this has been, as I thought it would be, a very interesting debate. I am not necessarily going to be able to give noble Lords all the enthusiastic encouragement that they look for but there is no doubt that this is something that will generate more discussion, and I accept that.
I know from the noble Baroness’s Amendment 51 that there has been a search for the words “TIF” and “enterprise zones” to be spelt out in the Bill. They are not specifically identified but I assure the Committee that the provisions under paragraph 37 of new Schedule 7B deliver both TIF 2 and enterprise zones. An amendment that names TIF in the Bill is therefore unnecessary.
Before turning to the substance of the amendments, I want to say that it has been interesting that the whole discussion has been on the basis of TIF 2 and none of it on TIF 1. I need to point out that the measures in the Bill relate to TIF 1, TIF 2 and enterprise zones. For the benefit of the record, I think that at some stage we need to spell out what TIF amounts to.
However, we want to clarify the position and remove misunderstandings about what is possible or not possible within the policy. I think it would be fair to say that noble Lords have not really acknowledged that, as a result of the Bill, all local authorities will have unfettered access to a share of business rate growth to increase their potential borrowing. As things stand at the moment, under TIF 1 it will be possible for local authorities to undertake developments unfettered. They can do so with their normal prudential borrowing.
TIF 1 rests wholly within the business rate retention scheme and the core feature of the rates retention system, including the levy and reset. Beyond that, the Government will not impose any further constraints, and local authorities will be able to get on with it. I know that the criticism has been—
Baroness Kramer
We did not raise TIF 1 here because it is more of a reset issue, but will the Minister acknowledge that, with the way the reset works, the capacity to do TIF 1 will be exceedingly limited because the whole project has to go from conception to completion and complete repayment within a very narrow reset period? The consequence is that certainly by year two or year three it will be absolutely impossible to raise the financing because nobody will have any certainty that there will be a flow of business rates beyond the end of the reset date to complete the payment cycle. Perhaps the Minister will acknowledge that it is a de minimis amendment. The language may not be de minimis but the effect of the way in which the reset period works makes it de minimis.
Baroness Hanham
I will persist with my view that there is an advantage here for local authorities in that they will have the opportunity with tax increment financing within the reset period of seven years, and then, with the longer reset period, 10 years, to help with those projects. In addition, the Government will guarantee long-term certainty over revenues and enterprise zones—as mentioned by the noble Lord, Lord Beecham —meaning that local enterprise partnerships, with which the revenue will sit, will be free to undertake long-term borrowing without any central government controls. Those are the two areas which do not come under TIF 2.
Finally, the Government stated, and made clear, in the 2011 Budget that they will support a limited number of TIF 2 schemes in the core cities, to which the noble Lord, Lord Shipley, referred. The Secretary of State may specify, in regulations made under paragraph 37 of new Schedule 7B, that business rates uplifts, from a very clearly defined area, will be disregarded from the levy and reset calculations for a specified period. The amendments specifically concern this measure.
The Government are fully committed to supporting growth. I noted carefully what the noble Lord, Lord Best, said about housing and about housing construction stimulating the economy. We will continue to have that debate, but the measures to do that are currently in place and are not related to TIF. There have also been a lot of questions about the £150 million in support from TIF for what will amount to a limited number of core cities. Some of those core cities have been announced today and are currently putting forward substantial and interesting proposal bids for this money. I have no doubt that it will work its way through the system.
Amendment 51 seeks a way to get TIF 2 reclassified as non-public sector debt, to which I say, “Oh dear”. Business rates are a tax, and taxes are uniquely established by the tax-raising power of government. Therefore, TIF 2 must be recorded as government borrowing. There is absolutely no choice to be made about how TIF 2 is accounted for—it is not the Treasury sitting on our shoulders here, it is the Office for Budget Responsibility that has made that decision. It is an independent body and has made very clear how this will score.
Furthermore, core cities that are successful in the TIF 2 competition will be undertaking additional borrowing that has not already been reflected in the Government’s local authority self-financed expenditure forecasts. The Government have been clear that we will need to limit the amount of TIF 2 that occurs so that the Government remain within the wider deficit reduction plans.
In respect of balance sheet issues concerning enterprise zones, the policy to allow rates to be retained within the zones will lead to an increase in the local authority self-financed expenditure forecasts and will be scored as public expenditure. As the business rates retention system does not start until April 2013, no costs have yet been accrued. The Government are working with local enterprise partnerships on forecasting these costs and will be discussing the detail with the Office for Budget Responsibility ahead of the Autumn Statement. That may give some substance for the noble Lord, Lord Beecham, who says I have not answered any of his questions. Given this, it is not possible to take TIF 2 schemes off the balance sheet, as the amendment seeks.
