HC Deb 24 October 1972 vol 843 cc1011-37

Lords Amendment No. 111, in page 49, line 28, leave out "consent of any sanctioning authority" and insert: approval of the Secretary of State

Mr. Deputy Speaker

With this Amendment we can take the following:

Lords Amendments Nos. 112, 113, 243, 244, 245, 246, 247, 248, 249, 250 and 375.

Mr. Speed

I beg to move, That this House doth agree with the Lords in the said Amendment.

This formidable list of Amendments is essentially a consolidation measure. They make possible the complete repeal of the Local Government Act, 1933, and the repeal of the financial provisions in four other Acts—Section 8 of the Local Authorities Loans Act, 1945, Sections 1, 2 and 3 of the Local Government (Miscellaneous Provisions) Act, 1953, Section 55 of the Local Government Act, 1958, and Sections 7, 8, 9 and 10 and Schedule 1 of the Local Government (Financial Provisions) Act, 1963.

An opportunity is also being taken to remove ministerial control over local authorities in a number of financial matters and also to simplify the procedures with regard to the alteration of interest rates.

I should make it clear that the introduction of this large consolidation measure in no way prejudges whatever conclusions the Government may arrive at later in the matter of the reorganisation of local authority finance. Indeed, it is a consolidation measure largely of the existing arrangements. The fact that they are introduced at this time means that they will not prejudge what we may decide to do later.

As to Clause 68, the Amendments are consequential on the proposed Part I of Schedule 13 which, amongst other things, requires the approval of the Secretary of State to the borrowing of money, other than for lending to another authority, by local authorities. The expression "sanctioning authority" which appeared in the 1933 Act is no longer to be used.

The new Clause after Clause 166 amends the various existing enactments listed in subsection (1) which require the Secretary of State to determine by statutory instrument the rate of interest chargeable by local authorities on money owed to them under those enactments. The enactments necessitate the making of fresh instruments whenever a significant change in the interest rate is required.

An opportunity is now being taken to bring the Acts mentioned into line with current practice—for example, the Agricultural Act, 1970—by linking the rate of interest directly to that charged by the Public Works Loan Commissioners on local loans.

This change has been sought for local authorities generally for some time, and it will be welcome to the Department because it saves the need for an appreciable number of statutory instruments.

Most of the rest of the arrangements are largely consolidating, except subsection (2). This provides that the new rate of interest being linked shall in future be one quarter per cent. above the rate determined by the Treasury for local loans of 15 years. Where more than one exists, the Treasury has to direct which shall apply.

If hon. Members have any questions on any of the other Amendments, I shall be happy to answer them, but I stress, as was stressed in another place, that these are consolidation measures and that the Government's thinking on local government finance will in due course be announced to the House before the end of the year.

4.30 p.m.

Mr. Arthur Blenkinsop (South Shields)

That was a totally inadequate explanation of this enormous group of Amendments, and it is just not good enough to say that they amount to consolidation. The local authorities, I understand, are most disturbed about the way in which all these proposals have been suddenly landed on them, as, indeed, they have been landed on us. It may well be that many of the provisions in the Amendments meet points which local authorities have sought in the past—I do not necessarily deny that—but it is intolerable that they and we should be asked to go through this mass of material—about 11 pages of major alterations dealing with important matters of finance—in this last-minute fashion.

I understand that the local authorities have had next to no time to examine the changes proposed, and I gather that city treasurers are telephoning to the local authority associations to ask for guidance, pointing out that it will take days, if not weeks, to go through it all to satisfy themselves that the Government's proposals are welcome to them.

This will not do. It is quite unsatisfactory to suggest that these are all agreed measures. Indeed, the comment in the other place by one Minister to the effect that, as far as was known, these proposals were not objected to is somewhat resented by the local authorities because, they say, they have just not had time to tell whether they object to them or not. The situation is absurd.

Yesterday, at the beginning of our proceedings, we were told that there were no major matters of deep concern which need worry us, yet here is a case in point. In this short period, some matters of concern have been detected, but we do not pretend that they are the only ones. Merely by way of illustration, I take as an example from these many sheets of the Paper before us Amendment No. 246, dealing with the important matter of borrowing, lending and funds. One item with which it deals is the power of local authorities to issue money bills, a perfectly proper power which we all appreciate and understand. It is a matter of great consequence. It is hard to think of anything more important.

There are two ways in which Amendment No. 246 imposes limitations upon the power of local authorities to issue bills. One is the perfectly understandable requirement that they must not borrow more than a certain proportion of their rate income, and that is set out. But there is a further provision laying down that A local authority shall not borrow by the issue of bills in any financial year during which the authority's estimated gross income derived from rates does not exceed £3 million or such other sum as may be prescribed by an order made by the Treasury. This also may be understandable, but the result appears to exclude the right of many smaller authorities to use the bill market. In the past, such local authorities have joined together. Authorities with limited resources—this has been a fairly common and recognised practice—have joined together in order to issue bills, setting up a consortium of authorities for the purpose. It is common in London. I believe that the City of Westminster issues for the London boroughs jointly. But, as we read these proposals —we may be wrong, and so may the local authorities, but there is great concern about it—that facility will no longer be available, and local authorities will not be able to join together. The requirement is clear: each authority wishing to make use of these facilities must have a gross income of at least £3 million from rates in the particular year.

I admit that I speak subject to correction, but that is an important change which is but one illustration—there may well be many others—of the way in which local authorities will be affected. I imagine that my right hon. and hon. Friends have already had other cases referred to them.

We cannot allow this group of Amendments to go by in the present situation. I have received representations from the Association of Municipal Corporations expressing a very serious view of this whole procedure. Our first thought on seeing the Amendments on the Paper was that the Government had decided to drop the idea of new legislation dealing with local government finance and they were proposing to mop us some of the problems in the present Bill. At earlier stages, we were told that many other matters involving finance with which we wanted to deal could not be dealt with in the Bill because one had to wait for the special legislation on local government finance to come forward next Session. We were all eagerly awaiting, with tongues hanging out, this new legislation, but now we are presented with this mass of proposals, 11 pages of them, of real significance and in no sense to be regarded as trivialities. They are rushed upon us at this stage of all stages in the protracted passage of the Bill, and we cannot accept what the Government have put before us.

