HC Deb 06 February 1963 vol 671 cc615-24

[Queen's Recommendation signified]

Considered in Committee under Standing Order No. 84 (Money Committees).

[Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

Motion made, and Question proposed, That, for the purposes of any Act of the present Session to continue with amendments the provisions relating to the payment of Exchequer Equalisation and Transitional Grants to local authorities in Scotland and for other matters, it is expedient to authorise the payment out of moneys provided by Parliament of any increase attributable to the provisions of the said Act of the present Session in the sums payable out of moneys so provided under the Housing (Scotland) Act 1962.—[Mr. Leburn.]

12.50 a.m.

Mr. William Ross (Kilmarnock)

I must protest at this important matter being brought before the House at this time of the morning. We see an Under-Secretary approaching in silence the penitential stool. I notice that this is Money Resolution (No. 2). I want some information from the Government, and my desire for information is shared by my Scottish colleagues assembled behind me. [Laughter.] I am glad that the Leader of the House is with us, because this matter is pertinent to his duties as well. It will not be unknown to the Bill that this relates to a Bill which is presently in Committee. It is not customary to make anything but a passing reference to what happens in Committee, but it is unusual and strange that, the Committee having reached the debate on the Question, "That Clause 2 stand part of the Bill," we should now be faced with a new Money Resolution, not one which replaces the first one, but one which adds to it and refers to the Housing (Scotland) Act, 1962.

The Money Resolution deals with a problem which has worried my hon. Friends and I as to what parliamentary authority the Government would have for certain moneys that were going to slip through the gripping hands of the Treasury into Scottish local authorities, particularly in a Bill which was meant to take money away from Scottish local authorities in relation to housing. We have had no explanation from anybody. We have had no apology from the Government. There has obviously been an omission, an oversight, neglect, or just sheer incompetence. There is a considerable staff of Ministers at the Scottish Office. There is a Secretary of State whom we never see in Committee. There are three Under-Secretaries, one of whom is being snowed under by work at present. There are two Law Officers idling or dallying in Parliamentary idleness; they are not Members of the House.

I want to know how this mistake could have been made. Why has this happened? What does it do? My hon. Friends and I have been trying to unravel this, because there is no reference to the Housing (Scotland) Act, 1962, in the Bill presently in Committee. There is a reference to the 1954 Act in the Housing (Scotland) Act, 1962. In the 1962 Act there is a formula which depends upon equalisation grant. As the Bill deals with equalisation grant and the purpose of it is to reduce equalisation grant in respect of certain local authorities, I can only presume that this is the thing which has been omitted. It is passing strange that the Scottish Office could not remember that a Measure dealt with such a short time ago which contained a reference to equalisation grant would be affected by one which deals specifically with equalisation grant. If I am right, this relates to Section 3 of the 1962 Act and to the Second Schedule thereof. The purpose of that was more or less the same as this—to hit local authorities and to divide the sheep from the goats, giving some of them a much smaller subsidy and others a larger one.

A notional calculation was made about their rent income, a subtraction was made and if they had a deficit they would get a higher subsidy. Then, in a spirit of generosity, the Government decided that if that deficit was big enough they would get yet an additional subsidy. Bust that additional subsidy was calculated in relation to a formula which said that the deficit would be reduced by a sum which bore the same proportion to the deficit as the equalisation grant which they received bore to the relevant local expenditure. It is a very simple matter.

We had a list in last Friday's OFFICIAL REPORT of the local authorities to be affected by a sum of the tune of£1 million. II the equalisation grant is to he reduced—that is to say, to reduce the sum to be deducted from the deficit—then what will be left will be a larger sum than otherwise would be left without the Measure before us. It could happen that, unknowingly and unthinking, a local authority in Scotland, unaware of this oversight of generosity on the part of the Government, might not get the additional subsidy.

