Clause 11
Additional provisions as to control of executive by council
11.0 a.m.
Mr. Heseltine
I beg to move Amendment No. 50, in page 14, line 20, leave out ‘major’.
This Clause deals with additional powers for the control of the Executive by the Council, and the word which is the subject of the controversy is the word “major” [column 270]in line 20. I do not believe there is a great issue here, and I hope that the Parliamentary Secretary will be able to help us. All that we seek to do is to examine the sort of responsibilities that exist between the Executive and the Council.
The Clause indicates that the Council can give the Executive general directions about the exercise and performance of its functions in relation to any matters which appear to the Council to affect policies and measures which it is the duty of the Council to develop, organise, and carry out. This is what one would expect [column 271]to find. Under subsection (2)(b), however, the Executive has to come back to the Council if it wishes to make a major change in any of these general directions, and it seems to us that this is unnecessary.
Surely the essence of devolution of this sort is that the Council will make up its mind about the general directions under which it wants the Executive to operate, and that it will at the same time define the matters about which it will expect to be consulted if there is a change. In other words, the Council will define what is here described as “major” . We submit that the word “major” has no significance. It is simply a question of how one interprets the situation at any given time.
A responsible authority which has control over an executive body always allows the executive body real flexibility in making day-to-day decisions. In the organisations of which I have experience the definitions and the flexibility of those definitions is laid down. I do not believe that one would say to a responsible manager, “Come back and talk to me about it if you think something is important, major, or big” . One would always try to find a definition.
The manager would probably be told, “If you are going to spend £X amount on capital account, that is the limit of your responsibility. Above that you must refer back to me. If the company is involved in legal matters, for instance in a claim for damages, that must be referred back. If you intend to change the fare structure, which is a major responsibility of yours, you must come back” .
All those areas would be defined when the Executive was given its responsibilities, and the Council must be responsible for deciding what it regards as major, and what it regards as minor. It would be superfluous to give the Executive discretion to make the judgment which we believe should rightly be made by the Council when it delegates its various powers.
Mr. Bob Brown
I think that the Amendment is completely unnecessary, because we are certain that the Executive and the G.L.C. will come to a commonsense definition of what “major” means. If the Amendment was accepted it would place on the Executive a duty to go back to the Council to discuss every change that it wanted to make. If the Executive wanted to send its mail by first-class, [column 272]instead of by second-class post, this change would have to be reported. I suggest that the Amendment would tie the hands of the Executive to a ridiculous extent, and that it is not necessary.
Mr. Heseltine
Suppose the postage bill of the London Transport Executive was £50,000 a year, or £40,000 a year to take an easy figure, and it decided to change to the 5d. post. That would increase its estimate by £10,000 a year, albeit in 1d. unit expenditures. Would the Parliamentary Secretary not regard that as a major item? I know from personal experience that many companies were faced with making a decision on this issue, and it is my guess that the decision was taken at a very senior level. The company for which I have any responsibility decided to restrict itself to the 4d. post.
I should be appalled if I thought that managers had to take decisions which, though small in themselves, resulted in an aggregate increase of no less than £10,000 a year. It is in this sort of area that the power being delegated to the Executive should be defined in advance as a result of consultations between the Council and the Executive. It is not the job of this Committee to provide the Executive with an excuse for saying “We thought we were taking a minor decision” . It is for the G.L.C. to decide what is major and what is minor.
Mr. Brown
I agree entirely, and that is why I do not want to accept the Amendment, because this is a matter for the G.L.C. I do not want to argue detailed cases, but the G.L.C. has accepted the present drafting, and I begin to wonder whether Mr. Plummer and his friends across the river, after reading the reports of this Committee, do not sometimes say to themselves, “Good Heavens, with friends like that we do not need enemies” .
Mrs. Margaret Thatcher
The G.L.C. may have accepted the drafting, but the Richard MarshMinister has found it necessary to make changes in it, and I do not think that the Bob Brownhon. Gentleman's last remark is worthy of him.