We have given an easy road to earlier Amendments today, we have made no attempt to hold matters up, but we must dig our heels in now. We cannot accept this situation, and we require from the Government an explanation very different from that which we have had from the junior Minister introducing the Amendments.

Mr. Speed

I cannot accept what has been said by the hon. Member for South Shields (Mr. Blenkinsop). His noble Friend in the other place accepted that they were largely consolidation measures, and so they are. However, if it will help —I appreciate that the new Schedule 13 is substantial, and I admit that I reeled in my chair when I first saw it, as, no doubt, he did—I shall go through the Amendment paragraph by paragraph in order to allay some of the fears which he has expressed.

Paragraph 1 of the new Schedule 13 in effect re-enacts Section 195 of the 1933 Act whereby local authorities require the consent of the sanctioning authority, that is, the Secretary of State, for the exercise of borrowing powers. In recent years, the Government have moved from control of individual projects towards control by programmes and by block allocations. Amendment No. 246 recognises this while still retaining the principle of control by loan sanction. In other words, it is a cleaning up as well as a consolidating exercise. The possibility has been considered of more far-reaching change in the law to reflect the Government's concern with all local government capital expenditure, not only with the amount of borrowing, but that would be a major departure from the present situation and we have decided not to make such a change at the present time.

Mr. R. C. Mitchell (Southampton, Itchen)

For convenience does the Minister prefer us to intervene on points we do not understand as we go along or would he prefer us to put all the points to him at the end so that he will then have to reply again?

Mr. Speed

I am happy to give way and, within the range of my ability, to answer the points which may arise.

Paragraph 2 lists the methods of borrowing available to local authorities subject to the restrictions in the other paragraphs in Part I. It consolidates and in addition it allows local authorities to borrow by any method not covered by the enactment which is subject to the approval of the Secretary of State with consent of the Treasury. It extends to all local authorities including parish councils, whose borrowing at present is confined to mortgages. The Schedule and Amendments impose no new burdens upon local authorities. There are no new restrictions as such laid upon them and the conditions and limits are those applying at present, so I am advised.

Paragraphs 3, 5 and 6 extend to authorities powers at present held by some under local Acts to borrow abroad or in foreign currency and to borrow by bills and transferable securities and the conditions and limits are those applying at present.

Paragraph 4 provides regulation-making powers in regard to the issue of mortgages, stocks and bonds and it replaces the detailed provisions on mortgages in sections 205–212 of the 1933 Act. For stocks and bonds it largely re-enacts the statutory provisions of Section 204 of that Act and Section 7 and Schedule 1 of the Local Government (Financial Provisions) Act, 1963.

Powers are required to ensure that local authority securities are issued on a uniform basis as readily understood and accepted by the market.

Mr. R. C. Mitchell

I believe that there are cases where local authorities have joined together to borrow money. Will the £3 million limit still apply?

Mr. Speed

£3 million is the present limit and I am advised that as there are no new restrictions or burdens the situation should not change in this regard.

Mr. Blenkinsop

We are on a very important point. It appears by the wording of the Amendment, particularly the subsection that I read out, in paragraph 5(3), where it says: A local authority shall not borrow by the issue of bills in any financial year during which the authority's estimated gross income derived from rates does not exceedmillion…" that there is a change, as the local authority associations believe, and that the change prevents the operation of consortia in the method that is available today.

Mr. Speed

I am advised that it is not a change, but if it is and if there is a real cause for concern it is a matter which we would certainly consider in any subsequent financial legislation which would be enacted, certainly before—

Mr. John Silkin

That is not good enough. The Under-Secretary, apart from anything else, has to convince us that even if he is right and nothing has been changed, which we do not agree, first that there was some over-riding necessity that caused these 11 pages to be inserted at this very late stage in the Bill which did not exist three months, six months or a year ago. Secondly, he must convince us that there is an over-riding necessity to put into the Bill something that does not change the situation, rather than that we should leave the matter for a few weeks or months until the whole financial question comes up again in the new Session.

4.45 p.m.

Mr. Speed

The right hon. Gentleman has raised a point with which I should like to deal in a moment. It does not change the situation in general but it changes it in certain respects. The right hon. Gentleman raised a valid point. The change has not come forward earlier because of the length of time the Bill has taken. We have been having lengthy discussions with the local authority associations on the Green Paper on local authority finance. Various representations of a major nature have been made which the Government are considering and on which they will, in the fullness of time, present their conclusions to the House. There is a whole series of minor representations some of which could properly be met in a consolidation Schedule of this sort within the Bill, some of which we felt were more important or would have to await a further financial Bill. A number were appropriate to be included in the Schedule even though it was introduced at a late stage in the other place. If the Bill had been enacted and if our discussions had taken place three or four months ago it would not have been possible to bring it forward in this way. When the Amendments were tabled in the House of Lords the secretaries of the local authority associations were informed. They had taken note and they had not so far raised any objection to the Department—

Mr. Denis Howell


Mr. Speed

The hon. Member says, "Nonsense", but that is what I am advised. The hon. Member may have his own lines of information about what they did or did not feel. They were informed when the Amendments were tabled and they have taken note. Most of the minor improvements and arrangements have been as a result of the discussions we have had with the local authority associations over the Green Paper on local authority finance. It is fair to say that the local authorities would like us to have gone much further but the Government will announce their conclusions on the reorganisation of local authority finance towards the end of the year. Whatever conclusions we reach then will be of a more major nature.

Paragraph 7 requires local authorities —[Interruption.]—I have already dealt with paragraphs 3, 5 and 6. I said that they extended powers enabling local authorities to borrow abroad and to borrow by bills and transferable securities. I said that the conditions and limits were those applying at present. At that point I was asked whether it represented a new restriction and I said that my advice was that it did not. I said that if I was wrong and if local authorities had a strong point of view about this they would no doubt be letting us know and I gave an undertaking that this was obviously a matter which would be looked at in the light of legislation we might introduce on local authority finance. I stress again that we are not here dealing with a new local authority finance Bill in any way. These are largely consolidation measures. They include a number of important but minor measures where the Secretary of State will no longer have control over local authorities in certain things they do.

Paragraph 7 requires local authorities to make provision for the payment of interest on debt and the amortisation of that debt by charges to the appropriate account over a period of years not greater than that fixed for the redemption of the debt. The provision replaces various sections of the 1933 Act and makes it clear that what has to be provided for is redemption of the original debt, not the repayment of a particular loan.

