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.

Such a deal could set a precedent for projects elsewhere in Britain and mark
a flexible approach to funding public projects by Gordon Brown, the
Chancellor, whose hardline policies are often blamed for hindering
developments. Mr Livingstone hopes new initiatives such as the East London
extension and the delayed Thameslink 2000 could be funded through bonds.

Some observers believe the £10m Crossrail route, another trans-London rail
link, could be financed, at least partly, through interest-bearing
securities.

It is understood that the mayor could set the price of bonds at a level
which would allow individual voters, as well as investment houses, the
opportunity to invest.

The proposal comes in the wake of Mr Livingstone's readmission to the Labour
Party and some observers believe it may have been part of a unspoken deal.

A senior Treasury official said: "The current constitutional settlement is
an unhappy compromise between central control and local discussion.''

Mr Livingstone can issue a small amount of bonds, but to raise money on a
substantial scale would require primary legislation. It would also need the
agreement of Alistair Darling, the Secretary of State for Transport, and
John Prescott, the Deputy Prime Minister, who is responsible for local
government.

Mr Livingstone, who will stand for re-election as mayor in the summer, has
recently taken a more supportive line towards the Chancellor. Four years ago
he urged the Government to dismiss Mr Brown.

Although an agreement over bonds would show a more liberal approach to
public finance by the Treasury, it would also allow itto blame Mr
Livingstone if projects went awry. It is not clear whether the bonds would
be part of public debt, something the Chancellor will be keen to avoid.

Mr Darling has said he would consider a degree of devolution. He said it
might be possible to give the Scottish and Welsh parliaments, as well as
regional passenger transport authorities, more responsibility.