Commons Sitting of 5 April 1982

Preamble
The House met at half-past Two o'clock
The House being met, MR. BERNARD WEATHERILL, THE CHAIRMAN OF WAYS AND MEANS, at the request of MR. SPEAKER, proceeded to the Table and, after Prayers, took the Chair as DEPUTY SPEAKER, pursuant to the Standing Order.

Oral Answers to Questions
  ENERGY

    Standing Charges
    Mr. Greenwayasked the Secretary of State for Energy if he is ready to announce the results of his discussions on standing charges; and if he will make a statement
    Mr. Chapmanasked the Secretary of State for Energy whether, in his review of standing charges for gas and electricity supplies, he has made any assessment of the fairness of the criteria used to determine such charges
    The Under-Secretary of State for Energy (Mr. David Mellor): My hon. Friend the Member for Braintree (Mr. Newton) and I are still considering the matter, and the point raised by my hon. Friend the Member for Chipping Barnet (Mr. Chapman) is one of the matters that we have very much in mind. I am having discussions with gas and electricity supply industries, whose sole responsibility it is to fix the level of standing charges. A statement will be made as soon as possible.
    Mr. Greenway: I appreciate that my hon. Friend has an indirect role in this matter, but does he accept that standing charges are widely, misunderstood, especially by the elderly, who find it difficult to cope with them? Is there some means which be could press by which standing charges can be consolidated into overall charges so that consumers pay only for what they use? Will he consider removing standing charges when the cost of the energy consumed is less than the standing charge?
    Mr. Mellor: I am grateful for my hon. Friend's recognition that the extent of charges is a matter for the industries concerned. We are once again examining the rationale behind standing charges. When an examination was carried out in 1976, it was concluded that standing charges were appropriate. The tariff basis for the gas industry was approved as recently as 1979 in the Price Commission investigation.
    Mr. Chapman: I am grateful to my hon. Friend for what I consider to be a most helpful and encouraging reply. While I appreciate that the cost of the standing charge is based on the cost of bringing the energy from its source of supply to the consumer, including the provision and maintenance of supply pipes, will he nevertheless keep in mind, when decisions are being taken, that it
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    seems unfair that the consumer must pay the standing charge when it becomes a substantial proportion of the total bill? Does he agree that in equity there should be some arrangement whereby standing charges are either reduced or transferred to the cost per unit of the energy concerned?
    Mr. Mellor: I am grateful to my hon. Friend for raising that point. I am well aware of the type of case to which he refers. If the object of the exercise is, as it was for our predecessors, to find a way of helping poor consumers, the problem is that poor consumers are not necessarily the smaller ones. Any removal of standing charges for one group could only lead to material increases in unit charges for others. That could make the position of some poor consumers worse than it is now.
    Mr. Donald Stewart: Is the hon. Gentleman aware that standing charges are not only a substantial part of energy bills, as the hon. Member of Ealing, North (Mr. Greenway) said, but that in many cases they are higher than the cost of consumption? Is he further aware that that is what old-age pensioners and people living on their own resent? Will he take the point made by his hon. Friend the Member for Ealing, North, that some way should be found to sink that cost in the overall cost of energy?
    Mr. Mellor: I had hoped that I had made the point clear. We are examining the matter. I am anxious not to raise hopes. It is only fair to say that when an exhaustive investigation was undertaken some years ago, it foundered on the difficulty of finding any form of tariff structure that would help all poor consumers. Not all poor consumers are necessarily small ones. That difficulty stands in the way of assisting people by merely removing standing charges, as standing charges are worth some £500 million in revenue to each supply industry and that money would have to be found in some other way.
    Sir Peter Emery: Will my right hon. Friend bear two matters in mind? First, will he bear in mind that in the 1976 inquiry the percentage of the bill represented by the standing charge was frequently nothing like so great as it is now and that standing charges have risen considerably in the past six years? Secondly, although one may not be able to help all poor people, will he bear in mind that those with small gas or electricity bills who are trying to keep their costs down are usually the poorest section of society and that it would be better to help some people than to help no one?
    Mr. Mellor: I certainly take my hon. Friend's point about the level of standing charges, but both industries have been seeking to make standing charges more truly reflect the underlying costs that they are supposed to represent. My hon. Friend will also be aware that in the past there was a low standing charge with a higher price for the first 52 therms. That has now gone and has been replaced by a higher standing charge.
    Mr. Stoddart: Is the Minister aware that, in the past two years, the charges have risen by between 300 per cent. and 400 per cent. and that the increase is greatly resented, particularly by pensioners and others on low income? Is he aware that pensioners lobbied certain hon. Members only last week—and pensioners are certainly low paid—asking for a withdrawal of the charges?
    Mr. Mellor: I know that the hon. Member wishes to be fair. He will therefore bear in mind the point that I made

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    in answer to my hon. Friend the Member for Honiton (Sir Peter Emery). It is a distortion to refer to increases of 300 per cent. in gas standing charges, because the higher charge for the first 52 therms has now been abolished. Had that system been in place in 1979, the gas standing charge in money terms would have been £6·37 per quarter.
    I had a most constructive meeting at the Department with the pensioners' group that organised the petition. I assure the hon. Gentleman that all these matters are being looked into with great care. As I said last time, however, I do not wish the Opposition to go away with the idea that it will be much easier for us to resolve the matter than it was when they were in Government.
    Mr. Rost: Will my right hoh. Friend look again at the percentage increase in standing charges for gas? Does he agree that British Gas is now using this as a disguised form of tariff, which is bearing most unfairly on some small consumers who are genuinelly trying to economise?
    Mr. Mellor: I have met the deputy chairmen of both supply industries to discuss these matters. We are concerned to ensure that the charges truly reflect the proper costs to the industry and are in no way a cover for inefficiency, but it appears that the accounting basis for the standing charges is accurate and truly reflects the costs that it is supposed to represent.
    Mr. Rowlands: As has been made clear by the exchanges today, there is now a widespread demand in all parts of the House for a genuine and radical review, and not just the promise of a half review. Can the Minister tell us the time scale of the review that he and his colleagues are undertaking and when we may expect the result?
    Mr. Mellor: The last review, which was very thorough, took the best part of a year. Clearly we wish to take a great deal less time than that. Nevertheless, this involves looking again at the considerable amount of work that was done in 1976. It also involves consultation with the industries and with my hon. Friend at the Department of Health and Social Security. I can only tell the House that these matters are being considered properly and seriously. As soon as we are in a position to make an announcement, one will be made.

    Coal Industry (Productivity)
    Mr. Dormandasked the Secretary of State for Energy when he next proposes to meet the chairman of the National Coal Board to discuss productivity in the coal industry.
    The Under-Secretary of State for Energy (Mr. John Moore): My right hon. Friend meets the chairman of the board frequently to discuss this and other aspects of the board's business.
    Mr. Dormand: When the Minister next meets the chairman, will he congratulate the miners on the increase in productivity, not least on the 6 per cent. increase at the coalface in the past year? In view of the stocks that have arisen as a result of the increase in productivity, will he impress upon the chairman of the NCB that for that reason there should not be pit closures?
    Secondly, will the Government do more than they are doing at present to increase the use of coal in industry, as their present efforts can only be described as feeble?
    Mr. Moore: The hon. Gentleman is right to congratulate the miners on the overall increase in
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    productivity of 3·4 per cent. output per man shift. It would be wrong, however, to encourage people to believe the simplistic notion that that is the only reason for the increase in stocks, which relates to the long-term supply and demand position. I am sure that, on reflection, the hon. Gentleman will wish to congratulate the Government on the improvement in the coal boiler conversion scheme announced in the Budget. I am sure that he appreciates the Government's attempts to produce real increases in the use of coal.
    Mr. Archie Hamilton: Will my hon. Friend confirm that if production is running well ahead of demand, there will have to be cutbacks in uneconomic pits?
    Mr. Moore: My hon. Friend draws attention to the undeniable problem facing the industry and all who support its long-term needs—namely, over-supply relative to current demand. It is no use ignoring that aspect. All who wish the industry well in future must recognise that basic difficulty.
    Mr. Gwilym Roberts: While congratulating the miners on the increase in productivity, may I ask whether the Minister accepts that the best way to increase productivity in the longer term is to sink new, modern pits which are up-to-date in every sense? In that respect, will he take what steps he can to speed up development in areas such as Cannock Chase, where there is the possibility of further coal development?
    Mr. Moore: The hon. Gentleman is assiduous in pursuing his constituency interest in this matter, but I am sure that he and all who are interested in the future of coal will understand the dilemma that we face. We have to develop new economic capacity while recognising the problems of closing uneconomic capacity.
    Mr. Skeet: Does my hon. Friend accept the "Plan for Coal" production targets of 135 million tonnes and 170 million tonnes by the end of the century in the light of what has been said about the declining market and increasing subsidies from the State?
    Mr. Moore: We and the industry are concerned to provide coal at competitive prices to meet the needs of the market place. I imagine that that will allow the industry to sell more coal to that market, but it must be competitive and offer security of supply.
    Mr. Eadie: How can the Government have any credible conversations or discussions with the NCB about productivity when their own policies are responsible for delaying replacement coal production capacity? Does the Minister recognise that that is the true meaning of the situation in the Vale of Belvoir and the comments of my hon. Friend the Member for Cannock (Mr. Roberts)? Will the hon. Gentleman give a categorical assurance that in the Vale of Belvoir, for example, the pits will be sunk in the lifetime of this Government?
    Mr. Moore: Quite the reverse of what the hon. Gentleman says has actually occurred. The Government have made it clear that the North-East Leicestershire prospect will be developed in an environmentally acceptable manner. That combination of policies will suit not just the coal industry but the wider interests that the Government have to bear in mind

    Gas Prices
    Mr. David Atkinsonasked the Secretary of State for Energy how domestic gas prices currently compare with those in European Economic Community member States.
    Mr. Spellerasked the Secretary of State for Energy how prices for domestic gas paid by consumers in France and Germany compare with prices in Great Britain.
    Mr. John Moore: Making adjustments for the change in exchange rates since the latest available information was given to my hon. Friend in answer to his similar question in February, prices in France and Germany are typically about 100 per cent. and 70 per cent. higher than in the United Kingdom.
    Mr. Atkinson: Does my hon. Friend's reply mean that, when taking British pay and pension levels into account, the British domestic gas consumer is now paying a more realistic price, which his European counterparts have always had to pay, and that it was grossly irresponsible of the Labour Government to force British Gas to sell at a loss?
    Mr. Moore: My hon. Friend is right in the sense that the price is more realistic, but it is only right to point out to people in the United Kingdom that the relative price change between domestic and industrial prices on the Continent still shows a far wider disparity than in Britain.
    Mr. Rowlands: As there is a very large lobby outside the House, and quite a strong lobby within it, for the export of British gas to Europe and therefore the establishment of a European price for domestic gas, are not the increases that the hon. Gentleman mentioned what the British domestic consumer could expect if such a lobby were successful?
    Mr. Moore: First, it would be better if the hon. Gentleman recognised that we are still not self-sufficient in gas. We import more than 23 per cent. of our gas from across the median line. He should also understand the nature of competition in producing new supplies. Competition always offers the consumer a better deal than monopoly pricing of supplies.

    Cross-Channel Energy Links
    Mr. Gwilym Robertsasked the Secretary of State for Energy what progress has been made in developing cross-Channel energy links; and if he will make a statement.
    Mr. Mellor: The CEGB has signed agreements with Electricité de France, approved by both Governments, to install cables of 2,000 MW capacity, which will allow electricity to be transmitted in both directions. A hydrosearch survey of the route is presently being undertaken, and it is expected that the link will be fully operational by 1985.
    Mr. Roberts: Does not the Minister accept that this news will be widely welcomed in the coal industry, where this is regarded as a method of exporting coal-generated electricity? When this project is considered, will the Minister assure the House that the Government will not shut their eyes to possible further developments of this kind between ourselves and the Continent?
    Mr. Mellor: We would not want to shut our eyes to further developments, although this was the most promising. The hon. Gentleman is right to welcome it. It will be of benefit to both France and Britain, and it means that for about a quarter of the cost of building a 2,000 MW power station in Britain, we have the advantage of being able to tap in to the French electricity system at the peak as, indeed, France can also do with British electricity when its marginal rates are high.
    Mr. Eggar: Has my hon. Friend noticed the support coming from the Opposition for a gas pipeline between England and the Continent? Will he confirm that the Government will not stand in the way of any such pipeline?
    Mr. Mellor: As I think my hon. Friend knows, the problem in Britain at present is not that we have so much gas that we need to consider exporting it, but that we do not have enough to meet home demand. Our present concern is to liberate the gas market so that proper home demand, particularly from industry, can be met.
    Mr. Douglas: When does the Minister expect the United Kingdom to be self-sufficient in gas? Will he assure the House that, unless and until we are self-sufficient, there will be no probability or possibility of exporting gas to anywhere on the Continent?
    Mr. Mellor: It is the Government's wish—as the hon. Gentleman knows, having served on the Oil and Gas (Enterprise) Bill Committee—that the liberation of the market that will take place when that measure becomes law will lead to an increased incentive to bring the gas cut of the North Sea to satisfy British demands. I again reiterate that our concern is with unsatisfied British demand, and at this stage we are not contemplating exports.
    Mr. Hannam: Does my hon. Friend accept that, while at present we are not self-sufficient in gas, there is every possibility that we could acquire from other sectors of the North Sea—for example, the Norwegians—future gas supplies that would make a cross-Channel link extremely valuable for the re-export of gas?
    Mr. Mellor: I am grateful to my hon. Friend for raising that matter. The House should know that we have told the Norwegians that we are willing to consider projects for the transmission of Norwegian gas through Britain for onward sale to the Continent.

    Coal Industry (Discussions)
    Mr. Ioan Evansasked the Secretary of State for Energy, if he will arrange a meeting with the new chairman of the National Coal Board and the new president of the National Union of Mineworkers to discuss the future of the coal industry.
    The Secretary of State for Energy (Mr. Nigel Lawson): While it would be premature to talk about the new chairman of the National Coal Board, I shall be meeting the new president of the National Union of Mineworkers later this month. Meanwhile, I am sure the whole House will join me in wishing Mr. Gormley well in his retirement, which starts today, and in paying tribute to his able and effective leadership of the NUM for the past 11 years. The coal industry and its prospects have undergone major changes while he has been president of

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    the NUM, and I am sure the whole industry and, indeed, the whole House recognise the important role he has played.
    Mr. Evans: I am sure that the House sends its good wishes to Joe Gormley and Derek Ezra. When will there be a Government statement about the appointment of the new chairman? Will the right hon. Gentleman consider calling the board and the union together to try to reach tripartite agreement for the future so that this successful, publicly owned industry can continue the level of production and productivity that it has enjoyed in the past, due to the investment of the Labour Government, which has been continued by this Government?
    Mr. Lawson: This Government have made available more substantial funds to the coal board for investment, and it is our intention that the coal industry, provided it plays its part, should be a success as, indeed, it can. An announcement about the new chairman of the NCB will be made in due course.
    Mr. Bill Walker: When my right hon. Friend meets the new president of the NUM, will he remind him of the sterling work done by Mr. Joe Gormley and point out that, if the new president looks after the interests of the mineworkers as well and stops playing politics, that will be to the benefit of both the mineworkers and the country?
    Mr. Lawson: I believe that the new president of the NUM has already received certain advice from his predecessor, upon which I do not think I could improve.
    Mr. Welsh: When the right hon. Gentleman meets the new president of the NUM, Mr. Arthur Scargill—as I have already said, he is a grand lad—will he bear in mind that he was president of the Yorkshire area for 10 years and never had a strike in that area? Will he discuss both productivity and production? It is no good having productivity if we decrease production. We are discussing both an increase in production and productivity, which in turn will mean an increase in sales. Will the right hon. Gentleman assure the new president and chairman that the Government will consider other aspects of selling coal, both in this country and outside? For example, many schools could now change from gas to coal, but they do not seem to be able to. Equally, many clubs, such as working men's clubs, could change to coal, and the coal board could sell a vast amount of coal as a result. Will the right hon. Gentleman look into that possibility?
    Mr. Lawson: The chairman of the coal board is well aware of the various different avenues for coal sales and is already exploring them actively, both in this country and overseas, where exports have risen substantially. As my hon. Friend the Under-Secretary has already said, while the possibilites in this regard have improved as a result of the improved coal-fired boiler conversion scheme in this year's Budget, nevertheless the paramount need for the industry to become competitve remains.
    Mr. Stanbrook: When the Secretary of State meets the next chairman of the coal board, will he persuade him to get rid of the board's assets in the private sector, especially those firms not engaged in mining activities that are competing unfairly with private businesses?
    Mr. Lawson: I believe that my hon. Friend recently raised this matter in an Adjournment debate, to which the Under-Secretary replied. I have nothing to add to what he said then.
    Mr. Cryer: Does the right hon. Gentleman accept that the president of the NUM does not need any advice from the Tory Governmet—the sworn opponent of the miners and, indeed, of all workers? If the Secretary of State is so anxious about maintaining a future coal mining industry, why is he so anxious to pour millions of pounds into the nuclear power industry and to go ahead with the PWR system? Why does he not abandon that, put the money into the coal industry and use our indigenous coal reserves rather than attacking the coal industry through the nuclear power industry?
    Mr. Lawson: Like their predecessors, this Government believe that our interests will be served both by a strong and competitve coal industry and an increasing share of electricity generation supplied by nuclear power, which is cheaper than any other form of power with the exception of hydro-power, which is limited. However, the hon. Gentleman's cheap jibes reflect more on him than on the matters that we are discussing.
    Mr. Eadie: Does the right hon, Gentleman not agree that it would be better for all concerned if a successor to Sir Derek Ezra were announced rapidly? Can the Secretary of State assure the Opposition that the new successor will not be a Tory Party political appointment?
    Mr. Lawson: I am grateful to the hon. Gentleman for his advice, which, of course, I shall bear in mind.

    Household Costs
    Mr. Marlowasked the Secretary of State for Energy if he will compare the percentage of household costs for a couple on retirement pension with gas as a sole means of energy (a) at the present time and (b) 10 years previously.
    Mr. John Moore: For a married couple whose only source of income is the flat rate retirement pension, the cost of enough gas for a cooker and main living room fire—280 therms—has fallen from as much as 8 per cent. of household costs in 1972 to just under 5 per cent. of household costs today.
    Mr. Marlow: Does my hon. Friend agree with me that this is very good news and not the sort of news that Labour Members are inclined to let people realise? Will he further say that the Government's policy to free the monopoly in the provision and supply of gas will probably lead to even further reductions in the real costs of pensioners in heating and looking after their houses?
    Mr. Moore: My hon. Friend is entirely right. It is new competition that produces new supply, and competition is always better for the consumer.

    Combined Heat and Power (Report)
    Mr. Rostasked the Secretary of State for Energy when he intends to respond to the Atkins committee report on combined heat and power.
    Mr. Mellor: We expect to receive this report later this month and we shall then consult widely among interested parties.
    Mr. Rost: Does my hon. Friend recognise that combined heat and power district heating can develop only if it offers heat at a competitive and attractive price to the consumer, as happens on the Continent, and that this can

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    happen only if the electricity produced by combined heat and power is sold at a fair price and bought at a fair price by the electricity industry? What criteria are the Atkins committee using in considering the cost-effectiveness of a large city scheme on the basis of the price that the nationalised monopoly will pay for the electricity?
    Mr. Mellor: I pay tribute to my hon. Friend's enthusiasm for combined heat and power and his expertise on it, which has been most useful and which will be even more useful when we receive the report. The question at issue is not whether combined heat and power district heating schemes can save energy, but whether they can do so economically. I cannot comment on these matters now, for obvious reasons. As my hon. Friend knows, we do not have the report. However, we shall study it and welcome his suggestions at the right time.
    Mr. Hooley: Is the Minister aware that, according to a reply given to me by his Department, power stations disperse the equivalent of 67 million tonnes of coal per year in waste heat? Surely this indicates that there should be a far greater sense of urgency in developing combined heat and power schemes.
    Mr. Mellor: We are following the recommendations of the Marshall report in setting up the Atkins committee. When we receive the report we shall examine it and act upon it as quickly as circumstances allow. I take the hon. Gentleman's point about electricity generation. However, he will know that it has been the policy of the electricity supply industry and of successive Governments to locate the large 2,000 mw power stations away from centres of population, for sound environmental reasons. These power stations are not the ideal accompaniment to civilised home life. The fact that the power stations do not have a district nearby to heat poses certain problems in making all our electricity generation available for district heating schemes.
    Mr. Robert Atkins: I claim no responsibility for the report. Is my hon. Friend satisfied that the lead city concept is still valid?
    Mr. Mellor: That concept is at the heart of our considerations. The Marshall report made it clear that 80 per cent. of the potential heat load from a CHP district heating scheme would be in the five major conurbations. We await with interest the report on the nine cities. We shall have to see whether the report recommends further studies.
    Mr. Stoddart: Is it not already clear that CHP will be more efficient than the present system, will save scarce fuel resources and will provide additional employment opportunities for the 3 million who are unemployed? Would it not be better if the Government were to reexamine their nuclear power programme with a view to building smaller power stations of about 200 mw in various areas, combined with heat systems? Would not that be the best route forward?
    Mr. Mellor: I am sure that the hon. Gentleman will not underestimate the good work that the Atkins committee is doing. He knows that the Select Committee on which he serves was able to visit the Atkins committee while it was at work—I do not think that he was able to go—and was left in no doubt about the good and solid work that it is doing. Without that sort of advice it would not be possible for the Government to go ahead sensibly. Everything that
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    I have said, and everything that has been said to my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), indicates that within the Department there is a great deal of interest in the possibilities of CHP. The central issue is whether we can make use of existing power stations in urban areas or whether it will be of the essence of the scheme to build new small power stations economically in such areas. We cannot pass judgment on that issue until we have the report to hand.
    Mr. Rowlands: When does the Minister think that we might see the first district combined heat and power scheme in operation? Will it be this side of 1990?
    Mr. Mellor: The time scale will not be a short one. No one should underestimate the problems that are involved. First, there will be a need to re-equip power stations and, secondly, it will be necessary to establish tine infrastructure. We shall have to grapple with major issues, including the choice that will be presented to the public in certain areas, of accepting the district heating scheme or opting not to do so. These are difficulties that will have to be faced. The Marshall inquiry was dealing with the year 2000 and it calculated that we could save 5 per cent. to 10 per cent. of primary fuel consumption if the economics were right. In looking towards that time scale it is difficult to see a scheme coming into play much before the 1990s.

    Industrial Gas Prices
    Mr. Hannamasked the Secretary of State for Energy by how much he expects the price of industrial gas to increase in 1983.
    Mr. John Moore: The price of industrial gas in 1983 will be influenced by the British Gas financial target and prevailing market conditions. The November NEDC report showed clearly that the majority of industrial gas consumers in the United Kingdom enjoyed prices that were at or below those paid by their European competitors. Following the action announced in the Budget to freeze industrial gas prices for the rest of this year, I have no reason to believe that United Kingdom prices will not remain competitive in 1983.
    Mr. Hannam: May I congratulate my hon. Friend on the help that is being given to British industry through the freezing of gas prices this year? Does he accept that this will give a welcome boost to jobs as our industry will have a competitive edge over our Continental rivals' prices? Will he confirm that, apart from basic cost increases, there will be no general increase in gas prices over the next few years?
    Mr. Moore: It is difficult for me to prejudge the future. Suffice it to say that this area of activity is profitable. In such a profitable area one sees no reason for any radical change in pricing policies.
    Mr. Edwin Wainwright: Will the Minister take into account the fact that some industries have great difficulty in converting from the use of coal? Does he realise that the glass industry is finding it difficult to use oil because of the huge costs involved and would like to transfer to gas if the Government offered it a grant? Will the Government consider doing that? Instead of reducing the price of oil from $34 a barrel to $31 should we not continue to sell at $34 so that we can help industries that are present unable to use coal efficiently?
    Mr. Moore: I am sure that the hon. Gentleman will be pleased to know that his advice, and that of others, was taken into account by the Chancellor and that we have added to the oil boiler conversion scheme those who are converting from gas to coal.
    Mr. Richard Page: Will my hon. Friend either confirm or deny that the recent increase in domestic gas prices now means that British Gas will make a small profit in the domestic sector while its vast profits will come from industry?
    Mr. Moore: After this year's increases we expect to see a return to profit in the domestic sector. The profits are not excessive. We are talking about a post tax profit of £156 million, which is a 1·6 per cent. return, in the current financial year. That will come from the industrial and commercial sector.
    Mr. Campbell-Savours: Is the Minister aware that the Confederation of British Industry in the Northern region is publishing a report that proves that the majority of manufacturers are having to cut their prices to retain their markets? How does he expect those same manufacturers to manage in 1983 when it is obviously the Government's policy to increase energy charges?
    Mr. Moore: It is the height of cheek and absurdity for Labour Members to make such absurd comments. Industrial gas prices are about 24½ per cent. cheaper than they would have been if the policies of the Labour Government had been followed. This has been achieved by the Government's actions.
    Mr. Archie Hamilton: When does my hon. Friend expect private supplies of gas to be available to industry? Does he imagine that the price of this gas will be higher or lower than that which is offered by the British Gas Corporation?
    Mr. Moore: There is a happy prospect of competition in supply, and the opportunity for the consumer to receive more than one offer of gas, I hope that that will come in the not too distant future following the successful completion of the Oil and Gas (Enterprise) Bill. My hon. Friend is right to draw attention to the opportunities that competition will offer to those in industry who seek competitive supplies.
    Mr. Merlyn Rees: Whatever the supply and demand influences, is it not likely that in a pre-election year there will be no increase in energy prices under the control of the Government?
    Mr. Moore: I made it clear in the debate on this subject that these policies were introduced to the House in January 1980. That seems considerably in advance of an election.