Paragraph 8 is a simplified reenactment of Section 216 of the 1933 Act empowering local authorities to re-borrow without the approval of the Secretary of State from time to time during the period fixed for repayment of the debt.

Paragraph 9 permits authorities to suspend making provision for the redemption of debt required by paragraph 7 and to capitalise interest payment on that debt for a limited period in certain circumstances. It is largely a re-enactment of Section 8 of the Local Government (Financial Provisions) Act, 1963, but the opportunity has been taken to extend the provision—this is one of the minor changes—so that it applies not only to revenue-earning works and associated land acquisition, but to expenditure solely on land acquisition in circumstances which the Secretary of State considers appropriate. In such cases the period of suspension will be not more than 10 years.

Paragraph 10 re-enacts Section 215 of the 1933 Act which enables local authorities to borrow temporarily, pending the receipt of revenues and the finding of long-term borrowing.

Paragraph 11 re-enacts Section 197 of the 1933 Act, taking up piecemeal Amendments in Schedule 13 of the Bill.

Paragraph 12 is a new power designed to make it easier for local authorities, should they wish, to obtain large loans —for example, stock issues—by combining their borrowing powers. It does not permit them to exceed any limits applying to them individually relating to particular forms of borrowing.

Mr. Denis Howell

This is the essence of our complaint on this matter. We have many other complaints to which we will come later. This new paragraph 12 is limited, is it not, by paragraph 5(2) and (3), to which we have already referred? We must take paragraphs 5 and 12 together to grapple with the point we are putting forward, that this is a new limitation, particularly on small local authorities.

Mr. Speed

I do not think that is so. Paragraph 5(3) is already the present restrictions. Paragraph 12 provides: Two or more local authorities may combine to exercise their powers of borrowing under this Part of this Schedule jointly, and where they do so—

  1. "(a) any limit on the amount which each authority may borrow shall apply to the amount which each authority receive from the joint loan;
  2. (b) paragraph 11 above shall apply to the money so borrowed."

Mr. Denis Howell

The point is simple, as raised by my hon. Friend the Member for Southampton, Itchen (Mr. R. C. Mitchell) a short time ago. Paragraph 5 limits the amount which local authorities may borrow. When we get to paragraph 12, that says, Two or more local authorities may combine". Does the limit already agreed in paragraph 5 apply to the two or more local authorities or to each of them? In other words, is it a multiple limit or a limit divisible by the number of authorities which come together?

Mr. Speed

There appears to be a misunderstanding. It does not permit them to exceed any limit applying to them individually. In other words, if three authorities combine, it is the multiple of three. It is an individual limit. This is not taking away anything they have at present. It is in fact making it easier.

Paragraph 13 extends to all local authorities the substance of a local Act power enjoyed by some councils enabling them to lend moneys to other authorities on agreed terms. This new power makes it unnecessary to re-enact powers in the 1933 Act which enable county councils to lend to parish councils.

Paragraphs 16, 17 and 18 re-enact, with the amendments previously included in Schedule 13, the provisions of Sections 1, 2 and 3 of the Local Government (Miscellaneous Provisions) Act, 1953, enabling local authorities to establish capital funds and renewal and repairs funds. Again, the opportunity has been taken to dispense with the need for the Secretary of State's consent to the amalgamation of a similar fund established under any local enactment with a general Act fund.

Paragraph 19 is re-enactment of Section 8 of the Local Authorities Loans Act, 1945, which empowers local authorities to use balances in capital and other funds and not for the time being required for the purposes of such funds for internal borrowing, subject to specified conditions as to repayment.

Paragraph 20 is a straight re-enactment of Section 203 of the 1933 Act. It is intended to afford protection to a lender against the misuse by a local authority of its borrowing powers.

Paragraph 21 re-enacts Section 217(b) and (c) of the 1933 Act. The effect is to exclude from the operation of the Schedule mortgages created against the security of the local sewers—it is doubtful whether any of these mortgages now exist—and local housing bonds which are secured against property as well as revenues.

Paragraph 22 is an interpretation provision which defines certain expressions used in the proposed Part I of Schedule 13.

I apologise for the time I have taken.

Mr. Blenkinsop

There is no need to apologise.

Mr. Speed

All right, I do not apologise. But when one looks at the vast amount of legislation of all kinds which is splattered over Bills over the centuries—the right hon. Gentleman the Member for Deptford (Mr. John Silkin) surely knows this more than most people —I think that these Amendments are essentially consolidation with one or two new measures, particularly involving the dispensation of the need to go to the Secretary of State for approval. I should think that this would meet with the approval of the House. I am under the firm impression, from the information I have, that although we may not go as far as we would wish with some of the local authorities' desires, on the whole this meets their approval as well.

Mr. John Silkin

Before the hon. Gentleman sits down. The right hon. Gentleman, whatever he would have done, would not have introduced 11 pages of questionable consolidation, which is capable of considerable inquiry before its effect is fully known, three weeks before the House is due to be prorogued by way of Lords Amendments. I would never have dreamed of doing that. The Government have got themselves into their own particular mess and will have to get out of it on that basis.

Mr. Speed

Where we knew that certain minor tidying up Amendments could take place and certain aspects of the Secretary of State's jurisdiction and control over local authorities could be removed—this has been a constant philosophy throughout the Bill—and there were reasonable and sensible ways in which these divers local authority financial Bills stretching back over the years—even to the Bill before I was born —could be brought together in these Amendments and in the Schedule, we felt it was right to do so. I apologise that it has been brought in at this late stage. If we had brought it in three or four months ago, with the discussions we have had with local authorities over the Green Paper, many of the minor Amendments and the tidying up which we have undertaken could not have been done. Nevertheless, I think it will make the Bill better and make the present financial provisions clearer. It removes the Secretary of State's direction over a number of small but important aspects of local authority finance. It in no way prejudges the major decision we must take later. I commend the Lords Amendments to the House.

5.0 p.m.

Mr. R. C. Mitchell

I want to add my voice to the protest against the way in which this has been done. I cannot remember another example of this sort of Schedule being introduced as a Lords Amendment in the time that I have been a Member of the House.

