The Government will be punished if it defies the wishes of Londoners

'New Labour would be in a stronger position if it had not starved public services for two years'

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The most important item on my agenda since the London elections has been my talks with the Government about its Comprehensive Spending Review which will determine the resources available to London to modernise the capital's transport system.

The most important item on my agenda since the London elections has been my talks with the Government about its Comprehensive Spending Review which will determine the resources available to London to modernise the capital's transport system.

For ten weeks these discussions went excellently, primarily with the Minister for London, Keith Hill, and his officials. Their purpose was to achieve a broad measure of agreement on London's transport needs in order to make the strongest possible case to the Treasury for the funds necessary to meet them.

Officials from both sides were involved in dozens of hours of detailed negotiation and there were at least six meetings between myself and ministers, including John Prescott the Deputy Prime Minister.

We rapidly reached agreement on the broad approach - which was to reduce traffic congestion by persuading motorists to transfer to social and public transport. Given the extreme over-crowding on the Tube and overground rail services and the unreliability and slowness of the buses, this would require a major programme of investment to increase the capacity on the Tube and railway and to provide more reliable, faster and more comfortable bus services. And given the time-scales involved in constructing new Tube and rail lines, it became clear that the most immediate improvements could be made to bus services where there is some spare capacity.

Such improvements in public transport, and other, complementary, measures would in turn make possible the introduction of congestion charging to reduce unnecessary car journeys in central London. On this point, ministers repeatedly made it absolutely clear to me that they were determined that congestion charging should be a success - which is why they put it in the Greater London Authority Act - and that it would have their full support in London.

Similarly we rapidly agreed on a number of key capital projects - extending the East London line, building CrossRail, linking east and west London, constructing new East Thames river crossings to assist in the economic regeneration of that part of London. I was also keen to take forward preparatory work for a new Hackney/Wimbledon Tube line. A series of steps to improve bus services was also common ground.

There were differences on some of the measures I considered important to produce rapid improvements in bus journey times - by introducing more conductors - and in making public transport more attractive by holding down fares. With evidence that conductors reduce bus journey times by 10 per cent, I wanted to triple the number in central London. I also wanted to freeze bus fares and bring in a flat rate bus throughout London.

Ministers and officials at the Department of the Environment, on the other hand, wanted to keep such measures to a minimum and concentrate on capital projects. There were compromises on both sides - recognition, for example, that congestion charging requires making public transport more attractive. We narrowed our differences and I trimmed my proposals to some £3.4 billion - which, while we were given no figures, appeared to be closer to what the Government Office for London was looking for.

We all agreed that this process had been highly constructive and useful to both sides. All of the indications were that there would be a good settlement for London.

Then, at the last moment, something was introduced which had never once arisen in all of the previous ten weeks of discussion. With my office geared to give a warm welcome to the Spending Review, less than 24 hours before John Prescott made his announcement in the House of Commons, something was introduced which had never been mentioned - that I would have to pay an enormous bill for the Jubilee Line extension.

This was a bombshell - I believe to Keith Hill as much as it was to me. All previous discussions had specifically excluded the London Underground because the government has not yet given control of the Tube to the Mayor. Now we were being told that we would have to pay out £104 million in the year 2001-2, leaving just £114 million for improvements to public transport over and above existing plans.

This meant that what was a very good settlement overall - £3.2 billion over three years - was massively back-loaded with only £114million in the first year, £428 million in the second and £637 million in the third for improvements over existing plans.

What is the logic of this?

If it is the mistaken idea that it is better to promise improvements in the future than deliver them now, the Treasury should have already learnt its lesson. The Government would be in a much stronger position today if it had smoothed its programme of public investment over its five year term - instead of starving the NHS, transport, education, and other departments of investment for two years and then promising large increases, some of which won't kick in until after the next general election.

London needs a steady improvement in its transport system. Giving us just less than 10 per cent of the funds in the first year will just introduce a totally artificial delay.

Alternatively, some kind of scorched earth tendency may have been instrumental in dropping in the Jubilee Line bill at the last minute to punish London. If that is the case, they will have only hurt the government.

The only way to win the support of the people of London is to act in their interests. Again the lessons of the recent past must be learned. Those who thought it was clever to try to stop London choosing its mayoral candidate did not do that and London punished them for it.

Myself, Labour Assembly members, Keith Hill and, I believe, John Prescott, did try to get a fair deal for the capital. If anyone deliberately tried to mess that up by dropping in the Jubilee Line bill at the last minute, then that was not clever. It was nuts - and nuts from the government's point of view. Only an idiot would irritate London by making it wait a year for the sake of £100 million out of a £3.2 billion three-year programme.

If it was deliberate, Tony Blair should call these types together before they cause any more damage. If not, and if it was simply some kind of cock-up, then I'm sure that together we will still be able to find the resources necessary to ensure that London waits no longer than necessary.

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