Amendment negatived.
Mr. Heseltine
I beg to move Amendment No. 51, in page 14, line 23, leave out
‘a substantial outlay on capital account’
[column 273]and insert:
‘an outlay on capital account in excess of such a sum as may from time to time be determined by the Council’.
This Amendment is very much along the lines of the earlier Amendment, but instead of a discussion on what is a major or a minor proposal which necessitates the Executive going back to the Council for additional authority, we now come to a decision about substantial outlay on capital account.
I accept that there is some shred of a case in what the Parliamentary Secretary said on the previous Amendment. I do not think that the hon. Gentleman is altogether right, but I think there is some shred of a case, particularly when he says that the G.L.C. will define “major” when it hands over powers to the London Transport Executive. I think that the Council would be wise to do that, and if it did, that would go a long way towards removing my objections.
We are now talking about expenditures on capital account. The standard practice in capital expenditure within any commercial organisation is to lay down ceilings which are within the discretion of the responsible manager concerned. There is no question of saying, “substantial” or “Do you think it is large?” or “Do you think it is urgent?” . This is done throughout industry, and this is the way it should be done here.
If the Parliamentary Secretary says that when “substantial” comes to be decided the G.L.C. will say to the Executive, “We believe that ‘substantial’ in the case of a junior manager is £250, in the case of a senior manager £1,000, and in the case of a general manager £5,000” , that is acceptable to me. But that does mean that the word “substantial” is not necessary in the legislation, because in drawing up that definition the G.L.C. will have divested itself of its absolute authority to the limits which I have outlined. Those limits may be nonsense, but they serve as an example. The Council will have handed that responsibility over to the managers, and, therefore, the word “substantial” will have no meaning and will not be necessary.
Nevertheless, it would be wrong for the possibility to exist of a dispute or disagreement between the G.L.C. and the Executive. Capital expenditure is clearly the responsibility of the G.L.C., subject [column 274]only to the ministerial intervention which we discussed at our last meeting. It is not the responsibility of the Executive. The Executive has to submit plans, for approval, and in agreeing to them it is right that the Council should be able to say, “The changes which are authorised within these plans are not a matter of discretion. There are certain limits for certain managers” . This is the correct way of dealing with these matters, and I hope, therefore, that the Minister will accept the Amendment.
Mr. Brown
The Council and the Executive, I am sure, may well agree a definition of “substantial” in the various fields of operation. As I see it, if the Amendment were to be accepted this would be a limit imposed on all fields and, as I said in the argument used on the last Amendment, it would be completely constricting on the Executive. Given that the acceptance by the Council and the Executive for a control system for investment must be agreed between them, it seems completely undesirable to prescribe the form that any such agreement should take, and I ask the Committee to resist the Amendment.
Mrs. Thatcher
I do not think that that argument is entirely justified. The Amendment gives the Council a certain extra control over the Executive. The Minister is trying to say that the G.L.C. may have accepted “substantial” , but one also has to recognise that the G.L.C. is not overburdened at the moment with experience of running an undertaking like this, and we really wish to give it extra powers. If we agree to the Amendment it means that the Council has to address its mind to what is substantial, and therefore to the question of outlay on capital account. Without the Amendment it may not do so.
Will not the Minister look at this again, perhaps in conjunction with the Council? We believe that much more precise direction may be necessary than the Council admits at the moment. We know the kind of correspondence that we get, and that we have to refer to the Executive, requiring a good deal of detail. An Amendment giving the Council more specific control and requiring that it must address its mind to the problem is better than leaving the Bill in this rather vague form.
[column 275]Mr. Brown
Would not the hon. Lady accept that one ceiling is more or less inferred in the Amendment, and that this would be inadequate? I am trying to be helpful. I am quite prepared to discuss this further with my right hon. Friend, but if the hon. Lady will look more closely into this matter she will see the point that I am trying to make.