The Minister's arguments seemed to me spurious. If this was an urgent matter, why could it not have been introduced at the proper stage and given detailed scrutiny in Committee? It follows that it was not urgent but is simply consolidation. In that case, why bring it in now? If it is not urgent, why do we not wait until next Session, when the Government will presumably reform local government finance? The Minister said that some of this arose from consultations with local authorities and other associations after publication of the Green Paper. I presume that he meant the Green Paper dealing with local government finance, which I assume will be followed by a Bill next Session. Perhaps it will not, and perhaps that is why it is being done today. Perhaps we will not have a Bill on local government finance in the next year or two.

If not, that makes nonsense of the whole of this Bill. Most local authorities will tell the Government that financial reform and this Bill are bound up together.

Mr. Speed

I have said more than once today that the Government hope, before the end of the year, to announce their conclusions on local government finance in a Green Paper.

Mr. Mitchell

Does that mean that legislation will be introduced?

Mr. Speed

To use the time-honoured phrase, I cannot anticipate what will be in the Queen's Speech.

Mr. Mitchell

If that is so, why is this proposal before us today? If we are to have a Bill in the next Session, why can this not be incorporated in it? Why should we not go through it in Committee, line by line?

Having read this through and heard the debate, I am still not convinced that the Minister's interpretation of Schedule 13 is right or that he is correct about the relationship of that Schedule with Schedule 12 on the question of borrowing. Had this and a number of other matters been considered in Committee, we could have examined them in the closest detail. We cannot do that tonight.

Why did the Government not say, "We are to have a Bill, so we will withdraw this Amendment and include this proposal in that Bill next Session."?

Mr. Michael Cocks

I support the protest of my hon. Friend the Member for Southampton, Itchen (Mr. R. C. Mitchell). The House has been misused in this matter. Both Ministers in charge of the Bill are so transparently honest that, as we have been before, when their case is thin they are ill-at-ease and a little discomforted in their presentation. The Under-Secretary has run true to form in this case. He has been conned. The Government, I believe, have got greedy and decided to shuffle into the Bill at the last minute a whole lot of extraneous matter which could well have been left out. The Government seem to want to have the penny and the bun.

Consolidation Measures are scrutinised very closely to ensure that they make no change in the law. I once moved 12 Amendments to a consolidation Bill to put in the Centigrade equivalent of 60 degrees Fahrenheit and I was told that it was such a revolutionary step that it could not be countenanced. The Amendments were negatived.

Now, the Minister says that this is mainly a consolidation Measure but that there are one or two changes. The two statements are incompatible. Either we are consolidating or we are not. If there are changes they should be subject to proper scrutiny, which is quite impossible in the present circumstances. If there have been changes over three or four months, it may be that more consultation would have revealed other things which might be thought desirable.

Like my hon. Friend, I see a sinister motive here. Possibly, in the coming months, when this matter comes up again, we shall be told that this was consolidated and fully debated back in October. I think that the Government have become greedy, rather in the same way that the Isle of Wight County Council was greedy over its Bill to deal with a little local difficulty. It seized the opportunity to throw everything into that Bill. Whether it was trying to save fees or not I do not know.

This is an abuse of the House, and of the accepted consolidation procedures. I do not know what my right hon. Friends have in mind, but I believe that some protest should be lodged about this treatment.

Mr. Denis Howell

As my hon. Friends have said, the House has been put in an impossible position. Local authorities and their associations have been put in an even more disgraceful position. We must protest about this.

I understand that these 11 pages of financial Amendments, which will dominate the whole future of this reorganised local government, were first put down on the Thursday before last. The Minister has made great play of the fact that the local authority associations were informed. My information is that they were rung up and were told that the Government were tabling in the other place Amendments dealing with the financial provision. The associations immediately sent their messengers to the Stationery Office for copies of these 11 pages of Amendments. They found that none had been printed. It was not until the following Monday, eight days ago, that the great local authorities of this country were able to get copies. That in itself is a scandalous situation.

Local democracy works in this way. When local authority associations obtain Government proposals, they must consult their members. They have a number of experts, of course, whom they consult but all the members of the associations are entitled to be consulted. So, having obtained the information on Monday, they sent it out, which means that most of the local authorities would not have got it until Tuesday or Wednesday —less than a week ago.

Local authority treasurers do not sit waiting for Government pronouncements to drop on their desks so that they can consider them. But even if they were, these Amendments are most involved. It needs a great deal of study to determine their effect.

I was not surprised to be told today —nor was my hon. Friend the Member for South Shields (Mr. Blenkinsop)—that many city and county treasurers are ringing in to say, "We are very sorry; Parliament may be discussing these matters for the last time this week, but we have not had the opportunity to work out the effect of these proposals on our local government finance." That is a scandalous state of affairs. The 11 pages of financial provisions which are before us, including the new Clauses, which appear in Lords Amendments Nos. 243 and 246, should not have been considered only on Report stage in the House of Lords. They should have a Second Reading and a Committee stage. It is an abuse of the procedures of the House that both new Clauses have received no Second Reading and no Committee stage. We are now in the impossible position that, if we take exception to either of the new Clauses, nothing can be done about it.

We all know why we are in this plight. The Bill is far too ambitious. Far too much has been crammed into it. When the Bill was introduced a year ago, there should have been a separate Bill for Wales, for example. Apart from that, to put boundaries, functions, powers and financing in one Bill is, in parliamentary terms, an impossible proposition. Although we have been as co-operative as we can, many of the 250 Clauses and 30 Schedules have had to go through rapidly and without proper parliamentary examination.

Therefore, we must register our strong protest about the way in which the local authorities have been treated. We are not enamoured by the explanation given by the Under-Secretary of State. The hon. Gentleman said that it is just consolidation. If that is so, why was not it introduced at a much earlier stage? Surely the hon. Gentleman has a whole army of civil servants behind him and he could have produced the consolidation proposals almost a year ago when the Bill was introduced. Somebody must have realised that if one reorganises the whole of local government in accordance with the Bill, one has to make certain financial provisions.

I understand that there are working groups in existence. There is a working group on grants, one on miscellaneous financial provisions and another on rates. They have a joint membership of Government representatives and local authorities. Not one of the working groups has been consulted about the detailed provisions of these proposals. That makes the situation even more ridiculous than perhaps hon. Members thought was so at an earlier stage.