    Wave Power
    Mr. Hooleyasked the Secretary of State for Energy when a decision will be made on the preferred system for wave power and the scale of Government funding for it.
    Mr. Mellor: When I have had the opportunity fully to study a report and the advice on the renewables programme from the advisory council on research and development for fuel and power.
    Mr. Hooley: Is the Minister aware that there is a suspicion in some quarters that the Government would like
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    to sink the wave power experiments? Is he aware that this is an enormously important renewable source of energy, especially for this country, and that there are possible world markets? Will he get a move on with his study into which system to fund and give an assurance that there will be generous funding for it?
    Mr. Mellor: I utterly repudiate the implication of the hon. Gentleman's comment that we have somehow been marking time on the matter. In cash terms, the Government are spending this year four times as much on research and development into the renewables programme as did the Labour Government. I do not know how impatient the hon. Gentleman was with the Government that he supported. After £12 million of public money has been spent on the wave programme, the advisory council is examining the whole renewables programme to see where we go from here. This is a sensible step, being undertaken by accomplished scientists and engineers. I await their advice with interest.
    Mr. Ancram: Does my hon. Friend agree that, on current costing of wave power, this is an energy option for the medium rather than the short term? If he does agree, will he consider, before taking his decision, such schemes as Salter's bobbing ducks, which are being developed in my constituency and which, for a small investment, show great potential for the medium term?
    Mr. Mellor: There is enormous admiration within my Department for the work that Dr. Salter is doing on a very accomplished piece of engineering.
    Mr. Grimond: Will the Minister confirm that while he is studying the report, experiments are still continuing? Can he give an idea when he expects that some electricity developed by wave power will be going into the grid?
    Mr. Mellor: I cannot do that in respect of wave power. It is too early to say. The right hon. Gentleman will be more aware than most hon. Members of what the Government are doing on renewables. It is in his constituency, on the Orkneys, that we have moved to demonstration by supporting to the tune of £4½ million the construction of an aero-generator to produce electricity from the wind, of which I gather, in his part of the country, there is quite a lot.

    Britoil
    Mr. Dalyellasked the Secretary of State for Energy on what basis he will assess the most advantageous time to put the shares of Britoil on the market.
    Mr. Eggarasked the Secretary of State for Energy if he will arrange, at the appropriate time, for British National Oil Corporation shares to be available for purchase by individual members of the public through the Post Office network.
    Mr. Douglasasked the Secretary of State for Energy if he will make a statement on the criteria by which he will assess the most opportune time to put the shares of Britoil on to the market.
    Mr. Lawson: Britoil will be sold to the public this year unless market conditions in the autumn are such that there is a convincing case for delaying until next year. Whenever the flotation takes place, I shall be seeking to secure a wide spread of ownership.
    Mr. Dalyell: What if market conditions do not improve?
    Mr. Lawson: That is a hypothetical question.
    Mr. Eggar: Is not the best way of obtaining wider share ownership the distribution of shares through the Post Office network, to be purchased by individual members of the public? Is it not possible for the national savings certificate system to be used in this regard?
    Mr. Lawson: I am grateful to my hon. Friend and also to my hon. Friend the Member for Derbyshire, South-East (Mr. Rost) for putting forward some helpful suggestions. All these ways and means of getting a wider spread of share ownership than is customary are being examined carefully. There are certain practical difficulties, but we are taking the suggestions seriously.
    Mr. Douglas: Will the Minister have the issue underwritten?
    Mr. Lawson: A decision on that has not yet been taken——
    Mr. Dalyell: Answer.
    Mr. Lawson: The hon. Member for Dunfermline (Mr. Douglas) will be aware that the Government that he supported made a large offer of BP shares in 1977. That offer was underwritten.
    Mr. Merlyn Rees: Will the Secretary of State inform the House of, and discuss with it, the actual method of sale before he proceeds?
    Mr. Lawson: I am not sure that it is sensible—I cannot think of any precedent—to discuss with the House anything so technical and complicated as the precise methods of sale. If the right hon. Gentleman and his hon. Friends want to put forward any proposals, I shall be happy to consider them.
    Mr. Dalyell: On a point of order, Mr. Deputy Speaker. In view of the unsatisfactory nature of the reply I beg to give notice that I shall seek to raise the matter on the Adjournment.

    North Sea Oil and Gas (Exploration)
    Mr. Skeetasked the Secretary of State for Energy if he will estimate the effect of the fall in oil prices and the changes in the tax regime on the level of exploration for oil and gas in the North Sea.
    Mr. Lawson: I do not expect these factors to have a significant effect on the level of offshore exploration.
    Mr. Skeet: Surely the Secretary of State must bear in mind that, with spot prices down to $28 a barrel, and with the announcement that the Government expect the same yield from the North Sea, this will deter anyone looking for commercial profit from going ahead with the exploration programme that was envisaged by the Government?
    Mr. Lawson: It is true that these are uncertain times in the oil market and that this is making all oil companies review their investment plans and assumptions throughout the world. That is inevitable. However, the level of exploration in the North Sea is higher than it has been for many years and there is no sign of any slackening, despite the tax changes that were announced a little over a year ago.
    Mr. Merlyn Rees: If it is the case that there is a pullback in investment in the North Sea—and the oil companies say when they meet hon. Members that this is the fault of the tax regime—has the Secretary of State discussed this with them to disprove the point that they are making?
    Mr. Lawson: I see representatives of the oil companies both in concert and singly on many occasions, as the right hon. Gentleman will imagine. There is no doubt that the oil companies would like to see a lighter tax regime. My right hon. and learned Friend the Chancellor of the Exchequer examined the matter carefully and reviewed it in the light of all the evidence, including investment plans, and came out with a new tax system that, with regard to structure, went a long way towards meeting the points made by the oil companies. With regard to the level of taxation, there was only a slight amelioration, but there was some. My right hon. and learned Friend is satisfied that that is a tax system that is fair both to the oil companies and to the general body of taxpayers.
    Mr. Michael Morris: Is not the rate of oil exploration a long-term matter? Therefore, is it not correct that it is as much the general state of the economic situation across the Western world as the immediate tax regime that affects the oil companies' business plans for the future? To that end, is it not a fact that when my right hon. Friend successfully launches Britoil in the current financial year it will show the Western oil companies that we believe in a successful and forceful policy in the North Sea''
    Mr. Lawson: I entirely agree with my hon. Friend. He may have read the article in the Sunday Telegraph yesterday, which pointed out the considerable attractions of Britoil for the investor.

    Common Energy Policy
    Mr. Mylesasked the Secretary of State for Energy what progress was made at the last meeting of the European Energy Council in agreeing a common energy policy.
    The Minister of State, Department of Energy (Mr. Hamish Gray): The Council of Energy Ministers on 16 March renewed its commitment to reduce dependence on imported oil and to the more efficient use of energy. Commission papers on coal, nuclear power, gas and investment in the efficient use of energy were considered, but were not ready for decisions by this Council.
    Mr. Myles: Will my hon. Friend ensure that we, as the leading energy producer in Europe, lead any discussions on a common energy policy and not opt out, as would the Labour Party?
    Mr. Gray: While I recognise the necessity of working towards a common energy policy within the EEC, I should point out to my hon. Friend that priorities are not always the same for every member country. Considerable progress has been made on such things as energy pricing and conservation and the reduced dependence on oil, as well as the fusion programmes. Progress is being made, if not perhaps as quickly as my hon. Friend would wish.
    Mr. Rowlands: Will the Minister assure the House that no common energy policy will mean the loss of national control over all our energy resources?
    Mr. Gray: That would be the wish of every hon. Member and the objective of the Government.
    Mr. Rost: Will the Energy Ministers in Europe make sure that the reserves of oil are not reduced below the levels recommended by the International Energy Agency just because there happens to be a surplus and lower prices now? Would this not be a dangerous development in view of the possible strategic advantages that can accrue from the maintenance of those reserves at a reasonable level?
    Mr. Gray: My hon. Friend will be aware that the maintenance of adequate reserves need not necessarily conflict with the economic use of oil, which is the objective of the Community.
    Mr. Robert C. Brown: Can the Minister of State give us any good reason why he believes that there should be a common energy policy in Europe?
    Mr. Gray: I am sure that the majority of hon. Members would agree that there are vast areas in energy where a common energy policy is advantageous. However, I pointed out at the outset that the priorities of countries are different, and therefore, across-the-board energy policies may be much more difficult to achieve than seems likely now.
    Mr. Teddy Taylor: When the Minister says that there are vast areas in energy where a common energy policy is advantageous, could he give us just one example to help us?
    Mr. Gray: There is little doubt that, as I suggested at the outset, a common form of energy pricing would be advantageous for energy conservation. Realistic energy pricing is essential.

    Combined Heat and Power Projects
    Mr. Spearingasked the Secretary of State for Energy when he expects to announce the results of consultants' reports on projects for combined heat and power systems.
    Mr. Mellor: The results of our consultant's investigations on combined heat and power will be announced after consultation with interested parties.
    Mr. Spearing: While I thank the Minister for that reply, may I ask him whether he would agree that the results of the investigations are taking rather a long time? Does he agree that there are a number of power stations in the country that would be suitable for active experiments on a large scale with this sort of project? Cannot the hon. Gentleman hurry up the programme?
    Mr. Mellor: The Atkins committee, which was set up following Dr. Marshall's inquiry, was originally due to report in January. There has been a small slippage to April, which those who follow these matters will understand, having regard to the complexity of the issues that are involved. I assure the hon. Gentleman that we are interested in the whole idea of heat and power district heating schemes and we shall be studying the report with great interest when it arrives shortly.
    Mr. Cryer: Meanwhile, are not local power stations being closed in rapid succession? They are the very sorts of power stations that would be ideal for combined heat and energy schemes. Why do not the Government hurry
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    up the process and stop the closure of these power stations, because some people are suspicious that this is being done to create capacity to be filled with nuclear power generation?
    Mr. Mellor: If the electricity supply industry, whose decisions these are, were to fail to close small and uneconomic power stations and that led to an increase in the price of electricity, the first person to complain would be the hon. Member for Keighley (Mr. Cryer).
    Mr. Rost: Can my hon. Friend confirm that when the Oil and Gas (Enterprise) Bill becomes an Act it will provide an important stimulus to the development of combined heat and power, because the gas monopoly has restricted the use of gas to industrial CHP?
    Mr. Mellor: It is right that we have shown some concern at the apparent difficulty of combined heat and power schemes using gas getting off the ground because of supply difficulties. There is no doubt in the mind of the Government that the effect of the Oil and Gas (Enterprise) Bill will be to make more supplies of gas available to a domestic market that is currently underprovided for.
    Mr. John Evans: Will the Minister confirm that the only power stations that are being closed are the old, small, clapped-out ones that would cost an absolute fortune to modernise and put back into commission?
    Mr. Mellor: I am very grateful for the robust common sense of the hon. Member for Newton (Mr. Evans). According to the merit table that the electricity supply industry has to use, the difference in the costs of generation in a large, efficient power station compared with some of the smaller ones is so marked that we cannot allow sentimentality to intrude on what is a case of hard economics, as I think the hon. Gentleman recognises.

  HOUSE OF COMMONS

    Scottish Grand Committee
    Mr. Canavanasked the Lord President of the Council what arrangements are being made for further meetings of the Scottish Grand Committee to be held in Scotland
    The Lord President of the Council and Leader of the House of Commons (Mr. Francis Pym): Further sittings of the Scottish Grand Committee in Edinburgh will be announced as soon as possible in the light of consultations through the usual channels.
    Mr. Canavan: Is it not a fact that most of the debate in Edinburgh was taken up by Ministers and ex-Ministers? May we have an extension of the time of the sitting beyond 1 pm to allow more Back Benchers to take part in the next debate? Will the right hon. Gentleman give an assurance that the Government definitely intend to continue with the experimental sittings in Scotland, despite some reports to the contrary and the reluctance of some hon. Members who seem to prefer the fleshpots of Westminster to the invigorating atmosphere of Scotland?
    Mr. Pym: It is our intention to hold further sittings as part of the experiment. It must be done by mutual arrangement and agreement through the usual channels. The length of the sittings and whether it would be convenient to extend them beyond 1 pm should, I think,

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    be decided at the time. A number of hon. Members believe that 1 pm is the most appropriate time to conclude. I wish to make an arrangement that is convenient and suitable to the House as a whole.
    Later——
    Mr. Bill Walker: On a point of order, Mr. Speaker. On question No. 25, tabled by the hon. Member for West Stirlingshire (Mr. Canavan), there was only one supplementary question. You allowed no question from a Government supporter. This is a very serious matter in Scotland——
    Mr. Speaker: Order. It so happens that I was not in the Chair at the time. I took the Chair immediately afterwards. There is no prescriptive right to ask supplementary questions on other hon. Members' questions.

  LORD PRESIDENT OF THE COUNCIL

    Government Information
    Mr. Charles R. Morrisasked the Lord President of the Council if he will list his responsibilities for the coordination of Government information.
    Mr. Murphyasked the Lord President of the Council if he will list his responsibilities for the coordination of Government information.
    Mr. Teddy Taylorasked the Lord President of the Council if he plans any new initiatives in co-ordinating information supplied by Her Majesty's Government.
    Mr. Pym: My role is to give advice and assistance to individual Ministers, who are responsible for their own departmental information, and I keep these matters under continual review.
    Mr. Morris: Is the Leader of the House aware that my constituents, who take a close interest in politics, have difficulty in analysing the coded messages that they are told are coming through in speeches by the Minister of Agriculture, Fisheries and Food regarding Government policy and the Government's stance generally? Will the right hon. Gentleman help by providing a glossary of terms to enable people to understand the messages that the Minister of Agriculture, Fisheries and Food conveys?
    Mr. Pym: The Government as a whole and individual Ministers make their position, views, policies and programmes very clear. I do not think that the policies and programmes of any previous Government have received so much public discussion and debate as those of the present Administration. Ministers are capable of making clear what they mean, and none more so than my right hon. Friend the Minister of Agriculture, Fisheries and Food.
    Mr. Murphy: Does my right hon. Friend advise the British majority group in the European Parliament of relevant Government information?
    Mr. Pym: No. I do not think that it is part of the Government's information machine. There are a number of contacts between my right hon. Friends as Ministers and the European Parliament, but there is no direct link. It is not part of the Government's information machine.
    Mr. Taylor: Does my right hon. Friend agree that one of the most vital areas of dissemination of information is the Government's policy on the Falkland Islands issue? Will he and his colleagues consider the possibility and the advisability of Her Majesty the Queen making a broadcast to the people of the Falkland Islands?
    Mr. Pym: I doubt whether that would be appropriate. My right hon. and noble Friend Lord Carrington has broadcast to the people of the Falkland Islands in the course of the last 24 hours. I believe that is adequate. As to the general position, it is difficult for anyone to read anything in the press except comment and discussion of the Falkland Islands issue.
    Mr. Dalyell: Did the Lord President advise the Foreign Secretary and the Defence Secretary that, as soon as the first shot was fired, they would be taking on right, left and centre the entire Spanish-speaking world, including many of those who have suffered at the hands of Right-wing Governments and who still believe that the Malvinas, or Falkland Islands, belong to a South American State 400 miles away, not a European State 8,000 miles away?
    Mr. Marlow: In view of the Government's unanswerable case for committing our forces to the South Atlantic to recover our land, will my right hon. Friend suggest to the Prime Minister that a broadcast to the nation setting out the Government's position and the national imperative should be made soon?
    Mr. Pym: I shall convey that view to my right hon. Friend.
    Mr. John Silkin: In view of the information that we have had today, and in the light of the right hon. Gentleman's responsibility for the co-ordination of Government information, will he arrange for a statement on the resignation of the Foreign Secretary to be made—perhaps by the Lord President of the Council or even by the next Foreign Secretary?
    Mr. Pym: That would not be in accordance with custom or precedent, but no doubt the matter will he referred to at various moments on other occasions
    Mr. Tam Dalyell: On a point of order, Mr. Speaker. I wish to raise a point of order of which I gave you notice and which I believe affects——
    Mr. Speaker: Order. If it is about the matter of which the hon. Member for West Lothian (Mr. Dalyell) gave me notice, it is not a point of order. He made a mistake by announcing that he had told me what it concerned. I think the hon. Gentleman wishes to pursue an argument, and that is not a point of order. It cannot be a point of order which requires my ruling.
    Mr. Dalyell: On another point of order, Mr. Speaker. Those of us who pursue the courtesies of the House, as most of us do, when Ministers refuse to give way and do not press them——
    Mr. Speaker: Order. The hon. Gentleman has been here long enough to know that that is not a point of order for me.

Argentina (Trade)
3.31 pm
Sir Peter Emery(by private notice) asked the Secretary of State for Trade what advice, instructions or regulations he is giving or introducing to cover those companies or organisations which are trading or which have contracts with Argentina.
The Secretary of State for Trade (Mr. John Biffen): It was announced on 3 April that the Government had frozen all Argentinian financial assets held in this country, that ECGD would not provide new export credit cover for Argentina, and that exports of military equipment and arms to Argentina had been prohibited. Other economic measures are being urgently examined, and we are consulting our European Community and other allies. British citizens are advised not to travel to Argentina, and British companies to withdraw their non-essential British staff. British firms must decide what action they should take in relation to existing commitments in the light of the present circumstances, the measures which have so far been announced, and the terms of their own individual arrangements with Argentinian firms. They are advised not to enter into new commitments.
Meanwhile, right hon. and hon. Members will recall that the Prime Minister told the House on 3 April of the Government's intention to despatch a substantial naval task force to the Falkland Islands. I should like to take this opportunity to announce to the House that Her Majesty assented to an Order in Council enabling the Government to requisition any vessels that may be needed, under the long-standing contingency plans available to meet national emergencies of this kind. The P & O liner "Canberra", whose captain is an officer in the Royal Naval Reserve, is being transferred to naval control this afternoon. Other ships will be requisitioned and chartered as necessary.
Sir Peter Emery: I thank my right hon. Friend for his reply. May I ask him two questions? Is he suggesting that firms which have existing commercial contracts with the Argentine should continue delivery under those contracts? Secondly, what action does he consider should be taken where, obviously, the Argentine will attempt to obtain spare parts for equipment made in Britain from third or fourth countries? Will the Government look very carefully at that position, especially where military equipment is involved?
Mr. Biffen: Replying to the first of my hon. Friend's questions, no general ban currently exists on exporting to the Argentine.
As for my hon. Friend's second question, of course, there is a ban on the export of arms and supplies from this country, and undoubtedly we shall do our utmost and shall expect our allies to assist us in that prohibition.
Mr. John Fraser: Is it not the case that, apart from the obviously necessary ban on arms exports, other sanctions on or interruptions in trade are inevitable and must be proportionate to the dispute which the United Kingdom has with Argentina? Will the right hon. Gentleman describe what he thinks those further sanctions or interruptions should be?
Can the right hon. Gentleman describe to the House what compensation, protection and support will be afforded to British firms and workers who suffer loss and injury from the interruption of trade with Argentina? Can

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he say expecially that the losses on the Export Credits Guarantee Department will be borne by the Government and not be exporting firms? The trading consequences of losses ought to be borne by the Government because these matters flow from their conduct of these proceedings.
May I ask the right hon. Gentleman about the EEC and our other trading partners? Our trading arrangements with the EEC have not always been favourable in international terms. On this occasion, will he have immediate consultations with our trading partners in the EEC, and will he confirm that they will support us to the full in those trading sanctions, whether they relate to arms or other matters, which may be necessary to support and further Britain's cause in this matter? Can the right hon. Gentleman say what other trading support he will get from members of NATO and other defence pacts to which we belong?
Mr. Biffen: Perhaps I may answer the hon. Gentleman's questions in reverse order. We are in consultation with our European Community partners with a view to co-ordinating as far as possible and making economic response to the present situation.
Dealing with the hon. Gentleman's second question, it is true that any interruption of trade which derives from a conflict such as this results in losses to a very large number of companies and people. This has always been true historically, and no doubt it will be equally true on this occasion. The same convention will apply on this occasion as applied within the lifetime of previous Parliaments.
As for our taking economic action, of course, this is a matter under careful review. We shall take account of the hon. Gentleman's aspirations that it should be proportionate to the dispute.
Several Hon. Members rose——
Mr. Speaker: Order. This is an extension of Question Time, but I propose to call two hon. Members from each side of the House before moving on.
Sir Derek Walker-Smith: With regard to contracts entered into by British firms and
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companies with Argentine interests, will not the British concerns be entitled to pray in aid the doctrine of frustration, well known in commercial and international law, and would not they be well advised so to do?
Mr. Biffen: Obviously that is a factor which will be borne in mind when the Government consider the next development in economic reactions.
Mr. Russell Johnston: Given that the last full trade statistics were published in 1978, can the Secretary of State confirm that an embargo, taking total proportions of trade, would still be about 10 times more injurious to the Argentine than to us?
Mr. Biffen: I am not sure that I want to take up the hon. Gentleman's statistics, but I can tell the House that our exports account for about 3 per cent. of the Argentine markets and that we account for 3 per cent. of their exports.
Mr. Kenneth Warren: Although I welcome what my right hon. Friend said about the cessation of arms sales from this country, will he make urgent representations to the Heads of Government of France, Italy and the United States, whose ground support in Argentina not only made the invasion possible technically for the Navy and Air Force of the Argentine but would also make it possible for the Argentine to sustain a counter-attack against our own forces?
Mr. Biffen: I am certain that any helpful economic response in this dispute can best proceed if we are supported fully by our nearest allies in the European Community.
Mr. Eric Deakins: Is the Secretary of State confident that our trading relationships with other Latin American States will not be disrupted by them as a result of the continuance of this dispute?
Mr. Biffen: No one can be confident in replying to such a question, but I hope very much that the dispute can be localised and that the mutual good interests that lie between this country and other Latin American States can be sustained.

Business of the House
3.39 pm
The Lord President of the Council and Leader of the House of Commons (Mr. Francis Pym): With permission, Mr. Speaker, I should like to make a short business statement.
The business on Wednesday 7 April will now be a debate on the Falkland Islands, on a motion for the Adjournment of the House.
Mr. Michael Foot: I thank the right hon. Gentleman for his statement. It was clearly the desire of the House on Saturday that there should be a further debate at the earliest possible moment. However, in the light of the announcements made today, can the right hon. Gentleman tell the House who will be speaking for the Government in the debate?
Mr. Pym: I cannot answer that matter of detail at this moment. I assure the right hon. Gentleman that the Government's position will be put clearly and in a forthright way, as no doubt will that of the Opposition.

Northern Ireland (Political. Developments)
3.41 pm
The Secretary of State for Northern Ireland (Mr. James Prior): I will, with permission, make a statement on political developments in Northern Ireland.
The Government have today published a White Paper setting out proposals for the election of an Assembly, which would provide a framework within which a devolved Government might again be set up in Northern Ireland. These proposals are designed to meet two objectives: first, to provide at once a means for greater democratic participation by the people of Northern Ireland in their own affairs; secondly, to give them the opportunity to evolve for themselves a form of government acceptable to them.
The Government propose that there should be an election later this year to a new Northern Ireland assembly. While consideration of the arrangements for a devolved administration will be its most crucial task, the Assembly will from its first day have important scrutinising, deliberative and consultative functions. It will be able to report on a wide range of topics, and its reports will be laid before Parliament. The Assembly will establish Committees corresponding to each of the Northern Ireland Departments to monitor and report on their policies and activities.
The Assembly will from the outset be empowered to recommend arrangements under which the whole or part of the full range of legislative and executive responsibilities, which were devolved in 1973, could be exercised by the Assembly and by a devolved administration answerable to it. If the Assembly sends to the Secretary of State proposals which have the support of 70 per cent. of the total membership of the Assembly, he will be required under statute to lay those proposals before Parliament for its consideration. He would also have discretion to present to Parliament proposals which did not command 70 per cent. support but which in his view enjoyed the support of both sides of the community in Northern Ireland.
I should like to make two things clear: first, the parties in Northern Ireland will have wide discretion about the basis on which a devolved administration and Assembly might be formed and operate—Her Majesty's Government are not seeking to impose any particular system; secondly, the Government would not recommend any arrangements to Parliament unless they believed them to be acceptable to both sides of the Northern Ireland community. Stable government can come only from such acceptability. If Parliament approved the Assembly's recommendations, powers would be devolved by Order in Council.
The Assembly will have the option of moving to full devolution of powers from the outset or, if if seems easier to achieve agreement on devolving the responsibilities of only some Northern Ireland Departments, to make proposals for partial devolution.
The arrangements will be flexible in that partial devolution could lead to further or full devolution, and if the agreement on which devolution was based collapsed and could not be re-established it would be possible for the Assembly to revert to its scrutinising, consultative and deliberative functions, with the Secretary of State taking back other responsibilities.