Mrs. Thatcher
If the Minister will have a look at this point again, that is all that we require at the moment.
Mr. Heseltine
I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Mr. Heseltine
I beg to move Amendment No. 52, in page 14, line 33, leave out from beginning to ‘shall’ in line 34 and insert ‘The Executive’.
We move on now to subsection (3), which deals with the publication of changes in fares. The first few words of the subsection are those which we seek to delete. The subsection deals with the publication of any fare changes, and the prefix to it reads—
“Unless the Council are of opinion that in all the circumstances it is unnecessary so to do, …” .
That is a strange form of wording, and I should be grateful to hear the Parliamentary Secretary's explanation for it. There must always be a temptation, however public-spirited and high-minded a Council may be, not to want to publish all the details—or, indeed, any of the details—of fare changes, because we all know from experience in national or local Government that the one thing that is likely to have an immediate boosting effect on one's post-bag is any suggestion that there should be a change of any sort, shape or size in public transport.
We all suffer from this. The Council will always wonder whether it is necessary to publish particulars of changes. The Executive certainly will not want to publish any changes, because it will have to bear the brunt of public wrath, which is often engendered in a totally disproportionate scale to the difficulties or hardships that are likely to follow. 11.15 a.m.
It therefore seems to us that we must decide either that there shall be publication [column 276]or that there shall not be publication, and that we should remove from the local authority the invidious temptation of having to be advocate and judge in its own court, in terms of publishing fares. Its interest will usually be not to publish, and it will only reluctantly and grudgingly come to the conclusion that it should do so. I should be interested to hear why the Parliamentary Secretary feels that this flexibility is necessary.
Mr. Brown
The amendment would remove the Council's discretion as to whether or not it should cause the Executive to publish the general level and structure of fares each time these were agreed by the Council. I can visualise few cases in which the Council would decide not to publish. The only time might be when a general review had been carried out, and when there were not to be any major alterations. In such a case I suggest that the Council should have the discretion not to publish. I doubt very much whether there is any point in hon. Members opposite pressing the Amendment because, as I have said, the discretion that we want to leave to the Council will certainly not be applied very often.
Amendment negatived.
Mr. Brown
I beg to move Amendment No. 53, in page 15, line 7, at end insert:
‘(5) In connection with the discharge of their functions under subsection (2)(d) and (3) of this section with respect to fares for the carriage of passengers by the Executive's railways, the Council—
(a) shall in each year consult with the council of any county within which any of those railways are situated as to the general level and structure of such fares on journeys within, to or from that county; and
(b) before approving any proposal for a change of substance in that general level and structure submitted to them for that purpose by the Executive shall inform the council of that county of that proposal; and the Council shall so exercise their powers under subsection (4) of this section as to enable them to inform the council of that county in advance of any proposal by the Executive for a change of substance in the level of the provision made for such journeys’.
This Amendment has been put down by my right hon. Friend and it imposes on the G.L.C. an obligation first, to consult each year the county councils outside Greater London on the level and structure of fares to be charged on rail services of the L.T.E. within, to and from the county [column 277]concerned; secondly, between the times of annual consultation to inform the county councils of any proposed change in their areas in the level and structure of fares, and, thirdly, to inform the county councils of any proposed change of substance in their areas in the level of rail services provided by the Executive.
This Amendment is designed to meet the representations of councils in the Home Counties—notably the Buckinghamshire County Council, which complained that it would be dependent for its rail service on the goodwill of the L.T.E., a body which would have no responsibility either to them or to the Government. The provision will give it access to the G.L.C., and is a very reasonable Amendment.