The local authorities have been treated with the utmost arrogance by the Government. I know that the hon. Gentleman and the right hon. Gentleman do not personally wish to treat local authorities with that degree of arrogance. However, the danger is that we will have legislation in this matter by civil servants' decree. It appears that civil servants got together and decided that certain things would have to be done and that it would be nice to do it by consolidation. It appears that it was decided to slip these matters in at this stage when perhaps nobody would be looking. The House will prorogue on Thursday, and we know that there is no time left to do anything about them. They will have to be accepted and the Government can use their great majority because they cannot risk being defeated. If matters were dealt with properly, we would send these Amendments back to another place so that they could be properly examined. We know that that will not happen, so we make the strongest possible protest about the way in which local authorities have been treated.

5.15 p.m.

I turn now to the specific Amendments which are causing us trouble. I recall what the right hon. Gentleman the Minister for Local Government and Development said in reply to the debate on Amendment 246. It took a long time to get from the right hon. Gentleman a proper appreciation of our concern and the concern of local authorities.

Mr. R. C. Mitchell

We have not got it yet.

Mr. Denis Howell

My hon. Friend says that we have not got it yet. I beg to differ. I think that we got it—at least, I hope so. The right hon. Gentleman properly told us that although two or more local authorities could combine in respect of their borrowing powers, the limitations in subsection (5) regarding what one local authority could borrow would be a multiple situation, and that that amount of money, multiplied by the number of local authorities combining, would represent their borrowing powers. On that strict assurance, we will not carry out our plan to vote against Amendment No. 246.

Mr. Graham Page

indicated assent.

Mr. Denis Howell

I am glad that the right hon. Gentleman put that on record. I should also like to put on record that the right hon. Gentleman has nodded his assent to the position which I have just restated. It will satisfy my hon. Friends that the right hon. Gentleman was nodding assent.

We have heard nothing about Lords Amendment No. 243, which deals with the rate of interest at which local authorities can borrow money. The right hon. Gentleman told us in his first explanation that it is one quarter per cent. above Treasury rate for 15 years, which is a long time. If local authorities may borrow at one quarter per cent. above Treasury rate for 15 years, that may be significant. Subsection (1) of the new Clause sets out the various Acts for which the money can be raised. First, there is Section 291(3) of the Public Health Act, 1936. Secondly, there is Section 10(2) of the Coast Protection Act, 1949. Thirdly, there is Section 10(6) of the Housing Act, 1957. Fourthly, there are three Sections of the Highways Act, 1959. Fifthly, there is Section 6(4) of the Housing Act, 1969. Finally, there is Section 23(5) of the Mines and Quarries (Tips) Act, 1969.

Those are substantial local authority responsibilities and considerable sums of local authority moneys are involved. The problem which the local authority associations and the city treasurers face is to know whether the rate of one quarter per cent. above Treasury rate over 15 years is a fair rate for them to pay for all their responsibilities, including the Acts which I have just read.

I hope that the right hon. Gentleman will not think that this is just consolidation. The local authorities fear that considerable financial burdens may be imposed upon them. It may be that their fears are misplaced. However, we do not think that is the case. As the local authorities have had the Amendments and the proposals in their hands for less than a week, they have not been able to work out the complicated financial sums which are necessary before they can draw intelligent conclusions. The local authorities rightly object to that situation. They also object to a Clause in a Lords Amendment, which deals with involved, complicated and important matters, which is being rushed through the House without an opportunity to put the matter right in another place. That is how we understand the situation.

I turn now from Lords Amendment No. 213 to Lords Amendment No. 246, since, with your customary indulgence, Mr. Deputy Speaker, we are dealing with a whole range of financial matters and we on this side do not wish to have another major financial debate either today or tomorrow, with the one exception of Amendment No. 183, which deals with a specific point.

My hon. Friend the Member for South Shields asked what we are doing legislating in this way when we are due to have a wholesale reform of local finances and the Government's thinking on this matter put before the House almost immediately. This again puts us in an extraordinary situation. We are entitled tonight to know what the Government's thinking is. We have had Green Papers and White Papers and consultations with everybody. Surely the Government should now be able to come forward, in the concluding stages of legislation for, as they believe, the future of local government over the next 50 years, to tell us the principles on which they believe local government finances should be provided. A whole range of questions, some major, some minor, must be taken into account.

For example, there is the question of the rate support grant. We are now discussing 11 pages of financial provision for the Bill and we should know something about the future of the rate support grant. Do the Government intend it to go on as it is? How do they see it working in the new set-up? There is also the question of rating. There is a growing feeling, which I share, that the rating system is inequitable and unfair to a large number of people. Since we are discussing local government reform, we should be told something about that. There is also the question of the full rating of agriculture, a matter of very considerable importance. I do not want to stray too far, although the Minister seems to think that I am doing very well, but agricultural rating is a pertinent subject.

Mr. Graham Page

Why not send for my right hon. Friend the Minister of Agriculture, Fisheries and Food?

Mr. Howell

I think that we should send for him. I am obliged to the right hon. Gentleman for that observation.

Mr. John Silkin

I prefer the presence of the Minister of State for the Ministry of Agriculture to that of the Minister of Agriculture himself.

Mr. Howell

My right hon. Friend the Member for Deptford (Mr. John Silkin) says that he would prefer the presence of the Minister of State to that of the Minister of Agriculture. So would every housewife. But the fact remains that for many years we have not had full agri- cultural rating. Yet we have started to change the whole basis of our agriculture and will have to change its structure even more now that we are entering the EEC. What will flow from that in terms of rating relief for the agricultural industry? That is a major question affecting millions of people.

Mr. Graham Page

Where is this in the Clause?

Mr. Howell

Until seven days ago, nothing of this was in the Clause. We are entitled to point out that there are grave omissions even from the 11 pages of complicated legislation we are discussing now. We want to do the thing properly. The financial provisions contained in these Lords Amendments should have been in a separate Bill complementary to the Local Government Bill.

Then there is the question of rate rebates, which has not come up. There is dissatisfaction in many parts of the country with the present allowances and the present system. We should know the Government's thinking on that. Finally, there are all these additional forms of new local authority finance. When one is starting a totally new system of local government, surely that is the moment when one should get one's mind clear as to the new form of financing.

Mr. Deputy Speaker (Mr. E. L. Mallalieu)

Order. The hon. Gentleman has been referring to many matters. He should not refer to them on this Amendment, although they are interesting topics.