Amendments 52 and 53 would not only remove important controls from the system—I have already explained the importance of maintaining the Government’s fiscal deficit policy—but would add further layers of complexity to the operation of the scheme. That would potentially impact on all the calculations of central shares and precepting authorities, removing the certainty that precepting authorities would have about the income they were to receive in that year. Noble Lords will not be surprised when I say that I cannot accept their amendments. I will not be surprised if they say they are going to return to this at a later stage.
Baroness Hanham
Sorry, I have to keep looking over my shoulder for. It would be better for me to quit looking over my shoulder and say that I will answer with detail in writing.
Baroness Kramer
My Lords, I am absolutely fascinated by the comments on the Office for Budget Responsibility. It is incumbent on the Government to provide us with the analysis or the statement that it made that requires this from its perspective to be on books because it would be very interesting and beneficial to everybody to get the comments of the accounting community and some of the various international standards boards. It would mean that we could have a fully constructive discussion. I cannot think that any of that could possibly be confidential. In fact it would be perfectly odd if it was confidential to explain why one made a decision that something needed to be allocated to one particular set of accounts or another. That would be exceedingly helpful.
It would also provide us with the criteria, because obviously there are many different ways to structure TIF projects. If various poor cities are bringing forward their proposals in such a way that they have inadvertently set them up so that they fall on books when, with some further thought and different structuring, they could be off books, that would be extremely sensible for everyone to know. That surely must be in the public arena, so I look forward to that.
Having heard the tone of this meeting, the Minister is exactly right to understand that this is an area that we would wish to pursue. I so much appreciate all of the various speeches and analysis that have happened from the noble Lords, Lord Jenkin and Lord Best, and others. It underscores the importance to local authorities up and down the country who are trying to drive forward economic growth in their communities and see TIF as a very significant tool with which to be able to achieve it.
I thank the Minister for her explanation, but she is exactly right: we will continue to push and I hope that she will take the issues back.
Airports: Heathrow
Baroness Kramer Excerpts(13 years, 1 month ago)
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Baroness Kramer
To ask Her Majesty’s Government what assessment they have made of night flights at Heathrow.
Earl Attlee
My Lords, the Government are aware that night noise continues to be a concern for residents around Heathrow. We have extended the current night-time flying regime at Heathrow for two years until October 2014 and will begin a review later this year on its replacement. In considering a new regime, it is important that we take care to strike a balance between noise disturbance and the economic benefits of night flights.
Baroness Kramer
My Lords, local residents are woken from 4 am onwards not because of capacity issues at Heathrow but because of limits on departure schedules at other airports. If the Government will not commit to eliminating night flights, will they at least undertake to negotiate with the relevant countries for a timetable that is gentler for residents under the flight path in this country? Will they also negotiate with the airlines to get them to commit to put the latest, quietest aircraft on these routes? I understand that none has yet committed to doing so for early landings.
Earl Attlee
My Lords, my noble friend makes a number of points. She referred to aircraft coming from distant countries. It is important to remember that if we insist on a later arrival time in the UK, a plane may have to leave the Far East later at night and that may cause a problem there. My noble friend talked about quieter and noisier aircraft. A quota system takes into account the noisiest aircraft, which cannot fly until later in the day.
Roads: Traffic Lights
Baroness Kramer Excerpts(13 years, 4 months ago)
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Earl Attlee
My Lords, noble Lords behind me are saying, “No way”, and I think they are right. There are already ways of giving cyclists priority over other traffic and improving their safety at junctions—for example, by introducing advance stop lines and cycle bypasses, and providing dedicated traffic signals for cyclists if required.
Baroness Kramer
My Lords, I am sure the Minister will be aware that New York City does not permit the right turn on red precisely because its layout is so similar to the kind that we see in cities and towns across the UK. Having spent many years driving in the United States, in places that permit a right turn on red, I can say that the problem is not traffic. You can see clearly whether traffic is in the way ahead and to the left, but it is virtually impossible to see whether pedestrians are crossing ahead and to the right. Therefore, in support of all those Members who have said that the difference is that we live in a pedestrian’s world, the United States regards pedestrians pretty much as aliens.
Aviation: UK Civil Aviation
Baroness Kramer Excerpts(13 years, 5 months ago)
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Baroness Kramer
My Lords, my noble friend Lord Bradshaw had hoped to speak on this issue and the House would have been very interested to hear him because he is clearly one of the leading experts in this field. I regret that I am only the understudy since he is unable to be here. I must also declare that I am a member of HACAN, the protest group that is made up primarily of residents but is now fairly international, which opposes further expansion at Heathrow and works closely with those of a similar view at both Stansted and Gatwick.