Mr. Heseltine
I am not quite sure what has brought about this change of heart. When this original piece of legislation was drafted the matter had been discussed for about two years between the hon. Gentleman's Ministry and the preceding Minister and the present Minister, and a clear arrangement had been reached. Everybody understood the basic situation, and all the arguments were known. There is nothing very sophisticated or original in the general case advanced by the Parliamentary Secretary, as he would be the first to admit. It is obvious that when we are handing powers and financial responsibility to the Executive and, ultimately, to the G.L.C., that there will be a withdrawal of the general consultative situation, which is also dealt with in other parts of this legislation.
It was discussed for months round the conference table and suddenly, for reasons which I have not yet heard argued, there was a change of heart. I understand the arguments for the Amendment, but why were they good in March, 1969, when they had been bad for all the months during which the negotiations had gone on? I did not hear the Parliamentary Secretary explain why the Ministry had changed its mind, and I am sure that he will want to explain that there is a good reason for this.
The nub of the question concerns the area where responsibility lies. We might as well face up to the problem. All local authorities outside the G.L.C. area are now receiving services from London Transport, and will continue to do so—and they will not have to pay for them. There are no provisions in this legislation [column 278]which would make them expect to pay for them. From the point of view of the local authorities outside the G.L.C. it is really a “Heads you win, tails I lose” situation; they simply cannot get it wrong.
They have only to object to every diminution in the services; they have simply to ask for a permanent increase or a permanent status quo, because there is absolutely nothing in it for them. Their local electorates will press them very hard to maintain these services, and if the services are maintained and the losses on them escalate, not one penny piece of their ratepayers' money will ever be called into account.
The more that one thinks about it the more extraordinary one finds the situation is. There are two ways in which these services could be financed. They could be financed by increases in fares, when the people using the services and living in these local authority areas would pay for the services they require, or the fares could be kept down, which would lead to larger losses at the centre, which would be borne by the rates of the Greater London Council.
The local authorities on the outside will be subjected to pressure, first, for the maintenance of the largest possible service and, secondly, for the maintenance of the lowest possible prices. In this situation they will not act in the most responsible manner.
The reverse situation of course exists in the G.L.C. It has to run a very large organisation, which can quickly run into deficit. It has been widely reported in the Press that the situation has declined for the London Transport Board. Even since the last fare application the situation has been declining and deteriotating. In those circumstances, in order to adjust rapidly to the changes in the market the G.L.C. wants to be able to take commercial decisions, which affect the ratepayers of London. The sort of Amendment that the Minister has now agreed, under pressure, to put in, can only delay those decisions being taken whilst a group of people are consulted who have got every reason to resist those decisions being taken and no reason whatsoever for supporting them, under any conceivable circumstances.
My hon. Friends and I are bemused, first at the change of heart—and we are looking forward to hearing the Parliamentary Secretary's explanation for that—and, secondly, at the reason for this [column 279]consultation with people who have absolutely no financial responsibility for the matters about which they will be consulted.
Mrs. Thatcher
While the Bob BrownParliamentary Secretary is thinking out an answer to my Michael Heseltinehon. Friend's excellent speech I wonder whether those who are here to help him could also think out an answer to the very specific question that I am now going to put. They can be thinking out that answer while he is answering my hon. Friend.
Is it necessary for the Bill to contain specific powers enabling the G.L.C. to receive an amount from another authority to meet a service which is otherwise making a loss? I suspect that it is not. Secondly, would it be necessary for Parliament to give specific powers to that other local authority—being a county council—to enable it to make a grant towards a service which would otherwise be discontinued? I should be glad if we could have specific replies to those questions.
Mr. Eric Ogden
Whilst this cross-conversation and consultation is going on I want to put one point to hon. Members opposite. We have listened to them very carefully for weeks, and I find that they jump from one position to another position and then to a third position every time we debate the question of the cost of the coming operation.
From time to time the Opposition talk about the commercial cost, and hon. Members opposite then stand in three different positions. They have yet to say what their argument is on any of these. The first thing the hon. Member for Tavistock (Mr. Michael Heseltine) spoke about this morning was the deficit in the Report. He seemed to be saying that he was speaking on behalf of the users of London Transport. The hon. Member has never said how he would overcome this deficit. He talks about marginal efficiency and improvements. This is extremely marginal.
