EFFECT OF SECTIONS 13 AND 14 (Hansard, 25 March 1981)

§ Mr. Dewar
I beg to move amendment No. 30, in page 7, line 42, leave out '1981–82' and insert '1982–83'.

§ Mr. Deputy Speaker
With this it will be convenient to take amendment No. 42, in clause 37, page 14, line 1, leave out `section 25' and insert `sections 15 and 25'.

§ Mr. Dewar
Clause 15 makes it clear that clause 13 and the penal machinery contained in it should apply in the financial year 1981–82. We object to that. It is a mistake to bring the machinery into operation so quickly. Amendment No. 30 proposes that clause 13 should not take effect until 1982–83. It is a charitable attempt to save the proposed system from chaos, and to save the Minister from a degree of ridicule.
It is common ground that clause 13 envisages a lengthy time scale and a complicated machinery. The theory is that the estimates will be examined in the February preceding the start of a financial year. There will be discussions between the Government and local authorities, and Ministers will decide whether estimates are excessive and unreasonable. No doubt there will be dickering backwards and forwards. For the purpose of the exercise we assume that no agreement will be reached. At that stage a report will be issued and subsequently there will be a debate in the House about an order. Only at that stage will it be possible for the Minister to claw back from that year's rate support grant the money that he intends to take out of the local authority's budget.
In Committee the Minister said: We hope that in the normal year the question of whether an order has to be presented to Parliament for the approval of Parliament can be put forward in about June or July of the year in question.' The Minister has an inbuilt tendency towards optimism when considering his stratagems and legislation. The estimate is for a normal year. It is not for the year 1981–82, but for subsequent years when the machinery is established and working to a normal routine and pattern.
If in a normal year we look at estimates in February, and do not reach the point of clawback until June or July, that point will be reached at a much later stage for the year 1981–82. The process cannot begin until the Bill reaches the statute book. It not only has to conclude its passage—perhaps today—through the House, but it has to go to another place where it will no doubt be subjected to the rigorous and sceptical examination that it deserves. It 959 will be some time before we reach the process of judgment, negotiation, condemnation and an order in the House.
The Minister has shown a tendency to disagree with that view. He may do so again. He said in Committee: In any event, at this point we have no reason to believe that it should not be possible this year to submit an order to Parliament, if one is required, at approximately the same time as will apply in subsequent years."—[Official Report, First Scottish Standing Committee; 10 February 1981, c. 402–443.] The Minister may have thought that when he made his statement, but with somewhat maturer consideration he should realise that it was a preposterous claim. It is misconceived to assume that he can make an order and lay it in the House in June or July this year while recognising that he cannot begin the processes of consultation until the Bill has reached the statute book.
In Committee on 10 February the Minister talked about October or November and said, rather weakly, that that was better than waiting until April, as was done under the 1966 Act machinery. Anyone reading his speech will realise that there is an implicit admission that it may be October or November before any clawback can be organised and before deductions are made from the weekly rate support grant payment.
Our simple proposition is that if it is as late as October or November we shall be faced with the prospect of crushing into the fag end of the financial year substantial cuts that will be hard and painful enough to accommodate when phased over 12 months, but when phased over four or five months will become an insupportable burden. Whatever the disagreement about what may happen in a normal year when there is a whole financial year in which to operate, we shall run into the complications that my hon. Friends and I described when discussing the possibility of using the escape clause machinery that was added to the Bill in a new clause on Monday.
The assessor of one major region said that if the escape clause came into operation as late as August it would be impossible to operate. I know that the Minister disagrees with that. However, he may accept that if we begin the machinery after the Bill has been passed we shall face considerable problems. Although he knows that we object root and branch to the whole concept of the Bill, that is not the point now. It would be more sensible to give the financial year 1981–82 a miss. The time scale is wrong because most of that year will be eaten up getting the Bill through the House.
If the Government think that this is a valuable legislative initiative—which we do not—let it be for future years, when it will have a chance of operating in a civilized and orderly manner, starting the timetable in the preceding February, as envisaged.
5.30 pm
None of us has a duty to approve the proposals in clause 13, but every hon. Member has a vested interest in ensuring that machinery that reaches the statute book should be in good order and demonstrably workable. To proceed with clause 13 powers at a time that is likely to be halfway through the financial year before the process can be started is a recipe for disaster, and will reflect no credit upon the House. Moreover, it will place an insupportable burden on the local authorities, which will have to bear the consequences of the heat of the battle.
I hope that the Minister will accept the reality of what I am saying. I know that he is anxious to have a few 960 sacrificial offerings in the coming financial year, but I hope that he will put that personal vendetta on one side and accept that in the interests of neat, tidy and workable government it is better to leave clause 13 for subsequent years, when it will be workable, if not desirable.