I am very pleased that the Government will be consulting, hopefully in the spring, on a sustainable framework for aviation, but it is absolutely crucial that green and environmental issues are at the forefront of that conversation. This House will be very aware that since 1990 the proportion of total UK carbon emissions from aviation has doubled and that we have serious climate change targets. Whether or not it is within the context of those targets or a broader context, climate change must surely be a real concern, and if we do not manage capacity in aviation as we look at those climate change issues, surely we make a mockery of being committed to the climate change problem at all. I stress that when we talk about airports, we are talking not just about carbon emissions from aviation itself but about the travel to and fro, which is overwhelmingly by car—and anyone who thinks that you can completely switch that in any circumstances to public transport has not looked at the behaviour of those who regularly use London’s current airports and who insist, when they have many bags, on using road services.
In reference to some of the comments that have been made on tax, surely now of all times, when we are all under pressure, aviation ought to be carrying more of its own weight. The very favourable tax climate that aviation enjoys dates back to when it was a new industry. Those new industry tax breaks, given a generation ago, in essence remain with aviation today and are only gradually being countered. Like many others, I would much rather that we were not doing this on a per-passenger basis and I hope very much that the Government will achieve their goals in Europe of shifting to a per-plane basis and getting the tax associated with the emission levels for each plane. The very notion that we should be giving further tax breaks to an industry that is already paying less than other transport rivals strikes me as absolutely extraordinary.
Perhaps I can join some of those who see the estuary airport as something of an election ploy. I suspect that this project will bite the dust by the time we get to mid-May, but I will make a couple of comments on it because it addresses one of the issues raised: that of capacity. Even in their most aggressive forecasts, the Government are basically saying that 470 million passengers will be flying by 2050, but the estuary airport plans and similar raise that capacity to 700 million—way beyond even the most aggressive forecast. If you are looking at this from a climate change perspective and you want both to shift to rail and to eliminate unnecessary travel through the use of new technology, some would say that 380 million passengers per year is a much better target to work towards. We are looking at a lot of capacity around the UK, not at places such as Heathrow, but we are a country not simply a city, which I think people sometimes do not notice. As we look at putting in new capacity, here we are talking about rebalancing an economy that is looking to the north to rebuild its industry, jobs, prosperity and growth. Yet how can we look seriously at a mechanism that seeks to put all that additional capacity back down into the London area? I would argue that that is illogical.
I will not even talk about the price because no one, I think, is able to put a price on it yet, but we have issues of safety such as bird migration and the wreckage of the community that currently serves Heathrow and that is based around Ealing and Harlesden. All those people will be unemployed or will perhaps move to some new city out near the new airport. There are all those issues, as well as the environmental ones.
I realise that I am running up against my four minutes, so I simply say this: most of the problems that people have with aviation are to do with the fact that some airports, and Heathrow is one of them, are not passenger-friendly or very well run, and you cannot get through immigration. That is what drives everyone absolutely insane. The better operation of what we have and making innovations in aircraft—these are the things that would make a real difference.
Transport for London Bill [HL]
Baroness Kramer Excerpts(13 years, 7 months ago)
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Baroness Kramer
My Lords, I am not sure whether it is an interest because it is a former one, but I am a former member of the board of Transport for London and have an ongoing interest in transport within London which, like most Members of the House, I use extensively. I rise not in opposition to the Bill but to raise issues and questions that could use exploring. The noble Lord, Lord Berkeley, has raised one of the central issues of the Bill, which is whether an outsider—someone other than Transport for London—should be engaged in the authorisation of the sell-off of operational land, particularly if it has implications for overland railway in contrast to simply the tube, bus and tram services that we most often associate with TfL itself.
In the spirit of the Localism Bill, as well as prudent practice, I would rather see the Greater London Assembly, which has an expert transport scrutiny committee, taking on that kind of responsibility rather than the Secretary of State. Understanding the implications of changing the use of land in London requires a real awareness of the intricacies and complexities of the city. I think that the Secretary of State, sitting up at that distant central government level, has relatively little understanding of the detailed dynamics of London. It is within the Greater London Assembly that that range of experience is present in people who understand what may be housing issues, dealing with waste management, transport issues, the whole range of elements that impact on decisions about land use in London. That would be the more appropriate body.
As the Greater London Assembly is not under the control of the mayor, which is evident from the institutional structures, it can provide independent scrutiny just as effectively, if not more effectively, than the Secretary of State. I raise that as a significant element. Transport for London is, after all, the transport arrangement for one particular city and it is certainly not a national transport arrangement, so detaching the Secretary of State from such an entity has a great deal of logic to it in the spirit of the Localism Bill, which we have recently taken through this House.
I raise one other set of issues—again, not in opposition. There is interesting language in the Bill on the securitisation of revenue streams from assets. I understand from earlier discussions—I have a letter here from Transport for London that goes into a little detail on it—that the concept behind this is that Transport for London owns property that it happens to rent out, as it sometimes does when it holds property for a period of time but which it believes it will need at some point in the future for a transport project. Alternatively, it has land that is used for parking, perhaps on a temporary basis, and again that land is set aside for some future transport purpose but can generate revenue in the mean time, or it may just have parking land because that is the only way it feels it can safeguard parking that is necessary for various transport facilities. Those revenues could be securitised as a mechanism for creating efficient borrowing. To me, that makes eminent sense.