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Direct rule has served Northern Ireland well. It was, however, introduced as a temporary arrangement. It does not provide satisfactory political structures through which a divided community in Northern Ireland can make the necessary mutual accommodations to tackle its special problems. For Northern Ireland requires new political arrangements suited to its unique character. These must reflect the history of the Province and its long experience of devolved government and must recognise and respect the differences of identity and aspiration which exist there. The proposals in the White Paper take account of those circumstances. At the same time, they are firmly based upon Northern Ireland's position as a constituent part of the United Kingdom for so long as that is the wish of the people of Northern Ireland.
The Government are convinced that good relations with the Republic of Ireland are of great importance. These relations are for the sovereign Governments and Parliaments. It is for the London and Dublin Parliaments to consider whether the governmental meetings of the Anglo-Irish Intergovernmental Council should be complemented by an Anglo-Irish body at parliamentary level in which members of an elected Assembly in Northern Ireland could take part. In addition, it would remain open to a devolved administration in Northern Ireland to make such bilateral arrangements and agreements with the Government of the Republic as it wished concerning the matters for which it is responsible.
The problems of Northern Ireland are formidable. The evil of terrorism has struck at the lives and expectations of ordinary people, Catholic and Protestant alike, for far too long. The economic decline is more acute and more intractable than elsewhere in the United Kingdom. The Government believe that the defeat of terrorism, the recovery of the economy, and the establishment of effective political institutions go together and support one another. An end to the political deadlock of recent years offers the best hope of a sustained improvement in the economy and in security.
The proposals in the White Paper are fair and flexible. Like all proposals for Northern Ireland, they involve risk and controversy. The Government in no way underestimate the magnitude of the task or the strains any proposals will have to bear. But they also offer an opportunity which, with time and patience and the continued commitment and good will of Parliament, may be exploited to the advantage and relief of all the people of Northern Ireland.
Mr. J. D. Concannon: I thank the Secretary of State for presenting the White Paper to the House today. We hope that it will put an end to rumour and lead to a constructive debate about constitutional arrangements.
Is the Secretary of State aware that we agree on the pressing need for peace and reconciliation in Northern Ireland, and that we think it right that the people of the Province should be given opportunities for broader political participation? Does he accept that we favour devolution of political power to Northern Ireland, and that we find the proposals broadly in line with what we would wish to do and build on? However, will he accept that the time is not altogether right for these proposals? Where economic and social conditions are so depressed, and
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where one in five of the workers in Northern Ireland is on the dole, it is unlikely that there will be a wide or enthusiastic response to constitutional changes.
Does the Secretary of State recall that when we were in office we took the view that political progress would be lasting only if people had safe jobs and decent social conditions? Have not the Government, in choosing to go the other way, put the cart before the horse? Does the Secretary of State accept that far more attention should be devoted to creating jobs in Northern Ireland than to righting social wrongs?
Putting those doubts aside, we support the plan for the election for an Assembly, and we hope that Northern Ireland politicians will take part in the elections. Does the Secretary of State agree that there is no better way of isolating the men of violence than by participating in legitimate forms of political activity? From what the Secretary of State said, it appears that new legislation will be necessary. Can he say when that legislation will be published? Does he realise that we shall have many questions to ask, not least about the confusion that may occur when political heads of departments are responsible to two different Assemblies? We shall look for strong safeguards to prevent abuse of executive power and to protect minorities from discrimination? Additionally, we shall want to be assured about the ultimate power of Parliament and the ability of this House to debate Northern Ireland matters, even when power has been totally devolved.
Will the Secretary of State note our disappointment about how little has been said relating to the Irish Republic? Will he confirm that the only channels through which members of the Northern Ireland Assembly may partake in the Anglo-Irish dialogue will he the parliamentary tier of the Anglo-Irish Intergovernmental Council? If that is so, will he give the House an assurance that the Government will allow time for the House to debate the merits of a parliamentary tier to that council? Further, will he look into the possibilities of allowing Northern Ireland representatives to take part in the Anglo-Irish council at other levels, pending the introduction of the parliamentary tier? We give a cautious welcome to the White Paper, and will the Secretary of State accept the Opposition's wholehearted endorsement of the theme of his statement and of the White Paper that all new structures of government in Northern Ireland must be acceptable to both sides of the community?
Such a principle must lie at the centre of our deliberations on this subject.
Finally, is it the Government's intention to have a separate debate on the White Paper? That would have a great deal of support in the House.
Mr. Prior: I am grateful for the support that the right hon. Member for Mansfield (Mr. Concannon) has given to some of the proposals in the White Paper. I recognise that any Minister seeking to embark on a course of trying to restore political stability to the people of Northern Ireland is bound to find certain areas of controversy. The more that I can win and hold the support of all hon. Members, the better it will be for the people of Northern Ireland to see that we are determined to press ahead sensibly and that we are prepared to leave to the people of Northern Ireland as much as we can.
Economic stability and prosperity go hand in hand with the political and security situations. One cannot achieve

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the one without at the same time seeking by every means possible to deal with the other two. The economic situation in Northern Ireland has deteriorated and continues to deteriorate. Regrettably, part of the reason for that is the lack of political stability in the North of Ireland as a whole.
Subject to what my right hon. Friend the Leader of the House might have to say, I would welcome a debate on the White Paper before debating the Bill, but I think that, in a matter which concerns the transfer of powers and fitting the new proposals into the context of the Northern Ireland Constitution Act 1973, it would be convenient if the House had the Bill presented to it before the White Paper debate. We would then have both in front of us even if we had, as we should, a separate debate on the White Paper.
I can confirm that it is for the Parliaments of the Republic and the United Kingdom to reach a decision about the parliamentary tier, but I hope that Members of the Assembly would be able to take part in any arrangement that is made. This ought to be a gradual process, and it is one on which all parties in the House and perhaps in the Parliament of the Republic will want to proceed with care if it is to be successful and if we are to remove the suspicions which will otherwise surround the initiative. There will also be opportunity for debates on those matters.
Mr. James Molyneaux: On the very day that the Armed Forces of the Crown are embarking on an expedition to free British subjects from foreign domination in the South Atlantic, is it not utterly shameful that a Minister of the Crown should come to the House on the pretext of improving internal government in part of the United Kingdom and launching an operation to erode the rights and privileges of British subjects within the United Kingdom, and in so doing using almost the same terminology as that employed in the statement on the Falkland Islands made by a Foreign Office Minister in the House in December 1980?
Mr. Prior: The hon. Gentleman does himself, his party and his fellow countrymen a grave disservice by such remarks. It could be interpreted that on a difficult day for the Government—we all know that it is a difficult day for the Government—we still thought that it was right in the interests of the people of Northern Ireland that we should face up to the difficulties as we are. I admire the people of Northern Ireland and I do not wish the hon. Gentleman's statement to detract from anything that happens in Northern Ireland or from all the great successes and contribution of British soldiers and the security forces in Northern Ireland.
Rev. Ian Paisley: I welcome the Secretary of State's proposal for an elected Assembly in Northern Ireland with the powers that were envisaged in the convention report, but does he not recognise that the different valuation that he proposed to put on the religious and political colour of votes in the Assembly is repugnant to democracy in Northern Ireland? Will the right hon. Gentleman explain why a 70 per cent. vote is demanded of the Unionist people who do not want power sharing of a united Ireland, but only 50 per cent. plus is demanded of those who will not even recognise the security forces
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that the right hon. Gentleman has praised but who want to destroy the position of Northern Ireland within the United Kingdom?
Will the right hon. Gentleman explain why the Assembly is not to be given its proper freedom to appoint or not to appoint people to the Council of Ireland? Surely the Assembly itself has a right to make a decision on such an important matter.
Mr. Prior: Paragraph 4 of the introduction to the White Paper states:
"The Government's proposals do not require any group in Northern Ireland to compromise its deeply held beliefs. They provide an opportunity for both sides to create a workable form of government in the interests of the common good and in the face of the urgency of the Province's problems. It will be for the people elected to a Northern Ireland Assembly to decide whether they are prepared to adopt this approach."
If it is the case, as the hon. Gentleman suggests, that the people are not prepared to move forward to a form of devolved government which involves both sides of the community, either through a 70 per cent. vote, or, as I have suggested, by something less which still has cross-community support, a devolved Government will not come into being. But there are other important matters that an Assembly in Northern Ireland could still undertake. It is in the spirit that there has to be some movement and compromise if Northern Ireland is to escape its problems that we are putting the proposals for an evolving form of devolution before the House.
Mr. J. Enoch Powell: At a time when the United Kingdom is on the brink of a conflict which may be both grave and long lasting, would it not be wise for the Government, having presented their White Paper, to allow mature time for it to be considered by the House and all those concerned in Northern Ireland before they committed themselves to the form of legislation or introduced a series of debates in the House and in Northern Ireland which might have the effect of creating division when unity is what is needed in the coming weeks?
Mr. Prior: No one will do more than Ito seek greater unity. I shall do all that I can to sustain and promote such unity. I believe that the unity of the United Kingdom is a great aim and goal to be protected and preserved at all costs.
On the question of debates, I recognise that this is an important matter for the House and the country. We should see how we get on. I do not think that we need to rush things unduly, but, at the same time, there are some who have suffered for many years. Are we to neglect their problems because of events in other parts of the world? We have a responsibility for the whole of the United Kingdom, and it is a responsibility which we shall discharge.
Mr. Julian Amery: Is my right hon. Friend aware that his proposals seem likely to be deeply divisive, not only in Northern Ireland but in the House and, I suspect, in the Conservative Party? Is he aware that they will be seen partly as implying Government support for the idea of a united Ireland and as leading inevitably to an encouragement of a revival of the devolutionist movement in Scotland and Wales?
May I join the right hon. Member for Down, South (Mr. Powell) in urging my right hon. Friend to let us debate the White Paper at leisure before there is any question of legislation being tabled so that he may take the feeling of the House before he finally commits himself?
Mr. Prior: I have already said that I believe that it would be right to have a separate debate on the White Paper. I do not believe that there is any connection between the problems of Scotland and Wales and those of Northern Ireland. Northern Ireland had a devolved Government for 50 years. Its political parties are not organised in the manner and on the basis of the political philosophies of the parties in other parts of the country. Of course, there is also the problem of the percentage of the minority who identify with a united Ireland. For all those reasons, I do not believe that there is a connection with the problems of Scotland and Wales and what we seek to do in the interests of the people of Northern Ireland is not connected with what we do for Scotland and Wales.
As for the issue being divisive, any proposal put forward in Northern Ireland is unlikely to be able to bridge the chasm between those who aspire to the nationalist cause and those who aspire to the Unionist cause and is, therefore, bound to create divisions. All that I can say to my right hon. Friend and to other right hon. and hon. Friends is that I seek no division within the Conservative Party. I will do all that I can to explain why I believe that our proposals are in the interests of all the people of Northern Ireland and in the interests of the United Kingdom as well.
Mr. Clive Soley: Will the right hon. Gentleman accept that many in the United Kingdom will expect the political parties in Northern Ireland to give his proposals careful and constructive consideration? Can he tell us whether the Assembly will be able, if it wishes, to consider the economic links between the North and the South and report on them, bearing in mind that that could be of considerable assistance to the people of Northern Ireland?
Mr. Prior: That will be a matter for the Assembly to decide. In days gone by, there were far closer economic links and discussions between Stormont and the Government of the Republic than there have been in the past 10 years. I do not wish to say anything that might make the re-creation of those links more difficult. It is best to leave the Assembly and the Government of the republic to sort out those matters themselves, but there are a number of matters on the economic side that would be helped by closer co-operation. I am certain that that is one of the points to which the Assembly will wish to turn its hand.
Several Hon. Members rose——
Mr. Speaker: Order. There is another statement to follow. I will allow questions on this subject until 4.20 pm. I hope that we shall have quick questions and answers.
Mr. James Kilfedder: I do not doubt the Secretary of State's sincerity, but does he realise that regret will be felt in Northern Ireland that he has made no promise about introducing a Bill of Rights before the establishment of an Assembly and no reference to the ending of religious apartheid, at the taxpayers' expense, in education?
Does the right hon. Gentleman understand that the Anglo-Irish Intergovernmental Council and parliamentary tier are detrimental to the interests of the people of Ulster, because we believe that the Foreign Office is involved in selling out the people of Northern Ireland?
Mr. Prior: I am sorry that we have not so far found time to include provisions on human rights in legislation. It is a complicated issue. We have done a great deal already, but more remains to be done. I take seriously what the hon. Gentleman said about education, because that is of very great importance.
I hope that the hon. Gentleman will not pursue his comments about the Foreign Office. Northern Ireland is a part of the United Kingdom and remains a part of the United Kingdom. The consent of the people would be required for any change in that arrangement, and that consent is not forthcoming. I hope that over a period of years the Government and I will be able to show to all the people of Northern Ireland the great benefits of remaining part of the United Kingdom.
Mr. Gerard Fitt: I accept the Secretary of State's dedication, but is it not a fact that three important elements on the island of Ireland—the Official Unionist Party, the SDLP, which is the party of the minority, and the Taoiseach and Government of the Republic—have expressed not only reservations, but total opposition to the proposals in the White Paper? If they maintain that attitude and the parties seek a mandate from their electors on their opposing ideologies, will not tha mean that the executive will have no hope?
Everyone of good will wishes the Secretary of State well in his endeavours to re-create parliamentary structures in Northern Ireland, but does he agree that if the ground is not well planned in advance and there is another failure it will be a total disaster for Northern Ireland into the foreseeable future?
Mr. Prior: Carrying on as we are is not a policy which carries no risks. That is one of the factors which I had to weigh up. I have also had to bear in mind that there is considerable resistance to the proposals that I am putting forward, but in Northern Ireland—as in some other parts of the world—it is easier to be against something, because that means that people do not have to go further in explaining their point of view.
I hope that the hon. Gentleman will use his considerable influence—it is a considerable influence and one which is greatly admired in the House—to do what he can to help the House bridge the gap that is so detrimental to all the people of Northern Ireland, but, perhaps above all, 10 those who have suffered most—the ordinary, decent, working class people.
Mr. Russell Johnston: Is the Secretary of State aware that Liberals welcome his initiative and congratulate him on the patience, determination and speed with which he has produced the proposals? Few politicians are less divisive than the Secretary of State. Is he aware that we greatly welcome the fact that he recognises that the Assembly must be representative and that, if it is to be representative and, therefore, effective, it must be elected by proportional representation?
Mr. Prior: The Assembly would be elected by proportional representation, on the same basis as the previous Assembly was elected. I point out again that we will leave it to the Assembly to put forward proposals about devolved government. I think that it will take some time to get to that stage, but unless we have a political forum where the cut and thrust of debate and the influence

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of one person's views on another person are able to operate there is no way that the problem that has dogged Northern Ireland for so long can be solved.
Sir John Biggs-Davison: Will my right hon. Friend try to understand the strong feelings of those who want Northern Ireland to be bound closer to Britain and not put into quarantine with fancy remedies that would perpetuate the sectarian differences of which he has spoken and would tend to undermine the Union? Has my right hon. Friend studied the latest poll, which shows that 88 per cent. of Protestants and 45 per cent. of Roman Catholics would find integration acceptable?
Mr. Prior: I have studied public opinion polls as closely as every other politician studies them, for one reason or another. I am not arguing with the figures that my hon. Friend has produced. However, in the same poll there are other figures which show that 60 per cent. of Catholics said that full integration with the Republic was acceptable to them and that 60 per cent. of Catholics wished to remain within the United Kingdom with a power-sharing Assembly. I do not think that we should place too much emphasis on the results of that public opinion poll.
I recognise the strong feelings that exist. I am doing nothing which puts the future of Northern Ireland into quarantine. I believe that our proposals are the most likely way to tie Northern Ireland into the United Kingdom. It is the duty of the House to seek to do that.
Mr. Harold McCusker: In the opening sentences of the White Paper, and in his statement this afternoon, the Secretary of State has emphasised the importance of defeating terrorism. In view of the slaughter which has been perpetrated by the IRA over the past eight days, and the likelihood that it will be able to repeat that performance in the autumn, is not the Secretary of State aware that it is the terrorists rather than the political parties in Northern Ireland who are likely to render his efforts meaningless? Whether they like it or not, the Members of the new Assembly will be held responsible by their electorate for security in the Province. What plans, if any, does the Secretary of State have for giving them some say in the overall security policy?
Mr. Prior: I believe strongly that there will be no total isolation of terrorism until all the parties and all the people of Northern Ireland can strongly and openly support the forces of law and order. That situation is still some way off, but it would be my wish that from the early days of the Assembly it might be possible for closer liaison on security to be developed between the Assembly and the Secretary of State. Although for the time being security and matters of law and order will remain with the House and with the Secretary of State, those are matters which could be transferred when it was thought that the moment was right to do so.
As for security generally, undoubtedly any move towards a devolved Assembly is perhaps too great an opportunity for the IRA to miss, because, if we are successful, that is the way that terrorism will be defeated. We should all remember that in what may be some difficult months ahead.
Mr. Peter Robinson: Does the Secretary of State recall that in a previous White Paper the
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Government stated plainly that they recognised that there were equally acceptable and satisfactory alternatives to power sharing? Does the Secretary of State still stand by that view, or is he saying, through these weighted majorities, that the views of the people of Northern Ireland are of little account and that whatever kind of devolution they may have it will be power-sharing devolution?
Mr. Prior: No. As far as possible, I am leaving it to the members of the Assembly to put forward their own views on how a transfer of power should take place. I must make it abundantly clear, since the aim is to create political stability, that political stability will not come unless there is a wide measure of cross-community support. That does not have to be achieved by a power-sharing executive. There are other means by which it can be achieved. It does not alter the fact that unless it has that cross-community support it cannot be stable and cannot work.
Mr. Neville Sandelson: Is the Secretary of State aware that my right hon. and hon. Friends give a broad welcome to the White Paper, albeit with guarded optimism? We shall look forward to a full debate on these matters after Easter. Questions arise concerning the mechanics of the way in which the Assembly will operate in practice. We shall seek to deal with some of them in the debate.
Does the Secretary of State agree that, whatever the reluctance of some political leaders and their parties in Northern Ireland to support these proposals, the majority of people there support moves towards filling the vacuum in an evolving devolution, and, indeed, would accept actual power sharing? The proposed Assembly——
Mr. Speaker: Order. I said that questions on this statement would end at 4.20 pm. The hon. Gentleman has asked enough.
Mr. Prior: I am grateful for the support of the hon. Gentleman and his colleagues. There is some momentum now which could enable the parties in Northern Ireland to come together in an Assembly. I think that, it will require a great deal of patience and understanding to get further than that, but the economic pressures alone now demand that we at least try to get some political stability.
Sir Philip Goodhart: When will the Secretary of State hold a referendum in Northern Ireland on his devolution plans? Does he recall that he voted in favour of the key referendum amendment on the Scottish devolution Bill? If it was right to consult the voters of Scotland and Wales directly on devolution schemes, why is it wrong to give the voters of Northern Ireland the same opportunity?
Mr. Prior: I know my hon. Friend's strongly held views on this subject; I have discussed them with him. I believe that the Northern Ireland situation is unique, as I think most hon. Members recognise. It would be easy for the parties to evade the issues, and I think that the result of any referendum could be negatived. If it was to have any impact at all, it would have to have an 83 per cent. majority before it could be seen to have a majority of both parts of the community. That would make matters very difficult.
Mr. Kevin McNamara: Is the Secretary of State aware that he should be congratulated on his proposals this afternoon, particularly

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in view of what has been happening behind him and is happening behind the Chair at the present time? The Government have kept their promise by bringing the White Paper before us in these difficult times, for which they should be commended. Is the right hon. Gentleman also aware that a power-sharing executive was last brought down by para-militaries on both sides—those who supported the Ulster Workers Council and those who supported the Provisional IRA? There is a lesson there for the democratic parties to ensure that their voices are heard.
Finally, can the right hon. Gentleman say to what extent there will be a degree of economic initiative lying within the power of the new Assembly?
Mr. Prior: On the last point, I have nothing to add to what I have already said. However, I would certainly wish to explain to the country, and perhaps to other countries, particularly America, the initiative that the Government are taking, and therefore the need for inward investment in Northern Ireland from America. I emphasise that I wish to see inward investment coming to Northern Ireland.
I believe that we are right, in the interests of Northern Ireland, to bring forward these proposals at the earliest possible moment. I do not think that anything that we say which would be helpful to get American investment in Northern Ireland should be interpreted in the way that the hon. Gentleman sometimes seeks to do.
Mr. Tom Arnold: Will my right hon. Friend re-emphasise that devolved institutions, supported by a majority of the people of Northern Ireland, can serve to strengthen and not weaken the Union?
Mr. Prior: I am grateful to my hon. Friend for that question, and I believe passionately that that is the case.
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Otherwise, there will be continual erosion in Northern Ireland of Northern Ireland's position within the United Kingdom. With a little wisdom, we could put that behind us for ever.
Mr. A. E. P. Duffy: Why is the Secretary of State so nervous of the parliamentary tier? Was it not agreed at the Heads of State meeting? Who has warned him off?
Mr. Prior: It is a question not of being nervous but of being frank with those who place a great deal of emphasis on the parliamentary tier. My experience of the House suggests that right hon. and hon. Members would be reluctant to give any of their sovereignty to that tier I have had to tell members of the SDLP and the minority community of the difficulties involved in that suggestion. That should be a matter for the House and the Dail to decide.
Dr. Brian Mawhinney: Does my hon. Friend accept that many of us—and I speak as a colleague and an Ulsterman—will welcome the proposals? Is lie not surprised at the unhappiness expressed when devolution is simply on offer and not imposed on the people of Northern Ireland? Does he agree that the divisions in the Province are likely to be made worse unless a move is made to bring the two communities together?
Mr. Prior: I am grateful to my hon. Friend for the help and advice that he has given over many months in trying to move forward a step at a time. I hope that some of the resistance from my our own side of the House will be mitigated by the fact that we are moving forward only as and when the people of Northern Ireland are prepared and willing to do so.

Council of Agriculture Ministers. (Meeting)
4.21 pm
The Minister of Agriculture, Fisheries and Food (Mr. Peter Walker): With permission, Mr. Speaker, I should like to make a statement on the Council of Agriculture Ministers' meeting in Brussels on 31 March and 1 and 2 April.
The Commission made a compromise proposal on the 1982 price package. After a long and detailed discussion, no agreement was reached. Following pressure from the United Kingdom, I was glad to see included in the package the virtual restoration of the butter subsidy and an improved provision for school milk. There were demands by many member States for higher price increases than those proposed. The United Kingdom opposed further price increases, though Germany and the Netherlands supported us on a number of commodities. We gathered good support for our fierce opposition to the co-responsibility levy on milk with lower rates for small producers, and for our view that we should have freedom as to whether and when there should be any revaluation of the green pound. It was recognised that further consideration was required, and the Council will resume its deliberations in Luxembourg on 20 to 22 April.
In order to allow the Danish Government to continue its policy of having no MCAs, a devaluation of the Danish green krone of 1·8 percentage points was agreed, subject in some cases to reference to capitals.
The current marketing years for milk, beef, sheepmeat and dried fodder were extended until 26 April.
Mr. Norman Buchan: I am grateful to the Minister for the statement, which is less precise than that which we read on page 3 of The Observer yesterday. We have heard the Minister and we regret his failure to come to grips with the need to press for a fundamental reform of the CAP.
In view of the business of the House and, above all, the gravity of the international situation, I shall not press further questions on the Government, so long as we have an undertaking that no final decisions will be agreed before the House has had an opportunity to debate the details. I have given the Minister short warning of my attitude, but we would welcome a rethink. If the Minister gives us an assurance close to that which we require, that would be the best way to deal with the matter.
Mr. Walker: I am grateful to the hon. Gentleman for his observations. I understand the spirit behind his suggestion. The debate on the price fixing took place only a week ago. I shall continue negotiations on 21 April, so I cannot guarantee that there will be further debate or that there will not be a conclusion on 20 to 22 April. The hon. Gentleman will understand that. He will also understand that nobody has been more forthcoming than I in coming to the House after a meeting in Brussels. I have never missed coming to the House and whenever the Opposition have required a statement, I have made one. I do not know whether there will be agreement on 20 to 22 April. That depends upon agreement on the budget, which depends upon a meeting of Foreign Ministers to agree the budget. If we cannot reach agreement on the CAP, I shall make
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a statement in the usual way. Alas, I cannot for obvious reasons, give the assurance for which the hon. Gentleman asks.
Mr. Buchan: Does the right hon. Gentleman accept that the timetable of the House has fluctuated—Saturday, for example—that it will fluctuate again and that, therefore we might have the opportunity for discussion earlier than has been envisaged? I must press one or two questions. Has the right hon. Gentleman been pushing the mandate on the principle of closing the gap between the EEC and world grain prices? Has that been abandoned? Is the right hon. Gentleman aware of the leaks that suggest that that gap is at a level of between 10 per cent. and 11 per cent.? What will that mean in terms of the support budget? The suggested figure is 16 per cent. but perhaps a more realistic level is 20 per cent. What will the new proposal of between 10 per cent and 11 per cent. mean?
How do the proposals square with proposals in the Tory manifesto that radical changes are necessary in the CAP and that we—and that means them—should insist on a freeze on products in structural surplus? How does that square with the statement in the middle of February that the United Kingdom urgently needed prudent price increases for products in surplus? Since then prices have been increasing.
Does the Minister agree with the House of Lords Select Committee that the proposals would add £70 million to the United Kingdom budget contribution? How much more will the increase leaked this weekend add to that £70 million? Does the right hon. Gentleman agree that the CAP is incapable of being reformed, that it has failed both the farmer and the consumer and that the best solution is for us to withdraw from the CAP and to develop a policy that will fulfil the needs of the producer and the consumer in this country?
Mr. Walker: The hon. Gentleman was a Minister in a Government under which the cost of CAP went up by 350 per cent., whereas under this Government it has gone up by only 30 per cent. In those circumstances, I do not accept the hon. Gentleman's criticism. The proportion of the European budget taken up by CAP has substantially reduced, whereas the proportion of CAP expenditure applied to British benefit doubled during this Government's lifetime. Therefore considerable progress has been made.
the detail of the compromise suggestion by the Commission on the price proposals was accompanied not by detailed costing but by the detailed assurance that it would still be within the budgetary limits and below the increase in own resources. We are seeking from the Commission detailed estimates of its proposals.
The hon. Gentleman raised the question of prices and their effect on consumers and statements on page 3 of The Observer and elsewhere. The Commission has moved to a proposal which averages 10·3 per cent. The effect on prices in the United Kingdom will be an increase—if all the price increases take place—of 1·2 per cent. in a full year. When one considers that in the lifetime of the last Labour Government food prices went up by 16·4 per cent. in a year, on average, that is not excessive.
We are interested to assess the cost of the proposals made by the Opposition last week. The hon. Gentleman suggested that there should be deficiency payments fixed between the current European price and the world price.

