Mr Edward Davey (Kingston & Surbiton, Liberal Democrat)

I beg to move amendment No. 86, in

clause 33, page 15, line 3, at end insert—

''(6A) No grant may be paid under this section in relation to any agreement under the Public-Private Partnership for London Underground.''.

I doubt that we will be quite so fortunate on amendment No. 86. The Minister may even accuse me of being slightly mischievous in moving it. We tabled the amendment because, under clause 33, the GLA will be able to receive grants at the will of Ministers without any check by Parliament. We debated parliamentary scrutiny of expenditure, and the Minister undertook to read my paper on the issue.

I do not want to retread that ground, but it is vital that we scrutinise clause 33 to consider what moneys are to be paid to the GLA at the whim of Ministers. We are approaching the matter in a slightly different way because the obvious grants that could be paid to London Underground without scrutiny are grants to support the public-private partnership. That takes me and the Minister down a nostalgic route because I think it was in this Committee Room that we debated, for more than three months, the Greater London Authority Bill, which set up the framework for the public-private partnership for London Underground. I shall not rehearse the many and long arguments that were advanced in that Committee, except to say that we did not agree with the Government's approach. We said that the Government's financing models were wrong, that they would not manage to sign the contract for many years—we were proved right on that—and that they would end up having to put a lot of taxpayers' subsidy into the system because it was such an inefficient way of raising and allocating finance.

Hon. Members may think me cynical, but my fear is that clause 33 is the bail-out clause for the public-private partnership, which will enable the Government to lever in money to rescue their failed London Underground project. The Committee that debated the Greater London Authority Bill in huge detail over three or four months, during which my hon. Friend the Member for Southwark, North and Bermondsey (Simon Hughes) entertained us with the details of public-private partnership, did not see any legislation that would allow a bail-out of PPP. That was controlled in the mother legislation. This clause has been sneaked into a Bill that is completely unrelated to PPP and the powers of the Greater London Authority and would allow the bail-out that we predicted would take place. Therefore, before the Committee assents to this extremely large clause, we need some assurances. If the Minister can give us an assurance that the Government have absolutely no intention of using the powers in clause 33 to bail out the London Underground PPP, we may be able to achieve some consensus, but if the Minister is unable to give us that assurance, we may have to press the amendment to a vote.

Mr Nick Raynsford (Minister of State (Local and Regional Government), Office of the Deputy Prime Minister; Greenwich & Woolwich, Labour)

Clause 33 slightly adapts the grant-making power in clause 31 for the purpose of the GLA. It takes account of the special relationship of the authority with its four functional bodies and acknowledges the central role of the Mayor in the GLA structure.

Amendment No. 86 would prevent the new power from being used to support the London Underground PPP. As the hon. Member for Kingston and Surbiton will recall from his time serving on the Committee that considered the Greater London Authority Bill, we already have the power under section 101 of the Greater London Authority Act 1999 to provide financial support for the tube when it transfers to Transport for London ownership, so we would not expect to need to use the new power for that purpose, and we certainly have no intention of bailing out the PPP, which will achieve substantial investment for improving the much-neglected infrastructure of the London underground. However, I do not intend to debate that now.

We want to retain some discretion in the matter because we might conceivably need the flexibility that the new power will allow. The amendment could have unforeseen and unfortunate consequences. For example, the Government might use the new power to support a London borough's initiative to reduce crime in the vicinity of its local underground station. Measures could well include the installation of CCTV cameras on London Underground property itself. The most practical option might be for the PPP contractors to do the work under a variation to their contracts, in return for some share of the grant. The amendment would make that impossible, which is why we do not want to accept it, although I can give the hon. Gentleman the assurance that he seeks that there is no intention to use the provision as a main source of funding for the PPP, for which it is not necessary in any case, as the PPP is a financial arrangement in its

own right, with its own grant-making powers available to the Government.

The arrangements in the clause do not disadvantage the bodies at all. It would not be possible for the Mayor to divert resources in a way that would be contrary to the intentions of Ministers, and I hope that the hon. Gentleman will recognise the good sense of retaining the Bill as currently drafted, which is designed to cope with the special and different circumstances of the GLA. I hope that he will withdraw his amendment.

Mr Edward Davey (Kingston & Surbiton, Liberal Democrat)

I was not completely convinced by the Minister's reply. On some of the examples that he gave, one can see many ways round the potential problems he suggested that the amendment would give rise to. In relation to the example of a local authority seeking to take anti-crime measures near a station that was being refurbished by the PPP, one could make grants to that local authority under clause 31. I was not convinced by his argument on that matter. He might have more of a point when he says that it might be more efficient for the contracts of PPP contractors to be changed slightly, so that anti-crime measures could be included. I had not considered that point, which seems reasonable.