It seems to me that this language also covers quite comfortably the notion of securitising the fare box. Revenues from the fare box seem to fall within the definitions in the Bill, and I support that. It is an important step forward in providing Transport for London and London itself with the mechanism that is needed to continue building our infrastructure. However, I should be interested in understanding whether that is the perception of Transport for London or indeed the perception of the Government. If so, that makes the Bill increasingly interesting.
None of the other issues covered here, such as the ability to do sensible kinds of hedging or to form partnerships with somewhat more flexibility in the current environment, seems at all controversial. However, I should be interested in hearing comment and response on the issues that I have raised.
Airports: Heathrow
Baroness Kramer Excerpts(13 years, 7 months ago)
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Lord Soley
According to the Written Answers I have received from Ministers, when the Chinese Government, the Chinese civil aviation authority and the Chinese airlines have asked repeatedly for more landing slots at Heathrow they have been told that their views will be taken into consideration by the review. Is this not deeply embarrassing and totally hopeless, in view of the economic need of this country to relate to China and other countries of that nature?
Earl Attlee
That was a bit quick, my Lords. We are grateful for all the input from all overseas Governments into our future aviation framework policy.
Earl Attlee
My Lords, I am grateful to the noble Lord. There will be no increase in slots at Heathrow, but the key point is that the number of aircraft movements is capped at 480,000 movements per year.
Baroness Kramer
My Lords, I apologise for my jack-in-the-box tendency earlier, which was due to my eagerness on this topic. Can the Minister confirm that operational freedoms are currently only in a pilot scheme and are undergoing consultation? Can he also confirm that the Government will be putting some pressure on the airlines to see whether they can move night flights into the post-6 am slot and to use quieter aircraft—the Airbus A380s, as they come on stream—for any flights that must happen at night?
Earl Attlee
My noble friend is quite right. The operational freedoms trial is in two phases: the current phase, and another phase largely over the Olympics period. One of the benefits of the operational freedoms trial is to reduce unscheduled night flights. I will have to write to my noble friend on the detail of her rather more searching questions.
Localism Bill
Baroness Kramer Excerpts(13 years, 10 months ago)
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Baroness Kramer
My Lords, I had not intended to speak on this amendment, but I feel that I must reply to the noble Lord, Lord Faulkner of Worcester. Like many here, I have great regard for the individuals at London TravelWatch and the work that they do. However, the very citation from ATOC carries its own message that, of all the groups in London, the train operating companies would prefer the body which they find they can more easily ignore to the one that they must take seriously. That is entirely in character with the functioning of the TOCs and ATOC. It is precisely to have a much bigger impact on behalf of passengers that it makes sense to make this move from TravelWatch, integrating it into the GLA.
I may have misheard the noble Lord, Lord Faulkner, but he seemed to suggest that, if there was that integration into the GLA, there would be a fracturing of the transport voice. Yet the GLA is already holding TfL rigorously to account. I was on the board of Transport for London and I can tell your Lordships which body it was afraid of—it was very much the GLA. It is the ability of that body to pound away on behalf of the passenger that would be gained by this shift, so I support this amendment.
Lord Whitty
My Lords, I hope that the Government’s reservations, to which the noble Lord, Lord Tope, referred, are indeed strong. This needs to be rejected. I do not want to repeat everything that my noble friend Lord Faulkner said but I would go for the fundamental point. The noble Lord, Lord Taylor, since he is a battle-scarred veteran of the Public Bodies Bill, will probably recall my advocacy of separate representation for the consumer interest in publicly provided bodies and in those which are regulated publicly. The Government wisely backed off from including in lists various bodies, including Passenger Focus, which could have been abolished, while for those that they are going to change they have provided an alternative but still independent body, either in another quango or in the third sector. It is a central provision of public services or those that are regarded as public utilities in this country that we have a separate consumer organisation. That applied when we set up the nationalised industries, when we privatised and liberalised those industries and when we passed the Greater London Authority Act to set up that body. It should continue to apply.
I suppose that I should apply two past interests here, both as a consumer champion as chair of Consumer Focus and as the Minister who, as the noble Lord, Lord Tope, will recall, brought the Greater London Authority Bill through this House. He will also recall that it was the second longest non-financial Bill ever—the absolutely longest, the Government of India Bill in 1935, was never implemented. The implementation of the Greater London Authority Act has left some problems but I do not believe that this is one of them.