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That would cost £1,000 million a year to the Exchequer and reduce farm incomes by 80 per cent. It would be catastrophic for employment and would cause unemployment in agricultural machinery, the tractor industry and farming, to the detriment of the nation.
Mr. John Carlisle: I appreciate the Herculean efforts of my right hon. Friend and his colleagues in Brussels to keep these prices as low as possible, but how optimistic is he that a settlement will be reached between 20 and 22 April? Does he realise that the longer this goes on, the greater the detriment it will have on trade and those trying to trade commodities? If, at the end of the day, he must agree to a higher price increase than he would wish, what would his thoughts be on a revaluation?
Mr. Walker: Obviously to settle a price fixing as near the marketing year date as possible, is an advantage for all the farming community. However, before we make any settlement, it is vital that we recognise the nature of Britain's budgetary contribution. That is why we have always made it clear that the agreement for Britain's future budgetary payments should be connected with and parallel to the price fixing.
Mr. Robert Maclellan:: Why is the Minister so opaque about the Government's intentions on the revaluation of the green pound? He must be aware of the farmers' concern about this matter. His statement merely outlined the Government's procedural opposition to that matter being considered by the Council. As a matter of law—not of the Minister's opinion—is this not a matter for the British Government to decide?
Mr. Walker: Yes, Sir. Our view has always been that any member country must be free to move its green pound whenever it wishes and at its own instigation. That has always been our view and that is why I repeated it in the statement. During the debate a week ago, I made it clear that, as far as I was concerned, there would be no revaluation of the green pound.
Mr. Richard Body: Is my right hon. Friend aware that most, if not all, hon. Members are grateful to him for continuing his practice of reporting back to the House, even when he sometimes comes empty-handed from Brussels? Does he agree that we now have a wonderful opportunity, which may never be repeated, to effect curbs on the way that the EEC dumps surplus grain, dairy products and sugar on the world market in a way that causes great hardship? Will he assure us that he will make the utmost use of that opportunity, which may not be repeated at this time next year?
Mr. Walker: Yes, Sir. The United Kingdom Government have always reported the facts on European trading policy, and we shall continue to do so. The present situation and uncertainty of world conditions on grain, for example, show how much better it is for Western Europe to have a surplus than a deficit.
Mr. Nigel Spearing: The Minister mentioned that there had been some support for the United Kingdom stand on the so-called "co-responsibility levy". Does he agree that trying to have a common market in milk over the whole of the EEC is not in accordance with the marketing facts? As he had some encouragement in this
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matter, would it not be more sensible to make separate arrangements where surpluses arise? Is that what the Council of Ministers is going towards?
Mr. Walker: No, Sir. The Commission's proposal to have a super levy, based on the real production of individual countries, is fully supported by the United Kingdom. That is a sane and sensible way of trying to curtail milk production.
Several Hon. Members rose——
Mr. Speaker: Order. I propose to call those hon. Members who have been rising. I hope that they will cooperate.
Mrs. Elaine Kellett-Bowman: I welcome my right hon. Friend's assurance that there will be no lower co-responsibility levy for small farmers, but will he assure us that large farmers, producing more than a certain gallonage or hectarage, will not be penalised?
Mr. Walker: Yes, I give that assurance. In no way would I accept such a proposal.
Mr. Teddy Taylor: First, if the Commission's proposals are accepted, will surpluses next year be larger or smaller? Secondly, was any move taken to curb the record exports of subsidised food to Russia? Thirdly, what is the point of having a price rise for sugar, for example, when the Common Market already produces about 70 per cent. more than it needs?
Mr. Walker: When one talks of price rises, one must consider their impact in real terms as opposed to purely money terms. There are many jobs in the United Kingdom sugar-producing industry. That industry is of considerable importance to Britain. It would be absurd to cause damage to it by not being realistic about the increase in input costs.
Whether surpluses will be greater or smaller obviously depends on many factors. Overall, even at present price levels—many of which we oppose on particular commodities—farm incomes in Europe will have dropped substantially over the past three years. That does not mean that a high price was the reason for surplus production. For example, on dairy production, I assure my hon. Friend that the curtailing of price over a long period has resulted in many small producers of milk endeavouring to improve their yields by having extra cows and thereby increasing production. Therefore, there is not a straight price production ratio.
Mr. Tony Marlow: I congratulate my right hon. Friend on fighting a magnificent battle for the British and European consumer when confronted by the whole of the European farming industry. Bearing in mind that my hon. Friend the Member for Devon, West (Mr. Mills) considered that a 9 per cent. increase was about right, that nurses were offered 6·4 per cent. and that some people in work have had no increases this year, does my right hon. Friend agree that if certain European countries believe that they need a higher price increase to suit their farmers because of their domestic circumstances, there should be an increasing divergence between our agricultural policies and those of other countries and that our increase should be restricted to a maximum of 9 per cent.?
Mr. Walker: First, one cannot start referring to 9 per cent. as if it applied to all commodities and that the proposal was for each to go up by 9 per cent. There is a

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great divergency of price increases. Secondly, it is wrong for anyone to equate farm price increases with wage increases for any sector. The two are totally disconnected. One is an increase, the largest part of which goes to meet increased wages and costs. It is not an increase in farmers' incomes of 10 per cent. It is absurd to say that the nurses or the civil servants have been offered this or that and that farmers should get the same. Farmers must meet a whole range of additional costs out of that increase. The two are not connected. If farm incomes over the past three years had been connected with wages or salaries, including those of the nurses, farm prices would be much higher than they are today.
Mr. David Myles: If there cannot be agreement before the beginning of the livestock year—one has heard that it will be postponed until 26 April—will my right hon. Friend ensure that producers who must market this livestock within that period will not suffer a disadvantage?
Mr. Walker: No, Sir. I cannot give that assurance. The normal custom in the Community has been not to back-date marketing years when agreement has been reached late. Therefore, I cannot give that assurance.
Mr. John MacKay: Remembering the years when, under the Labour Government the MCAs were greatly to the disadvantage of the British farmer, will my right hon. Friend resist any pressure to devalue the green pound? Does he realise that the British agriculture industry is 100 per cent. behind him in that determination for consumers?
Mr. Walker: Yes. That applies not only to the British agriculture industry. I have no doubt that the detriment to British agriculture and, therefore, to all the industries connected with it from having a negative MCA policy was disastrous in those years. Since we have had positive MCAs, we have massively increased the proportion of the United Kingdom market supplied by British farmers. That is an indication that the reverse policy is proving to be correct.
Mr. Buchan: I would not have intervened again, but comments have been made that make it necessary for me to do so. The nonsensical costing of a deficiency payment, on the estimates that I put before the House 10 days ago, in the first half, tallied closely with the figures that I gave. I said £900 million, and it came to £1,000 million. To accompany that with a reduction of 80 per cent. in farm income is a spurious and totally irrelevant figure plucked out of the air.
Is it not also the case that to attach that to a comment on the consequential forward investment in
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machinery—when this is precisely what has happened in British farming over the past few years as a result of Common Market policy—is almost like trying to rebuke Satan in defence of the CAP sin? That position certainly increased under our old structures. Does the Minister agree that if it was possible for us to operate a deficiency payments structure when we operated our own agricultural policy before we entered the Common Market, it is equally possible for us to operate it after we leave the Community? That seems to be manifest. Does the Minister agree?
The right hon. Gentleman blames me for the price increase under the Labour Government. I remind him, first, that that price increase took place during a transitional period when prices had been considerably jacked up year by year. Secondly, I remind him that I resigned from that Government because their policy was too close to his policy for my liking.
Mr. Walker: I do not blame the hon. Gentleman for resigning from that Government. I commend him for doing so. With regard to the costing, I repeat that when one looks carefully at the wording of the hon. Gentleman's statement in Hansard, it seems that, if he was implying that he would fix the prices for British farming at the average between the current world price and the current Community price——
Mr. Buchan: I did not day that.
Mr. Walker: I was saying that that was implied. Therefore, I look forward to hearing the hon. Gentleman say at what level the price would be fixed. If he fixed it at the present price in order to maintain present farm price levels—therefore, not to reduce farm incomes—the cost would be much more that £1 billion. It would be a tremendous amount more than that. Therefore, the hon. Gentleman's figures would be wrong.
Another factor that the hon. Gentleman will remember is that food prices more than doubled under the previous Labour Government. At the end of the Labour Government's period of office, the Minister responsible for agriculture announced that only a small proportion of that was due to CAP farm prices increases.

BILL PRESENTED
  MERCHANT SHIPPING (LINER CONFERENCE)
  Mr. Secretary Biffen, supported by Mr. Humphrey Atkins, Mr. Secretary Howell, Mr. Secretary Tebbit and Mr. lain Sproat presented a Bill to provide for the implementation in the United Kingdom of the Convention on a Code of Conduct for Liner Conferences signed at Geneva on 6 April 1974; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 102.]
Orders of the Day
  Local Government Finance (No. 2) Bill
  As amended (in the Standing Committee), considered.
  Local Government Finance (No. 2) Bill
    New Clause 1

      WATER AUTHORITIES AND NATIONAL WATER COUNCIL
      'Schedule 3 to the Water Act 1973 shall have effect with the substitution for paragraphs 38 and 39 of that Schedule (accounts and audit of water authorities and National Water Council) of the paragraphs set out in Schedule (New paragraphs for Schedule 3 to the Water Act 1973) to this Act. '.—[Mr. Giles Shaw.]
      Brought up, and read the First time
      4.44 pm
      The Under-Secretary of State for the Environment (Mr. Giles Shaw): I beg to move, That the new clause be read a Second time.
      Mr. Speaker: With this it will be convenient to take amendments Nos. 19, 20, 21, amendment (a), to amendment 21, and amendments Nos. 23, 24 and 25.
      Mr. Shaw: The Bill has been fully considered in Committee. Hon. Members who served on that Committee will recognise that one of the matters that caused substantial concern was the position of water authorities under the Bill, particularly public rights of access to water authorities' accounts. During the Committee stage I tried to place an amendment before the Committee for discussion, but I was unable to do that. However, we have now tabled an amendment in the shape of new clause 1, which seeks to meet the points that were brought to the attention of the Committee.
      We received numerous representations about the auditing of water authorities, but nearly all made one point—that it is wrong to deny the public access to the books of water authorities when they already have those rights. That is largely because of the system under which water authorities have been audited to date. That system is similar—and identical in most respects—to that applied to local authorities. Under the Bill the audit commission will be the vehicle by which local authorities will be audited, whereas the Secretary of State will appoint auditors, thus bringing them closer to the position of nationalised undertakings.
      It was apparent from that move that the traditional rights enjoyed by ratepayers and electors in being able to make representations to auditors would be lost during the passage of the Bill unless it was amended. Therefore, right hon. and hon. Members may be surprised that such a short and comparatively simple new clause, which refers to new paragraphs for schedule 3 to the Water Act 1973 should have taken four pages to achieve. I hasten to assure the House that there is nothing sinister about that. There is no surreptitious attempt to smuggle in new provisions. Tinkering with schedule 2 in order to introduce our amendments on public rights would have led to an unwieldy set of provisions and would have involved extra cross-referencing. Therefore, we considered it better to replace schedule 2 with a new schedule to include the full set of accounting and auditing arrangements for water authorities. That is the purpose of the new schedule.
      Most of what the new schedule contains is already in existing legislation or in schedule 2 to the Bill. The only
      710
      changes of substance relate to the public inspection of accounts and rights to make representations, which are found in paragraph 39C. Paragraph 39A refers to the provisions about general duties of auditors.
      In Committee I endeavoured to meet hon. Members by committing the Government to bring forward these amendments. By the amendments, a local government elector is given rights to inspect and copy the accounts, books and deeds relating to the accounts of a water authority, which are the rights that he presently enjoys under section 159 of the Local Government Act 1972. Under 39C(2) he is given the right to question the auditor. The right to challenge an item in the accounts is modelled on the existing provision, although it differs from it in one or two respects. The existing right to make objections is closely tied to the possibility that there has been illegality or wilful misconduct in the incurring of expenditure. There are provisions for the district auditor to follow up any such cases. That is an essential part of his duties under local government legislation.
      Therefore, in future the water authority auditor will have two general duties, which are spelt out in paragraph 39A. The first is to ensure that there are proper accounting practices and that any ministerial requirements have been observed in the compilation of the accounts. The second general duty is for the auditor to consider whether he should make a report in the public interest on anything coming to his notice in carrying out the audit. Those duties are connected with existing duties under local government legislation. A useful means of conferring a right of challenge upon the public is also provided. Under paragraph 39C(2) the public will be given the right to draw the auditor's attention to any matter on which he might make a report in the public interest.
      That is a full and adequate set of rights that preserves the public's present position in relation to the audit of water authorities. It extends those rights somewhat in that it extends them to the full range of water authorities, not just those which, historically, have been audited by the district auditor process. However, the public rights will not extend to the accounts of the National Water Council. They are inappropriate for such a national body. There has never been any objection to the accounts of the National Water Council.
      The remaining amendments in the group—amendments Nos. 19, 20, 21(a), 23, 24 and 25—are consequential. They do not call for comment from me. I commend new clause 1 and those amendments to the House.
      Mr. Ted Graham: We shall be pleased to support the new clause because it is in accordance with an undertaking that the Minister gave after a long debate in Committee—one of the longest debates on one issue. The Minister said that it might appear that a short amendment would be required, but as there are many dovetailing procedures amendment No. 21 has had to be long. It is right that the House should be reminded that the Government substantially changed their attitude to this matter during a four or five hour debate. That was due largely to pressure from both sides of the Committee. That needs to be put on the record.
      The House should be aware that the Government's original view was set out during the debate in Committee on 2 March, when the Minister said:
      "It is our view, which is why the Bill is so drafted, that there is a sufficiently strong case for saying that, in the vital services with which the water authorities provide the consumer; in their

      711
      structure and regional organisation; in the way in which Government have used the mechanisms of MMC and other ministerial intervention and the way in which Ministers are perhaps more directly responsible in Parliament to what water authorities do than is the case with individual local authorities, it seemed sensible to us that the regional water authority, in auditing terms, should be treated more as a nationalised undertaking than as a local authority."
      That was the point at which the Government, quite fairly, defended the existing provisions in Committee. However, the Minister said:
      "I take the point absolutely that in the Bill as drafted, and without amendment No. 143"—
      that amendment added water authorities to the other list and was tabled by my hon. Friend the Member for Blaydon (Mr. McWilliam)—
      "individual ratepayers would lose their right of access to water authorities' accounts."
      I want the Minister to make it absolutely clear that exactly the same rights as now exist will be preserved in the changes. The Minister also said:
      "We shall introduce an amendment to the Bill at the appropriate stage which, subject to consultation, we foresee as providing for existing rights to continue so that consumers will have access to water authority accounts and will be able to question the auditor in the manner sought by the hon. Member for Edmonton and my hon. Friend the Member for Reading, North."—[Official Report, Standing Committee D, 2 March 1982; c. 515–519.]
      I have received reports from The National Farmers Union, as no doubt, have other members of the Committee. It is not cavilling at the intention of the new clause but draws attention to one or two points. In a letter to me the NTU states:
      "At present under the Water Act 1973 water authority audits are regulated by Part VIII of the Local Government Act 1972. By virtue of section 159 of that Act, where the audit is conducted by a district auditor a local government elector may attend before the auditor and make objections"
      That is the first point. It must be made clear that the right to make objections to the accounts is preserved. The letter continues:
      "an elector may also question the auditor about the accounts, and where the audit is conducted by an approved auditor may request the Secretary of State to direct a district auditor to hold an extraordinary audit"
      I want the Minister to confirm that all those existing rights are preserved. The letter adds:
      "The elector seems to be losing a right of objection, and a right to request the direction of an extraordinary audit."
      The Opposition will raise no objection to the new clause if the Minister can assure us that the provisions of the Water Act 1973, and in particular section 159 of the Local Government Act 1972, are contained and preserved in their entirety. In fact, we shall congratulate the Government on their change in attitude.
      Mr. Tony Durant: I welcome the new clause. I strongly pushed for this change to be made in Committee. I place on record my appreciation of the Reading ratepayers who initiated this move, involving myself as the local Member of Parliament. They ran a successful campaign, contacting about 60 Members of Parliament who had an interest in the subject. They deserve credit for their efforts. I know that they are pleased with the new clause.
      The Government are right to leave out the National Water Council. I take a jaundiced view of the water council. I hope that it will be included in the consideration of water authorities now in hand following the recent
      712
      Green Paper on the future of the water authorities. I am not convinced that the water council does as good a job as it should. In anticipation of the possibility of the water council being abolished, I am not worried about its exclusion from the new clause. It is right that the powers should be extended beyond two water authorities and that the new powers will now cover all water authorities. That is to be widely welcomed.
      A promise was given in Committee to table an amendment dealing with the powers and duties of rating authorities to reduce a rate, make refunds to ratepayers, recover sums paid to precepting authorities and to deal with the resultant costs to rating authorities. An amendment has not been tabled. I hope the Government have not changed their mind. My own county council is in some difficulty because no one is in charge at the moment. It would help the county council if such an amendment became law. Some London boroughs would welcome the opportunity to reduce their rate during the year. The Minister will remember that I withdrew an amendment on the understanding that the Government would table an amendment to deal with this matter of a rate reduction or rate refund during a year. I realise that there are legal problems but I urge my hon. Friend to tell us that the matter has not been forgotten.
      Mr. David Madel: I believe that my hon. Friend is referring to the cause celebre in Bedfordshire. We had the problem of a supplementary precept before the beginning of the financial year. I agree with my hon. Friend and I hope the Government will make it clear, absolutely clear that a supplementary rate precept, although started in the previous financial year, is void for the financial year beginning 1 April 1982.
      Mr. Durant: My hon. Friend is right. We debated Bedfordshire at great length in Committee. I was avoiding the use of the word "Bedfordshire" for fear of starting an exchange. I am grateful that my hon. Friend has reminded me of the case although it was in my mind. However, I consciously decided not to mention Bedfordshire on this occasion.
      I urge the Minister to tell the House that this matter is not forgotten and that in the other place an amendment will be tabled that will give relief to those authorities that are in difficulty.
      I welcome the new clause and pay tribute to the Reading ratepayers for their initiative. It meets the points raised and I am delighted that it goes further than existing legislation. I support the new clause and schedule.
      Mr. Robin Squire: I refer to amendment (a) to Government amendment No. 21. This concerns a small but important aspect of the amendments tabled by the Government—the nature of those who are enabled to audit the water authorities. I speak on behalf of the Chartered Institute of Public Finance and Accountancy, which feels strongly on this point. Its members audit water authorities as employees of the district audit service. They are also employees of private firms, which also audit water authorities. Under the Bill none of these members would be allowed to act as auditors in their own right. CIPFA is concerned with public sector accounting and audit and its members have considerable expertise. The exclusion of these members from the list of auditors would, therefore,

      713
      exclude as principals people with specialist public sector expertise. That exclusion is wrong. The amendment is designed to remedy that.
      In the past there has been some opposition from the Institute of Chartered Accountants in England and Wales to the inclusion of CIPFA names in this context. However, negotiations have taken place and agreement has been reached. I shall quote from two letters.
      5.0 pm.
      The first letter is from the secretary of the Institute of Chartered Accountants to the secretary of CIPFA. It states:
      "As you know the Local Government Finance (No. 2) Bill provides, at Schedule 2, Paragraph 2, that a person shall not be qualified for appointment as auditor of a water authority unless he is a member of a body of accountants established in the United Kingdom and recognised for the purpose of section 161(1)(a) of the Companies Act 1948.
      We understand that CIPFA intends to suggest to the Department of the Environment that, in addition to members of those bodies recognised by the Department of Trade in accordance with section 161(1)(a) of the Companies Act 1948, members of CIPFA should be qualified to audit water authorities…The object of this letter is to advise you that the Institute of Chartered Accountants in England and Wales will not oppose such an amendment as long as it is understood to be subject to the following qualification … it is agreed by this exchange of correspondence that a member of CIPFA will not, in practice, be eligible to undertake the audit of a water authority unless either:
      in the case of a member admitted before 1 January 1974, he has completed three years' experience engaged principally on auditing work in a practising office; or in the case of a member admitted after 31 December 1973, he has completed five years' experience engaged principally on auditing work in a practising office."
      CIPFA replied:
      "We accept the conditions set out in your letter and this exchange of letters will constitute an agreement between us as to the practical effect of the addition of the name of this Institute."
      The two bodies most affected by this small but important aspect are in agreement. It would be in their interest and in the interests of the auditing of water authorities generally if the small amendment were accepted.
      Mr. Harry Cowans: I, too, welcome new clause 1. The Bill as published would have taken away the right of ratepayers to examine water authority accounts.
      The hon. Member for Reading, North (Mr. Durant) is right to praise the Reading ratepayers, but it was a little churlish of him not to acknowledge the support of right hon. and hon. Members on the Opposition Benches in the debate which brought about the new clause. I do not make a party political point, but together we forced common sense on the Government. Right hon. and hon. Members on the Government Benches repeatedly asked for greater speed, but had we proceeded faster such points would have been missed, to the detriment of ratepayers.
      I hope that the Minister will acknowledge the part that we played. Had we gone faster we may not have had the new clause.
      Mr. Durant: I do not wish to be churlish, but the main thrust of the Opposition's argument was that the water authorities were being shifted to a different audit status. The question of the involvement of ratepayers came later.
      Mr. Cowans: The hon. Gentleman is partly right. That was part of our argument, but, equally forcefully, we
      714
      argued that ratepayers would lose their right to review water authority accounts. I could quote from our Committee debates to prove that I am correct, but I am sure that, being an honourable man, the hon. Gentleman will accept my word. I believe that it is vitally important to place that fact on the record.
      Dr. Brian Mawhinney: In Committee, I joined my hon. Friend the Member for Reading, North (Mr. Durant) in tabling the amendment to encourage the Government to rectify this mistake. I join him this afternoon in welcoming the new clause and thanking the Government. I thank my hon. Friend the Minister For fulfilling, in the spirit and tha letter, the assurance that the new clause would be drafted in time for it to be examined, so that, if it was not acceptable other amendments could be tabled.
      There is no intention to be churlish. The Opposition made a contribution. The hon. Member for Newcastle upon Tyne, Central (Mr. Cowans) and his right hon. and hon. Friends argued this and many other cases in Committee. They argued them well but not always with conspicuous results. Had it not been for the interest of my hon. Friend and myself they might have argued another case well but with no conspicuous result. We should all thank the Government for responding to cross-party pressures in Committee.
      Mr. David Alton: I, too, participated in the Committee debate on 26 March, but I shall not take part in the self-congratulation. I am grateful to the Minister for fulfilling the obligation that he gave, but I agree with the hon. Member for Newcastle upon Tyne, Central (Mr. Cowans) that the new clause does not go far enough. The right of access to information has been restored, but the right of objection should have been enhanced.
      I quote again from the letter from the National Association of Local Councils, which states:
      "Our Association has been much exercised all last year about the lack of local control over the operations and charges of Water Authorities and we have just settled a policy paper seeking more influence in their decision for those they serve. It seems very wrong that a revision of audit procedures should take away an opportunity for the local public to query the accounts of the Water Authorities."
      That association, too, put pressure on the Government. It has been all-party pressure. The debate in Committee helped to bring about the new clause.
      There is also general concern about the size of water bills. Many ratepayers have a feeling of futility because they cannot go to an elected representative and gain access to the water authority. Following the consultation paper "The Membership of Regional Water Authorities" and the Department of Trade's paper "Consumers' Interests and the Nationalised Industries", I hope that the Government will bring forward radical proposals for the greater democratisation and accountability of water authorities.
      The water rate system needs to be reformed. It is iniquitous that an elderly person living alone can pay the same water rate as a family next door purely because of arbitrary property valuations. I and other Liberal colleagues made representations to the Secretary of State for the Environment about the matter last week in response to his Green Paper on rating.
      I hope that we shall see radical proposals to change the way that water authorities operate and to ensure that they become far more responsive to consumers and more

      715
      accountable. The purpose of the Bill was to get value for ratepayers' money. I hope that we shall not lose sight of that purpose when considering the role of water authorities.
      Mr. Giles Shaw: I shall respond briefly to some of the points that have been raised. The hon. Member for Edmonton (Mr. Graham) asked for an assurance, as did the hon. Member for Liverpool, Edge Hill (Mr. Alton), that the rights being embodied in new clause 1 were identical to those that now exist. They are not identical in words although they are in design.
      An objector has the right to challenge the auditor but not in precisely the same way as the district auditor accepted those rights under the local authority legislation. The district auditor's response to an objection is in relation to illegality, the rule of the courts and so on, closely allied to procedure in the courts. This is a much wider power. We are providing an open right of challenge linked to the auditor's duty to report matters in the public interest. That meets the request of the NFU. It will continue to have the right to object. That is an appropriate right for the water industry in its new guise.
      My hon. Friend the Member for Reading, North (Mr. Durant) welcomed the proposed change. I, too, recognise the part played by the ratepayers of Reading and the other ratepayers' associations that raised this issue. My hon. Friend made a further and extremely important point. He pointed out that there is not as yet an amendment dealing with the powers to reduce a rate. My hon. Friend the Member for Bedfordshire, South (Mr. Madel) also referred to that matter. I assure both my hon. Friends that the matter will be dealt with in another place. My right hon. Friend intends to bring forward an amendment for that purpose. Its omission from the Order Paper today indicates the complexity of dealing with the matter, not a lack of intention that it should be dealt with.
      My hon. Friend the Member for Hornchurch (Mr. Squire) spoke in support of amendment (a) to the new schedule, which we are pleased to accept. It allows CIPFA members to join the audit team in the same way as other qualified members. From what I have heard, I believe that there is general acceptance of new clause 1 and the amendments. I welcome that view and I commend the amendments to the House.
      Question put and agreed to
      Clause read a Second time, and added to the Bill.
      Mr. Squire: On a point of order, Mr. Deputy Speaker. I am unclear whether you have disposed of my amendment (a).
      Mr. Deputy Speaker (Mr. Bryant Godman Irvine): We work through the Amendment Paper, of which the hon. Gentleman has a copy.