Mr. Howell

You are the last man I wish to take issue with, Mr. Deputy Speaker, as you know, especially as I am doing my best to take issue with the right hon. Gentleman. But, with respect, I must say that the House has been put in an impossible position. We have been given these 11 pages of legislation—new Clauses which have not had a Second Reading or been in Committee—and in my view their provision at this late stage in the Bill is an abomination to our parliamentary procedure. If these Clauses had had a Second Reading and a Committee stage, my remarks would have been pertinent and in order because it would have been proper then to move Amendments as a substitute for what is proposed here. We could at least have tested the climate and found out what the Government had to say. It is in that sense that I am trying to rectify the impossible position in which you, Mr. Deputy Speaker, find yourself, just as we do. I am sorry for it. It is not your fault. However, in order to assist you, and having mentioned these various matters of finance and revenue, I will pass rapidly on.

Mr. R. C. Mitchell

Is it not very important, in connection with these Lords Amendments, to know the Government's future intention as to how local authorities will raise money—for example, how much from borrowing and how much from revenue? Is there to be any change whereby local authorities are expected to raise more by borrowing powers for capital expenditure? All this is relevant.

Mr. Howell

That is a very pertinent intervention, but as I have already undertaken to move on I will not trespass further on your indulgence, Mr. Deputy Speaker. But it is fair to say, in view of all the things contained in Amendment No. 243, and if the Government intend to amend this sort of provision, as we believe to be the case, that this must be the moment to consider the effects of any such changes.

I do not know whether the Under-Secretary of State intends to reply. I hope that he will do so because I hope that he now has an appreciation of our feelings about the constitutional position of Members of this House, the way they have been treated, and the fact that we believe that we are having to suffer the indignities of these proposals at the very last hour because the Government wish to get this legislation through before Prorogation. We all have an understanding of that situation. All Governments are faced with it with some Bill or another. But in the 17 years I have been here, no other Government, in enacting such a major Bill, affecting every person in the country, have tried to rush it through in the last two or three days of a Session, with inadequate time for full examination of the consequences of late Amendments.

But even more important than the treatment of the House is the treatment of the local authorities, whether they be large or small. The Under-Secretary of State said that the Government had received no representations following the message sent last week to the local authority associations. That comment was extremely revealing. He must know, and certainly his officials should, that no local authority could possibly consider these complicated proposals and make representations within the six effective days it has had them before our discussion today. It is a disgraceful situation, and in order to register our serious concern and disgust at the way in which local government and the House are being treated, I advise my right hon. and hon. Friends to divide against Amendment No. 111.

5.30 p.m.

Mr. Graham Page

I am grateful to the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) for saying that the Opposition will not divide against Lords Amendment No. 246 because I am sure that they would not have been doing a good service to the local authorities had they done so.

We have perhaps loosely called this "consolidation". Perhaps we should properly have called it "codification". When the hon. Gentleman complains that he has not had a chance to debate the matter, he must know the lack of opportunity of debate on consolidation Bills. I have been rather rudely called on occasion the "consolidation king" because I have often stood at the Opposition Dispatch Box late at night endeavouring to say things on consolidation Bills. I had a pact with the previous Speaker that he could call me to order six times before I gave up. That is as much debate as one can get on a consolidation Bill. Had these proposals been included in a consolidation Bill, the hon. Gentleman would not have been able to make the speech he has just delivered.

Mr. John Silkin

But these proposals could not have been contained in a consolidation Bill because they embody changes.

Mr. Graham Page

That is why I said that we had rather loosely called it "consolidation" when we should have called it "codification". I will tell right hon. and hon. Members how it came about.

Throughout the long debates we have had over many months, we have appreciated that, with a great deal of the Local Government Act, 1933, there would come the day of reckoning, as it were, in relation to what was left in it. I remind the Opposition that we obliged them on many points and amended the Act in this Bill. Eventually, the only matters left in the Act related to the borrowing powers, and, of course, it would be convenient to have all local government matters in one Bill so far as we could get them. We see no reason whatever for retaining the 1933 Act just to retain the borrowing powers, which were already getting a little out of date and a little tatty by reason of the many private Bills which local authorities have had.

Having decided to transfer these provisions from the 1933 Act and to take the Act off the Statute Book, it seemed ridiculous to put these borrowing powers into the Bill without the sort of Amendments which the local authorities wish. They are Amendments which appear in many private Bills. They are the standard forms of Amendment which local authorities have had to the general law over many years. So, with the one or two points which have been mentioned, we included these Clauses in the Bill. We appreciate that it was a short period of time in which to include them, but I am sure that it was the practical thing to do and that it will turn out to be most convenient for the local authorities. They will have it all in one Bill.

I do not find the difficulty in interpreting the provision giving power to combine with other local authorities for borrowing which the hon. Gentleman seems to find. It is clear to me that if a local authority has a certain borrowing limit one ought not to allow it to overstep that minimum by combining with other authorities—that the amount that a local authority gets out of a combined borrowing should be limited to its normal borrowing power. But the loan itself can be an accumulation of the borrowing powers of the local authorities concerned. For example, if three local authorities, each with a borrowing limit of £3 million, combine to borrow, the combined loan can be £9 million, but each local authority cannot receive more than its £3 million limit out of the loan.

I turn now to Lords Amendment No. 243, which I understand is the one on which the hon. Gentleman wishes to divide the House. This Amendment refers to the rates to be charged by local authorities to those who owe them money. At one stage, I thought that the hon. Gentleman was arguing that it referred to the rates of interest to be paid by local authorities. That is not so. It concerns the rates to be charged by the local authorities.

The new Clause amends various existing enactments requiring the Secretary of State by Statutory Instrument to determine the rate of interest chargeable by local authorities on money owed to them under those enactments. As they now stand, those enactments necessitate a Statutory Instrument whenever a significant change in the interest rate is required. The opportunity is now taken to bring the enactments into line with current practice—and the hon. Gentleman mentioned the Agriculture Act, 1970 —by linking the rate of interest directly to that charged by the Public Works Loans Commission on local loans.

This change has been sought by local authorities from the Department for many years and we are obliging the local authorities by making it. I agree that we are also obliging the Department, because in future we shall be saved the trouble of producing Statutory Instruments, but we are obliging the local authorities. The hon. Gentleman does no service to them to divide the House against that Clause.

