"Angus Bryant" wrote in message ...
http://news.independent.co.uk/uk/tra...p?story=484806

A plan to grant Ken Livingstone the power to raise hundreds of millions of
pounds for transport projects through issuing bonds is under consideration
by ministers.
Whitehall officials say private discussions between the Mayor of London and
the Treasury are aimed at striking a "constitutional settlement" between the
Government and the capital to allow the Greater London Authority more leeway
in financing major schemes.

I think it is a good idea (with some reservations) - although the low
value bonds may be a bit of a side-show to make it look more
'democratic'. Most of the money will come from city investors.

Business/City leaders are always saying how important transport is to
the London economy. Yet they are usually reluctant to invest directly
in transport improvements - because the risk is high and the return is
low. At the same time Governments/Mayors etc find it hard to justify,
from taxpayers funds, the huge up-front capital investment needed for
transport projects compared to schools/hospitals/police etc. They are
also (especially after the Jubilee-line fiasco) terrified of cost
overruns.

Bonds offer a middle way - a chance to encourage THE CITY to invest in
the infrastructure of their own city (like they used to in the 19th
century). Investors are attracted because the rate of interest on
bonds is guaranteed (low risk). Government & TfL gain both because
they get the cash up-front and (because of the guaranteed return) can
offer a relatively low rate of interest - cheap borrowing.

Unfortunately, the risk of escalating costs remains largely in the
public-sector, although this may be shared with the construction
companies if the contracts are well negotiated. But - since the bonds
will be issued by TfL not the treasury - the responsibility for
repaying the interest (and eventually the capital) may also be a
business incentive to both TfL managers and local politicians to run
the system more efficiently.