    New Clause 2

      DURATION OF PART I OF ACT
      `(1) The provisions of Part I of this Act shall cease to have effect at the expiration of one year from the date on which it comes into force unless extended by order of the Secretary of State made by statutory instrument
      (2) No statutory instrument containing such an order shall take effect until it has been approved by resolution of the House of Commons.'.—[Mr. Oakes.]
      Brought up, and read the First time.
      Mr. Gordon Oakes: I beg to move, That the clause be read a Second time.
      New clause 2 is short and would simply limit the duration of part Ito 12 months from the date on which the legislation comes into force, giving the Government an opportunity to renew part I by statutory instrument approved by the affirmative procedure of the House.
      There are three principal reasons why the Opposition want to discuss the new clause in the House. First, the Secretary of State himself, the Minister for Local Government and Environmental Services and the Under-Secretaries of State have repeatedly, on Second Reading and throughout the Committee stage, referred to this as an interim measure. The Opposition believe that if it is to be enacted at all, it should be enacted as interim legislation. At the penultimate sitting of the Committee, the Minister made it clear at that late stage that the Government intended to operate clauses 1 and 2 retrospectively. Because of that, the Opposition wanted the House to have the opportunity to debate what the Committee did not have the opportunity to debate as a result of that extremely late intervention by the Minister.
      5.15 pm.
      Ministers have continually said that this is interim legislation. It is detested by all local authority associations. They would be mollified a little if they knew that the Government would treat the legislation as being an interim measure.
      Our second reason might interest Conservative Members, if they were here in sufficient numbers to be interested. They often express concern about reform of the rating procedure, on which the Government introduced a Green Paper. The final date for representations to be made on the Green Paper was 31 March this year. The Minister—indeed, all Ministers—continually tell the country that they intend to act on the rating system. If they intend to do something, why are they introducing this measure as primary legislation for all time? Our new clause will strengthen the arm of those who want something done about the rating system, as it will give the Government only 12 months to operate the Act—by which time, presumably, they will have done something about the Green Paper and put proposals before the House to deal with the reform of the rating system.
      Thirdly, throughout the Committee stage we were presented with a kaleidoscope. It is a pity that the hon. Member for Bedfordshire, South (Mr. Madel) has left the Chamber, as the matter is apposite to Bedfordshire. Matters changed from week to week, and the Government changed the Bill from week to week. The issue of Bedfordshire is apposite to clauses 1 and 2. We believe that it is wrong for the Government to have introduced retrospection in primary legislation, which is intended to remain for all time. Were the legislation intended to be interim, we could understand that, but the House should not allow the Government to introduce retrospection in primary legislation.
      My right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) will speak about clause 4 and part II which are intimately connected with part I. During the weekend, we witnessed an international shambles created by the Government. Members of the Committee were not surprised, as a permanent shambles was presented to us by the Government. We understand that there is likely to be a major change to clause 4, which in itself was a major

      717
      change to the original Bill, which in turn was a change to the Local Government Finance (No. 1) Bill. In such circumstances, it is wrong for the House to pass part I as primary legislation. The Government should at least partly rectify the position by saying that this is interim legislation, that it is for only one year and that the House will have the opportunity annually to review it.
      Mr. John Cartwright: I rise briefly to support the new clause. As the right hon. Member for Widnes (Mr. Oakes) has said, we are here stepping into very dangerous and uncertain waters. I certainly do not wish to explore the Bedfordshire case at this point, but it highlights the fact that unanticipated events have occurred even during the passage of the Bill. If it can happen in Bedfordshire, it can happen elsewhere and it is clear that other problems may crop up that even the Government have not anticipated or expected. In that situation, it seems sensible to review the application of part I annually.
      The right hon. Member for Widnes referred to the situation as a kaleidoscope. That is a colourful term, but I should have thought that the present situation for local government was more like a switchback, with considerable ups and downs and some very nasty turns and bends, not to mention jolts, for some local authorities. It would therefore be sensible for Parliament to review this major change. The removal of the right to levy supplementary rates, which has existed for many years, is a major and extremely important change that should not be lightly made, and it is right that it should be reviewed annually. I therefore support the new clause
      The Under-Secretary of State for Wales (Mr. Wyn Roberts): It seems to me that in Committee we covered, if not exactly this ground, at least very similar ground, as well as what I might describe as allied ground. In other words, the new clause represents yet another attempt by the Opposition to prevent the Government from banning supplementary rates.
      This is in no way a temporary expedient. Reference has been made to the comments on Second Reading of my right hon. Friends the Secretary of State for the Environment and the Minister for Local Government and Environmental Services. I see no contradiction whatever between the two statements. My right hon. Friend the Secretary of State said:
      "In all it is an important measure to carry us forward to the next stage which will follow the consultation we have now begun on the reform of local government finance itself."—[Official Report, 18 January 1982; Vol. 16, c. 58.]
      It is in that context that we must see the total ban that the Government intend to impose on supplementary rates.
      I assure the House that this measure is not intended to avoid the need for the fundamental reform of the domestic rating system to which we are committed. As the House knows, consultation on this finished at the end of last month. We must now consider the results of that consultation. The ban on supplementary rates and precepts is an interim measure, at least in the domestic sector, pending our proposals for the reform of the domestic rating system. In the commercial and industrial sector, in which rates may well remain for the foreseeable future, the ban is likely to continue.
      I think that I have explained to the House why we oppose some of the arguments advanced in favour of the new clause in relation to our proposals for rating reform.
      718
      The real reason behind our banning of supplementary rates was stated by my right hon. Friend the Secretary of State for the Environment on Second Reading, when he said:
      "What the House clearly has to face, and what is at the centre of the controversy about so much of local government today, is that parts of local government are determined to scrap the traditional relationship between central Government and local government whereby local government recognised and accepted the right of central Government to set the level of local expenditure."—[Official Report, 18 January 1982; Vol. 16, c. 49.]
      Last year, a situation developed in which 30 local authorities levied supplementary rates. That was something of a novelty, and the Government are not prepared to allow it to continue.
      In further justification of our decision to abolish supplementary rates, I must point out yet again that they have never been allowed in Scotland. We have come to the conclusion that ratepayers in England and Wales have the right to seek the protection of the Government from the depredations of irresponsible local authorities, as large numbers of ratepayers have done in the past six months. Our objective in banning supplementary rates and precepts is to give ratepayers that protection and to prevent hasty and ill-considered increases in spending after the financial year has begun and both domestic and non-domestic ratepayers have made their financial plans for the year.
      I repeat that there is nothing temporary about the measure that we propose to abolish supplementary rates. Therefore, I must ask the House to reject the new clause.
      Mr. Oakes: All that the Minister has really said in reply is that in the vocabulary of Her Majesty's Ministers "interim" means "permanent" and "permanent" may mean "interim". In the words of a famous comedian, there is no answer to that. There is no point in debating the matter further. I therefore ask my right hon. and hon. Friends to divide the House on the new clause.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 206, Noes 262.

      Division No. 118]

      [5.25 pm

      AYES

      Abse, Leo

      Cohen, Stanley

      Adams,Allen

      Coleman,Donald

      Allaun, Frank

      Conlan,Bernard

      Alton,David

      Cook, Robin F.

      Archer, Rt Hon Peter

      Cowans, Harry

      Ashley, Rt Hon Jack

      Cox, T. (W'dsw'th, Toot'g)

      Ashton,Joe

      Craigen, J. M. (G'gow, M' hill)

      Atkinson,N, (H' gey,)

      Crowther,Stan

      Bagier, Gordon A.T.

      Cryer, Bob

      Barnett, Guy (Greenwich)

      Cunliffe,Lawrence

      Barnett, Rt Hon Joel (H'wd)

      Cunningham, DrJ.(W'h'n)

      Benn, Rt Hon Tony

      Dalyell, Tam

      Bidwell,Sydney

      Davidson,Arthur

      Booth, Rt Hon Albert

      Davies, Rt Hon Denzil (L'lli)

      Boothroyd, Miss Betty

      Davies, Ifor (Gower)

      Bottomley, Rt HonA.(M'b'ro)

      Davis, Clinton (HackneyC)

      Bradley, Tom

      Davis, Terry (B'ham, Stechf'd)

      Bray, Dr Jeremy

      Deakins,Eric

      Brown, Hugh D. (Provan)

      Dean, Joseph (Leeds West)

      Brown, R. C. (N' castle W)

      Dewar,Donald

      Brown, Ronald W. (H' ckn 'yS)

      Dixon,Donald

      Brown, Ron (E'burgh, Leith)

      Dobson,Frank

      Buchan,Norman

      Dormand,Jack

      Callaghan, Rt Hon J.

      Douglas,Dick

      Callaghan, Jim (Midd't 'n& P)

      Dubs,Alfred

      Campbell,Ian

      Dunn, James A.

      Campbell-Savours,Dale

      Dunnett,Jack

      Canavan,Dennis

      Dunwoody, Hon MrsG.

      Carmichael,Neil

      Eadie,Alex

      Cartwright,John

      Eastham, Ken

      Cocks, Rt Hon M. (B'stolS)

      Edwards, R. (W'hampt'nS E)

      719

      Ellis, H.(NE D'bysh're)

      Oakes, Rt Hon Gordon

      English,Michael

      O'Halloran,Michael

      Evans, loan (Aberdare)

      Neill,Martin

      Evans, John (Newton)

      Orme, Rt Hon Stanley

      Faulds,Andrew

      Park,George

      Field,Frank

      Parker,john

      Flannery,Martin

      Parry,Robert

      Fletcher,Ted (Darlington)

      Pendry,Tom

      Foot, Rt Hon Michael

      Penhaligon,David

      Ford,Ben

      Pitt,WilliamHenry

      Forrester,John

      Powell,Raymond(Ogmore)

      Foster,Derek

      Price, C. (Lewisham W)

      Foulkes,George

      Race, Reg

      Fraser, J. (Lamb'th, N'w'd)

      Radice,Giles

      Freeson,Rt Hon Reginald

      Rees, Rt Hon M (Leeds S)

      Garrett, John (NorwichS)

      Richardson,Jo

      George,Bruce

      Roberts,Albert(Normanton)

      Gilbert, Rt Hon Dr John

      Roberts,Allan(Bootle)

      Ginsburg,David

      Roberts, Ernest (HackneyN)

      Golding,John

      Roberts,Gwilym(Cannock)

      Graham, Ted

      Robertson,George

      Grimond, Rt Hon J.

      Robinson, G. (CoventryNW)

      Hamilton,James (Bothwell)

      Rooker, J. W.

      Hamilton, W. W. (C'tral Fife)

      Ross, Ernest (Dundee West)

      Harrison, RtHon Walter

      Rowlands,Ted

      Haynes, Frank

      Sandelson,Neville

      Heffer, Eric S.

      Sever, John

      Homewood,William

      Sheerman,Barry

      Hooley,Frank

      Sheldon, Rt Hon R.

      Howell, Rt Hon D.

      Silkin, Rt Hon J. (Deptford)

      Howells,Geraint

      Silkin, Rt Hon S. C. (Dulwich)

      Hoyle,Douglas

      Silverman,Julius

      Huckfield,Les

      Skinner,Dennis

      Hughes, Robert (Aberdeen N)

      Smith, Rt Hon J. (N Lanark)

      Hughes, Roy (Newport)

      Snape, Peter

      Janner,HonGreville

      Soley,Clive

      Jay, Rt Hon Douglas

      Spearing,Nigel

      John,Brynmor

      Spriggs,Leslie

      Johnson, Walter (Derby S)

      Stallard, A. W.

      Johnston,Russell (Inverness)

      Stoddart,David

      Jones, Rt Hon Alec (Rh'dda)

      Stott,Roger

      Jones, Barry (East Flint)

      Strang, Gavin

      Kaufman, Rt Hon Gerald

      Straw,Jack

      Kilfedder, JamesA.

      Summerskill,HonDrShirley

      Kilroy-Silk,Robert

      Taylor, Mrs Ann (Bolton W)

      Lamborn,Harry

      Thomas, DrR.(Carmarthen)

      Leadbitter,Ted

      Thorne, Stan (PrestonSouth)

      Leighton,Ronald

      Tilley,John

      Lestor, MissJoan

      Tinn, James

      Lewis, Arthur (N'ham NW)

      Torney,Tom

      Litherland,Robert

      Varley, RtHon Eric G.

      Lofthouse,Geoffrey

      Wainwright,E. (DearneV)

      Lyon,Alexander(York)

      Wainwright,R.(ColneV)

      McCartney,Hugh

      Walker, Rt Hon H.(D'caster)

      McDonald,DrOonagh

      Watkins,David

      McKelvey,William

      Weetch,Ken

      MacKenzie, RtHonGregor

      Wellbeloved,James

      McNamara,Kevin

      Welsh,Michael

      McTaggart,Robert

      White, Frank R.

      McWilliam,John

      White, J. (G'gowPollok)

      Magee, Bryan

      Whitehead,Phillip

      Marks,Kenneth

      Whitlock,William

      Marshall, Jim (LeicesterS)

      Willey,RtHon Frederick

      Maynard, Miss Joan

      Williams, Rt Hon K(S'sea W)

      Meacher, Michael

      Wilson,William (C'trySE)

      Mellish,Rt Hon Robert

      Winnick,David

      Mikardo,Ian

      Woodall,Alec

      Millan,RtHonBruce

      Woolmer,Kenneth

      Miller, DrM.S. (E Kilbride)

      Wright,Sheila

      Mitchell,Austin (Grimsby)

      Young, David (Bolton E)

      Mitchell, R.C. (Soton Itchen)

      Morris, Rt Hon C. (O'shaw)

      Tellers for the Ayes:

      Moyle, Rt Hon Roland

      Mr. Allen McKay and Mr. George Morton.

      Newens, Stanley

      NOES

      Adley,Robert

      Ancram,Michael

      Aitken,Jonathan

      Arnold, Tom

      Alexander,Richard

      Aspinwall,Jack

      Alison,Rt Hon Michael

      Atkins,Robert(PrestonN)

      720

      Atkinson,David(B'm'th,E)

      Gorst,John

      Baker,Kenneth(St.M'bone,)

      Gow, Ian

      Baker, Nicholas (N Dorset)

      Grant, Anthony (HarrowC)

      Banks,Robert

      Gray, Hamish

      Bendall,Vivian

      Greenway, Harry

      Benyon, W. (Buckingham)

      Griffiths,E.(B'ySt.Edm'ds)

      Berry,HonAnthony

      Griffiths,Peter Portsm'thN

      Best, Keith

      Grist, Ian

      Bevan, DavidGilroy

      Gummer,JohnSelwyn

      Biffen, Rt Hon John

      Hamilton, Hon A.

      Biggs-Davison,SirJohn

      Hamilton,Michael(Salisbury)

      Blackburn,John

      Hampson, DrKeith

      Blaker,Peter

      Hannam,John

      Body,Richard

      Haselhurst,Alan

      Bonsor,SirNicholas

      Havers, Rt Hon Sir Michael

      Bottomley, Peter (W'wich W)

      Hawksley,Warren

      Bowden,Andrew

      Hayhoe,Barney

      Boyson,Dr Rhodes

      Heddle,John

      Braine,SirBernard

      Henderson,Barry

      Bright,Graham

      Hicks,Robert

      Brinton,Tim

      Higgins, Rt Hon Terence L.

      Brittan,Rt.Hon.Leon

      Hogg,HonDouglas(Gr'th'm)

      Brotherton,Michael

      Holland,Philip(Carlton)

      Brown,Michael(Brigg&Sc'n)

      Hooson, Tom

      Browne, John (Winchester)

      Hordern,Peter

      Bruce-Gardyne,John

      Howe, Rt Hon SirGeoffrey

      Bryan,Sir Paul

      Howell, Rt Hon D.(G'ldf'd)

      Buchanan-Smith, Rt. Hon. A.

      Howell, Ralph(N Norfolk)

      Buck,Antony

      Hunt,David (Wirral)

      Budgen,Nick

      Hunt,John(Ravensbourne)

      Burden,SirFrederick

      Hurd, Rt Hon Douglas

      Butcher,John

      Jenkin, Rt Hon Patrick

      Cadbury,Jocelyn

      Jessel, Toby

      Carlisle, John (Luton West)

      JohnsonSmith,Geoffrey

      Carlisle,Kenneth(Lincoln)

      Jopling,Rt Hon Michael

      Carlisle, Rt Hon M. (R'c'n)

      Joseph, Rt Hon Sir Keith

      Chalker,Mrs.Lynda

      Kellett-Bowman,MrsElaine

      Channon, Rt. Hon. Paul

      Kershaw,SirAnthony

      Chapman,Sydney

      Kimball,SirMarcus

      Clark, Hon A. (Plym 'th, S'n)

      King, Rt Hon Tom

      Clark, Sir W. (CroydonS)

      Kitson,SirTimothy

      Clarke,Kenneth(Rushcliffe)

      Knight, MrsJill

      Clegg,SirWalter

      Knox,David

      Cockeram,Eric

      Lamont,Norman

      Colvin,Michael

      Lang,Ian

      Cope,John

      Latham,Michael

      Cormack,Patrick

      Lawrence, Ivan

      Costain,SirAlbert

      Lawson, Rt Hon Nigel

      Cranborne,Viscount

      Lee, John

      Critchley,Julian

      LeMarchant,Spencer

      Crouch,David

      Lennox-Boyd,HonMark

      Dean, Paul (NorthSomerset)

      Lester, Jim (Beeston)

      Dickens,Geoffrey

      Lewis,Kenneth(Rutland)

      du Cann, Rt Hon Edward

      Lloyd, Ian (Havant& W'loo)

      Dunn,Robert(Dartford)

      Lloyd, Peter (Fareham)

      Durant, Tony

      Loveridge,John

      Eden, Rt Hon Sir John

      Lyell,Nicholas

      Eggar, Tim

      McCrindle,Robert

      Elliott,SirWilliam

      McCusker,H.

      Emery, Sir Peter

      Macfarlane,Neil

      Fairbairn,Nicholas

      MacGregor,John

      Fairgrieve,SirRussell

      MacKay, John (Argyll)

      Farr,John

      Macmillan, Rt Hon M.

      Fell, Sir Anthony

      McNair-Wilson,M. (N'bury)

      Fenner, Mrs Peggy

      McNair-Wilson, P. (NewF'st)

      Finsberg,Geoffrey

      Madel,David

      Fletcher,A.(Ed'nb'gh N)

      Major,John

      Fletcher-Cooke,SirCharles

      Marlow,Antony

      Fookes, Miss Janet

      Marshall,Michael(Arundel)

      Forman,Nigel

      Marten, Rt Hon Neil

      Fowler, Rt Hon Norman

      Mates,Michael

      Fox,Marcus

      Mather,Carol

      Fry, Peter

      Maude, Rt Hon Sir Angus

      Gardiner,George(Reigate)

      Mawby, Ray

      Garel-Jones, Tristan

      Maxwell-Hyslop,Robin

      Gilmour, Rt Hon Sir Ian

      Mayhew,Patrick

      Glyn,DrAlan

      Mellor,David

      Goodhart,SirPhilip

      Meyer,SirAnthony

      Goodhew,SirVictor

      Miller,Hal(B'grove)

      Goodlad,Alastair

      Mills,Iain(Meriden)

      721

      Mills, Peter (West Devon)

      Shepherd,Richard

      Moate,Roger

      Shersby,Michael

      Monro,SirHector

      Silvester,Fred

      Montgomery,Fergus

      Sims,Roger

      Moore,John

      Skeet, T. H. H.

      Morgan,Geraint

      Speed,Keith

      Morris, M. (N'hamptonS)

      Speller,Tony

      Morrison, Hon P. (Chester)

      Spicer, Jim (West Dorset)

      Mudd,David

      Sproat,Iain

      Murphy,Christopher

      Stevens,Martin

      Myles, David

      Stewart,A.(E Renfrewshire)

      Needham,Richard

      Stewart, Ian (Hitchin)

      Nelson,Anthony

      Stokes,John

      Neubert,Michael

      Stradling Thomas,J.

      Newton, Tony

      Taylor, Teddy (S'end E)

      Onslow,Cranley

      Temple-Morris,Peter

      Oppenheim, Rt Hon Mrs S.

      Thompson,Donald

      Page, Richard (SW Herts)

      Thorne, Neil (IlfordSouth)

      Parkinson, Rt Hon Cecil

      Thornton,Malcolm

      Parris,Matthew

      Townend,John (Bridlington)

      Patten,Christopher(Bath)

      Townsend,CyrilD,(B'heath)

      Patten, John (Oxford)

      Trippier,David

      Pattie,Geoffrey

      Trotter,Neville

      Pawsey, James

      van Straubenzee, SirW.

      Percival,Sir Ian

      Viggers,Peter

      Peyton, Rt Hon John

      Waddington,David

      Pink, R.Bonner

      Wakeham,John

      Porter,Barry

      Walker, B. (Perth)

      Prentice, Rt Hon Reg

      Walker-Smith, Rt Hon Sir D.

      Prior, Rt Hon James

      Waller,Gary

      Proctor, K. Harvey

      Ward,John

      Pym, Rt Hon Francis

      Warren,Kenneth

      Raison, Rt Hon Timothy

      Watson,John

      Rathbone,Tim

      Wells,Bowen

      Rhodes James, Robert

      Wells,John(Maidstone)

      Ridley,HonNicholas

      Wheeler,John

      Rifkind,Malcolm

      Whitelaw, Rt Hon William

      Rippon, Rt Hon Geoffrey

      Whitney,Raymond

      Roberts, Wyn (Conway)

      Wickenden,Keith

      Rossi,Hugh

      Wiggin,Jerry

      Rost, Peter

      Wilkinson,John

      Royle, Sir Anthony

      Williams,D. (Montgomery)

      Sainsbury, Hon Timothy

      Wolfson,Mark

      St. John-Stevas, Rt Hon N.

      Young,SirGeorge (Acton)

      Scott,Nicholas

      Younger, Rt Hon George

      Shaw, Giles (Pudsey)

      Shaw,Michael (Scarborough)

      Tellers for the Noes:

      Shelton,William (Streatham)

      Mr. Peter Brooke and Mr. Robert Boscawen.

      Shepherd,Colin (Hereford)

      Question accordingly negatived.

    New clause 3

      SUPPLEMENTARY REPORTS
      `In section 61 of the Local Government, Planning and Land Act 1980 at the end of subsection (6) there shall be inserted—
      "(7) Subject to subsection (8) below, where, during a financial year, the level of prices, costs and remuneration is higher than the level taken into account, through the application of section 54(4)(d) above, for the purpose of determining the amounts payable the Secretary of State shall, during the financial year, make one or more supplementary reports.
      (8) A supplementary report made in accordance with the provision of subsection (7) above shall—

      (a) contain the details set out in (i) to (iii) below which said details shall have been agreed by the Secretary of Slate and such Associations of Local Authorities as appear to him to be appropriate, and

      (b) specify—

      (i) the level taken into account for the purpose:, of the said section 54(4)(d) as a percentage of the higher level; and

      (ii) the additional amount of Block Grant payable to each local authority; and

      (iii) the method of calculation of the said additional amount of Block Grant".'.—[Mr. Kaufman.]

