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Part of the debate – in the House of Lords at 3:16 pm on 28th April 2004.

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Photo of Lord Sheppard of Didgemere Lord Sheppard of Didgemere Conservative 3:16 pm, 28th April 2004

rose to call attention to the governance of London; and to move for Papers.

My Lords, I welcome this opportunity to hear a range of views from across the House on London and its governance. Collectively this House has immense experience on just about every facet of life in London.

I am an East-Ender by birth. Over recent years I have, on a voluntary basis, been deeply involved in several initiatives aimed at making London a better place in which to live, work, invest and visit. Accordingly I declare my interests as founder president of London First and as a director of the London Business Board, the East London Business Alliance, the Central London Partnership and other similar bodies. I am also deeply involved in London's important higher education sector. I declare my interest as Chancellor of Middlesex University and a governor of the London School of Economics.

My comments this afternoon are personal ones. My question is: what can we do to make the government of London more effective and better value for the public money involved? I am talking about organisational structures and management processes. I am not talking about party politics that seemed to be the main make-up of the debate on London which took place last week in another place.

I am, of course, concerned about why decisions regarding London take so long. This is true of the Labour Government's debate regarding the Mayor of London and the debate about the London Underground which seemed to go on for ever. It is also true, though, of the previous Conservative administration and the present Labour administration. I refer to the 15 years of indecision with regard to Crossrail.

I would like to stress that I am not criticising any individual. London benefits from having many hard-working and able officials as well as dedicated politicians from all parties.

Before I discuss governance, I shall consider London itself. London is, of course, a great economic success. This is vital not only to Londoners but also to the whole of the UK. The problem with being a global leader is that one must keep winning. Any inefficiency or indecision on tackling London's needs would lose London its leading status fairly rapidly over a period of years.

Of course, good governance alone will not give London continued success. It is the actions and attitudes of 7 million Londoners that are critical. However, any inadequacies on education, training, transport and law and order can negate success driven by those individuals, so also can the ongoing failure of all political parties over many decades to achieve inclusiveness in London's inner suburbs. If that continues, it will be a threat to the future of London's economic prosperity.

The overall task is, of course, a considerable one, given the size and complexity of London. The GDP is bigger than that of either Greece or Portugal, to take two examples. The population is bigger than those of Scotland and Wales put together. Public spending in London is only 30 per cent of GDP, compared with 41 per cent for the UK as a whole. London makes a major net contribution to the national Exchequer. Estimates vary, depending on which economist one talks to, between £7 billion and £20 billion per annum net contribution to the rest of the UK. I suspect that the answer is nearer the £20 billion. Whatever it is, either figure is big enough to deal with the present infrastructure shortages that London has.

London's leading international position in financial and professional services, together with its growing strength in creative and knowledge-driven industries, gives London high productivity. In fact, London focuses on the provision of high-value added services, both nationally and internationally. A win for London is, however, a win for the UK, be it on inward investment or simply straight prosperity. London's main competitors are not the rest of the UK, but overseas cities around the world.

So far, that has sounded like good news for London, but London is obviously not all good news. We must maintain and improve the quality of life in London. Its success acts as a magnet for people within the country and from overseas. Today, there are half a million more Londoners than there were 15 years ago. That puts great pressure on our schools, housing, hospitals and transport. The answers are not easy ones, whatever political party happens to be in power. We need more housing, for example, but we need to keep our green areas both in and around London and to avoid being overwhelmed by a sea of concrete.

Skills shortages leave many individuals excluded in London. They also leave certain sectors, such as construction and the hospitality industry, short of the staffing that they require. In a decade of national employment growth, London has failed to cure the unemployment problem of its inner-city areas that has been around for decades, perhaps centuries. Skills shortage is not the only problem, and things can get more complicated. If we look at the cost of childcare in London, it is not surprising that the proportion of London's population in employment is lower than that of any UK region, except the north-east.

Let us turn back to the governance issue and the huge task that London has. The abolition of the GLC in the 1980s and the resultant period without regional government brought uncertainty, but also some benefits. The abolition itself demonstrated that London needs a regional government that tackles London issues, not one that tries to compete with the elected national government. The hiatus encouraged boroughs to be more self-reliant, but also to work collectively in smaller groups on subjects such as waste. It very much encouraged business to become involved. I admit that that was partly through desperation, but it became a determination for business and the voluntary sector to become more involved with local government in tackling some issues in London.

The Greater London Authority Act 1999 took forward the governance of London, with a resultant clearer voice for London and an ability to think and act pan-London. However, it left London with a very complex and at times slow-moving governance process, divided between central government, the Mayor and the GLA and the boroughs. It also left London with very complex management processes on many subjects such as, to name but two, policing and the commuter rail services. It was concern about the complexity of London's governance that led London First to undertake an extensive consultation with its members and other parties, looking at how governance could be improved. The result was the publication of Who is Responsible for London, which contains 41 recommendations. Noble Lords will be pleased to know that I shall touch on only a few of them this afternoon.

As we all know from our own experience, be it in business, local government or wherever, it is often more difficult to improve success than to turn round failures. The newspaper headlines are about people turning round failures, but the really difficult thing is to take a success and make certain that it continues. Whatever we do in changing our governance in London, we must not lose the will that Londoners have to succeed—the drive for both their individual and collective success.