Mr. Denis Howell

I did not say that we were to divide against the Clause; I said that we should divide against Lords Amendment No. 111 as a token of our disgust with the way in which local authorities had been treated.

The right hon. Gentleman says that I do no service to local authorities, but I must tell him that I am raising this matter at the specific request of local authorities, which are concerned about the situation, particularly about the 15-year borrowing period. A combination of the ¼ per cent. above the Treasury rate for the services that I outlined and a 15-year borrowing period has caused them to ask whether this is fair, or whether it will merely be an additional burden on the ratepayers.

We shall not divide the House against Lords Amendment No. 243, because of the assurance that I believe to have been implicit in the right hon. Gentleman's remarks and rather more explicit in those of the Under-Secretary. It was that if the fears were found to be well founded, the Government would take an early opportunity in forthcoming legislation to put the matter right. If the Minister is saying that if the concern of the authorities is found to be justified when they have had time to make a thorough examination, the Government will put the matter right, we shall not divide against the Government's proposals.

Mr. Graham Page

We think that we have it right, but if the local authorities make representations to say that we have not provided what they want—and the Clause is being enacted for them and no other purpose—we will amend it in the coming legislation on local government finance. By saying that I am also giving some form of assurance that there will be legislation on local government

finance. We have already committed ourselves in statements in that respect, but I cannot say what the date will be, or what the contents will be, or what that legislation will say about the difference between rates and borrowing money and so on. All that will come out when the Bill is presented.

There will shortly be an opportunity to discuss the rate support grant because, as the hon. Gentleman knows, that debate occurs before Christmas. If he will be patient, we shall be able to go into the merits of the finance on the next Bill. Here we are merely doing a service to the authorities by providing what they want in connection with borrowing.

Question put, That this House doth agree with the Lords in the said Amendment:—

The House divided: Ayes 174, Noes 160.