      Brought up, and read the First time.
      5.30 pm
      Mr. Gerald Kaufman: I beg to move, That the clause be read a Second time.
      I first offer an apology in advance. I must attend a meeting of the Shadow Cabinet at 6 o'clock. Therefore, after I have spoken, I shall be unable to remain for much of the first part of the debate. I hope that the House will forgive me in the special circumstances.
      We have tabled this new clause because of the chaos into which the whole business of rate, target and penalty fixing has fallen as a result of the Government's inability to manage these matters and the Bill.
      Since last year, the Government have involved local government in a series of targets and penalties by which the Secretary of State seeks to control local authority expenditure. I shall not go into the basis of the right hon. Gentleman's unfounded allegations that local authority spending is out of control, but, looking at these various operations, one sees that last year's hold-back exercise was written off by the Secretary of State as disastrous. This year's exercise—that is, the targets announced with the rate support grant report—is based on criteria which, as I have tried to point out in previous debates, are not only new and different from the criteria introduced during the last hold-back exercise, but are also irrational and, to many, incomprehensible. They are also riddled with flaws. Last year volume targets were imposed on local government, which led to many local authorities being subjected to penalty. When the Secretary of State considered the outcome of the hold-back exercise he thought that too many local authorities had been subjected to penalties. From his point of view, too many Conservative authorities had been penalised.
      When the exercise had been completed the right hon. Gentleman introduced the alternative criterion of grant-related expenditure assessment. He introduced that belatedly as a way of reprieving some Conservative authorities. Forty-six authorities were relieved of penalty by the introduction of the alternative criterion despite the fact that there was an aggregate overspend of over £70

      723
      million on the basis of the Secretary of State's criterion. That episode was described by the right hon. Gentleman as disastrous.
      This year the Secretary of State has attempted to retrieve the disaster by introducing new targets and from the start assigning grant-related expenditure assessment as an alternative ceiling. He has said that any local authority that spends up to but not beyond the GREA will not be subjected to penalty, even if the authority is above its expenditure target.
      In our debates last year we forecast that the optional target fixing would lead to many councils spending well over the target in the knowledge that they could not be penalised. We estimated that it could lead to an overspend—this is on the Secretary of State's criterion because we do not acknowledge that there is such a thing as an overspend—of about £790 million.
      At present we have incomplete information about local authority budgets but the information that is available shows that council after council has decided to budget precisely up to its grant-related expenditure assessment where that assessment is above the target. Among the metropolitan authorities five local authorities have budgeted to spend up to their GREAs—Oldham, Birmingham, Wolverhampton, Kirklees and Leeds. Each authority is spending over its target and in some instances well beyond it. However, the authorities will be free of penalty.
      As I have said, the relevant information is incomplete but that which is available has brought some crazy anomalies to light. For example, Salford, a Labour-controlled authority, is budgeting to spend 2·5 per cent. over its target and will be subject to penalty as a result. Wirral, a Conservative authority, is budgeting to spend 2·5 per cent. over its target but will not be subject to penalty because it will not exceed the GREA. Gateshead, a Labour authority, is budgeting to spend 3·7 per cent. above its expenditure target and will be subject to penalty. Oldham, which is also a Labour-controlled authority, is budgeting likewise to spend 3·7 per cent. above its target but it will be subject to no penalty because, although it is spending precisely as much over its target as Gateshead, it will be below its GREA.
      Bury, a Conservative-controlled authority, is budgeting to spend 4·9 per cent. over its target and will be subject to penalty. Bolton, a Labour authority, is budgeting to spend 5·2 per cent. over its target but will be subject to no penalty because it is spending below the GREA.
      5.45 pm.
      The anomalies become even more bizarre the more we examine them. Tyne and Wear, which is a Labour authority, is budgeting to spend 13·9 per cent. over its target, and the House will not be surprised to hear that in these circumstances it will be subject to penalty. However, Leeds, which is also a Labour authority, is budgeting to spend not 13·9 per cent. but 16·4 per cent. above its target, and will not be subject to penalty because it is spending within its GREA.
      I have chosen these examples to show the demented nature of the irrationality and to demonstrate that it does not exclude Conservative councils. The Government are
      724
      so bad at the way in which they connive that they cannot even do a political fiddle. If a Government cannot manage that, they are failing in what is expected of them.
      The counties provide an interesting example. If there is one group of authorities which is responsible for overspending beyond targets, it is Conservative-controlled county authorities, which are spending more than their targets but seeking to escape penalty by remaining below their GREAs. The unreasonableness of the targets combined with the GREA loophole is estimated—this is based on the latest information that is available—to have led not to the £790 million overspend that we anticipated but to an overspend of £1,460 million. The shire counties are responsible for 41 per cent. of that huge overspend. The House should remember that the shire counties number only 45 out of the 411 local authorities in England.
      The Minister for Local Government and Environmental Services (Mr. Tom King): I know that the right hon. Gentleman does not want to mislead the House with his ingenious use of statistics. I think that he said that the shire counties are responsible for 40 per cent. of the overspend. Perhaps he will tell us the level of expenditure that is represented by the shire counties. If he does not have the figure readily to hand, let me tell him that it is about 50 per cent.
      Mr. Kaufman: I realise that. However, the Government have rigged the rate support grant. Last year the counties received an increase in RSG. It was increased from 32 per cent. of the total to 53 per cent. We do not have the figures for this year. That increase is one of the reasons for their high level of expenditure. They are buttressed by RSG.
      Mr. King: With great respect, that figure is wildly wrong.
      Mr. Kaufman: No, it is mildly right. The right hon. Gentleman has a tendency to blurt things out. He must take great care. These statistics are based on figures that he supplied to me. A simple pocket calculator—I shall be ready to supply him with one—will allow the right hon. Gentleman to arrive at the same conclusion. In the circumstances, it is no wonder that the condemnation of the Government is spreading far more widely than was previously the case. Last week there was a leading article in The Daily Telegraph which stated:
      "For all his grand gestures Mr. Heseltine has worse confounded the confusion. Mr. Heseltine has imposed somewhat arbitrary limits on spending and still more arbitrary penalties on offenders. The result has been litigation, bad tempers and no real brake to extravagance. The fundamental problems relating to tiers of Government and the welter of unnecessary statutory duties remain untouched."
      It is true that the Secretary of State's alleged controls have not led to reduced rate burdens. The average rate increase, so far as it is known for the financial year that began last week, is higher than inflation. In London, it is Conservative-controlled councils which have the highest rating. Of the 15 councils that plan to increase their general rate by more than 11 per cent., the current rate of inflation, only one is Labour controlled. Although some Conservative authorities, including the authority to which I pay rates in London, Westminster, are blaming the precepts from the GLC and the ILEA, the fact is that Labour authorities have had also to bear those precepts. Yet, on average, Labour authorities in London are rating much below Conservative-controlled authorities.
      Mr. King: I think, on any understanding of the English language, "rating" means the amount of rates that are charged. Does the right hon. Gentleman accept that the rates charged consistently by Labour authorities in London are higher than those charged by Conservative authorities when one considers the rate in the pound?
      Mr. Kaufman: I am sorry that the right hon. Gentleman has fallen so easily into that trap. He will now have to withdraw everything that he said about the figures issued by my hon. Friend the Member for Blackburn (Mr. Straw) in which my hon. Friend showed that people living in Labour authorities were paying less in rates than people living in Conservative authorities. The Minister stood his own argument on its head and said that this was not true: it was not what one paid in rates but the rate poundage that counted. Now he says precisely the reverse. The right hon. Gentleman had better make up his mind where he stands. My hon. Friend the Member for Blackburn has proved conclusively that people living in Labour areas are paying less in rates than people in Conservative areas.
      Mr. King: Is the right hon. Gentleman advancing the theory that a large department store in Oxford Street should pay no more rates than a corner tobacconist in Newcastle?
      Mr. Kaufman: I am very much in favour of a large department store in Oxford Street paying more in rates. I am not, however, a large department store in Oxford Street; I am a householder living in Westminster. I am paying vast rate increases because of the profligacy of Westminster city council on things that are unimportant, including the sending out of wasteful, expensive and politically motivated leaflets for which I, as a Westminster ratepayer, have to pay. In the end, as The Daily Telegraph among others has pointed out, it is the sheer irrationality of the grant that is the most onerous factor. That is one reason for the Opposition moving the new clause.
      We refer to the level of prices, costs and remuneration. Those factors are among the reasons for the irrationality of the basis upon which the Secretary of State has approached the rate support grant. We say that if such costs rise above the level laid down in the rate support grant report, as they already have, the Secretary of State should move a supplementary report to compensate local authorities.
      As well as those factors, there is also the question of the lawfulness of the targets and the penalties being laid down by the Secretary of State. All hon. Members know—the Minister has admitted it—that the targets and penalties of last year's hold-back exercise were unlawful and that the penalties cannot be imposed until this Bill becomes law. The Minister has said—it is in the rate support grant report—that clause 4 clarifies the situation. Now that we have produced for the House and the country the Anglo-Heseltinese dictionary that is necessary for people who study rating matters, we know that "clarify" means to make lawful retrospectively that which was unlawful when originally done by the Secretary of State for the Environment.
      We knew that the targets and penalties of the hold-back exercise were unlawful. We thought that we knew that the targets for the financial year that began last week were equally unlawful but that they would be made lawful when
      726
      this Bill becomes law. It is now said that the targets will not become lawful even when the Bill, as drafted, becomes law.
      The Government have had three shots at drafting clause 4. They tabled it; they amended it; they reamended it. We are now told—this requires clarification frome the Minister—that clause 4 as it is before the House is still wrong. We are now told that the targets referred to as guidance in the clause will remain unlawful if the Bill is carried in its present form because they are constructed with the PESC figures. We have had brought to our notice that it is considered that targets constructed on PESC figures will not be targets that are stated in clause 4(1) as being
      "in accordance with principles applicable to all local authorities."
      Because of the phraseology of guidance issued
      "in accordance with principles applicable to all local authorities"
      we are told that not only are the spending targets for the current financial year unlawful in the Bill as at present drafted but that the exclusions from the targets—the limits—of spending on urban aid and riot damage will be unlawful despite the fact that the Government say that these elements will be excluded from the spending limits.
      It is essential that we should hear a statement from the Minister clarifying the position—a statement that will tell the House whether, five months after the Bill was originally introduced, after the withdrawal of the Bill, after its reintroduction, after the amendment of clause 4, after the withdrawal of the amendments on clause 4, after the tabling of new amendments on clause 4 and after the incorporation into the Bill of the new amendments on clause 4, this Bill still contains a basic flaw at its heart and that clause 4, as drafted at present, is not fulfilling what the Government say it will fulfil. If that is so, I tell the Government here and now that this House, which has spent many months on the Bill, will regard it as intolerable if they seek to remedy their further mistakes by slipping in amendments for passage in the House of Lords. It is the House of Commons that has been put to prolonged inconvenience by the Government's incompetence in drafting the Bill.
      The Government would be treating the House with discourtesy if they were to seek to pass the Bill in a form—it is for them to tell us whether this is so—that they knew themselves to be faulty. If the Government treat the House with any respect, they should abandon this debate until they are ready with new amendments to clause 4 which they can present to the House so that hon. Members may consider them carefully, debate them and decide whether to seek to amend them. I am assuming that when the Government draft the amendments they will get them right at the fifth attempt. They cannot be relied upon to do so. They have made four attempts so far and have got it wrong every time. We want to know now whether the Government think that they have got it right this time. if they have got it wrong, we want to know that they are sure that when they amend the Bill again they will get it right. There is a procedure whereby Bills can go backwards between the House of Commons and the House of Lords, but if it is done too frequently it is likely to get noticed.
      Mr. Harry Cowans: My right hon. Friend makes too many assumptions for my liking because he seems to say that the Government have clause 4 right. May I cast my right hon. Friend's memory back to when this No. 6, 7, 8, 9 or 10 Bill was first

      727
      introduced? The Government assumed then that they had clause 4 right and argued that they had. They subsequently brought in an amendment to clause 4 and argued that that was correct. Later they brought in another amendment to the amended clause 4 and argued that that was correct. We now understand that this is clause 4 mark 58, and this one is correct. However, my right hon. Friend has just told us that there is another clause mark 59 coming up which again will presumably be right. If all those clauses were supposed to be right, how can my right hon. Friend assume that the latest effort will be right?
      Mr. Kaufman: I accept my hon. Friend's correction. It was an act of impertinence on my part to believe that the Government were likely to get it right on this attempt, the next one, or the one after that.
      The Opposition want a categoric statement from the Government on the position on clause 4. If the case is not as I have started it, we will be corrected, although only if the Government are 100 per cent. sure. If what we are saying is right, the best thing that the Government can do is to abandon this botched-up and ill-starred Bill altogether. It has brought them nothing but trouble since they so unthinkingly launched it.
      6 pm
      Mr. Alton: I support the new clause for a number of reasons. First, in many ways local councillors are having to fulfil a dual capacity of not only serving their constituents in their wards but having to immerse themselves in the detail of law and becoming Philadelphia lawyers. At the same time they are having to find out the details of how chartered accountancy works. It is not the job of a local councillor to become a professional in either of those capacities. Yet, as a result of this legislation introduced by the Secretary of State and the Government, it is becoming a nightmare for people to become local councillors.
      In Committee, I suggested that it would be appropriate for the Government to bring forward and amendment to clause 4 so that we could be made aware of the Government's true intentions, after they had got the Committee in the mess that they had. Now we hear that there is to be a further new clause 4—probably to be introduced in the House of Lords—and we are being asked to vote for legislation that the Government must think is inadequate. That seems to be a crazy way of going about things.
      As I said before, it is a nightmare for people to work in local government. They do not know whether they are coming or going, and this legislation makes things worse. Rate support grant settlements are more complicated to understand these days than the Rubik cube. Local councillors can be seen muddling through pages and pages of circulars from central Government and diktats and new amended pieces of legislation, all of which lead to the complete bewilderment of those who are there to serve their local constituents.
      Local councils should have the inalienable right to levy a supplementary rate. I do not see why it should be a matter for central Government to interfere in these matters. If local authorities make a mess of things, local electors can throw them out. Why should the Government constantly interfere with the work of the local administration?
      728
      I think it was Disraeli who coined a phrase to the effect that centralisation is the death blow of freedom. He must be turning in his grave today considering the things that the Government have introduced within the past three years. There was the Local Government, Planning and Land Act, then the Housing Act and now this latest legislation. All three pieces of legislation add up to the same thing—the reducing of powers of local authorities and the taking of more power to the centre.
      In many ways the approach being adopted towards local authorities is similar to the approach that Cromwell adopted towards the monasteries—first list them, then bust them. Clearly, the Secretary of State's intentions have been at all times to thwart the democratic will of local electors in electing councillors to serve them.
      The right hon. Member for Manchester, Ardwick (Mr. Kaufman) referred to a specific local authority where already great chaos has been caused as a result of the proposals in this legislation. It is worth looking again at the example of Bedfordshire county council. In Committee, the Minister accused me of maligning the leader of the Conservative group on the county council because I suggested that he had told local ratepayers not to pay their supplementary rates bills. It comes ill from the party that calls iself the party of law and order to go round telling people to defy the legitimate rights of the local council to levy a rate or a supplementary rate. That is still the law as it stands today.
      However, the Government intend, retrospectively and against every tenet of natural justice, to enact legislation that will bust that local authority and undo what a local authority quite legitimately decided to do in a democratic meeting of its council. It is interesting to examine the legal opinion given to the members of the Bedfordshire county council. It stated that it is a general rule of English law that no statute can be construed so as to have retrospective operation, unless such a construction appears clearly in the terms of the Act or arises by necessary and distinct implication. On the basis of that advice, the county council stood by its original decision to go for a relatively small increase in rates to ensure that it could continue running local services.
      It is worth noting that Bedfordshire county council has suffered badly as a result of the decisions taken by the Government. For instance, over the past three years it has lost more than £12 million in central funds. In 1981, prior to the county council elections, the Conservatives used the balance of £11 million in a desperate bid to retain their seats on the council. While opposing the cuts in the council's police budget, the same Conservative leaders have been urging people not to pay the supplementary rates that have been levied in an attempt to retain the level of services provided by the county council.
      Mr. Madel: The hon. Gentleman is giving us a great lecture about Bedfordshire county council and the difficulties in the county. Will he address his mind to the difficulties that face industry in that county and how the proposed supplementary precept and rate would affect it and disturb its employment base?
      Mr. Alton: Yes, I shall do so. It is relevant to the amendment.
      It is worth noting precisely what it is that the Bedfordshire county council is attempting to do. It is trying to maintain services and at the same time to improve

      729
      certain things that it promised to do in the mandate it asked for at the election. It is not doing anything that it did not say it would do at the time. It would be dishonest of it now to run away from the commitment that it gave to the electors. Equally, the Labour Party has a majority on that council and, therefore, a right to implement its policies.
      Mr. Madel: The hon. Gentleman is not answering my question. I referred not to services but to industry in Bedfordshire and the effect that the supplementary rate would have on it. Will the hon. Gentleman get his nose out of community politics and address himself to the problems of Bedfordshire industry?
      Mr. Alton: I am aware of the effects of massive rate increases on local businesses. That is why the Liberals on Bedfordshire county council attempted to introduce rates that they regarded as being reasonable to maintain services without at the same time hitting local industry unduly.
      The county council now has to levy a 31 per cent. rate increase simply to stand still and provide the same services. The Liberals and the Labour Party were characterised on that county council by the Conservatives as being wicked. The extra spending that the Liberals proposed amounted to another 2 per cent.
      Mr. Madel: Answer the question.
      Mr. Alton: Two per cent. of the 33½ per cent. increase is our responsibility. The rest of the increase is the responsibility of the Conservative Party.
      Mr. Madel: Answer the question.
      Mr. Speaker: Order.
      Mr. Alton: The Conservatives have reduced central Government funds to Bedfordshire county council by £12 million over the past three years.
      Mr. Allan Roberts: I am grateful to the hon. Member for Liverpool, Edge Hill (Mr. Alton) for making such a good case for the Bedfordshire county council supplementary rate. I hope that he is prepared to apply similar arguments to the supplementary rate levied by the Merseyside county council.
      Mr. Alton: My argument is that it should be a matter for local authorities to decide for themselves. If hon. Members had listened, they would have heard me say that councillors were elected on the basis of the programme that they offered to the electorate. The programme that the Bedfordshire county council Liberal group offered was to maintain services and to improve them in certain areas. On Merseyside, the county council is Labour-controlled and dominated by Left-wing elements. That has led to the resignation of the leader and deputy leader of that county council's Labour group, because they could no longer stomach the decisions made in the name of the old Labour Party. Under its Labour leadership, the county council made such profligate proposals that they had to be opposed. For example, Labour councillors wanted to open a resources centre, which is a total waste of ratepayers' money.
      These matters must be looked at on their merits by local councillors. They should not be matters for Parliament to decide. This legislation is ill-conceived, because it takes away power from local councillors.
      I think that everyone agrees that the whole of local government finance, especially the rates, is now in chaos. It was not an easy task to get it into this state, but the
      730
      Secretary of State has spent three long years working hard at it. The right hon. Gentleman reminds me of a certain Left-wing Labour leader in Liverpool who has vowed publicly to grind the city to a halt. Both are part of that other alliance that uses local government, local money and local people for its own selfish and dogmatic ends.
      I support the new clause.
      Mr. Cowans: I agree with much that the hon. Member for Liverpool, Edge Hill (Mr. Alton) has said. I am amazed by Government supporters who appear. though one can never be certain because there have been many cartwheels performed before, to be about to oppose new clause 3.
      The new clause would at last put some sanity, though not enough, into this nonsensical Bill. The ability to raise a supplementary rate is being taken away from local authorities, and new clause 3 is proposed as an alternative. Obviously it is not the full alternative, but it will help. The advent of the Bill has left officers in local government in a complete void. They do not know what advice they can give, and they look to the new clause to provide some sense at last.
      6.15 pm.
      I assume that the Government will be totally opposed to the new clause. However, I remind them that it is taken from their own Act. The new clause refers to the Local Government, Planning and Land Act, a Conservative Act. I should have thought that they would support their own Act. The clause mentions section 61, which refers to
      "supplementary reports for that year."
      In the new clause, we seek to put some bones on what the Government have said in the interests of local authorities. The Government agree that supplementary reports are necessary. That is provided for in their 1980 Act. However, they seem reluctant to spell out clearly and precisely, so that those in local government know exactly where they are going and what they are about, what should be contained in these supplementary reports.
      My right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) spoke of the penalties and targets. I do not want to go over that ground. But there are other aspects dealt with in the clause, apart from the penalties and targets. Any hon. Member who has served in local government will agree about the uncertainty of the finances of local government. At best they are based mainly on guesstimates.
      Again there seems to be agreement between the Government's Act and our new clause. The Government provide in section 54(4)(d) that
      "the current level of prices, costs and remuneration and any future variation in that level which in the opinion of the Secretary of State will result from decisions which appear to him to be final and which will have the effect of increasing any particular prices, costs or remuneration."
      So it is agreed that prices, costs and remuneration are relevant. The difference is that the Government believe that the dictatorial hand of the Secretary of State is the only one that shall decide what prices, costs and remuneration are to be considered.
      That is absolute nonsense. One has only to consider the time when the Secretary of State decides prices, costs and remuneration. There is a gap in the financial year when the financial position changes, sometimes as a result of Government policies. The Government are well aware of the disastrous policy changes that there have been. Interest

      731
      rates change, prices go up, costs go up and wages go up from the time that the Secretary of State makes his guesstimate of the rate support grant.
      The Opposition say that that is reasonably fair. No one can foresee the future, though one gets that impression from reading the Act. But no one can see into the future, and it is reasonable that the Secretary of State shall make supplementary reports. That is the fundamental difference between the Opposition and the Government. The Opposition say that the Minister "shall", whereas the Local Government, Planning and Land Act 1980 says that he "may". Having said that he should make supplementary reports bearing in mind that during the year prices, costs and wages change, we should try to spell out exactly what is to be done in those supplementary reports. If the Secretary of State makes a supplementary report—and up to now there has been no disagreement about a supplementary report being made—it seems reasonable to spell out what is to be contained in it and what the method of that supplementary report shall be. If we do not do that, we achieve nothing.
      We do that by stating what shall be contained in the supplementary report and the matters of which it should take account. But we go even further, because we do not see the Secretary of State as the be-all and end-all of knowledge. The right hon. Gentleman's track record lets him down too much even to think of giving him that dictatorial power. The Opposition are not prepared to say that one man, whether it be a Conservative or a Labour Secretary of State, should be in a position to make these decisions.
      When the Secretary of State makes his supplementary report, the Opposition say that he should make it to the people at the sharp end—those in local government—and agree the data and agree the prices, costs and wages which are to be considered. Only when they have been agreed is the right hon. Gentleman in a position to publish that report. In addition, he must state the amount of the block grant that is payable to each local authority, and, more important—something that the Government always manage to hide—the method of calculation. Nothing in the Bill has confused local authorities more. It even makes them hanker for the old method. People working in local government did not like that method, but the implications of this Bill make them nostalgic for it.
      Mr. Graham: Does my hon. Friend really have confidence in the ability of this Secretary of State or this Government to forecast accurately, for instance, the levels of inflation and wages, when the built-in figures in this year's settlements are woefully inadequate—4 per cent. for wages and 9 per cent. for inflation? They seem to be totally out of touch with reality.
      Mr. Cowans: By no stretch of the imagination do I consider that this Secretary of State is capable of forecasting anything. One of the problems for local government is that the Government do not make truthful forecasts or view matters in their proper perspective. Many Government actions create inflation, but then the Government profess not to have created inflation. They fix a low rate support grant, with disastrous consequences for local government.
      The new clause is necessary because this measure has created more confusion in local government than any other
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      legislation before has done. The Government have been successful in one respect: they are the only Government that I recall who have united all local authority associations of all political colours against what they seek to do. Worse than that, they have put local government officers who are employed to give legal and professional advice in an impossible position. I do not come from Bedford, but that area is a monitor of what is happening in local government throughout the country. Something which at present is lawful and on which chief executives have to pronounce suddenly becomes retrospectively unlawful. Local authorities are in a mess. What a chief executive says today will be illegal when the Bill comes into force, although it is legal when he says it. New clause 3 is an attempt to clear the mist that is slowly descending on local authorities.
      I want to highlight what I am saying by quoting a letter which, although it relates to Bedfordshire, applies throughout the country. I do not seek to make a political point. I want to show the utter confusion that now exists in local government. The chief executive says in his report to the council:
      "In what is undoubtedly a very complex and difficult situation,"—
      without new clause 3 it will be worse—
      "and probably one without precedent, any advice which is tendered to Members can only be a personal judgment. Again, as has been the position for some months, the easier course for any officer would be merely to present the issues to the Members and conclude 'the committee's instructions are requested."'
      That is what the Bill is doing to local officers who, because they now have to look at their own legal position, may have to opt out. The chief executive goes on:
      "I would see this as an inadequate discharge of a professional responsibility and propose therefore to put forward a recommendation. It is my opinion"—
      it should be noted that it is his opinion; the way the Bill is drafted, that is all that he has to rely on, because the legal validity is changing day by day—
      "that the Council should continue to maintain the validity of the supplementary precept and should take whatever measures are necessary to see that its validity is established but that, at the same time,"—
      this is where local government is in complete confusion—
      "some restraint should be applied to the commitment of expenditure so as to reduce the difficulties which would occur if that argument should fail and the income from the supplementary precept should be lost after all".
      That is what the Bill is doing to local government—apart from the many other ways in which councils are being placed in utter confusion.
      I do not claim that the new clause will solve every difficulty. The letter refers to other matters which are relevant to later amendments, but I shall not refer to them now because they are not germane to this new clause. New clause 3 may not be the be-all and end-all. All I claim is that it would make this nonsensical and obnoxious Bill a little better than it is. If the Government have the interests of local government at heart, they will accept it because it will help to clarify the situation.
      Mr. Allan Roberts: New clause 3 is particularly relevant to this legislation and to the Government's administrative and executive action in determining the rate support grant for the financial year 1982–83. I shall describe how the new clause and the Government's actions in that respect affect Merseyside and the metropolitan district of Sefton, in which my constituency lies.