I think that that is the purpose of this additional Money Resolution, because without it the Government have no power to pay or to meet the promise they made in the 1962 Act. I want to know why the Treasury missed it. Why did the Scottish Office miss it in relation to the Act which was passed so recently? After all, in the Scottish Committee we are considering a Bill. We have already passed the whole of the 1954 Act. In that Committee we have passed a Clause relating to that Act with our customary fairness and speed. I do not know why the Leader of the House should laugh at that remark. Is there any other Committee in the House which has so quickly approached Clause 3 of a Bill? And that despite the meaningless mystification of the Under-Secretary. Had he not made so many speeches we would probably have completed our consideration of the Bill by now.

In those proceedings so far not one Government supporter has spoken, mainly because they generally do not know what the Under-Secretary is talking about. I am discussing an important point tonight because we have passed the Clause which relates to the Bill which is affected by the Money Resolution which has come so belatedly. The least we can expect from the Government is an apology, an explanation as to how this all came about and an explanation of what will now be permitted, not just in relation to the point which the Government have in mind but to the possibilities which are now opened up to us for amending the 1962 Housing Act.

As far as I can see, there is nothing in the Money Resolution that limits us to any great extent as long as we relate it to the purposes of the Act. It refers to …any increase attributable to the provisions of the said Act of the present Session in the sums payable out of moneys so provided under the Housing (Scotland) Act 1962. That being so, I must warn the Leader of the House that he should not expect to get this Bill from the Committee as quickly as we may have led him to believe, because here we have opened up the possibility of amending yet another Act of Parliament.

I want the Under-Secretary to tell us whether that is right, and to tell us, also, what sum of money is involved in this No. 2 Money Resolution for which he requires Parliamentary authority to pay. We shall certainly listen very anxiously to his extremely lucid explanation—and I hope that on this occasion he does not use a brief relating to a Measure of about four or five years ago, as he did the other day in the Scottish Committee.

1.3 a.m.

Mr. E. G. Willis (Edinburgh, East)

This is another example of the blundering ineptitude of the Government, and particularly of the Scottish Ministers. As my hon. Friend says, with about six or seven Ministers, it is asking us to tolerate a great deal when we are faced with the fact that the Government are unable to present a Money Resolution covering one of their Bills and so have to introduce a second one for that purpose.

I do not know whether it is just incompetence or whether it is not something rather clever. This seems to be a rather dangerous practice. The Scottish Committee has discussed Clause 1, which deals with the continuation of the 1954 Act, and in seeking to amend it we have been limited by the Financial Resolution passed by the House, and so have not been able to put down any Amendments that would have dealt with the Housing (Scotland) Act, 1962. It is in order for the Government to put down Amendments which they can later cover by Financial Resolution, but it is not in order for the Opposition to put down Amendments not covered by the original Financial Resolution. Therefore, by adopting this method of introducing two separate Financial Resolutions the Government rob us of the opportunity of putting down Amendments dealing with the matter.

That is a very serious prospect. By this procedure, the Government could prevent the Opposition from putting down Amendments to a large part of the Bill. When we on this side were seeking method of amending Clause 1 to the advantage of the people of Scotland, we came up against the Money Resolution.

The Money Resolution limited our efforts to benefit the people of Scotland. Now the Government introduce a Resolution to extend the original one, having robbed us of the opportunity of doing some good to the Bill. This is rather serious. It might have been done deliberately or it might have been sheer ineptitude. As I am always suspicious of the Government I am apt always to think the worst.

Mr. Ross

It might have been both.

Mr. Willis

Yes. It might have been done by somebody more cunning than the Ministers. The Treasury put down the Resolution and the people there may have been cleverer than the Scottish Ministers, and the responsible Ministers have not realised this. I agree that the Under-Secretary ought to apologise sincerely to the Committee and to Scottish Members not only for the inconvenience he has caused but for the opportunities of which he robbed us of amending Clause 1 of the Bill.