It is important that we retain the distinction between the provider, and those who oversee the provider, and the consumer interest. The mayor is responsible for the provision and the London authority for overseeing that provision. In that sense, they are not much different from a private sector board as regards their consumers, so I am afraid that it does not impress me that all parties on the Greater London Assembly welcome and support this move. It is no more impressive to me than if there was a unanimous vote on the board of Thames Water to say that it wished to abolish the Consumer Council for Water, or that Michael O’Leary and the board of Ryanair said that they wished to abolish the Air Transport Users Council or—to go back to my past interests—that the boards of British Gas or npower should say that they wished to abolish Consumer Focus and any successor powers.
We must distinguish between the role of a consumer interest representative and those who are providing, or are part of the governance structure of those who provide, a service. Indeed, in London, predecessor bodies to this go back to the private company of London Transport, through the nationalisation process, through the GLC, through the abolition of the GLC, into the establishment of TfL and through to the London authority and the 1999 Bill. That was sensible. London Assembly members may well have reservations about aspects of this and may well feel that some changes need to be made—that might be right—but this clause does not say that, nor does it say that there should be some rationalisation between the London authority and Passenger Focus.
It might be conceivable that the transfer of this body into Passenger Focus was a rational move; I do not personally think so, but it would still provide an independent consumer voice focus. Actually, however, for the reasons that my noble friend points out, London is unique in this response. London is the only city in this country where the vast majority of people go to work by public transport. TfL has responsibilities way beyond the bus and train area—for roads, taxis and so on. As has also been pointed out, people outside London, and therefore with no voice in the election of GLA members, have an interest in this. So there is no principled argument that would call for the abolition of this body. I would be prepared to consider, and I suspect that the Government would be prepared to consider, something less than that, which allowed for easier changes, but the straight abolition of an independent consumer voice in the most complex, most difficult and in many respects most integrated transport system in the whole country would be a seriously retrograde move and I hope that the Minister will soundly reject it.
Baroness Kramer
“Transport for London: Rail Authority for London
(1) Section 196 of the Greater London Authority Act 1999 (power of Greater London Authority to give instructions or guidance to Franchising Director) is amended as follows.
(2) In subsection (1), for “The Authority may give instructions or guidance to” substitute “Transport for London shall be”.
(3) Omit subsections (2) to (4).
(4) In subsection (5)—
(a) in the opening words, omit from “give” to the end;(b) in paragraph (a), for “prevent or seriously hinder him from complying” substitute “fail to comply”;(c) omit paragraph (b) (but not the “or” following it).(5) In subsection (6), for “the Authority” (in both places) substitute “Transport for London”.
(6) In subsection (7), for “instructions or guidance may be given” substitute “the Franchising Director shall act”.
(7) In subsection (8), for “the Authority” (in both places) substitute “Transport for London”.
(8) Omit subsection (9).
(9) For the title substitute “Transport for London to be the Franchising Director”.”
Baroness Kramer
My Lords, this amendment follows on nicely from the previous amendment. It also illustrates the general confusion over the structure of transport in the London area. The purpose of the amendment is to remove from the Department for Transport the responsibility for rail franchising within the inner suburban area of London and transfer it to Transport for London. It is wholly within the spirit of the Bill to take from the centre and give to a regional or more local body powers that it can exercise more effectively and more efficiently for the benefit, in this case, of passengers.
Noble Lords will know that at present Transport for London effectively either manages or in some way regulates the Tube, the Docklands Light Railway, bus services, river transport services and taxi services, but when it comes to rail, it has only a very limited purview. It directly manages London Overground, which is one very minor line, and it will have oversight of Crossrail once it is completed. However, when it comes to the inner suburban rail services that criss-cross much of the London area, Transport for London’s role is extremely limited. The Department for Transport lets and manages the franchises and Transport for London can simply specify and pay for either an increment to that service or—terrible bureaucratic word—a decrement to that service. Essentially, the consequence of that has not been very beneficial to passengers.
I would argue that London is different from much of the rest of the country when it comes to rail. Fourteen per cent of Londoners use the National Rail network to commute daily to work. Indeed, outside of London proper, in the south-east and east of London there are many more who use that rail network to commute to work within the London area. That makes it distinctly different from any other part of the country. There are 10 train operating companies, so it is a highly fragmented service. Demand in the area is so inelastic that the kind of competitive pressures that have effect in the rest of the country are virtually irrelevant when it comes to London, where demand is so high, capacity is constantly at breaking point and there is always a need for additional capacity. So the competitive issue that exists elsewhere is not relevant within London itself.