      733
      New clause 3 puts back into statute law the provision for a supplementary report to be made by central Government during the course of a financial year. Traditionally, the purpose of a supplementary report is to enable the Government to put right mistakes, errors of judgment or miscalculations made when the original rate support grant settlement was decided and implemented. It has always been felt advisable that central Government should have the power to correct, adjust or change the original rate support grant settlement as the financial year progressed because no Government—no matter how successful they may be at predicting economic trends, inflation, unemployment or wage settlements—always get it exactly right. This Government are no better at assessing the likely outcome of economic trends than any other Government. For that reason, we feel that they should retain the power to produce a supplementary report and to alter the rate support grant settlement originally decided at the beginning of the year.
      New clause 3 is particularly important because the Bill takes away all the other options for correcting mistakes that have been made in the rate support grant settlement. It takes away the options that were previously available to local government to correct the mistakes. For instance, the assumptions made in the Government's rate support grant settlement of 4 per cent. for wage settlements and 9 per cent. for inflation are totally inaccurate, but local government is landed with a block grant rate support grant settlement dependent on those two assumptions.
      6.30 pm
      The Government must introduce a supplementary report during the current financial year—we have passed 1 April—to rectify that mistake, but, according to the Bill, the Government do not have the power to do so. Local government does not have the power to make up the deficit that every local authority in the country will face as a result of the Government's miscalculations. We have already pointed out that the Bill takes away from local authorities the power to levy a supplementary rate to put right the mistakes and to close the gap between the assumed and actual rates of inflation and wage increases.
      In addition, if there is a crisis within a local authority and the grant is withdrawn, or if there is not enough rate support grant available and the local authority cannot raise the extra revenue from the rates because it is not allowed to levy a supplementary rate, it cannot pass on a deficit to the following year. If it does, it will be penalised by the Secretary of State for overspending and for passing on overspending from one financial year to the next.
      Therefore, the option of maintaining a deficit and carrying it forward and levying a rate for it in the following year is closed to local government. If a local authority, because of economic difficulties, faces the prospect of becoming insolvent—a prospect that never existed before the Government began legislating to prevent local authorities from raising revenue to make up for losses in grant—the first call on its moneys goes to those who have lent it money, not to its employees or anyone else. The first call on a local authority that has borrowed money is the interest that must be paid. That is another area where local government is in a Catch-22 situation and where it is important that the Government are at least in a position to move in to assist with a supplementary report.
      What will happen if new clause 3 is not accepted must be related to what is happening on the ground. This is not
      734
      an academic debate. It matters in terms of the services provided by local authorities for local people. Before May 1981 a Conservative-controlled Merseyside county council overspent £16 million on its own Government's target and left a £5 million deficit to be carried forward into the financial year 1981–82. That £5 million deficit which was left by the Conservatives to an incoming Labour county council, led to a penalty being imposed by the Secretary of State for the Environment who withdrew grant for the current and the following financial years.
      When the Merseyside county council came to formulate its budget for 1982–83, it faced a number of choices. There was an aspiration budget of £180 million, which everyone would like to have seen. That would have provided the best possible services for Merseyside. A budget of £168·7 million was put forward by the various services committees of the council, which, having scrutinised their budgets, made cuts where it could. A budget of £157 million was proposed by the officers of the local authority, because they did not want to annoy the Government or the Secretary of State. They wanted to do what the Secretary of State asked them to do, but they could not quite make it, because the Secretary of State's target figure was £140 million. The Merseyside county council examined the services committees' request budget of £168·7 million and managed to reduce that to £165·5 million. The £140 million target required by the Secretary of State was deducted from the £165·5 million. That left £25·5 million above the Secretary of State's target. That was done 'to maintain essential services in Merseyside.
      The Labour group on the Merseyside county council knew that the Bill was going through Parliament, but its strong view was that it was acting legally and that the Secretary of State had no legal power of super holdback or clawback under the existing legislation when the budget was made or as it exists now as the precept goes out to the districts and the rate bills go out to the electors. The budget was drawn up in the knowledge that the councillors were acting legally.
      What is sad is that the Bill may or may not—the legal advice that the Minister offered in Committee does not clarify the position—retrospectively make the actions of Merseyside county council illegal. The advice given to the county council is "We do not think that it will retrospectively apply to you. You are certainly acting legally at the moment." The Minister's remarks in Committee lead us to believe that he has received advice which leads him to believe that the Bill is all right as it is because it will retrospectively make illegal the action taken by the Merseyside county council.
      I suggest to the hon. Member for Liverpool, Edge Hill (Mr. Alton) that his defence of Bedfordshire county council in its desire to fulfil its election commitments, to keep its promises to maintain services and, as a consequence, to raise a rate higher than the target set by the Secretary of State, applies equally to Merseyside county council.
      Mr. Alton: I rise simply to inform the hon. Member for Bootle (Mr. Roberts) and other hon. Members that I take that view and that it would be illogical not to do so. It is a matter for the Merseyside county council to determine. I accept that the Labour Party has a majority on Merseyside and, in many ways, is doing what it said

      735
      that it would do when it was elected. If local electors do not like that, they should replace Labour councillors at the next local election.
      My objection to what Bedfordshire county council has now done is that it was intimidated into taking that action by decisions that were taken in Committee, because the Bill will apply retrospectively to that council. That goes against what the electors in that area wanted.
      Mr. Roberts: I am grateful to the hon. Member for Edge Hill for his assurance that he supports what the Merseyside county council is doing to fulfil its election pledges.
      In Committee, I asked the Minister a specific question about local authorities receiving advice from various quarters about what was and was not legal?
      The Merseyside county council hopes to receive a supplementary report to help it make up the money lost because of extra inflation and wage increases, greater than anticipated expenditure on the police service and the expenditure—which the Government have still not met—to deal with the results of the rioting in Toxteth.
      The council also wants a supplementary report, which will give it a greater block grant allocation, so that it can provide bus passes for old-age pensioners in the Sefton area, which includes my constituency. The Sefton council—the only authority on Merseyside which is controlled by the Conservatives—is so measly that it will not give pensioners proper bus passes, but insults them by providing a handful of tokens, which run out within about three months, after which they cannot travel without paying the full fare.
      During the county council elections, the Labour Party promised to introduce a uniform bus pass for the whole of Merseyside and, in default of the Sefton council doing its duty, to provide passes for pensioners in Sefton. The council was advised that it might be illegal to provide bus passes for the elderly citizens of Sefton and elsewhere on Merseyside by other ratepayers and district councils. It was suggested that if the county council provided the service for Sefton, some ratepayers might be paying twice, which could be illegal.
      The county council consequently expressed its desire to establish arrangements, if lawful, for the concessionary travel system to be on a basis similar to that in Liverpool and other districts. We are still waiting to find out whether that is lawful. I hope that the Under-Secretary will give me an answer.
      Mr. Alton: I strongly support the latter part of the hon. Gentleman's argument. What is being done to local government is creating a licence for lawyers to make money. As a result of the legislation, more cases are going to court, and those who benefit are not the ratepayers but the legal profession.
      Mr. Roberts: I welcome that intervention. I must be careful. If the hon. Gentleman and I continue to agree with each other, those on Merseyside will not understand what is happening.
      I hope that the Under-Secretary will accept the new clause, because it will give to him and his colleagues the flexibility that they need to deal with the rate support grant settlement as the year progresses. It need not commit them
      736
      to extra expenditure, but it would show local authorities that the Government are not as vindicative as they appear to be.
      Mr. John McWilliam: I wish to put the debate on the new clause into its proper context. New clause 2 sought to make the legislation temporary and we know from the result of the Division on that clause that the Green Paper on the replacement of the rates and the Government's stated intention to abolish the rates are nothing more than a vote-gathering sham and were never intended to be more than that. If they had been otherwise, the Government would have accepted the new clause.
      We now have to deal with the rest of the nonsenses in the Bill. It is clear that there will be nothing to replace the Bill in the foreseeable future, that the Government have no intention of treating it as temporary legislation—as was at least implied—and that the Bill will be the law for the lifetime of this Parliament and Government. Let us have no illusions about that.
      6.45 pm
      One of my problems with the Government is that they are like the Hapsburgs—they have remembered everything and learnt nothing.
      Mr. Cartwright: It was the Bourbons, and they learnt nothing and forgot nothing.
      Mr. McWilliam: I am grateful for the results of the hon. Gentleman's classical education.
      Mr. Allan Roberts: Both the accurate quote and the quote used by my hon. Friend are applicable to the Government.
      Mr. McWilliam: I am grateful to my hon. Friend. The point that I am about to make is underlined by the interventions.
      The Government have had adequate time to study the Layfield report, which was published in 1976. Paragraph 46 of the report states:
      "Wages and salaries tend to rise faster than other costs in the economy. Between 1972 and the first half of 1975"—
      we did not have a Labour Government in power for most of that time—
      "this tendency was particularly marked. In those years the relative price effect, which we describe in paragraphs 29–32, was large, so putting local government finances under extra strain. Because of the relative price effect local authorities would have been obliged to increase their expenditure beyond the general rate of inflation even if'—
      and this is important—
      "they had only maintained their services at existing levels … and if the wages and salaries they paid had increased no faster than wages and salaries generally."
      It is bad enough that the Government have not taken that aspect into account, but that is compounded by Layfield's comment:
      "Wages and salaries in local government therefore increased faster than wages and salaries generally and so aggravated the problem."
      Why did those wages and salaries increase faster? The Layfield committee said:
      "the emphasis in national pay awards was on lower-paid workers, many of whom are employed in local government."
      The relative costs of local authorities are not directly related to the level of inflation and if the country decides that the low-paid deserve to keep up with inflation better than the higher paid the preponderance of low-paid

      737
      workers in local authorities means that the costs of local government are higher than the general level of wage inflation at the time.
      Layfield goes on to say in paragraph 47:
      "Any misjudgement of the likely amount of inflation in the coming year could lead to a serious shortfall in the necessary income. In turn that required greater rate increases in the succeeding year than the spending in that year might demand."
      It is not as if the Government did not have any evidence before the matter was discussed in Committee. They had the considered opinion of an emiment Royal Commission and they ignored it.
      The situation becomes worse in paragraph 48. It says:
      "Within their normal provision for contingencies and reserves, local authorities have only limited scope for meeting increased expenditure once the rates for the year have been set."
      If that was true in 1976, given that supplementary rates are to be banned under this Bill, it is even more true now. In 1976 the Layfield committee gave the Government the benefit of its advice.
      The final crunch in the Layfield report comes in paragraph 49, which says:
      "Further difficulties were caused for some authorities by the increasing tendency of aggrieved ratepayers to withhold rate payments pending the outcome of appeals".
      Given the level of uncertainty which the Government are building in to this legislation, that seems to be much more likely in the future than it was in the period leading up to the Layfield report of 1976—the good old days which many Conservative Members try to hark back to.
      To be fair, all Governments tend, at least initially, to put relatively unrealistic figures upon the projected level of inflation for the coming year. My criticism of the Government is that the word "relatively" is inadequate to describe the misinformation which they have attempted to perpetrate upon the populace in general and upon local government in particular.
      I disagree fundamentally with my hon. Friend the Member for Bootle (Mr. Roberts) when he says that our proposal is intended to put right errors of judgment. It is intended to do no such thing. It is intended to set the law right, to make the Bill workable. If it is not accepted, the Bill will not be workable.
      A local authority has an absolute duty to levy an adequate rate. If it tries to levy that rate on the basis of 4 per cent. and 9 per cent., local authorities know—and if they are honest the Government will accept—that that level of rate is inadequate. The only way that that shortcoming can be made up is for the Government to accept the responsibility which our proposal lays upon them. This has always been the case in Scotland, where we did not have access to supplementary rates. It was only that kind of provision which enabled us to stay within the law in levying a rate.
      The Government might be trying to make a political point. They might have been trying to lead people down a certain path, and if people did not go down that path—even if the Government had tried their best and failed—at least they would bail out the local authorities in the sense of levying an adequate rate.
      It is impossible under the Bill for any local authority to carry out its legal duty to levy an adequate rate. I say most strongly to the Minister that if he will not accept the new clause how will he make up the shortfall which as a result of Government mis-estimates—deliberate mis-estimates
      738
      in many cases—will occur in the income of local authorities to enable them to carry out their legal duty to levy an adequate rate?
      Mr. Giles Shaw: I rise, much to the sadness of Labour Members, to urge the House to oppose this new clause. As is so often the case with debates of this kind led by the right hon. Member for Manchester, Ardwick (Mr. Kaufman), a considerable amount of time has been spent, not on what the clause contains but on other matters which are considered germane to the discussion. That is understandable to those who served on the Committee.
      First, the right hon. Gentleman made some claims about the counties receiving substantially more recently than they should have done at the expense of other classes of authority. He probably missed the point that in the years prior to 1981–82 part of the counties' grant resources was paid as a resources element to the district, unlike block grant, that counted as part of the district's rate income and was therefore taken by the county through the precept.
      The simple arithmetic proposed by the right hon. Gentleman simply does not work. I suspect that that has happened once or twice during the Bill's progress. The relevant part of the resources element paid to the districts has to be added to the share received by the counties. When that is taken into account, it will be seen that there has been no major change in the counties' share of grant between 1980–81 and 1981–82. I sincerely hope that the right hon. Gentleman will accept that.
      The second matter raised concerned clause 4 and the question of the public expenditure control system and whether the Government were seeking to make further amendments to it. As a layman, looking at clause 4, I believe that the principles enacted, including the
      "principles applicable to all local authorities"
      are those that fairly operate.
      It is common in local authority financing to find that a number of local authorities do varying things with their income. Some are police authorities, some programme authorities and some education authorities. However, all authorities have to operate within budgets which relate to the principles of public expenditure. That is common to Governments of both parties. The detailed use of those words has been raised by my hon. Friend with the local authority associations.
      Discussions on the fine points of legal definition are continuing. If some clarification is recommended, it would be appropriate for an amendment to be made. That would be within the ambit of discussion. Clause 4 contains an acceptable definition of the principles applying to all local authorities. Indeed, a wide range of local authorities would seek to make exemptions anyway. Programme authorities are a typical case in point. Should there be any consequential change, an amendment will be tabled in another place.
      The hon. Member for Bootle (Mr. Roberts) slightly misconstrued the present position. He implied that there is no power to make a supplementary report in existing legislation. Under section 61 of the 1980 Act the Secretary of State has the power to make a supplementary report
      "at such time … as he thinks fit".
      However, neither the 1974 nor the 1980 Act makes it obligatory on him to use that power. I suspect that that is the point that the hon. Gentleman was wishing to make.

      739
      7 pm
      The statutory basis for rate support grant settlements in the 1980 Act is the same as that in the 1974 Act. At any given time the Secretary of State has to take into account present and prospective levels of pay and price increases which affect local government. He must take a prospective view of trends in expenditure.
      My right hon. Friend the Secretary of State, like his predecessors, has made clear in each RSG report the rates of increase which he has taken into account. Most increases in costs are in the hands of the local authorities and not of the Department.
      Mr. Allan Roberts: Does the Minister agree that the legislative framework for the rate support grant is the same as it was in making the settlement on assumptions of inflation and wage settlements? Does he agree that the proposed legislation takes away the power of local authorities to adjust for discrepancies in the basis on which the rate support grant is calculated? Is that not why the new clause is necessary? If local authorities cannot adjust in the way in which they have been able to adjust, surely the Government must be required to adjust.
      Mr. Shaw: I do not accept that. We are talking about the cash planning by which local authorities are controlled. That was the discipline used by the right hon. Member for Stepney and Poplar (Mr. Shore). The circular issued at the time of the last settlement promulgated by the right hon. Member for Stepney and Poplar incorporated a pay factor of 5 per cent. The circular stated:
      "Expenditure programmes should therefore be planned and managed on the basis that even if pay and prices increase faster than estimated, for the purposes of the cash limits, the grant will be held within the limits".
      Mr. McWilliam: I accept what the Minister has said, but I hope that he will accept that the difference between then and now is that my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) had the opportunity to put the matter right, whereas under this legislation the Secretary of State will not have the opportunity to put right his mistakes.
      Mr. Shaw: I accept that at that time the power of the supplementary rate was not available to the local authority and that that power was available to the Secretary of State. What is being suggested now is, in principle, identical. Local authorities are now budgeting for a full 12 months, just as Chancellors of the Exchequer and Governments must do. The discipline is no different. There is no reason why Opposition Members should assume that what is now required is an amendment to remove the cash control system.
      Opposition Members should bear in mind that the 1979 circular made it clear that the payment of additional grant to match the full increase in expenditure as a result of inflation is not automatic.
      I stress the message that even the Labour Government understood. The level of service provided by local government and elsewhere in the public sector must be determined by the finance available. It is the cash that counts. The new clause would run counter to a cash control policy and should be rejected.
      Mr. Graham: In the absence of my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman), I must reply. The Minister has made an unsatisfactory defence. As a result of what the Government are doing in
      740
      the Bill and in the Local Government, Planning and Land Act, local government is being made a nightmare not only for councillors but for ratepayers and the public in general. We are asking the Government to accept some reasonableness and flexibility in their control of local government. The Minister has demonstrated once again——
      Mr. Cowans: Will my hon. Friend reflect on the Conservative manifesto in which there was a pledge to give more democracy to local government? Is this the Conservatives fulfilling that pledge?
      Mr. Graham: This is a demonstration of the way in which the Government fulfil their pledges. There is a mockery and a sham about it. Even the Conservative-controlled Enfield council is aghast at what is happening. Only this morning did the hon. Members for Enfield, North (Mr. Eggar) and Southgate (Mr. Berry) and I receive letters from the town clerk, who complained bitterly about the impost in the legislation.
      My hon. Friends the Members for Bootle (Mr. Roberts), Newcastle upon Tyne, Central (Mr. Cowans) and Blaydon (Mr. McWilliam) and the hon. Member for Liverpool, Edge Hill (Mr. Alton) have considerable experience of local government. They have tried to explain the anguish of councillors in their areas and their belief that damage will be done to local government if the new clause is not accepted.
      The forecasts on which the Government based their settlements were made in November and December 1981, but the Government are looking ahead to the costs to be borne by councils in 1982–83. There is a gap of between 15 and 18 months. As such forecasts are obviously far out of tilt, we ask the Government to introduce a supplementary report. That can be done only in consultation with the local authorities. In this Bill and in others the Secretary of State has taken unto himself more power than any other Secretary of State. The Minister has made a bad job of defending the proposition. I have no hesitation in inviting my right hon. and hon. Friends to press the new clause to a vote.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 227, Noes 276.

      Division No. 119]

      [7.09 pm

      AYES

      Abse, Leo

      Callaghan, Rt Hon J.

      Adams, Allen

      Callaghan, Jim (Midd't'n &P)

      Allaun, Frank

      Campbell, Ian

      Alton, David

      Campbell-Savours, Dale

      Archer, Rt Hon Peter

      Canavan, Dennis

      Ashley, Rt Hon Jack

      Carmichael, Neil

      Ashton, Joe

      Cartwright, John

      Atkinson, N. (H'gey,)

      Clark, Dr David (S Shields)

      Bagier, Gordon A.T.

      Cocks, Rt Hon M. (B'stol S)

      Barnett, Guy (Greenwich)

      Cohen, Stanley

      Barnett, Rt Hon Joel (H'wd)

      Coleman, Donald

      Beith, A. J.

      Concannon, Rt Hon J. D.

      Benn, Rt Hon Tony

      Conlan, Bernard

      Bidwell, Sydney

      Cook, Robin F.

      Booth, Rt Hon Albert

      Cowans, Harry

      Boothroyd, Miss Betty

      Craigen, J. M. (G'gow, M'hill)

      Bottomley, Rt Hon A. (M'b'ro)

      Crowther, Stan

      Bradley, Tom

      Cryer, Bob

      Bray, Dr Jeremy

      Cunningham, DrJ.(W'h'n)

      Brocklebank-Fowler, C.

      Dalyell, Tam

      Brown, Hugh D. (Provan)

      Davidson, Arthur

      Brown, R. C. (N'castle W)

      Davies, Ifor (Gower)

      Brown, Ronald W. (H'ckn'yS)

      Davis, Clinton (Hackney C)

      Brown, Ron (E'burgh, Leith)

      Davis, Terry (B 'ham, Stechf'd)

      Buchan, Norman

      Deakins, Eric

      741

      Dean, Joseph (Leeds West)

      Mc Namara, Kevin

      Dewar, Donald

      McTaggart, Robert

      Dixon, Donald

      Mc William, John

      Dobson, Frank

      Magee, Bryan

      Dormand, Jack

      Marks, Kenneth

      Douglas, Dick

      Marshall, Dr Edmund (Goole)

      Dubs, Alfred

      Marshall, Jim (Leicester S)

      Duffy, A. E. P.

      Martin, M (G'gowS'burn)

      Dunn, James A.

      Maynard, Miss Joan

      Dunnet, Jack

      Meacher, Michael

      Dunwoody, Hon Mrs G.

      Mikardo, Ian

      Eadie, Alex

      Millan, Rt Hon Bruce

      Eastham, Ken

      Miller, Dr M. S. (E Kilbride)

      Edwards, R. (W'hampt'n S E)

      Mitchell, Austin (Grimsby)

      Ellis, R. (NE D'bysh're)

      Mitchell, R. C. (Soton Itchen)

      English, Michael

      Morris, Rt Hon C. (O'shaw)

      Evans, Ioan (Aberdare)

      Morton, George

      Evans, John (Newton)

      Moyle, Rt Hon Roland

      Faulds, Andrew

      Newens, Stanley

      Field, Frank

      Oakes, Rt Hon Gordon

      Fitch, Alan

      O'Neill, Martin

      Flannery, Martin

      Orme, Rt Hon Stanley

      Fletcher, Ted (Darlington)

      Owen, Rt Hon Dr David

      Foot, Rt Hon Michael

      Park, George

      Ford, Ben

      Parker, John

      Forrester, John

      Parry, Robert

      Foster, Derek

      Pendry, Tom

      Foulkes, George

      Penhaligon, David

      Fraser, J. (Lamb'th, N'w'd)

      Pitt, William Henry

      Freeson, Rt Hon Reginald

      Powell, Raymond (Ogmore)

      Garrett, John (Norwich S)

      Price, C. (Lewisham W)

      Gilbert, Rt Hon Dr John

      Race, Reg

      Ginsburg, David

      Radice, Giles

      Golding, John

      Rees, Rt Hon M (Leeds S)

      Graham, Ted

      Richardson, Jo

      Grant, George (Morpeth)

      Roberts, Albert (Normanton)

      Grant, John (Islington C)

      Roberts,Allan (Bootle)

      Grimond, Rt Hon J.

      Roberts, Ernest (Hackney N)

      Hamilton, W. W. (C'tral Fife)

      Roberts, Gwilym (Cannock)

      Harrison, Rt Hon Walter

      Robertson, George

      Hattersley, Rt Hon Roy

      Robinson, G. (Coventry NW)

      Haynes, Frank

      Rodgers, Rt Hon William

      Heffer, Eric S.

      Rooker, J. W.

      Homewood, William

      Roper, John

      Hooley, Frank

      Ross, Ernest (Dundee West)

      Horam, John

      Rowlands, Ted

      Howell, Rt Hon D.

      Ryman, John

      Howells, Geraint

      Sandelson, Neville

      Hoyle, Douglas

      Sever, John

      Huckfield, Les

      Sheerman, Barry

      Hughes, Mark (Durham)

      Sheldon, Rt Hon R.

      Hughes, Robert (Aberdeen N)

      Shore, Rt Hon Peter

      Hughes, Roy (Newport)

      Silkin, Rt Hon J. (Deptford)

      Janner, Hon Greville

      Silkin, Rt Hon S. C. (Dulwich)

      Jay, Rt Hon Douglas

      Silverman, Julius

      Jenkins, Rt Hon Roy (Hillhead)

      Skinner, Dennis

      John, Brynmor

      Smith, Rt Hon J. (N Lanark)

      Johnson, Walter (Derby S)

      Snape, Peter

      Johnston, Russell (Inverness)

      Soley, Clive

      Jones, Rt Hon Alec (Rh'dda)

      Spearing, Nigel

      Jones, Barry (East Flint)

      Spriggs, Leslie

      Kaufman, Rt Hon Gerald

      Stallard, A.W.

      Kilfedder, James A.

      Stoddart, David

      Kilroy-Silk, Robert

      Stott, Roger

      Kinnock, Neil

      Strang, Gavin

      Lamborn, Harry

      Straw, Jack

      Leadbitter, Ted

      Summerskill, Hon Dr Shirley

      Leighton, Ronald

      Taylor, Mrs Ann (Bolton W)

      Lestor, Miss Joan

      Thomas, Mike (Newcastle E)

      Lewis, Arthur (N'ham NW)

      Thomas, Dr R. (Carmarthen)

      Litherland, Robert

      Thorne, Stan (Preston South)

      Lofthouse, Geoffrey

      Tilley, John

      Lyon, Alexander (York)

      Tinn, James

      McCartney, Hugh

      Torney, Tom

      Mc Donald, DrOonagh

      Varley, Rt Hon Eric G.

      McKay, Allen (Penistone)

      Wainwright, E. (Dearne V)

      McKelvey, William

      Wainwright,R.(ColneV)

      MacKenzie, Rt Hon Gregor

      Walker, Rt Hon H.(D'caster)

      Maclennan, Robert

      Watkins, David

      McNally, Thomas

      Weetch, Ken

      742

      Wellbeloved, James

      Winnick, David

      Welsh, Michael

      Woodall, Alec

      White, Frank R.

      Woolmer, Kenneth

      White, J. (G'gow Pollok)

      Wrigglesworth, Ian

      Whitehead,Phillip

      Wright, Sheila

      Whitlock, William

      Young, David (Bolton E)

      Willey, Rt Hon Frederick

      Williams, Rt Hon A.(S'sea W)

      Tellers for the Ayes:

      Williams, Rt Hon Mrs (Crosby)

      Mr. J. Hamilton and Mr. L. Cunliffe.