It is true that we may have the opportunity to do that and to use the Money Resolution on Report, but we have no certainty that the Amendments will be called, since rather tighter rules apply on Report than apply in Committee. I hope that the Under-Secretary is seized of the gravity of this matter and will not try to brush it off as something trivial. We do not regard it as trivial. We regard it as serious because it has interfered with our rights. We hope that the hon. Gentleman will appreciate the injustice that he has done to the Opposition and the unfair manner in which he has treated us by this omission from the original Money Resolution.

We are, of course, glad that the Government have noticed the omission and are putting it right. I do not know how much this means to the local authorities. It probably means a small amount, but that has nothing to do with it. It is the principle that counts and not the amount involved. I hope that the hon. Gentleman in his reply will come clean about it and will give us some reassurance that steps will be taken to prevent a recurrence in future.

1.9 a.m.

The Under-Secretary of State for Scotland (Mr. Leburn)

I should like to offer to you, Sir Robert, and to the Committee my apologies, first for inflicting this Money Resolution on the Committee at this very late hour. I should also like to offer my apologies to hon. Members that it should have been found necessary to put down this second Money Resolution. I offer these apologies in the most handsome way, but really this matter was not due to carelessness or ineptitude but to the fact that we are dealing with a rather remote thing. It was only when I considered putting down an Amendment to the Bill to help local authorities that the financial experts—although I take full responsibility for this—pointed out to me that what I proposed to do was not covered by the Money Resolution.

As I have been asked to explain the effects of this new Money Resolution, even though the hon. Member for Kilmarnock (Mr. Ross) and the hon. Member for Edinburgh, East (Mr. Willis) clearly understand what is involved, perhaps I may do so. Its purpose is to ensure that the effect of Clause 3 of the Bill, under which a local authority may have its share of Exchequer equalisation grant reduced, is taken into account when applying the test of qualification for a supplementary subsidy under the Housing (Scotland) Act, 1962.

The amount of Exchequer equalisation grant received by a local authority affects the rate of supplementary subsidy which it is entitled to receive under the Second Schedule of the 1962 Act if its notional housing deficit is above a certain level. To give an example, where a qualifying authority's notional housing deficit exceeds a rate of 1s. 3d. but not 2s. 6d., it gets additional subsidy of£8 per house. In making this calculation, allowance has to be made for Exchequer equalisation grant received by the local authority. We want to ensure, however, that in doing that, due account is taken of any reduction of Exchequer equalisation grant under Clause 3 of the Bill. This is only fair to the local authorities.

When the point was brought to my attention, I wished to put down an Amendment to achieve that. It was at that point that the financial experts explained to me that it was not covered by the Money Resolution. The effect of all this might be to increase the total of the housing subsidies—

Mr. Ross

What does the hon. Gentleman mean by saying that he would put down an Amendment to effect this? That is achieved by the terms of the Bill.

Mr. Leburn

No. I wanted to put down an Amendment to ensure that the local authorities were not losers in this matter if they had Exchequer equalisation grant deducted under Clause 3 because their rents were not reaching the standard which we are setting of gross annual value or 85 per cent. of gross annual value. They might then lose Exchequer equalisation grant. I did not want that operation to endanger the amount of supplementary housing subsidy which they might receive under the Second Schedule of the 1962 Act.

Mr. Ross

It could not do so.

Mr. Leburn

This procedure makes it easier for them. The hon. Member knows that the notional housing deficit is made up of two parts, the rateborne and Exchequer equalisation parts. If the latter were reduced because there had been a deduction by the Exchequer for low rents under Clause 3, the rateborne part would be the lower. Therefore, local authorities might not come in for supplementary payment or they might not qualify for£16 but only for£8, or for£24 instead of£16. Therefore, the effect of all this might be to increase the total of the housing subsidies paid under the 1962 Housing Act. But I agree that the amount is only marginal.

1.15 a.m.

The hon. Gentleman asked me how much it would cost. I have to tell him that we do not know and that we really cannot know, but we estimate that it will only be marginal. I have been advised, as I have explained to the Committee, that such an increase is not within the scope of the original Money Resolution and hence the supplementary Resolution, which would provide the necessary Parliamentary authority for what we are here considering tonight. I am sure that all hon. Members are in favour of this. Again I say that I apologise for the fact that it was not included in the original Money Resolution, and I hope that we can support it.

