Transport for London Bill [Lords]: Revival

Andy McDonald Excerpts

Monday 16th November 2015 Commons Chamber

[Emily Thornberry (Islington South and Finsbury) (Lab)]

I am concerned about clause 5, in particular, and the idea of limited liability partnerships. As I understand it, limited liability partnerships were established in 1907 to enable people to become partners without taking on the liability. There needs to be a general partner who will be liable for everything, but then those who are coming into the partnership, and perhaps giving money towards it, would not have any form of liability. I understand that it is a means of raising capital, but I am very worried about who the partners might be. We have heard all kinds of scare stories, and I would be very interested to hear some reassurance.

[Andy McDonald (Middlesbrough) (Lab)]

When my hon. Friend describes the scope of limited liability, is it her understanding that the limit of the liability in such a partnership arrangement could be nil? If that is the case, what on earth are we doing thinking about such an arrangement?

[Emily Thornberry]

I believe that that is exactly the position. This legal instrument was created in order to help to raise money. However, the difficulty is that we will be raising money on public land—public for the moment, at least. That is land owned by you, Madam Deputy Speaker, by me and by all of us, and we will be handing over some sort of investment in it to organisations that are cloudy, to say the least. Is there anything to stop these partners being offshore companies or being able to establish themselves with £2-worth of capital? Is there anything to stop documents naming certain people as responsible for the company, only for the Russian mafia to take over at a later stage? Are we handing over Caledonian Road, Old Street and potential developments in my constituency to such people? I certainly hope not, but I am worried that this Bill’s revival may allow that to happen.

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[Emily Thornberry]

My hon. Friend makes an important point. Essentially, the sponsor of the Bill and TfL are saying, “Trust us. Let us enter into limited partnerships with who knows who.” TfL wants to enter into a limited partnership, which is not a distinct legal entity, which has a clear consequence for public transparency. For example, we cannot use the Freedom of Information Act to find out who is behind the partnerships that TfL may get into. TfL says, “Don’t worry about it. We can be trusted.” The difficulty is that TfL’s behaviour during the past few years, with some of the developments we know about, shows that we cannot in fact trust it.

Caledonian Road is not a frivolous example. As the hon. Member for Harrow East said, it is one of the few tube stations that has disabled access that is available to the large number of people who go to watch the highly successful Arsenal football club, but it will be closed for six months. What about Arsenal fans in wheelchairs during that time? TfL cannot look after a tube station with four shafts. It tells me that it needs to close it for six months to renew one of the lift shafts; yet it has two functioning lifts at the moment, both of which it will stop. I said, “The lift capacity is only 50%, so just use one lift while you are repairing the other one.” It replied, “Oh, but what happens if the lift that is in use breaks down?” I said, “Well, excuse me, TfL, but you’ve got lift engineers on site. You are re-doing the other lift shafts, so what’s your problem?”

If TfL has difficulty running a tube station, I have some concerns about its ability as a property developer, particularly if it goes into partnership with others. Those people may be perfectly adequate. TfL may go into partnership with a latter-day Peabody. That would be fantastic, would it not? It would be great if it went into partnership with somebody who really wanted to provide housing that was entirely appropriate for my constituents. The difficulty is that I do not really believe that, and I do not think that the hon. Member for Harrow East does either. TfL is trying to make as much money as it possibly can out of that land, and it will make as much money from affordable housing as it will from luxury flats.

[Andy McDonald]

My hon. Friend hits the issue on the head. Of course the value of the assets needs to be maximised, but the structure is based on the best investment opportunity. It will not be a Peabody Trust that comes along: it will be someone who wants to make the maximum money out of it. That is why the flexibility is there. It is an “ask no questions” policy—“we do not care who you are”.

[Emily Thornberry]

My concern is that we will be the partner who takes unlimited risks. My constituents will not get what they need, but their public assets will have been subject to a fire sale and they will be taking the risk.

