The planned London assembly and elected mayor for the capital constituted neither local government nor regional government, deputy prime minister John Prescott told MPs during the first day of the Second Reading debate on the Greater London Authority Bill.
'A body that governs seven million inhabitants will clearly have strategic and regional features, but we are discussing a city government with an elected mayor, which one would not normally expect a regional authority to have - not according to my concept of regional government. There are clear distinctions. This will be a new type of city government', he said.
Shadow environment secretary Gillian Shephard moved a reasoned ammendment welcoming the creation of an elected mayor but opposing the Bill because the assembly did not consist of representatives from each borough and the City of London Corporation - and was therefore likely to create conflict and diminish the role of the boroughs - and because the transport elements, which did not privatise London Underground and imposed additional taxes on motorists, were inadequate in dealing with the capital's traffic problems.
There was also widespread criticism from all quarters at the extensive powers over the mayor and assembly reserved for the secretary of state.
Mr Prescott said: 'We are creating a general purpose for the authority, which is to promote economic and social development in greater London. The mayor will not be able to use that power to extend the GLA's role into borough activities; nor will it extend the authority's remit into the management of health services or further education, as suggested by the Liberal Democrats'.
He said the GLA budget would be within the existing financial framework for local authorities. The GLA would set budgets for itself, the Metropolitan police authority, the London Fire and Emergency Planning Authority and the London development agency. MPs criticised the fact that not only would the GLA be subject to the new twin-capping regime, but also to spending floors by which the secretary of state could order the assembly to spend at least a minimum amount on a particular activity.
Mr Prescott said two new government grants would be established.
'The first is a new general hgrant to cover most of the annual costs of the mayor and assembly, estimated at about£20 million. London council taxpayers will contribute approximately 20% of that sum - about 3p a week on a band D council tax bill, raising approximately£4 million. That is a very small price to pay for giving London the strong directly elected government it needs'.
The second grant is a new GLA transport grant, which will consolidate existing transport grants.
Mrs Shephard said: 'We recognise that there is a case for a voice for London. That voice will be the mayor's. Her or his voice will speak up for Londoners to national government and for London on the international stage. It was because we recognised the need for a voice for London that we recommended a yes vote in the referendum'.
But she said the prospects for improving transparency, accountability and the involvement of the electorate were not bright.
'If the Bill is passed in its present form, London will have no fewer than four intermediate layers of government between local authorities and central government. There will be a mayor, the assembly, the London development agency and the government office for London. There will also be a transport body for London, the Metropolitan police authority, a London fire and emergency planning authority and the cultural strategy group.
'They will have something to say on issues affecting Londoners, who will need a lexicon to know who is saying what and on who's behalf'.
The debate continues into a second day.