As I am talking from the Opposition's side of the House, albeit from the very back of the Back Benches, noble Lords may not be surprised that I believe overall that one answer is to have less government. That will give Londoners the opportunity to use their personal initiative and help to build London's success. Of course, side by side with that, there has to be a real drive for equality of opportunity in London. We cannot continue to have major exclusion.

Whatever government activity is essential—clearly, there are some essential government activities—it should be as close as possible to the people. The electorate must understand the government processes and actually contribute and try to add value to them. Central government, whatever their colour, should therefore accordingly devolve all tasks in London to the lowest level commensurate with effective operation. If the Government believe in devolution, they should practise it. That means that, to take one example, the programme delivery function of the Government Office for London should be transferred to within London. That will enable the office and its highly talented and knowledgeable team to focus on strategy and not to get lost in the detail.

That need to concentrate on strategy and delegate the detail in London is also required by the Government themselves. The Government and their officials need to understand fully the case for London. They do not have to do everything themselves, which they have to understand. To achieve that, I suggest that the Government go back to what was practised in the previous Conservative governments, which was to have a senior Minister acting as a voice for London within the Cabinet. The post should be at Cabinet level. The reality of London must also be recognised within each department, especially the spending departments and, above all, the Treasury. From my experience, that is not always true at present.

The case for a Cabinet champion is well illustrated by the saga of Crossrail. Business has been asking for more than a year for serious dialogue on funding and even willingness to make a contribution. We have spoken to the Prime Minister, the Treasury, the spending departments and so on, but are still waiting. The independent review of the project, led by Adrian Montague, was of a high standard, I think. I have not been allowed to see it yet, but I have heard so much about it, and he is certainly of a high standard. It was completed in February. When will the Montague report be published? When will the Secretary of State for Transport make a definitive statement about Crossrail?

I shall step back from that. On most issues in London, more value for money would be achieved on future spending if strategic priorities were set centrally but specific projects were built from the bottom up. Probably the best examples of that are the huge amounts of money spent on economic regeneration and training. Greater reliance, together with tough targeting, should be based on the London Development Agency. The agency was set up under the GLA Act, so why do we not get it to earn its living? Doubtless the Minister will tell us that government projects are joined up and built from the bottom up. All I can say is that it does not quite look like that, out on the field.

On all public spending or subsidy, I recommend that the various appropriate levels of local government in London be much more involved, to make public accountability more obvious and ensure flexibility and more relevant application to local needs. That applies whether the budget is held by a spending department, an agency, a quango or whatever. Incidentally, a better understanding of London's needs by regulators would also be a big advantage, because of their importance.

I shall move on from the subject of central government versus London local government to look within London. Should we tackle the issue of the number of boroughs that exist? I would suggest that that is not a high priority. We would do much better to concentrate on particular issues. A good example is the Traffic Management Bill, currently in Grand Committee, where the definition of a "local" versus a "strategic" road would take us forward and define those roles within London. Of course, whenever one makes a decision on that one gets into difficulties, as there are many excellent boroughs carrying out good work on roads, including the Corporation of London in its role as a borough, and to that extent we must be careful that we do not lose those advantages.

The Association of London Government and the GLA should encourage the exchange of best practice between boroughs. We have some excellent boroughs and some terrible boroughs in terms of efficiency. We should also encourage the boroughs to work together in local groupings and that is particularly true in subjects such as planning—where there is a chronic shortage of good planners—and education.

We should also encourage business to work with all levels of government, including local authorities in the London area. Progress on business improvement districts has taken a long time, but is at least now under way and will be good news.

Finally, turning to the important subject of funding, currently 90 per cent of London's revenues are raised by the Treasury. I have two thoughts on that subject—which come from the business community in the London First report and not from our Mayor.

First, should business rates in London go directly to the GLA with a corresponding cut in Treasury grants to London? That would force a real dialogue between the boroughs and the GLA, which would not be a bad thing. That would make the uses and importance of business rates more obvious, both to the public and to the business community. Certainly, I have described in various business meetings that paying business rates is rather like throwing money over the wall in the dark—one does not know exactly where it is going or where it is ending up, but one does know that one is parting with money.

Secondly, should London command a predictable share of national government revenues? That is a much more complex issue. Maybe it is a pity that the noble Lord, Lord Barnett, is not in his seat, because he could have advised us on having a Barnett formula. I will talk privately to him.

In conclusion, London is a great success but its governance can be improved. The guiding principles should be subsidiarity with all functions being undertaken at the lowest tier of government capable of effectively exercising that task. The No. 10 Strategy Unit has now, I believe, finalised the recommendation part of its recent study on London for the Prime Minister. It will be interesting to see what that report has to say on governance, if anything. Will the Minister tell us what the status is of that report? Will it be published and, if so, when? The House of Lords All-Party London Group recently proposed a select committee to look at the working of the GLA Act. I know that happened only recently, but we are talking about one of the UK's greatest successes, so we cannot play for time. Let us hope that at some time in the not too distant future, despite all of the time pressures upon us, we have a chance to look at that again. Meanwhile, I look forward to the contributions of other speakers on this major subject. I beg to move for Papers.