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[Emily Thornberry]

There we are. I am very grateful to my hon. Friend. I believe we ought to be focusing on whether the Bill should be revived and whether it will make London a better place. My fundamental belief is that it will not.

There are more questions in relation to the Bill than there are answers. It is about disposing of land all over London, much of it operational land. Some of it may be appropriate for development, but some of it may not. Who is to say whether these shady partners might not be pushing TfL into inappropriate developments? Yes of course we need housing, but where may we have it? For example, there is a large tract of land next to Farringdon station just by Farringdon road that on the face of it is very valuable. At the moment, it is just tracks. Is there a possibility of that land being built over and some form of flats being built there? I do not know.

Is there a possibility of something being built over Old Street? Old Street is a phenomenal station. It has two wells in it. I do not know how it functions as a tube station, but what kind of property might be built on top of it? We may well find these shady partners pushing TfL into developing such areas, which would be entirely inappropriate for the building of flats, even luxury flats. We should be very careful about that.

Another risk of the Bill is that we may end up restricting TfL’s ability to invest more in transport in London, because we have caged in a particular area or built a block of flats on a particular place, not allowing it to continue to develop the transport system that London needs and deserves.

[Andy McDonald]

We have heard examples of investments in other places in other cities, but is there not a stark distinction between other places and London? There is no risk involved whatever in investing in the property market in London. People are investing in a goldmine, so there is no need for special purpose vehicles or any other such arrangements that may not withstand scrutiny. Is that not the reality of the situation?

[Emily Thornberry]

Certainly, the way things seem at the moment is that the property market in London only goes upwards. We will see what happens in the future. There has to be, in the end, a limit to it, and there may be some form of risk. One risk has to be, for example, finding asbestos. If asbestos is found at a development site, what happens then? Again, the risk is nationalised and the profits are privatised.

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[Emily Thornberry]

My hon. Friend tempts me. I understand what he says, and there are times when London MPs argue for investment in our infrastructure, yet wonder why it is that London has to beg when it is the driving force behind our economy—

[Andy McDonald]

rose—

[Emily Thornberry]

I will give way in a moment!

London is a driving force, so it seems a ridiculous idea that TfL can be so short-changed at a time like this, when the economy is supposed to be getting back on its feet, and we are finally coming out of the recession caused by the international financial crisis. We seem finally to be staggering our way out of it, despite the Tories crowing about it over a large number of years. At a time like this—[Interruption.] The Minister says “Staggering?” from a sedentary position. There are 3 million people in this country who believe themselves to be underemployed, and, despite the fact that there may seem to be more people employed, the last lot of statistics show that the number of hours we are working as a nation has gone down. So, yes, I do say “staggering”.

[Andy McDonald]

I am grateful to my hon. Friend for giving way. She is being tempted down a particular path, so I simply wish to bring to her attention the fact that, at least on the Labour Benches, we are all in it together, and there is a momentum and imperative towards us staying together in solidarity, which is the order of the day. We should not forget the regions that have made a major contribution to this city in building its sewers, its stadiums and all the rest of it. I ask my hon. Friend not to be too tempted by the proposition suggested by my hon. Friend the Member for Harrow West (Mr Thomas).

[Emily Thornberry]

I am very grateful to my comrade for bringing me back from the brink. In those circumstances, there is nothing more to say about that.

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[The Parliamentary Under-Secretary of State for Transport (Claire Perry)]

I congratulate my hon. Friend the Member for Harrow East (Bob Blackman), who has been an assiduous campaigner for this Bill and made some very important points in seeking its revival on the Floor of the House today. I have listened with interest to the contributions and I hope to continue to do so. I have say, however, that we have meandered—nay, staggered—round a very circuitous path in talking about this Bill. We have talked about mafias, Moldova and the city of York, which the last time I looked was a little way away from the city of London. We have staggered around a special purpose vehicle, and for some reason the image of a white van is flashing before my eyes.