I am pleased that the Government have again said that there will be no bail-out of the PPP—that the project will live and die on its own merits. However, I was slightly concerned to hear the Minister say the Government have that bail-out power anyway. That was not how the matter was described when we debated that particular legislation. We were given categorical assurances then that there would be no bail-out, just as we were given categorical assurances about many other aspects of the PPP, which have not been valid. I think that this short debate—I shall bring my remarks to a close shortly—has been worth it, because the Minister has yet again said on the record that there will be no bail-out of the PPP. For Londoners, I hope that he is right, and that the project will work in the way that the Minister has suggested.

It is in no one's interest for the tube to grind to a halt. As we have seen recently during the fire strike and after the accident on the Central line, the closing of many stations causes huge inconvenience. However, many of us remain to be convinced that the model that the Government have chosen for London Underground will work in the way that they describe. Despite the Government's assurances, I still fear that at a future date the Minister or his successors will have to come to the House to justify using national taxpayers' money to bail out their failed project. However, that debate is for another day, and therefore I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mr Desmond Swayne (New Forest West, Conservative)

Subsection (2) places a condition on the Mayor to pass on funds to a functional body. I notice that under subsection (5) the Mayor enjoys that power even when he is not placed under such a

condition. In his earlier response, the Minister said that the purpose of the clause is to adapt slightly the powers granted under clause 31, and I wish to probe him on that. Given that under clause 31 a Minister may make a grant to whomever he determines—a huge, sweeping power—he can therefore hand the money directly to a functional body, should he so wish. Why is it therefore necessary to have clause 33, and subsection (2) in particular, which enables a condition to be placed on the Mayor, so that the Mayor has to pass the money on to a functional body? Under the powers granted under clause 31, the Minister can give the money straight to the functional body himself.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

My hon. Friend the Member for New Forest, West makes an interesting point. I had not spotted the difference of emphasis between subsections (2) and subsection (5), which the Minister might like to explain. It appears that subsection (5) weakens the requirement in subsection (2). Subsection (5) says that the Mayor may transfer the grant to a functional body. Presumably it means that he may not also. The Minister needs to explain that. I would also be grateful if he could explain the need for the clause. Why not simply include a clause that says that the Minister may pay a grant either to the Mayor or to a functional body? If the Minister paid the grant direct to the functional body there would be no need for all this complication.

I should also be glad of explanation of subsection (6). Who is the transferee and who is the transferor? It is not entirely clear. The Secretary of State transfers the grant to the Mayor, who transfers it to the functional body. Which in that chain is the transferee and which the transferor? I suspect that the Minister will say that it is all about devolution—about giving the Mayor more devolved powers. The Minister shakes his head, so he must have another explanation. I shall be happy to listen to it.

I am concerned about clause 31(1), referred to by my hon. Friend, which states:

''A Minister of the Crown may pay a grant to a local authority towards expenditure incurred or to be incurred by it.''

That is a wide power. I am still concerned about how, under these clauses, we will track the money, both to ensure that we obtain best value and to ensure that fraud or misappropriation is not involved. In giving away the powers concerning where money is to be spent, the Minister needs to assure the Committee in strong terms how it will be properly tracked and monitored.

Mr Nick Raynsford (Minister of State (Local and Regional Government), Office of the Deputy Prime Minister; Greenwich & Woolwich, Labour)

Clause 33 slightly adapts the grant-making power in clause 31 for the purposes of the Greater London Authority. That is its purpose. It is not a special devolution arrangement; it is to take account of the special relationship of the authority with its four functional bodies—Transport for London, the Metropolitan Police Authority, the London Fire and Emergency Planning Authority and the London Development Agency. It is a unique relationship in local government and its unique circumstances necessitate the clause.

The grant power will operate in basically the same way as for other authorities, but any grants intended for the functional bodies, because of the structure of the GLA, have to be paid first to the Mayor and then, with the provisos in subsections (2) and (4), transferred to the individual functional body.

Clause 33(5) is separate. It allows Ministers also to pay grants to the Mayor that are not earmarked for any individual body. That gives the Mayor discretion as to how to use the grants. Those are the two separate functions that apply in the case of the GLA that require a special formulation. There is nothing sinister about it; it is a reflection of the structure of the GLA, of which the hon. Member for Cotswold would probably have a deeper understanding if he had suffered for three months, along with the hon. Member for Kingston and Surbiton, on the Greater London Authority Bill Committee. I hope that hon. Members will accept that the purpose of the clause is to ensure proper measures to scrutinise expenditure and to counter fraud. The arrangement whereby all grants have to go via the Mayor with a central financial control is clearly advantageous in that respect.

Question put and agreed to.

Clause 33 ordered to stand part of the Bill.