Transport for London (Best Value) (Contracting Out of Investment and Highway Functions) Order 2005

rose to move, That the draft order laid before the House on 16 November be approved [10th Report from the Joint Committee]. The noble Lord said: My Lords, I commend to you this order under Section 70 of the Deregulation and Contracting Out Act 1994, as applied by Section 18 of the Local Government Act 1999. It confers on Transport for London powers to contract out its investment functions and highway functions in the same way that other local authorities can. Under Section 1 of the Local Government Act 1999, Transport for London (TfL) is a ““best value authority””, defined as a ““local authority”” for finance purposes and as a ““local highway authority”” for road management purposes. ““Best value authorities”” have a duty to make arrangements to secure continuous improvement in how their functions are exercised, having regard to a combination of economy, efficiency and effectiveness. In meeting this duty, guidance from the Office of the Deputy Prime Minister states that ““best value authorities”” should challenge why, how and by whom a service is provided. Other ““best value authorities”” outside the GLA group have already been granted powers to contract out investment functions and highway functions through three separate orders made under the Deregulation and Contracting Out Act 1994. These orders are: the Local Authorities (Contracting Out of Investment Functions) Order 1996; the Local Authorities (Contracting Out of Highway Functions) Order 1999; and the Local Authorities (Contracting Out of Highway Functions) (England) Order 2001. This order would allow TfL to contract out the functions that other local authorities may already contract out under those orders. While the GLA Act made provision for the Deregulation and Contracting Out Act 1994 to apply to the GLA itself, it did not make such provision for TfL or other GLA functional bodies. This means that TfL is the only local highway authority unable to contract out its highway functions and, unlike all other local authorities outside the GLA group, is also unable to contract out its investment function. Because TfL does not currently have the full range of legal powers that are available to other ““best value authorities””, it can only discharge its investment and highways functions by in-house staff and is consequently restricted in its ability to pursue alternative means of discharging those functions. Local authorities have been granted powers to contract out investment functions so that they can call on the expertise of specialists with the necessary experience, systems and understanding of the market, making them better suited to ensuring optimum return for investment. TfL’s inquiries with brokers indicate that it could achieve higher returns than is currently the case through outsourcing parts of its investment functions, while keeping risks at a similar level to investment managed internally. Similarly, TfL cannot contract out its highway functions in the same way that local highway authorities can. TfL is responsible for maintaining the 580-kilometre Transport for London road network and traffic control equipment within the GLA boundary. It cannot currently contract out highway functions that it considers contractors are better placed to manage at greater value for money. It is also unable to compare in-house operations with external arrangements, as encouraged by best value guidance. We have carried out extensive consultation on these proposals among a range of stakeholders. This exercise revealed no strong opposition to granting TfL these powers, beyond the importance of TfL demanding similar standards from contractors carrying out its highway functions to those it would expect from its own staff. I agree that this is important, but feel confident that Transport for London is well placed to manage this issue. Under these arrangements, TfL would retain responsibility for the discharge of its highway functions and would thus continue to be accountable for the work carried out by contractors acting on its behalf. Other local highway authorities have used powers to contract out highway functions effectively for many years, including provisions within contracts to manage both quality and response time standards to satisfactory levels. I do not believe that there are any legitimate reasons to treat TfL differently from other local authorities in these respects. The arrangements set out in the order will enable TfL to better pursue its obligations as a best value authority and should enable it to achieve greater value for money in arranging for the execution of its highway functions and of its investment functions. As noble Lords will have noted from the title of the draft order, we had originally intended for the order to be made last year. This was not possible, due to parliamentary time constraints. Should noble Lords agree to approve the order, as I hope they will, the year cited in the title shall of course be changed to 2006. I commend the draft order to the House. Moved, That the draft order laid before the House on 16th November be approved [10th Report from the Joint Committee].—(Lord Bassam of Brighton.)