What I have also noticed is a revival of interest in transport matters on the Opposition Benches. Many Labour Members are frequent and assiduous campaigners on behalf of constituents in London, but there are also those I have neither heard nor seen in my time as the Minister—either at Transport questions or in any correspondence coming across my desk. I am therefore delighted that we are seeing that revival of interest in transport matters this evening.

Let us now return to reality, rather than remaining in the meandering world that we have been inhabiting. The Bill simply seeks to enable TfL to expand its financial freedoms, and to use practices and mechanisms that will allow it to release greater value from its financing arrangements. It is not some back-door attempt to—what was it?—allow members of the Russian mafia in to finance Londoners through special purpose vehicles.

[Andy McDonald]

The Minister says that the Bill is not a back-door deal to let in various nefarious characters, but how does she know that? How can she guarantee that someone will not come along and exploit this arrangement? Given the lack of transparency, we might never know who that person was.

[Claire Perry]

Like many Labour Members, the hon. Gentleman is displaying a complete disregard for the scrutiny role of London Assembly members, and, indeed, for the Independent Investment Programme Advisory Group, which provides the Mayor with independent insurance and expert advice in relation to TfL’s investment programme. Labour Members are displaying a blatant disregard for the devolved authority that we have given to the Mayor.

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[Ian Lavery]

I fully agree with my hon. Friend. Gold-diggers with money to burn will buy the properties, and will not use them at all.

[Andy McDonald]

We talk about outer-London MPs, and there are no more outer-London MPs than those from the north-east and Scotland. This is not just a matter of London votes for London laws; it is a matter for everybody. What we have been seeing in this capital city are safety deposit boxes in the sky, with nobody living in them. Those properties could provide proper housing for the population of London, rather than investments. Does my hon. Friend agree that that is indicative of the way the Government are going? I do not know whether it is true, but I strongly suspect that a contractor might be able to get away without even putting proper finishes on such properties, because nobody is ever going to live in them.

[Ian Lavery]

I thank my hon. Friend. That is the point that I have been making from the outset. The essence of communities in the capital city and elsewhere across the country is affordable properties. Nobody would disagree that we also need private properties. The right balance is needed, and the right balance is different in different areas. But if a huge swathe of properties without the proper finishes is bought up by property developers who live across the globe, what will that contribute to the local economy? Nothing. It will lead to the development of ghost towns in this wonderful city. That is something we must all try to avoid.

The main point of contention, as I mentioned, is clause 5, which refers to limited partnerships. Clause 5 would give Transport for London a new power which would enable it to enter into limited partnerships with private developers and to incur unlimited liabilities. That is a huge gamble with public funds. It is a casino-type economy, which we cannot afford when the economy generally is not at its best. Not only that, but if the Bill is passed, Transport for London could undertake wider activities than it is permitted to undertake now.

[Andy McDonald]

My hon. Friend rightly focuses on clause 5. Does he agree that the reason there is such freedom in the arrangement, as opposed to the return that is going to be made, is self-evident? If somebody is given the maximum possible return, it is because of the freedoms that that delivers. There is a lack of transparency and a lack of accountability in that arrangement which is utterly dangerous. Does my hon. Friend agree?

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[Ian Lavery]

I thank the Minister for that intervention. I am not criticising limited partnerships but the potential for bad limited partnerships, and I am wondering whether it is in the best interests of people in the capital city for transport in London to become part of these limited partnerships. She mentioned the donations that the Labour party has received from limited partnerships. I wish I had done my homework to find out exactly how much the property developers, rather than limited partnerships, have donated to the Conservative party.

[Andy McDonald]

Is there not also a concern about the stamp duty arrangements that are made on these potential transfers down the track? As I understand it, if those are transferred to the limited liability partnerships there will be an exemption from stamp duty. Does my hon. Friend share my concern that before this debate is out we should hear from the Minister the assessment made of the loss of stamp duty as opposed to the returns that will be got on this deal?