I said that there were 10 different train operating companies. That means 10 different brandings, 10 different fare structures, 10 different forms of marketing, 10 different commercial strategies and 10 different operating time horizons. As noble Lords will know, the McNulty review recommends that more power should go to the train operating companies and franchises should be longer. So trying to create an integrated London Transport service within this environment, where rail is so fragmented and Transport for London has so little direct power, is very significantly undermined. If your Lordships would like an example of what this does to, as it were, disadvantage passengers, I draw your attention to the Oyster card. I should declare that I am a former member of the board of Transport for London and was very involved with the rail side. Rows went on year after year to try to get any form of Oyster card available on National Rail. Then we got “pay as you go”, which most people have now enjoyed only for the past couple of years. Technically it could have been done very easily, but the issue was never high on the priority list for the Department for Transport, which had to be involved because of the franchising structure. The TOCs saw it as a way to leverage money out of London Transport. The whole process was very much to the disadvantage of passengers. If your Lordships want another quick example, just go down to Waterloo. The next time you are stuck on a train that is slow because there is no space to get into Waterloo station, you will see that there is an empty platform. When Eurostar moved to St Pancras, one of the international platforms was, at great expense to the Government, converted to domestic use. The department has never managed to get its act together to put that into play for passengers. That is another huge, wasted asset. Frankly, this is repeated all over London.
Sometimes I seethe with envy when I talk to transport friends in Berlin as they are able to work with the bus and taxi services so that late-night trains are met by a co-ordinated timetable of buses and taxis, ensuring that train passengers have a seamless journey. The battle in London has been to look at travel as a single journey, whether you use one mode or multiple modes to get to your destination, and to create that kind of integration. It has been phenomenally successful, but leaving out rail makes no sense.
Sometimes people say that people from outside London use the services so they must not be too London biased. We can give them a voice by putting some directors from outside London onto the relevant board within Transport for London. It is also true that the department will continue to have a voice, but the balance needs to be shifted towards an entity which has a genuine interest, in a detailed way, in the quality of service, as Transport for London does.
Lord Spicer
Is the empty platform at Waterloo, which the noble Baroness has been describing, the reason why plays are being put on there now?
Baroness Kramer
Plays are not taking place on the adapted platform but it would be better to use it for a play than nothing at all. It is absolutely ridiculous.
I have two more points to make. Some people say that there must have been a lot of thought about how the franchises should be divided up and a reason for not giving far more influence over the rail franchising process to Transport for London. The rationale was, “We don’t like Ken Livingstone”. When the GLA Bill went through this House, particularly when TfL was under review, there was an attempt to minimise the London influence. We had the disastrous Tube public/private partnership, which was a key part of the structure and which ensured that Transport for London really could not manage the system as a whole.
There was very little appreciation of the benefits of integration. That is one of the other pieces, if you like, which came out of much of that kind of thinking. We have all moved beyond that and recognise the benefits of integration and the benefits of regional management. I argue that at this time, when the transport infrastructure in this area is desperately overstretched, when we really are in a situation of economic recovery in some areas of London and you practically have to strap people to the roofs of transport carriages, we need to maximise the use of that infrastructure. Therefore, the logic is to change the franchising responsibility, which is what this amendment attempts to do.
Lord Berkeley
This is an interesting amendment. I was particularly seized of the way in which the noble Baroness, Lady Kramer, proposed it because, following the previous amendment and the discussion about London Travel Watch—I am sorry that I was not in the Chamber at that time—I was sent a map of the extent of London Travel Watch, which goes well beyond the GLA boundary in many areas. I do not think it goes all the way out to Banbury but it goes quite a long way in that direction; it also goes a long way west and a long way south. It made me think that if this amendment were accepted, one would end up with the same kind of problem. On the main network, not many trains terminate within the GLA boundary. I believe Croydon must be near the edge—I am no expert on Croydon but perhaps some of my noble friends could confirm that—but I do not think that any services that go through East Croydon terminate there. So there will be a debate between those who want long-distance services as frequently as possible, stopping as infrequently as possible, between Croydon and the centre of London, for example, and those who live within the GLA boundary who want a regular stopping service.
The other problem, which is particularly evident on the lines south of London, is that in many places you can get to two or three different London termini by train. It is a lovely service if it works—it usually does—but it is a very complex network. It compares strongly with the Underground lines which, on the whole—apart from the Northern line—may serve two destinations at each end, but not three or four. I can see a time when Transport for London might say that it would like to rationalise the services south of London, for example, by making them more frequent, but going to fewer destinations, and having cross-platform interchange in some places, because it thought that would be better for its electorate.
I mentioned the question of through-services and the debate regarding them and the shorter-term. There is also the question of access for freight—I declare an interest as chairman of the Rail Freight Group—although there is not much freight south of the Thames, so we can probably forget about that. However, I also recall a big debate during the many Crossrail debates, because when TfL thought it was in charge of Crossrail and the Great Western, it started off on the basis that it would have the sole use of the slow lines, to Maidenhead or Reading, and all the other trains could have the fast lines. TfL thought that was a brilliant idea, because it would run a very frequent service—there would probably be those lines of heavy cables that you see between London Underground lines—but it completely forgot that those lines are run as a network of four tracks. If anything goes wrong on one track, the trains are immediately switched to the other ones to keep the service going. I did a calculation at the time, which indicated that if Crossrail had got its way the passenger operators would have had to cut their service frequency to places such as Cardiff, Oxford and Bristol by at least 50 per cent, if not more. Only half the freight trains would have gone up that line, and when one of the lines was dug up, they would just have to stop.
