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17.11.15

Revived TfL Bill would allow it to sell assets and form private partnerships

MPs have voted to revive the sunken Transport for London (TfL) Bill from the last Parliament, which would allow the body to form limited partnerships and sell its assets and land to plug an alleged £700m funding gap left by the Spending Review.

The controversial Bill, promoted by TfL, was originally introduced in Parliament in November 2010, but has been dragging through both Houses ever since, with several reintroduction attempts.

Part of this is due to a divisive clause allowing TfL to form limited partnerships. Over time, MPs successfully amended the clause to ensure any partnerships would require the transport secretary’s approval, to maximise public scrutiny.

There would also be oversight from the London Assembly, its transport committee and the mayor of London.

But the Bill faced fierce opposition yesterday (16 November), including from shadow transport secretary Lilian Greenwood MP – with some calling for more regular oversight by ordinary Oyster-card holders and a reform of the TfL governance to give Londoners greater control over asset sales and fare rises.

Others raised concerns that partnerships would open up opportunities for fraudsters and “the Russian mafia”, since control could move from one organisation to another or expose swathes of public finance to unlimited liability.

Labour’s Ian Lavery, MP for Wansbeck, said: “Although the Bill is not long, it lacks transparency. A limited partnership differs slightly from a limited liability partnership. A limited partnership is a form of agreement between parties, not a distinct legal entity, with unclear consequences for public transparency measures, such as the Freedom of Information Act.

“It has been suggested that TfL should not be able to enter into these partnerships until it proves that it can manage them properly, and I think that is fair.”

The Bill would also allow TfL to undertake commercial activities through several forms of private initiatives, to “conduct its affairs more flexibly and meet the maximum value from its assets”, as well as mitigate risks through hedging.

The rail minister, Claire Perry MP, added: “I understand from TfL that this private Bill could immediately generate savings in excess of £50m by improving its hedging power, enabling it to borrow money in a cost-effective way and make the most of its assets.

“The Department supports TfL’s commercial programme. We want TfL to better maximise its unique commercial position.”

She also agreed with another MP that most state-owned institutions are not good at “maximising the value” from developments, but said: “The same is true across the rail network, but we have to look at difference mechanisms to enable organisations to unlock the value from that public-private partnership which is so crucial.”

Perry did not deny rumours that TfL will see £700m cuts in next week’s Spending Review, which Emily Thornberry, Islington South and Finsbury MP, said helped clarify why the organisation was “in desperate need of a fire sale” of land to subsidise fares.

And Daniel Zeichner, Labour’s Cambridge MP, added: “TfL, caught like so many bodies across the country between a rock and a hard place, faces difficult spending decisions. With some 5,700 acres of land and more than 500 major potential development sites, it is one of the capital’s largest landowners.

“As we have said, Labour supports TfL earning revenue by utilising its underused facilities, but we have to be absolutely sure that such activities do not risk having an adverse impact on the current provision of transport services and, importantly, on TfL’s ability to expand transport services in the future. We do not want it rushing to sell its assets, given that we have to build a future transport system for the city.”

The RMT rail union also acknowledged that TfL is “pinning all its hopes on filling the gap” created by budget cuts by leasing land, but said: “Speculative property gambles benefit global finance capital and open the door to a barrage of dirty money and the warehousing of residential units that turn whole areas into ghost towns. TfL should have no part of that.

“TfL needs to be properly funded by government and not encouraged to gamble its financial future and the safe provision of transport services on shady property deals straight out of The Long Good Friday.”

After the heated debate, the House passed a motion to revive the Bill by 141 to just 29 against.

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