Mr. Ross

I am sorry about this, but I do not know whether my limited intelligence is at fault or whether it is the strange frankness of the Under-Secretary of State. There was no reason why it should be included in the original Money Resolution if the Bill as originally printed had no effect upon the matter. The Under-Secretary of State kept telling us that the need for this came out when he wanted to put down an Amendment. With all due respect to the hon. Gentleman, a Government do not relate their Money Resolutions when first put down in relation to a Bill which they have printed to an Amendment that they are going to put down later. In other words, if the hon. Gentleman is going to put down an Amendment later on he has no need to apologise but only to explain.

I do not know whether I am right about this—the hon. Gentleman can tell me tonight or later—but the hon. Gentleman's reading of the Second Schedule of the 1962 Act is certainly not my reading of it. The deduction that is made, the simple subtraction sum, is made in relation to the original determination as to whether the local authority gets the higher or the lower subsidy. If it gets the higher subsidy it is because there is a deficit, not a notional deficit. The word in the Statute is "deficit", and whether or not the local authority gets the increased subsidy is determined by what is called in the Second Schedule the "reduced deficit."

The reduced deficit is clearly defined as a deficit less the amount which bears to that deficit the same proportion as the amount of the Exchequer Equalisation Grant payable to the local authority for the relevant financial year.

Mr. Leburn

My reading of the reduced deficit is that it is the notional deficit minus Exchequer equalisation grant. If I am wrong about this I will certainly explain it to the hon. Gentleman.

Mr. Ross

I will gladly read it to the hon. Gentleman. I have it here. It says: the local authority's reduced deficit means the deficit referred to, in relation to the local authority, in paragraph (a) of subsection (4) of section three of this Act less the amount which bears to that deficit the same proportion as the amount of the exchequer equalisation grant payable to the local authority for the relevant financial year under the Local Government (Financial Provisions) (Scotland) Act, 1954, bears to the authority's relevant local expenditure as certified by the Secretary of State to have been estimated under the said Act of 1954 according to the latest estimate made before the end of the relevant financial year. That is the formula and that is the meaning of the reduced deficit. Then we proceed from that reduced deficit to find whether or not that fits in with the product of a 1s. 3d., a 2s. 6d. or a 3s. 9d. rate. What the Government are doing in the Bill as originally printed will, for certain local authorities, reduce what is going to be paid to them, and, by reducing that, they reduce one part of the known proportion, and so they determine that the proportion which bears the same relation is smaller. If one reduces the deficit by a smaller amount, one gives a local authority a better chance of qualifying for one of these increased subsidies. It is not a question of amending a Bill to do this. It is a question of what the Bill actually says. I shall watch eagerly and anxiously for the Amendment that the Under-Secretary of State said would be tabled. There is an Amendment, but it only adds to the financial Clause the very words that we have added to this Money Resolution.

I sincerely hope that, having learned the lesson of covering carefully all the implications of the matter, we shall not have a repetition of this sort of thing. Let us not have the Government telling us that right from the start they intended to be generous to local authorities and that this is the reason for the addition, and that it is purely an oversight. Indeed, if any Amendment goes down, it will probably be to ensure that the calculation will be related to the Exchequer equalisation grant that was originally thought to be payable, rather than that which actually will be paid after the Bill goes through. In other words, the local authorities will find themselves in exactly the same position after the Bill goes through as they were before, and they will not get this sudden and unexpected accretion of their possibilities of getting an additional subsidy.

The hon. Gentleman said that he did not know what will happen, but that it will only be marginal. Yet he tells us that this is the objective, in order to achieve which he was going to put down an Amendment. When he says he was going to put down an Amendment to achieve something, the effect of which he was ignorant, but that it would only be marginal, frankly I think he was talking nonsense at that point.

Question put and agreed to.

Resolution to be reported.

Report to be received this day.