That is the logical consequence of splitting responsibilities. There is work to be done with TfL and the Department for Transport to take into account the needs of people who live within the GLA area and then we can have a big debate on how the available capacity is shared out between the department’s view, which is, one hopes, long-distance, and TfL’s, which has a local view. As for giving the train operators—all 10 of them, as the noble Baroness said—more responsibility, I think that is a bit dangerous when so much co-ordination is needed. It is a debate that we need to have. I am not sure whether this is the right amendment, but I think it is very useful to be having this discussion.
Lord Faulkner of Worcester
My Lords, I was tempted to speak by the noble Baroness, Lady Kramer, as she was tempted to speak by me on the previous amendment. I have a great deal of sympathy with the points she is making. I will start with a correction—also for the noble Lord, Lord Spicer—that it is not only one platform at Waterloo that is out of use; it is platforms 21, 22, 23 and 24. I think I am right in saying that it is 21 and 22 which are being used by the production of “The Railway Children”, which I can recommend unreservedly. I speak as a trustee of the National Rail Museum, as it is very much our play.
Baroness Kramer
Without being a train wonk on this, there is only one platform that has been converted for domestic use. The other platforms could be, but that work has not been done.
Lord Faulkner of Worcester
The noble Baroness, Lady Kramer, is quite correct. As I said, I have a great deal of sympathy with the point she makes but my concern is that the introduction of a new franchising authority, which the amendment proposes, would be in danger of creating greater fragmentation of the railway than we have at present. I agree with her that there are probably too many train operating companies. It is the Government’s intention that franchises should be longer than they have been in the past, and I strongly support that. However, to introduce a new franchising operator could lead to confusion and fragmentation. My noble friend Lord Berkeley refers to services that serve London but go well beyond. The classic example of that is the Thameslink line, which starts in Bedford, goes through Luton and St Albans—none of which is covered by Transport for London or the GLA—and then goes south from Croydon to Brighton.
Services like that need to be looked at in a regional context, and I am not certain that looking at them in a London context would make a great deal of sense. However, I pay tribute to what Transport for London has done in the development of its Overground service. The opening up of the East London line is an extraordinarily successful venture. The trains are very popular and they provide new journey opportunities for people who probably did not make those journeys, or tried to do it by car, or struggled on buses. It deserves to be commended for that.
I agree with my noble friend that it is helpful to have this debate, but this amendment is not quite the way that we should go.
Earl Attlee
My Lords, I understand the intention behind my noble friend’s amendment; namely, that the mayor and TfL should have greater control over London’s commuter rail franchises, given their wider transport responsibilities. As my noble friend Lady Hanham said in her letter following the Committee stage, TfL already plays an important role in relation to London’s commuter rail services. It already has, as pointed out by my noble friend, effectively full franchising powers over the London Underground concession, covering a number of key routes across London. It works closely with the Department for Transport in the development of other rail franchises affecting London, with the mayor having the ability to pay for outputs over and above those that the DfT specifies. By the way, I undertake to look up in the dictionary the definition of “decrement”.
The devolution of other London commuter rail franchises to the mayor and TfL is not a straightforward matter. The geography of London’s commuter rail network does not sit well with London’s administrative boundaries, with many lines extending well into neighbouring counties, as pointed out by many noble Lords. Furthermore, capacity on much of the London commuter network is limited, and there are inherent conflicts between London-area and non-London services that need to be balanced in the best interests of all users, and to keep overall costs down.
I am afraid my noble friend did not satisfy me in how the balance would be struck between the needs of commuters who live in London, and who elect the mayor and the Assembly, and those living in Luton, Brighton and Woking, who do not. There is a real question of a democratic accountability deficit if other London commuter rail services are devolved to the mayor, as many commuters do not live in London so do not have the opportunity to participate in the elections.
Nevertheless, the Department for Transport is happy to engage TfL further about the devolution of local rail services, in the context of Sir Roy McNulty’s independent study on rail value for money earlier this year. This study suggested that more local control of rail services could contribute to the development of lower-cost regional railways and, in line with the Government’s localism agenda, we are considering options for more local control of some rail services in other parts of England. We will also continue to encourage operators to work more closely with TfL. The new working arrangements, put in place for the South Central franchise which was let in 2009, appear to be working well.
On this basis, I urge my noble friend to withdraw her amendment.
Baroness Kramer
My Lords, I am delighted that I have been able to stir up some debate on this issue and see it get some attention—rather than slip to its usual place at the bottom of everybody’s priority list—because there are some genuine issues here.