§ Mr. Rifkind
I listened with interest, and perhaps a little amusement, to the speech of the hon. Member for Glasgow, Garscadden (Mr. Dewar). He would have us believe that his only interest in tabling the amendment is the serious, solemn and sober desire that the provisions should work in a straightforward and simple administrative way, and that he had not contemplated for one moment that the amendment, if accepted, would mean that local authorities, whose spending for 1981–82 was excessive and unreasonable, would lose their rate support grant.
The hon. Gentleman knows that the Government made it clear some time ago that the provisions, if approved, would take effect for 1981–82. Local authorities., too, knew that when they fixed their budgets, and no doubt took it into account.
In any event, I disagree with what the hon. Gentleman said about the time scale factors, He assumed that the process cannot begin until the Bill receives Royal Assent. My right hon. Friend, as happens most years, received the budgets from local authorities some time ago. Those budgets are being scrutinised at present, as happens in any event. By the time the Bill receives Royal Assent, my right hon. Friend will already be in a position to tell those local authorities whose proposed spending he considers excessive and unreasonable his conclusions in that respect. He will then be able to tell them the extent by which their spending is excessive and give his reasons for doing so.

§ Mr. Peter Fraser (South Angus)
I am interested to know that the examination of local authority spending is already under way. When shall we be told the Secretary of State's decision? People in parts of my constituency in Dundee district will be anxious to know whether they are to be singled out for the treatment that they rightly deserve.

§ Mr. Ernie Ross (Dundee, West)
Rubbish.

§ Mr. Rifkind
The hon. Member for Dundee West (Mr. Ross) says "Rubbish." He will agree, whether or not he likes what the Government are doing, that the people of Dundee will be waiting with great interest to see how they will be affected by the proposals.
My right hon. Friend is empowered under existing statute to obtain and consider the budgets. Clearly he cannot say what conclusions he will reach. Nor can he carry out any of the specific powers given to him in the Bill until after Royal Assent. Then, after Royal Assent, he will be able to excercise those powers.

§ Mr. Dewar
I accept that we shall be given no specific information about who is to be on the hit list at this stage, but the Minister seems to be saying that the matter is already being considered. He must therefore know what the objectives are. How will the system work? If it is decided that expenditure is excessive and unreasonable, and if it is decided that a specific sum is excessive, will that entire sum be clawed back in the rate support grant? Will there be a punitive penalty over and above, pour encourager les autres, as one might say, or will it be a token deduction? If it is to be pound for pound, how will the deduction be made?

§ Mr. Rifkind
The hon. Gentleman will have to await my right hon. Friend's decision. He knows perfectly well that my right hon. Friend's powers will be to ask Parliament to approve the withdrawal of rate support grant in respect of expenditure that is excessive and unreasonable.
On the matter of procedure, my right hon. Friend, shortly after Royal Assent, will expect to be able to inform the affected authorities of his proposals. We do not expect to have weeks and months of consultation with an individual local authority. If there were weeks and months of consultation at the discretion of a local authority, not only this year but every year, a large part of the year would elapse before the consultations were concluded. My right hon. Friend will carry out his statutory obligations regarding consultation and will then put his proposals to the House.
The hon. Gentleman is under another misapprehension. He says that if he is correct and we are wrong, and it were necessary to have weeks and months of consultation before the House approved an order, the local authority would know only in November or December what it would lose in rate support grant. Any local authority that acted in that way would be acting in a most irresponsible fashion. If it knew relatively early in the year the amount that the Secretary of State proposed to withdraw in rate support grant, it should take into account—if it were a responsible local authority—the fact that my right hon. Friend will not change his mind.
Any sensible and responsible authority will take into account the sum that the Secretary of State proposes to withdraw when it decides on its spending pattern during the subsequent period. I fully accept that local authorities are not obliged to do that. I am simply expressing my opinion about what a responsible local authority would be likely to conclude at that stage. In any case, that all stems from the hon. Gentleman's assumption, which I do not accept, that a considerable period will elapse between the original intimation to a local authority and any decision by the Secretary of State to report to the House of Commons.