There are only three ways in which this kind of organisation could be run in a commercial manner, paying its way and making a profit. One of the ways is to increase the fares to an economic level on all services. As a supporter of the users he would oppose this. The next way is to say, “Right, if we are to provide peak [column 280]services, using the capital equipment and the labour force for only a certain amount of the time, we will have to pass the cost to the ratepayers” . Immediately the hon. and gallant Member for Carshalton (Captain W. Elliot) protests on behalf of the ratepayers. He says that of course we cannot do this; the users should do it.
Then they both get together and say that the burden should be borne by the taxpayers. Then hon. Members representing constituencies outside London get together and say “Why should the North-West, the North-East, and every other part of England subsidise it?” They are arguing it three different ways to three groups of people. I ask that at some time they should come down off the fence.
I do not want to add to the burdens of the hon. Member for Tavistock. He seems to get little support from his cohorts behind him. He is always pressing his Amendments. Why not share it round a little bit? Let other hon. Members opposite do the pressing. Why should he have to carry the can all the time? Instead of speaking with three voices, could they say exactly how they propose, on behalf of the users, the taxpayers and the ratepayers, to overcome some of these difficulties? Let them put that kind of Amendment forward.
Mrs. Thatcher
May I give a preliminary answer to the Eric Ogdenhon. Gentleman? In general the users should pay the cost of providing an efficient service. The hon. Gentleman has asked me for an answer and I am giving him one. The users should pay the cost of an efficient service. That leaves the question: what is an efficient service? The users would know. If there are reasons for maintaining a service which is not paying its way it is for the governing authority to decide whether a grant should be paid towards that service.
Mr. Ogden
With respect, those are two quite different points. The hon. Lady says that the users should pay for the cost of running an efficient service—but if the users are not paying the cost of an efficient service and it is losing money, it should be made up by grant. That is what the hon. Lady was saying. I wonder how much London Transport would have to increase its fares if the proposition put forward by the hon. Lady was accepted.
[column 281]Mrs. Thatcher
I agree that there is an inherent difficulty in the proposition. It always arises in the case of an undertaking run by a public authority, because the yardstick of efficiency is competition, and that is the one yardstick which cannot be applied in this case.
11.30 a.m.
Mr. Brown
I am grateful for the very helpful intervention of my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden). The hon. Member for Tavistock (Mr. Michael Heseltine) has chided me for not explaining the type of discussions which have gone on between county councils and my Department. I felt that my duty this morning was to propound the case for the Amendment and not explain the negotiations that led up to it. Surely a change of heart is always welcome. The Amendment simply gives the right of consultation to county councils. For Buckinghamshire, the Amersham line is absolutely crucial, and it is right that we should give that county council the opportunity of being kept in touch.
The hon. Lady posed two questions. The answer to her first is that the G.L.C. needs no power to receive grants and, in any event, the L.T.E. would be the body that would receive them. Secondly, the county councils have certain powers under the 1948 Local Government Act. I believe that they are in Section 136, but I am not quite sure.
Mrs. Thatcher
I am most grateful. That gives the G.L.C. power to say to a local authority, “You are putting up a case for retaining this service. We say that it is losing money, and we are going to test your sincerity by asking you whether you will pay a grant to enable that service to run economically.”
Mr. Anthony Berry
Can the Minister tell us whether the G.L.C. is in favour of this Amendment, giving the local authorities these rights?
Mr. Brown
I am not able to give the hon. Gentleman an answer on that point at this stage.