I say to those who are concerned about passengers outside the London area that most people have London as their destination and are therefore intensely important to TfL; they are not marginal. Also, most people who come in contribute in some way to London’s economic viability, either through business or entertainment, and so are very much a concern to Transport for London even though they do not actually live within the area. Again, we can also bring in other board members.
I am delighted to have sparked off some of this debate. Given that, I beg leave to withdraw the amendment.
Airports: Heathrow
Baroness Kramer Excerpts(13 years, 10 months ago)
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Earl Attlee
My Lords, the noble Lord will understand that we cannot arrange for every flight coming into Europe to land at Heathrow.
Baroness Kramer
My Lords, the Minister will be aware of the recent report by Airport Watch, which demonstrates that Heathrow and London dwarf every European rival in number of flights to the world’s main business destinations. Therefore, would he agree that in order to keep its place, Heathrow should focus on how it treats its passengers and perhaps the UK Border Agency could change its policy so that people with non-UK passports can get through in less than one and a half hours, which was true at terminal 3 two weeks ago?
Earl Attlee
My noble friend makes extremely important points which were all picked up by the South East Airports Taskforce. She mentioned the UK Border Agency. We are aware of scope for improvement and UKBA is working on that. She will also be aware of other things that will be happening as a result of the South East Airports Taskforce’s work, which will improve the experience for passengers.
Railways: Thameslink Rolling Stock Contract
Baroness Kramer Excerpts(14 years ago)
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Earl Attlee
My Lords, any job losses are highly regrettable. However, Bombardier has previously advised the department that it expected to make redundancies at this time regardless of the outcome of the Thameslink procurement order as Bombardier’s Derby factory is currently operating at peak capacity and several of these orders come to an end later this year. Noble Lords will know that there are several other rolling stock procurement contracts in the offing.
Baroness Kramer
My Lords, as I am sure the Minister will agree, it is crucial that we keep in this country the engineering skills to design and build trains. Are there any planned negotiations with Siemens and Hitachi to bring those kinds of jobs to the UK? In the case of Bombardier, has he considered extending some of its existing contracts, for example to provide electrical units to the train sets it has already built, and that are much needed on the Great Western, Northern and Southern lines and would help preserve that skill base in this country?
Earl Attlee
My Lords, on the last point, I am not sighted on that, but I will write to the noble Baroness if I have anything to add. There is an issue about the capacity for Bombardier to design rolling stock in the UK, but it is a matter for that company whether or not it maintains a capacity.
Transport for London (Supplemental Toll Provisions) Bill [HL]
Baroness Kramer Excerpts(14 years ago)
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Lord Lucas
My Lords, I am very grateful to the noble Baroness for so eloquently moving the Motion that the Bill do now pass and for any influence that she might have had in securing the amendments that she described. I am quite content with the Bill as it is now, partly because TfL is a much more benign institution under current management than it was. Where it finds levels of misbehaviour, it seems interested not in immediately slapping down fines but in exploring the reasons for it, amending signage and handing out warning notices beforehand. I find it a civilised and easier-to-deal-with institution these days. I am also comforted by the level to which the Secretary of State will be involved in granting TfL any substantial powers under the Bill. I thank the noble Baroness and Transport for London, and wish this Bill good luck.
Baroness Kramer
I shall be brief in my comments on the Bill. I was a member of the board of Transport for London when the congestion charge was brought in and chaired all the public meetings on that issue. I have been an open opponent of the Thames Gateway Bridge, so am very glad that that project has been scuttled.
I should like to ask two questions about the Bill, just by way of seeking confirmation. Do all the usual processes of planning, consultation and approval remain in place, even though this mechanism provides the funding for any new river crossing that might be tolled? Secondly, could this framework apply to other projects carried out by Transport for London? For example—since we have had many discussions on air quality—if there were to be a low-emissions zone and it was decided to toll cars that did not meet the relevant emissions standard as they entered the zone, could this framework again be used for that purpose? It is a framework that London might turn to, particularly at the time of the Olympics. Although I seek confirmation on those matters, I am very supportive of the Bill.
Baroness Grey-Thompson
My Lords, I thank the noble Lords and the noble Baroness who have taken part in this debate. I thank the noble Lord, Lord Lucas, for his support and should like to address the points made by the noble Baroness, Lady Kramer.
The mayor’s transport strategy had an impact on the passage of the Bill. The Bill was not intended to be applied solely to the Thames Gateway Bridge and it continues to be relevant to other projects. Other projects will be carried through in the usual way in terms of tolling.
The powers in the Bill are very wide, and the supplementary toll provisions order will not take effect unless it is confirmed by the Greater London Authority. Lots of provisions are in place. I am afraid that I cannot answer the noble Baroness’s question on emissions. I hope she will accept Transport for London writing to her on that matter; I am afraid that I am not an expert on that area of the Bill.
Baroness Kramer
I apologise to the noble Baroness. I should have let her know that I was going to ask that question. I am afraid that it did not come to me until the early hours of this morning.