§ Mr. Dewar
The Minister's answer is thoroughly unsatisfactory. He is being uncharacteristically coy about his right hon. Friend's intentions. He must know whether there is to be a pound-for-pound deduction and what the machinery will be. He owes it to the House to give us that information. In an attempt to disguise what is happening, he paid lip service to parliamentary scrutiny and the importance of Parliament's having to approve. He then had the cheek to say that Parliament will rubber stamp the prejudices of the Secretary of State. That will not do. Will the Minister give us a definition of the word "consultation", if it is as meaningless, as this form of words suggests?

§ Mr. Rifkind
I thank the hon. Gentleman for saying that I was being uncharacteristically coy. From him that is a supreme compliment, and I am grateful for it. There will, of course, be an opportunity, as statute will require—there is no question of discretion—for the Secretary of State to tell a local authority what he has in mind and why he considers its expenditure to be excessive and unreasonable, and the local authority will have an opportunity to comment. It is not a question of the local authority's being presented with a brand new set of statistics of which it is totally unaware and which comes upon it like a thunderbolt from the sky.
962 We are talking about information which the Secretary of State will have gleaned from the local authority's budget, and the authority should be familiar with that. It will know why particular items are included or why allowance has been made for particular forms of expenditure. Therefore, if a local authority wishes to make any response to the Secretary of State it should do so in a very short time. Assuming that it knows its original reasons for including items in its budget it will not need lengthy investigation before being able to indicate those reasons to my right hon. Friend.

§ Mr. Robert Maclennan (Caithness and Sutherland)
The procedure that the Under-Secretary is describing is utterly draconian. He confirms not only that it is but that it is intended to be, removing as it does considerable discretion from local authorities. If the local authority is to know whether the sanctions operating under clause 13 are to be introduced, presumably it will at least be advised in advance not only that its expenditure is regarded as unreasonable and excessive, but against what criteria the Secretary of State may have it in mind to act.
Is the Under-Secretary saying that this whole operation is to be wrapped up in one communication to the local authority and that, ex post facto, it will have the whole draconian procedure visited upon it without opportunity to comment upon the criteria, and even before it can say whether the Secretary of State's requests can be met? Does the Secretary of State intend to publish the criteria separately and then apply them to particular cases?

§ Mr. Rifkind
The hon. Gentleman says that the procedure is draconian, but it is the procedure set out in the Labour Government's 1966 Act. There is no reference in the Bill to procedure. The 1966 Act dealt with the Secretary of State imposing a similar penalty on a local authority. The only difference here is that the local authority will already have spent excessively rather than be proposing to do so.
The hon. Gentleman asked whether the local authority would have the right to know, and whether the information would be published. He can rest assured that it will be. Under the 1966 Act procedure the report which the Government have to lay before the House in asking it to approve any intention to reduce rate support grant must include the reasons why the Secretary of State has reached that view, along with any comments that the local authority in question may have made in response. That may not be a satisfactory procedure to the hon. Gentleman, but it was used in the 1966 Act and we are happy to rest on that.

§ Mr. Maclennan
Clause 13 introduces the words the Secretary of State…may…have regard…to such other criteria as he considers appropriate". That is an innovation. Unless the right hon. Gentleman intends to publish the criteria in advance of seeking to visit the draconian clause 13 sanctions upon the luckless authority, he will not give it a proper opportunity to consider whether its expenditure is excessive and unreasonable, decided against the new and, so far, undisclosed criteria.

§ Mr. Rifkind
The hon. Gentleman is introducing a new factor. His previous intervention was about procedure. All of us understand that "procedure" means the steps that the Secretary of State or the local authority must take. The procedure is specified in the 1966 Act, and is in no way 963 altered by the Bill. However, the hon. Gentleman is now referring to the criteria that my right hon. Friend must take into account in determining whether to initiate that procedure. If he applies those criteria he is obliged to inform the local authority and the House of his reasons for doing so.