Division No. 348.] AYES [5.40 p.m.
Adley, Robert Fookes, Miss Janet McNair-Wilson, Patrick (New Forest)
Allason, James (Hemel Hempstead) Fowler, Norman Maddan, Martin
Astor, John Fox, Marcus Madel, David
Atkins, Humphrey Gilmour, Sir John (Fife, E.) Marten, Neil
Baker, W. H. K. (Banff) Godber, Rt. Hn. J. B. Maude, Angus
Balniel, Rt. Hon. Lord Goodhart, Philip Maudling. Rt. Hn. Reginald
Batsford, Brian Gorst, John Maxwell-Hyslop, R. J.
Beamish, Col. Sir Tufton Grant, Anthony (Harrow, C.) Meyer, Sir Anthony
Bennett, Dr. Reginald (Gosport) Gray, Hamish Mitchell, Lt.-Col. C.(Aberdeenshire,W)
Benyon, W. Green, Alan Mitchell, David (Basingstoke)
Berry, Hn. Anthony Griffiths, Eldon (Bury St. Edmunds) Moate, Roger
Biggs-Davison, John Gummer, J. Selwyn Monks, Mrs. Connie
Blaker, Peter Gurden, Harold Monro, Hector
Boardman, Tom (Leicester, S.W.) Hall, John (Wycombe) Montgomery, Fergus
Body, Richard Hall-Davis A. G. F. More, Jasper
Boscawen, Hn. Robert Hamilton, Michael (Salisbury) Morgan, Geraint (Denbigh)
Bossom, Sir Clive Hannam, John (Exeter) Morgan-Giles, Rear-Adm.
Bowden, Andrew Harrison, Col. Sir Harwood (Eye) Morrison, Charles
Bray, Ronald Hawkins, Paul Murton, Oscar
Brewis, John Hayhoe, Barney Normanton, Tom
Brinton, Sir Tatton Heseltine, Michael Onslow, Cranley
Brown, Sir Edward (Bath) Hiley, Joseph Oppenheim, Mrs. Sally
Bryan, Sir Paul Holt, Miss Mary Orr, Capt. L. P. S.
Buchanan-Smith, Alick (Angus, N&M) Hordern, Peter Osborn, John
Carlisle, Mark Hornby, Richard Owen, Idris (Stockport, N.)
Cary, Sir Robert Hornsby-Smith, Rt. Hn. Dame Patricia Page, Rt. Hn. Graham (Crosby)
Chapman, Sydney Howell, Ralph (Norfolk, N.) Page, John (Harrow, W.)
Clark, William (Surrey, E.) Hunt, John Parkinson, Cecil
Clarke, Kenneth (Rushcliffe) Hutchison, Michael Clark Powell, Rt. Hn. J. Enoch
Clegg, Walter Iremonger, T.L. Price, David (Eastleigh)
Cockeram, Eric James, David Prior, Rt. Hn. J. M. L.
Cooke, Robert Jennings, J. C. (Burton) Pym, Rt. Hn. Francis
Cooper, A. E. Jessel, Toby Quennell, Miss J. M.
Cordle, John Jopling, Michael Ramsden, Rt. Hn. James
Corfield, Rt. Hn. Sir Frederick Kellett-Bowman, Mrs. Elaine Rawlinson, Rt. Hn. Sir Peter
Cormack Patrick King, Tom (Bridgwater) Redmond, Robert
Costain A. P. Kinsey, J. R. Reed, Laurance (Bolton, E.)
Crouch, David Kirk, Peter Rees, Peter (Dover)
Davies, Rt. Hn. John (Knutsford) Knight, Mrs. Jill Renton, Rt. Hn. Sir David
d'Avigdor-Goldsmid, Maj.-Gen-Jack Knox, David Ridley, Hn. Nicholas
Dykes, Hugh Lamont, Norman Roberts, Michael (Cardiff, N.)
Edwards, Nicholas (Pembroke) Lane, David Roberts, Wyn (Conway)
Elliott, R. W. (N'c'tle-upon-Tyne, N.) Le Merchant, Spencer Rost, Peter
Eyre, Reginald Lewis, Kenneth (Rutland) Russell, Sir Ronald
Fell, Anthony MacArthur, Ian St. John-Stevas, Norman
Fenner, Mrs. Peggy McCrindle, R. A. Scott, Nicholas
Fidler, Michael McLaren, Martin Shaw, Michael (Sc'b'gh & Whitby)
Fisher, Nigel (Surbiton) McNair-Wilson, Michael Simeons, Charles
Fletcher-Cooke, Charles Sinclair, Sir George
Skeet, T. H. H. Taylor, Frank (Moss Side) Warren, Kenneth
Smith, Dudley (W'wick & L'mington) Taylor, Robert (Croydon, N.W.) Weatherill, Bernard
Soref, Harold Thatcher, Rt. Hn. Mrs. Margaret Winterton, Nicholas
Speed, Keith Thomas, John Stradling (Monmouth) Wolrige-Gordon, Patrick
Spence, John Thomas, Rt. Hn. Peter (Hendon, S.) Wood, Rt. Hn. Richard
Sproat, Iain Thompson, Sir Richard (Croydon, S.) Younger, Hn. George
Stainton, Keith Tugendhat, Christopher
Stanbrook, Ivor Turton Rt. Hn. Sir Robin TELLERS FOR THE AYES:
Stewart-Smith, Geoffrey (Belper) van Straubenzee, W. R. Mr. Victor Goodhew and
Stokes, John Walker, Rt. Hn. Peter (Worcester) Mr. Tim Fortescue.
Sutcliffe, John Ward, Dame Irene
Allaun, Frank (Salford, E.) Grant, John D. (Islington, E.) Moyle, Roland
Allen, Scholefield Griffiths, Eddie (Brightside) Mulley, Rt. Hn. Frederick
Archer, Peter (Rowley Regis) Grimond, Rt. Hn. J. Murray, Ronald King
Ashton, Joe Hamilton James (Bothwell) Oakes, Gordon
Atkinson, Norman Hamilton, William (Fife, W.) O'Malley, Brian
Barnett, Guy (Greenwich) Hannan, William (G'gow, Maryhill) Orme, Stanley
Bennett, James (Glasgow, Bridgeton) Hardy, Peter Oswald, Thomas
Bidwell, Sydney Harrison, Walter (Wakefield) Padley, Walter
Bishop, E. S. Hart, Rt. Hn. Judith Paget, R. T.
Blaker, Peter Heffer, Eric S. Palmer, Arthur
Blenkinsop, Arthur Hooson, Emlyn Pannell, Rt. Hn. Charles
Booth, Albert Horam, John Pardoe, John
Bradley, Tom Houghton, Rt. Hn. Douglas Pavitt, Laurie
Broughton, Sir Alfred Howell, Denis (Small Heath) Pendry, Tom
Brown, Hugh D. (G'gow, Provan) Huckfield, Leslie Pentland, Norman
Buchanan, Richard (G'gow, Sp'burn) Hughes, Rt. Hn. Cledwyn (Anglesey) Perry, Ernest G.
Butler, Mrs. Joyce (Wood Green) Hughes, Mark (Durham) Prentice, Rt. Hn. Reg.
Callaghan, Rt. Hn. James Hughes, Robert (Aberdeen, N.) Prescott, John
Campbell, I. (Dunbartonshire, W.) Hunter, Adam Rhodes, Geoffrey
Carmichael, Neil Janner, Greville Roberts, Albert (Normanton)
Carter-Jones, Lewis (Eccles) Jeger, Mrs. Lena Roberts, Rt. Hn. Goronwy (Caernarvon)
Cocks, Michael (Bristol, S.) Jenkins, Hugh (Putney) Robertson, John (Paisley)
Cohen, Stanley John, Brynmor Roderick, Caerwyn E.(Brc'n&R'dnor)
Concannon, J. D. Johnson, Carol (Lewisham, S.) Ross, Rt. Hn. William (Kilmarnock)
Corbet, Mrs. Freda Jones, Gwynoro (Carmarthen) Rowlands, Ted
Crosland, Rt. Hn. Anthony Jones, T. Alec (Rhondda, W.) Sheldon, Robert (Ashton-under-Lyne)
Cunningham, Dr. J. A. (Whitehaven) Kaufman, Gerald Short, Mrs. Renée (W'hampton,N.E.)
Dalyell, Tam Kelley, Richard Silkin, Rt. Hn. John (Deptford)
Davies, Denzil (Llanelly) Kerr, Russell Silkin, Hn. S. C. (Dulwich)
Davies, G. Elfed (Rhondda, E.) Lambie, David Silverman, Julius
Davies, Ifor (Gower) Lamborn, Harry Skinner, Dennis
Davis, Terry (Bromsgrove) Latham, Arthur Spriggs, Leslie
Deakins, Eric Lawson, George Stoddart, David (Swindon)
de Freitas, Rt. Hn. Sir Geoffrey Lee, Rt. Hn. Frederick Strang, Gavin
Dempsey, James Lewis, Ron (Carlisle) Swain, Thomas
Doig, Peter Lipton, Marcus Thomas,Rt.Hn.George (Cardiff,W.)
Dormand, J. D. Lomas, Kenneth Tinn, James
Duffy, A. E. P. Loughlin, Charles Torney, Tom
Eadie, Alex Lyons, Edward (Bradford, E.) Tuck, Raphael
Edwards, Robert (Bilston) McBride, Neil Urwin, T. W.
Ellis, Tom McCartney, Hugh Varley, Eric G.
Evans, Fred Mackenzie, Gregor Wainwright, Edwin
Ewing, Harry Maclennan, Robert Walden, Brian (B'm'ham, All Saints)
Faulds, Andrew McNamara, J. Kevin Walker, Harold (Doncaster)
Fletcher, Ted (Darlington) Mallalieu, J. P. W. (Huddersfield, E.) Wallace, George
Foot, Michael Marks, Kenneth Watkins, David
Ford, Ben Mason, Rt. Hn. Roy Wellzman, David
Forrester, John Mellish, Rt. Hn. Robert White, James (Glasgow, Pollok)
Freeson, Reginald Mendelson, John Wilson, William (Coventry, S.)
Galpern, Sir Myer Millan, Bruce Woof, Robert
Gilbert, Dr. John Miller, Dr. M. S.
Ginsburg, David (Dewsbury) Mitchell, R. C. (S'hampton, Itchen) TELLERS FOR THE NOES
Golding, John Morgan, Elystan (Cardiganshire) Mr. Joseph Harper and
Gourlay, Harry Morris, Alfred (Wythenshawe) Mr. James Wellbeloved.
Grant, George (Morpeth) Morris, Charles R. (Openshaw)

Question accordingly agreed to.

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