UK Economy (London)

Part of the debate – in Westminster Hall at 3:16 pm on 10th March 2004.

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Photo of Ruth Kelly Ruth Kelly Financial Secretary, HM Treasury 3:16 pm, 10th March 2004

My hon. Friend is aware that the Treasury set up the Barker review to consider the responsiveness of housing supply and to address some of these issues. There will be an update on that in next week's Budget. I shall not pre-empt any announcements today. However, the Treasury is concerned with the housing market supply, the planning system and the responsiveness of the housing market.

Several hon. Members spoke about transport infrastructure. Public spending on transport in London is two and three-quarter times the UK average. Improved transport structure is essential to ensuring that London remains internationally competitive and that people are able to realise their full potential. My hon. Friend the Member for Leyton and Wanstead spoke about some of our ambitious plans, even in his own constituency—for example, the Thames gateway project. There is also the London-Stansted-Cambridge corridor, which is creating high quality mixed communities to meet the growth pressures that success brings.

Hon. Members spoke about Crossrail. I cannot give any definitive answers, other than to say that, as they are no doubt aware, my right hon. Friend the Secretary of State for Transport is considering the detailed advice on that subject that he received from Adrian Montague. He will publicise his findings in due course.

Transport Ministers have just received the Strategic Rail Authority's procurement proposals for taking forward the East London line extension. I understand that that will be considered in the context of the forthcoming spending review. My hon. Friend the Member for Leyton and Wanstead can look forward to that process. Transport will remain a vital component of London's economic strength. As he knows, the Government are committed to very long-term investment programmes in London, as in the rest of the UK.

The Government provide strong support to the Greater London authority, and the budget for the group as a whole was about £7.5 billion last year. More than half of that was provided by central Government. Fares and fees provided almost 40 per cent. of the budget, with the council tax precept providing the remainder. The London boroughs control a similar sum, spending approximately £7 billion.

My hon. Friend the Member for Leyton and Wanstead, who secured the debate, and my hon. Friend Mr. Coleman raised the question of whether the Greater London authority should be allowed to borrow. I may be able to clarify the proposals that the Treasury has agreed. From 1 April 2004, the prudential borrowing regime will give the GLA and other local authorities new freedoms to borrow to meet capital expenditure needs in London. The Government have imposed no upper borrowing cap for 2004–05. That new flexibility will increase Transport for London's ability to meet the capital's transport requirements. I am not sure whether the Mayor is asking for greater borrowing flexibility than the Treasury has proposed, but it may want to discuss those proposals with him to see if they meets his, and its, concerns.

The London Development Agency, one of the GLA bodies, also plays a key role. I noted the concerns of Dr. Cable on that score. The issue is one for the Mayor and the GLA, although of course the Government take a keen interest in the LDA's internal restructuring and how it has pledged to improve its service delivery. The LDA focuses on maintaining and enhancing London's international competitiveness and position as one of the world's leading economic centres, thus acting as a driver for the nation's economy. The LDA also addresses some of the market failures in the capital, particularly those associated with the high cost of housing, which I have already mentioned, child care, which was raised by my hon. Friend Ms Buck, and business premises.

Many of my hon. Friends and others stressed the stark disparity in wealth in London. There are disparities between ethnic groups, between types of household, between areas of London, and between those with higher qualifications and those with lower qualifications. As was mentioned by the hon. Member for Twickenham, key problems are levels of unemployment, which remain higher than in other parts of the United Kingdom economy, particularly long-term unemployment. My hon. Friend the Member for Regent's Park and Kensington, North mentioned the difficulties in respect of child care that have to be overcome before many people, particularly lone parents, can enter into the world of work.

Many Londoners find that they are ill-equipped to access its opportunities. They experience poverty, poor health and social exclusion as a consequence. The Government's strategy for tackling child poverty is multifaceted, but perhaps the most important part is to help each family to secure a decent family income, with work for those who can, and support for those who cannot work.

Some 20 per cent. of all lone parents live in London. We have considered that group in particular when trying to design schemes that make it easier for lone parents to get back into the work force. On child care, we are aware that affordability remains a problem in parts of London among particular groups. That is being examined in the context of the ongoing child care review, which will be taken into account in the spending review proposals, so my hon. Friend the Member for Regent's Park and Kensington, North can be reassured that the issue is being taken seriously by the Government.

My hon. Friend also raised the issue of the Cabinet Office strategy unit's report on London, which has been completed and is being considered by Ministers. A decision on publication is due to be made shortly. That is an ongoing process that will feed into the Government's strategy on London.

In conclusion, I thank all hon. Members who have taken part in the debate. If there are issues to which I have not had time to respond, I will be happy to take them up and respond to them afterwards. The debate has been extremely worth while and broad. I look forward not only to continuing to champion the cause of London in the UK economy, but to creating an environment in which other regions have the opportunity to share similar types of prosperity to those experienced in parts of the London region.