§ Mr. Hugh D. Brown
Will the Minister confirm what he said earlier? We are dealing here with a question of confrontation. He knows—we warned him—that he is about to take on authorities over unreasonable and excessive expenditure. That is the whole purpose of the exercise. Does he think that such authorities will work within the law or will not wait until Parliament has approved the order that he is to put before the House? He has indicated that he expects them to jump the gun. What is the purpose of all these orders and resolutions? He might just get another "Aberdeenshire, East rebel", because other Conservative Members will have to win their spurs as well. The hon. Gentleman should not take Parliament for granted.

§ Mr. Rifkind
I am not taking Parliament for granted. I am not saying that an authority would be required to reduce its spending instantly. Only on Monday, however, the Opposition agreed with a Government new clause which allowed a local authority, from the moment the Secretary of State informed it that he was proposing to reduce its rate support grant, the right to reduce its rates as an alternative. If it is acceptable for the local authority to reduce its rates in that way, it is not unreasonable for me to say that even if it does not wish to use that facility it may nevertheless wish to reduce its spending from that date. It is not compulsory, but a responsible authority, knowing that it might be about to lose rate support grant, would wish to make a precautionary move. Nothing that I have said indicates that it would be compelled to do so. However, the position that I have outlined is no worse than that applying under the new clause that the Opposition accepted on Monday.
There has never been any doubt that the Government intend that the provisions should apply in the current year. We believe that in any event it will be possible, well before the time scale to which the hon. Member for Garscadden referred, for the proposals to be implemented and for the House to consider them. It is on that basis that I believe that the clause and its date of commencement are acceptable.

§ Mr. Maclennan
rose—

§ Mr. Deputy Speaker
Amendment proposed, page 7 line 42—

§ Mr. Maclennan
Did you overlook me, Mr. Deputy Speaker?

§ Mr. Deputy Speaker
Is this a point of order?

§ Mr. Maclennan
I thought that you might have overlooked me when I rose to speak, Mr. Deputy Speaker.

§ Mr. Deputy Speaker
This is the Report stage and the hon. Gentleman has exhausted his right to speak.

§ Mr. Maclennan
I have not made a speech, Mr. Deputy Speaker. I merely intervened in the speech of the Under-Secretary. I therefore did not think that it was necessary to seek the leave of the House to speak again.

§ Mr. Deputy Speaker
I apologise to the hon. Gentleman. I thought that his intervention was a speech. Does he wish to speak now?

§ Mr. Maclennan
I am most grateful, Mr. Deputy Speaker.
I need not detain the House at great length, but it is important that I should deal with the point that the Minister was seeking to make in answer to me. I was raising a substantive, not a procedural, point. I submit that this is a matter of procedure. If the Secretary of State is simply proposing to announce to the local authority in one move that its expenditure is excessive and unreasonable, that is one procedural step. If he proposes, however, to publish the general criteria against which he proposes to test local authority expenditure as being unreasonable or excessive, and then to apply those criteria to the local authority, that will constitute two procedural steps. It will make a considerable difference to the amount of time taken in giving effect to the Secretary of State's determination. That is highly germane to the amendment. If this is to be done properly, with due process and with proper regard to rules of natural justice, widely conceived, it will take much longer than the Minister says.
If, however, the Minister is saying that the whole process is to be wrapped up in one confrontation and that the criteria will be disclosed to an authority only when it is deemed by the Secretary of State to have transgressed, that is different.

§ Mr. Rifkind
The hon. Gentleman may have been absent from the Chamber when the Government amendment was accepted by the House. The part of the Bill to which he referred contains the phrase such other criteria as he considers appropriate. The Government amendment that was accepted by the House a few minutes ago specifically replaces that by referring to economic, demographic and other named criteria.
The procedure with which my right hon. Friend will comply is the procedure under statute, as laid down in the 1966 Act. That requires him to intimate his proposals; to a local authority and to give it an opportunity to make comments and representations to him on those proposals, Only after he has given it an opportunity to do so—whether it uses that opportunity is up to it—is he enabled to lay a report before the House. That procedure is laid down in the 1966 Act and is adopted for the purposes of the Bill.