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 Earl’s 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.
7.45 pm
What is the rationale behind allowing TfL to indemnify or guarantee third parties by borrowing against its own assets in that way? What do the fare payer and taxpayer get out of that? TfL owns the asset, which it is putting up as security. It is borrowing the money and using it for the guarantee or the indemnity. I can see how that will benefit the party that is being offered the guarantee or being indemnified, but I cannot see how it will sufficiently or safely benefit TfL. I need an answer on this point.
I also need to deal with amendment 18 and amendments 21 and beyond. I do not intend to press these amendments to a vote; I am simply looking for explanations. Clause 4(6) states:
“Except for the property identified in the Schedule to this Act, a TfL subsidiary may not charge any property for any of the purposes mentioned in subsection (2) without the consent of the Secretary of State.”
I do not understand why such a division is being made, and I have therefore made some suggestions. I use the word “I” in the broadest sense here, because this was originally the conceit of the shadow Chancellor, who is much wiser on these matters than I am. However, I have adopted his logic and his argument here. I do not see why the consent of the Secretary of State should not be needed in all cases. That is why I propose in amendment 18 to leave out the words:
“Except for the property identified in the Schedule to this Act”.
Failing that, I have set out certain points in the schedule that could be changed. I shall not go into detail here.
I am assuming—perhaps “guessing” would be a better word—that there is some rationale behind this decision, and that a property that may be charged without the consent of the Secretary of State would be more remote from the ordinary operational duties of TfL. That is to say that the Secretary of State would have more of an interest in land that was being used for railway purposes than in land that was simply lying fallow or being put to some non-railway use. I am not quite sure of the logic behind that, however, because both types of land would still constitute a substantial public asset. This seems to be going back to the intention of the original clause, now withdrawn, which would have allowed anything to be sold off without the consent of the Secretary of State.
I have suggested that certain modifications be made to certain parts of the schedule, particularly in relation to land that might ostensibly be non-operational but might still be within the curtilage of, or adjacent to, operational land. However, I am still looking for an explanation as to why the consent of the Secretary of State should not be needed in all cases. A concession was made earlier by TfL, and I am not quite sure why, having made that concession, it has effectively gone back on it by listing substantial parts of its property in the schedule. That is all I have to say about that.
The withdrawal of clause 5 is welcome, although I do not understand the timing or the logic. We may get an explanation, but perhaps I should not look a gift a horse in the mouth, as it appeared to be at the heart of the Bill. After the old clause 4 was dropped early on over the Secretary of State’s consent, clause 5 appeared to be the heart of the Bill and TfL fought tooth and nail for it. TfL made some concessions in Committee under severe scrutiny from the public petitioners and following the sterling work of the Committee’s members, but it did not withdraw the clause entirely. We had long debate on it here, but it did not withdraw the clause. The time for the Bill elapsed, and the previous Parliament ended. The Bill then had to be revived, and that revival debate took place both here and in the other place, and the clause was suddenly dropped. That is welcome, but I ask why, and why at this stage.
I will not go through this again, because I covered it, in parentheses, earlier, but we know what the problem was. It was set out time and again to TfL in private
meetings, in this Chamber and elsewhere. It was set out by the RMT in negotiations, and by members of the public. We do not believe, either as a commercial matter or as a matter of public policy, that it should be open to TfL, or any other public authority, to go into the sort of deals that it was contemplating doing with limited partnerships, which allowed the sort of partners that Capco was setting up to do the deals over Earl’s Court. Although that is a big scheme, it would have paled into insignificance beside the many hundreds of schemes that TfL is preparing to run.
I say thank you, because the change is a positive step, but I wonder why it is has happened. We obviously do not oppose it, and are pleased that it will be made tonight, but let us shine a light on it, and get a bit of the transparency that my hon. Friend the Member for Brentford and Isleworth was talking about a few moments ago. TfL fought for more than five years to retain the clause, so why is it disappearing now?