Mr. Heseltine
In order that we may come back to this situation later, when [column 282]the Parliamentary Secretary has had time to look at the second part of the question put by my hon. Friend, I should like to know whether, in the event of his discovering that the local authorities who would be requiring services from the G.L.C. but at this moment are not mandated to pay for them do not have the power to pay for them under the Act to which he referred, he would consider introducing, on Report, a Clause to give powers to local authorities who are receiving these services, so that they could make grants in the event that they wanted so to do.
Mr. Brown
I cannot give a direct assurance on that point. We shall clearly have to check and consider the matter.
Amendment agreed to.
Mr. Heseltine
I beg to move Amendment No. 54, in page 15, line 14, leave out ‘substantial’.
The Chairman
With this Amendment we can take Amendment No. 55, in page 15, line 15, after ‘except’, insert:
‘in the day-to-day management of their affairs other than’.
Mr. Heseltine
We are still concerned with the powers of the Bill that deal with additional provisions for the control of the Executive by the Council. Amendments Nos. 54 and 55 have the purpose of clarifying the existing drafting of the Bill. No great issue is at stake.
Under subsection (5) the Council is entitled to—
“give to the Executive such directions as appear to the Council from any such review”
—of the workings of the Executive—to be necessary in the way in which it is organising its activities, in order to make it more efficient. The Bill then continues:
“… and the Executive shall not make, or permit to be made, any substantial change in the manner in which their undertaking is organised except in pursuance of a direction given by the Council under this subsection or with the approval of the Council” .
We want to remove the word “substantial” , so that the subsection will read:
“… the Executive shall not make, or permit to be made, any change in the manner in which their undertaking is organised except …”
—and here I insert the words in Amendment No. 55—
“in the day-to-day management of their affairs” .
[column 283]
I do not think I need do more than explain the purpose of the Amendments. It is only a drafting matter. The Amendments make it clear that the day-to-day affairs of the Executive are under the control of its managers, and that they can make minor adjustments of the sort that any departmental manager would expect to make, but they cannot make changes that are not on a day-to-day basis. That is a more usual form of restriction on a departmental activity than the one in the legislation as drawn.
Mr. Brown
I feel that we have covered the main argument; it is much the same as the argument on the two Amendments with which we have already dealt. Hon. Gentlemen opposite may feel that the word “substantial” , coupled with the requirement placed on the Executive to reorganise only under the Council's direction or with its approval, blurs the classic distinction applicable to the G.L.C.-L.T.E. relationship. This distinction is normally drawn between those matters where the sponsoring body has clear cut powers of control or of intervention and day-to-day matters, where the management is responsible for running its own business. I ask the hon. Gentleman to withdraw his Amendment.
Amendment negatived.
Question proposed, That the Clause, as amended, stand part of the Bill.
Mrs. Thatcher
I want to raise a point in connection with the general structure of fares. At the moment there is a direction to the Prices and Incomes Board to raise a certain amount either from an increase in fares or an alteration in structure. The Clause gives the Council and Executive directions as to the way in which the structure of fares shall be arranged in future.
I am interested in what happens in the interregnum. We could have a situation in which the Council and Executive would wish to have a completely different structure of fares from that which they inherit. This situation would be alleviated considerably were there to be consultation now, and were those who are taking over London Transport to make their representations to the Prices and Incomes Board if they have any definite views about the kind of fares structure which they will require at the time. [column 284]
The Bob BrownhonMember may say that he cannot tell me, but it would make it a great deal easier, administratively, if the G.L.C. and the Executive were to take over a structure of fares with which they are broadly in agreement and which is adequate to make the undertaking viable.
Mr. Brown
I am not certain whether the power exists for the G.L.C. to make representations to the P.I.B. As my right hon. Friend, the Minister, said on Tuesday, it is not wise for Ministers to make off-the-cuff statements in Committee—and it is even less wise for junior Ministers to make off-the-cuff statements. So I shall not make the statement that I was about to make. The only thing that I can say is that I shall discuss this point with the Minister. We may have something to say later.
Question put and agreed to.
Clause, as amended, ordered to stand part of the Bill.