      Wilson, Rt Hon SirH. (H'ton)

      Wilson, William (C'try SE)

      NOES

      Adley, Robert

      Dunn, Robert (Dartford)

      Aitken, Jonathan

      Durant, Tony

      Alexander, Richard

      Eden, Rt Hon Sir John

      Alison, Rt Hon Michael

      Eggar, Tim

      Amery, Rt Hon Julian

      Elliott, Sir William

      Ancram, Michael

      Emery, Sir Peter

      Arnold, Tom

      Fairbairn, Nicholas

      Aspinwall, Jack

      Fairgrieve, SirRussell

      Atkins, Robert (Presfon N)

      Farr, John

      Atkinson, David (B'm'th,E,)

      Fell, Sir Anthony

      Baker, Kenneth (St. M'bone)

      Fenner, Mrs Peggy

      Baker, Nicholas (N Dorset)

      Finsberg, Geoffrey

      Banks, Robert

      Fisher, Sir Nigel

      Beaumont-Dark, Anthony

      Fletcher, A. (Ed'nb'gh N)

      Bendall, Vivian

      Fletcher-Cooke, SirCharles

      Benyon,W. (Buckingham)

      Fookes, Miss Janet

      Berry, Hon Anthony

      Forman, Nigel

      Best, Keith

      Fox, Marcus

      Bevan, David Gilroy

      Fraser, Peter (South Angus)

      Biffen, Rt Hon John

      Fry, Peter

      Biggs-Davison, SirJohn

      Gardiner, George (Reigate)

      Blackburn, John

      Gardner, Edward (S Fylde)

      Blaker, Peter

      Garel-Jones, Tristan

      Body, Richard

      Gilmour, Rt Hon Sir Ian

      Bonsor, Sir Nicholas

      Glyn, Dr Alan

      Bottomley, Peter(W'wich W)

      Goodhart, Sir Philip

      Bowden, Andrew

      Goodhew, Sir Victor

      Boyson, DrRhodes

      Goodlad, Alastair

      Braine, Sir Bernard

      Gorst, John

      Bright, Graham

      Gow, Ian

      Brinton, Tim

      Grant, Anthony (Harrow C)

      Brittan, Rt.Hon.Leon

      Gray, Hamish

      Brooke, Hon Peter

      Greenway, Harry

      Brotherton, Michael

      Griffiths, E. (B'ySt.Edm'ds)

      Brown, Michael (Brigg &Sc'n)

      Griffiths, Peter Portsm'th N)

      Browne, John (Winchester)

      Grist, Ian

      Bruce-Gardyne, John

      Gummer John Selwyn

      Bryan, Sir Paul

      Hamilton, Hon A.

      Buchanan-Smith, Rt.Hon.A.

      Hamilton, Michael(Salisbury)

      Buck, Antony

      Hampson, DrKeith

      Budgen, Nick

      Hannam, John

      Burden, Sir Frederick

      Haselhurst, Alan

      Butcher, John

      Havers, Rt Hon Sir Michael

      Cadbury, Jocelyn

      Hawksley, Warren

      Carlisle, John (Luton West)

      Hayhoe, Barney

      Carlisle, Kenneth (Lincoln)

      Heddle, John

      Carlisle, Rt Hon M. (R'c'n)

      Henderson, Barry

      Chalker, Mrs.Lynda

      Hicks, Robert

      Channon, Rt. Hon. Paul

      Higgins, Rt Hon Terence L

      Chapman, Sydney

      Hogg, HonDouglas (Gr'th'm)

      Clark, Hon A. (Plym'th, S'n)

      Holland, Philip (Carlton)

      Clark, Sir W. (Croydon S)

      Hooson, Tom

      Clarke, Kenneth(Rushcliffe)

      Hordern, Peter

      Clegg, Sir Walter

      Howe, Rt Hon Sir Geoffrey

      Cockeram, Eric

      Howell, Rt Hon D. (G'ld'f'd)

      Colvin, Michael

      Howell, Ralph (N Norfolk)

      Cope, John

      Hunt, David (Wirral)

      Cormack, Patrick

      Hunt, John(Ravensbourne)

      Costain, SirAlbert

      Hurd, Rt Hon Douglas

      Cranborne, Viscount

      Jenkin, Rt Hon Patrick

      Critchley, Julian

      Jessel, Toby

      Crouch, David

      JohnsonSmith, Geoffrey

      Dean, Paul (North Somerset)

      Jopling, RtHon Michael

      Dickens, Geoffrey

      Kellett-Bowman, MrsElaine

      Dorrell, Stephen

      Kershaw, Sir Anthony

      du Cann, Rt Hon Edward

      Kimball,Sir Marcus

      Dunlop, John

      King, Rt Hon Tom

      743

      Kitson,SirTimothy

      RhodesJames, Robert

      Knight,MrsJill

      RhysWilliams,SirBrandon

      Knox,David

      Ridley,HonNicholas

      Lamont,Norman

      Rifkind,Malcolm

      Lang, Ian

      Rippon, Rt Hon Geoffrey

      Latham,Michael

      Roberts, M. (Cardiff NW)

      Lawrence,Ivan

      Roberts, Wyn (Conway)

      Lawson, Rt HonNigel

      Rossi,Hugh

      Lee,John

      Rost, Peter

      LeMarchant,Spencer

      Royle,SirAnthony

      Lennox-Boyd,HonMark

      Sainsbury,HonTimothy

      Lester, Jim (Beeston)

      St. John-Stevas, Rt Hon N.

      Lewis,Kenneth (Rutland)

      Scott,Nicholas

      Lloyd, Ian (Havant& W'loo)

      Shaw, Giles (Pudsey)

      Lloyd, Peter (Fareham)

      Shaw,Michael(Scarborough)

      Loveridge,John

      Shelton,William(Streatham)

      Lyell,Nicholas

      Shepherd,Colin(Hereford)

      McCrindle,Robert

      Shepherd,Richard

      Macfarlane,Neil

      Shersby,Michael

      MacGregor,John

      Silvester,Fred

      MacKay, John (Argyll)

      Sims,Roger

      Macmillan,Rt Hon M.

      Skeet, T. H. H.

      McNair-Wilson,M.(N'bury)

      Speed,Keith

      McNair-Wilson, P. (NewF'st)

      Speller,Tony

      Madel,David

      Spence,John

      Major,John

      Spicer, Jim (West Dorset)

      Marlow,Antony

      Spicer, Michael (S Worcs)

      Marshall,Michael(Arundel)

      Sproat,Iain

      Marten, Rt Hon Neil

      Squire,Robin

      Mates,Michael

      Stanbrook,Ivor

      Mather,Carol

      Stevens,Martin

      Maude, Rt Hon Sir Angus

      Stewart,A. (E Renfrewshire)

      Mawby, Ray

      Stewart Ian (Hitchin)

      Mawhinney,DrBrian

      Stokes,John

      Maxwell-Hyslop,Robin

      StradlingThomas,J.

      Mayhew,Patrick

      Taylor, Teddy (S'end E)

      Mellor,David

      Temple-Morris,Peter

      Meyer,Sir Anthony

      Thorne, Neil (IlfordSouth)

      Miller,Hal(B'grove)

      Thornton,Malcolm

      Mills,Iain(Meriden)

      Townend,John (Bridlington)

      Mills, Peter (West Devon)

      Townsend, Cyril D, (B'heath)

      Moate,Roger

      Trippier,David

      Monro,SirHector

      Trotter,Neville

      Montgomery,Fergus

      van Straubenzee,Sir W.

      Moore,John

      Vaughan, DrGerard

      Morris, M. (N'hamptonS)

      Viggers,Peter

      Morrison, Hon C. (Devizes)

      Waddington,David

      Morrison, Hon P. (Chester)

      Wakeham,John

      Mudd,David

      Waldegrave,HonWilliam

      Murphy,Christopher

      Walker, Rt Hon P.(W'cester)

      Myles, David

      Walker, B. (Perth)

      Neale,Gerrard

      Walker-Smith, Rt Hon Sir D.

      Needham,Richard

      Wall,SirPatrick

      Nelson,Anthony

      Waller,Gary

      Neubert,Michael

      Ward,John

      Newton,Tony

      Warren,Kenneth

      Normanton,Tom

      Watson,John

      Onslow,Cranley

      Wells,Bowen

      Oppenheim, Rt Hon Mrs S.

      Wells,John(Maidstone)

      Osborn,John

      Wheeler,John

      Page, Richard (SW Herts)

      Whitelaw,RtHon William

      Parris,Matthew

      Whitney,Raymond

      Patten,Christopher(Bath)

      Wickenden,Keith

      Patten,John (Oxford)

      Wiggin,Jerry

      Pattie,Geoffrey

      Wilkinson,John

      Pawsey, James

      Williams, D. (Montgomery)

      Percival,Sir Ian

      Wolfson,Mark

      Pink,R.Bonner

      Young,SirGeorge (Acton)

      Porter,Barry

      Younger,RtHonGeorge

      Prentice, Rt Hon Reg

      Proctor, K. Harvey

      Tellers for the Noes:

      Raison, Rt Hon Timothy

      Mr. R. Boscawen and Mr. D. Thompson.

      Rees, Peter (Dover and Deal)

      Question accordingly negatived.

    New Clause 5

      Accountability to Parliament
      "(1) The Commission shall undertake or promote studies of the impact on economy, efficiency and effectiveness in the provision of local authority services and in the financial management of local authorities of statutory provisions and of guidance and instructions issued to them by Ministers of the Crown.
      (2) The Comptroller and Auditor General shall have access to all documents and records held by the Commission relating to any such studies.
      (3) The Comptroller and Auditor General shall report to Parliament the results of his examination of any such documents and records, provided that he shall not in any such report refer to the affairs of any individual authority in a way which identifies that authority by name or otherwise.".—[Mr. Joel Barnett.]
      Brought up, and read the First time.
      Mr. Joel Barnett: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker (Mr. Bernard Weatherill): With this it will be convenient to take amendment No. 16, in clause 21, page 16, line 17 after "20", insert "or section (Accountability to Parliament)".
      Mr. Barnett: I hope and believe that the objectives of the new clause are the same for the Government, local authorities and the House of Commons—to ensure better value for money in public spending and also proper and more effective parliamentary control. The new clause is a limited, but important, step to take the House in some way in the direction that the Public Accounts Committee unanimously recommended in its report last year. That report commanded all-party support among nearly 300 hon. Members in early-day motion 252.
      The purpose of the new clause is to enable the Public Accounts Committee, through reports from the Comptroller and Auditor General, to report to Parliament on the spending of large sums of money that the House votes. For example, there is the 1982–83 rate support grant voted by the House, which will be over £10 billion. I believe that we can do that under the terms of the new clause without infringing the proper democratic rights of local authorities. I shall want to say a word or two about local authorities and their fears, which I recognise they have.
      New clause 5(1) states:
      "The Commission shall undertake or promote studies of the impact on economy, efficiency and effectiveness in the provision of local authority services and in the financial management of local authorities"—
      this is the important part—
      "of statutory provisions and of guidance and instructions issued to them by Ministers of the Crown."
      Therefore, that is a fairly narrow subsection.
      I make it clear that the subsection is narrow. I would have preferred to go further, but we have deliberately written the new clause in a way that should be acceptable. It seeks to ensure that the House has the opportunity to consider whether Government measures and guidance encourage efficient local administration or the reverse. That is what the new clause is about. That is why I say that it should command acceptance on both sides of the House. It is a question whether the financial arrangements set by Government are well designed to meet what Parliament and the Government have approved.
      The work does not have to be carried out by public sector or private sector auditors or by this or that type of

      745
      consultant. That is not an issue. The Public Accounts Committee has never argued that the work must be done by public sector or private sector auditors. I hope that we can remove that question from any argument.
      Personally, I very much regret the fact that, unfortunately, the way in which the debate has been conducted has given the impression that auditors are being treated as a sort of political football. Local authorities are being left, wrongly, with the impression that the auditors, whether private or public sector, are intent on intervening on policy issues. That is not what we are talking about. Auditors, consultants and others, who have specific skills, have the abilities to help local authorities, not to work against them and not to take political decisions that are rightly the responsibility of local authorities.
      Mr. Christopher Price: My right hon. Friend did not have the benefit of attending umpteen sessions of the Committee. Is he aware that it has been made clear by private as well as public auditors that they would very much resent being brought into this situation, so much so that they might refuse outright to be compulsorily appointed to audit a local authority if there were the slightest implication that they were there to do a political hatchet job on that local authority?
      Mr. Barnett: I cannot say that I am sorry that I did not sit through those sessions, day and night in Committee, having done too much of that on Finance Bill Committees over the years. I am glad to hear my hon. Friend's comments because I know from colleagues in the profession that they do not want to become involved in policy-making decisions.
      The difficulty is that local authorities feel that achieving greater efficiency in the spending of money is synonymous with cutting expenditure in total. That does not follow. The total level of expenditure is a matter for Government and local authorities. Within a certain level of expenditure better value for money will help local authorities that want more expenditure. More expenditure will be available through the proper and more efficient use of the money at their disposal. I hope and believe that local authorities will welcome the new clause and the direction in which we are seeking to move.
      I am sorry that we are not going further. This will be borne out by my colleagues on the Public Accounts Committee. When witnesses from the local authorities came before the Committee it was clear to us that they were under the misapprehension that the Comptroller and Auditor General was part of the Executive. They did not see him as the independent figure that he is, although the Public Accounts Committee would prefer it if he were appointed in a different way. He is wholly independent of the Executive and of Parliament. He is an independent man—one day that person may be an independent woman—who would not intevene on policy matters affecting local authorities.
      For the reasons that I have given I believe that local authorities will benefit from the studies that the Comptroller and Auditor General would be enabled to undertake under the terms of the new clause. In that way a Department's actions vis-a-vis local authorities—that is to say its statutory provisions or guidance—will be able to be properly checked by the Comptroller and Auditor General. Reports will be made to the House of Commons
      746
      through the Public Accounts Committee. That can only be to the benefit of local authorities rather than to their disadvantage.
      Therefore, new clause 5(2) provides access to documents for the Comptroller and Auditor General. Again I make it clear that it is nothing like a broad and general access. Subsection (2) states that that access is severely restricted to documents related to the studies that have been referred to in subsection (1). It is not general access either to the books and records of the local authority's auditors, or to the books and records of the local authority. Therefore it is narrow and restricted access.
      New clause 5(3) specifically provides that the Comptroller and Auditor General will not be able to report on any individual local authority. That is rightly a matter for the audit commission and local authority auditors. That is their function, and not that of the House, or the Comptroller and Auditor General. I know from my experience as chairman of the PAC that the obligation of the Comptroller and Auditor General to report to the House of Commons, by convention through the Public Accounts Committee, will ensure that the report will not be treated in a manner that would harm local authorities. I know that my predecessor, the right hon. Member for Taunton, (Mr. du Cann), will agree.
      7.30 pm
      Having said that, I understand the worries of local authorities, whatever their politics. I have frequently said, both in this Chamber and outside the House, that their fears are very much misplaced. We seek to help them achieve greater efficiency, not to hinder them or involve ourselves with their policy-making decisions. No one is suggesting that the Comptroller and Auditor General and his staff should duplicate the work of the audit commission and its staff. The new clause does not suggest that. It is designed to help local authorities, and in so doing, help the taxpayer and ratepayer.
      The new clause does not go as far as I know that ray colleagues on the PAC would like. I should like it to go much further. However, it is a modest but important step in the right direction.
      Mr. King: The right hon. Gentleman said that he would like to go much further. Does he mean much further in the direction of local authorities or in other aspects of the possible role of the Comptroller and Auditor General? It is important to put that on record.
      Mr. Barnett: There are two separate issues. First, as the right hon. Gentleman knows, there is the wider question of general access for the Comptroller and Auditor General to wherever public money goes. That is strongly supported by myself and nearly 300 members on both sides of the House. Secondly, although this is a limited new clause, I would much prefer that this House should go along with our recommendations in relation to local authorities. If the whole aspect were covered by a national audit office there would be better opportunities for pooling and sharing ideas and training, and for ensuring that the House was better advised and better able to obtain effective control of public money. However, I make it clear that that is not in the new clause. It is a narrow new clause.
      I hope that the House and the Government will accept the new clause as a useful first step. However, I do not

      747
      intend to stop here, although I must do so as it is a local government Bill with limited opportunities for amendment. The PAC believe that there is much more still to be done. It is an important step for two reasons. It will help local authorities and Governments to obtain better value for money, as the House intended. It will provide better accountability to the House of Commons. I hope that that is not a party political issue but one that all hon. Members will support as a means of proper and effective control over the Executive. The new clause does not undermine the principles of the Bill—which some of us may not like for other reasons—or the Government's plans on policy. Therefore, I ask the House to support the new clause, and the Government to accept it.
      Mr. Edward du Cann: In the course of his admirable and lucid explanation of the new clause, the right hon. Member for Heywood and Royton (Mr. Barnett) laid strong emphasis on its constructive purpose. I am sure that that was entirely appropriate and right. He was also right to make the point that we are dealing with a relatively limited aspect of a campaign about which he feels, I know, as strongly as I do—the opportunity to make certain that the House has, on a continuous basis, adequate information with which to supervise the activities of the Executive.
      I am pleased to be able make common cause with the right hon. Gentleman about this limited matter. It involves a principle that I believe to be important—that the House of Commons, which is accountable to the public, should be able to follow public money wherever it is spent, to decide how well it is spent and to publish its findings so that the public in general may judge the situation. I believe that that is essentially a practical and constitutional principle about which we have been too careless in the past. The process is essential for economy and efficiency in public expenditure, as the right hon. Gentleman also argued.
      Total expenditure in 1982–83, as the Chancellor announced recently, is planned to rise to £114,900 million in cash terms—9 per cent. higher than the outturn for the previous year, 1981–82, when the figure was £105,000 million. Provisional planning totals shown in the White Paper show that spending in cash terms for 1983–84 will rise to £121,000 million and in 1984–85 to £128,000 million. The House will no doubt be astonished if the figures are as low as that. There is a downward pressure on public expenditure as a percentage of gross domestic product over this period—at any rate, that is forecast, but we shall see. Some may applaud that tendency but that is the matter, in truth, that divides us, or should be the chief argument between the two parties. However, We can all agree that the absolute figures are formidable, and so is the amount voted by the House for local government.
      Volume 2 of the Government's expenditure plans shows that in 1982–83, this current financial year, it is estimated that the total local authority expenditure will amount to no less than £23,300 million and the aggregate Exchequer grant for the same year will be no less than £14,000 million. The rate support grant will be over £10,000 million. Those are huge figures.
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      I quote one sentence from the recently published report of the Treasury and Civil Service Select Committee on efficiency in the Civil Service. This passage is worth quoting and underlining:
      "Very few areas of public expenditure are currently subject to accurate measurement of output."
      The burgeoning expenditure of central Government makes for extreme difficulty in making judgments on the competence of that expenditure. There are always physical difficulties. There is the obvious difficulty of time. That is why a number of us have argued that we should make opportunities now in different ways, hence the establishment of the Select Committees to provide Members of Parliament with better advice than hitherto. That is possible through the Select Committees with the appointment of professional advisers of one sort or another. That is precisely why hon. Members on both sides have argued so strongly, and will continue to do so, for an extension of the remit of the Comptroller and Auditor General. The House will then have better and more catholic information about what is happening. In parenthesis, I cannot resist saying, and I make no apology for doing so, that it is an impertinence that almost three years should have passed since the then Leader of the House on 26 June 1979 undertook that the Chancellor of the Exchequer would examine that proposal as a matter of urgency. Nothing has been heard since. That is why the right hon. Member for Heywood and Royton and I thought fit to table an early-day motion arguing for the extension of that remit, a motion that has been signed, as the right hon. Gentleman pointed out, by more Back Bench Members than any other motion so far in this Parliament. It is time that we received an announcement from the Government.
      Returning to the matter of judgments on the competence of expenditure, we know that in any event judgments on some items are bound to be subjective. Judgment on some items also is bound to be bedevilled by party views or prejudices. But other items in the catalogue of expenditure are competent. Their effectiveness can be accurately measured. I suggest that there are more such matters in the total of central Government expenditure than are currently accurately measured. In general, the same is true of local government. Of course there is a problem. To some extent local authorities are creatures of central Government—that is to say, much of what they must do is dictated by Whitehall. To a large extent they are prisoners of Whitehall, but not entirely. In any case, it must be right as a matter of habit to ensure that outturn is compared with forecasts to ensure that one local authority's costings and competence are compared with another' s.
      I dare say that right hon. and hon. Members can think of many other examples where it is right that better comparative information should be available. What I and the right hon. Member for Heywood and Royton complain about is that, in general, that is never available. Nor do the public—the ratepayers—see value for money obtained on specific projects as a general rule. I truly believe that if there were a better examination of what local government is doing with the money that Parliament votes, a considerable sum could be saved with, no doubt, considerable relief to the individual and the corporate taxpayer.
      I cite one example relating to the assertion that I have just made. It came into my hands just last week. It is a

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      report published by a ratepayers' group about the activities of one local authority. I shall not give its name, as it might be assumed that I was making a party point, which I am not. It is a matter of general interest.
      In the memorandum accompanying the report, the following assertions are made. The report shows that the authority concerned spends far more proportionately than any other council, yet the social need is less than that in many other council areas. It points to items of wasted expenditure which, in the several areas examined, might be cut by about one-third without any disadvantage to deprived persons. It goes on to say that the area concerned spends 50 per cent. more per head on services than the average inner borough. Last, but by no means least, if all local authorities were staffed at the level of this local authority, there would be a further 1¼ million council employees. Those examples show clearly the need for a more searching examination of what local authorities spend in the public's name and what is done with the money that Parliament votes to them.
      7.45 pm
      Mr. John Garrett: Does the right hon. Gentleman agree that he has quoted an extremely one-sided example which is typical of "studies" carried out by ratepayers' associations? Such studies should also take account of the effectiveness of local authorities—the extent to which the local communities' needs are met. If the purport of the new clause is not simply to find cuts in the administration of local government but to enable local government to give better service to the community for which it is supposed to be providing services, that is one of the best points in the clause.
      Mr. du Cann: I agree with the thrust of the hon. Gentleman's intervention. My right hon. Friends the Minister for Local Government and Environmental Services and the Secretary of State have made substantial attempts to control expenditure. Unfortunately, what they have done has inevitably been a fairly crude operation. As the hon. Member for Norwich, South (Mr. Garrett) argued, it is possible to suggest that that type of exercise may result in a diminution or a decrease in services. That is quite possible, and it may happen. In any case, many of us, while agreeing in general with the argument of my right hon. Friend the Secretary of State that central Government cannot be indifferent to what local authorities are doing in the context of the economy in general, feel some unease as to whether local democracy is being interferred with.
      Like the hon. Member for Norwich, South, I would say that there is a more scientific method of proceeding. It is right to argue for value for money studies. It is right to expose what is being done. It is right to make certain that there is a real evaluation of needs and an accurate scientific measurement of whether those needs are being satisfied economically or extravagantly, well or badly.
      That is the object of the new clause. It fits exactly with the idea that the hon. Member for Norwich, South has just advanced. Above all, those who spend money voted by the House of Commons must be accountable to the House. That is the whole purpose of the new clause. I very much hope that my right hon. Friend the Minister of State, my neighbour and friend for whose qualities I have such admiration, will think that what we are endeavouring to
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      do through the new clause is prudent, right and wise. I hope that he will accept the amendment or at least the principle behind it.
      Mr. Christopher Price: I am happy to join in with the remarks of my right hon. Friend the Member for Heywood and Royton (Mr. Barnett) and the right hon. Member for Taunton (Mr. du Cann). I am a passionate believer in the independence of local government, and it is essential for Parliament to retain this antibody in the body politic and to ensure that we do not swallow local government whole and deprive it of any sense of independence that it has. Nevertheless, we must vest in Parliament some broad control, rather than detailed control, of the effective spending of the money voted by Parliament.
      The new clause is the right compromise for the time being. It seems that the Government will bow gracefully to the clear feeling of the House that this is the right compromise. I am pleased that that will happen. One has to admit that it is a difficult area. There will always be tension between central Government and local government.
      It is a fact of political life in the United Kingdom that when one party takes control of central Government, the instinctive reaction—I believe it is a good instinctive reaction—of the thoroughly nonconformist, in the nonreligious sense, British people is to say, "The Tories are in Whitehall, so we shall put a different lot in our town hall just to stop that lot getting slightly too big for their rather substantial boots". We should do nothing in auditing and efficiency studies to invalidate that very good instinct of the British people which has been shown in succeeding elections since the Second World War.
      There is, however, a caveat which I put forward in Committee and wish briefly to reiterate now. I very much favour proper auditing. I also very much favour studies of the impact on the economy of efficiency and effectiveness in the provision of local government services. But I believe that those are wholly different jobs. One is the professional auditing of the local authority's accounts. The other is the making of studies. They must be kept separate.
      I say that in the context of the letter that the Standing Committee finally revealed to the public and had placed in the Library. Mr. Ken Sharp, head of the Government Accountancy Service, wrote about what he described under the heading of "soliciting" but referred to in the body of his letter as "touting". Mr. Sharp wrote in December 1981 to the 13 big accountancy firms in Britain:
      "I am writing to express my deep concern at a developing practice within the profession to 'tout' for public sector business. Recently two cases have been brought to my attention of quite unsolicited approaches by leading firms to Government Departments."
      In Committee, I cited a number of cases, including one in Birmingham in which one of the big 13 firms had moved from its auditing function to its study function, as it were, without anything going out to tender, giving the impression that the Government's desire to bring the private sector into public sector auditing in Britain was a method of introducing a further element of privatisation—I do not say that that was the Government's intention, but that was the impression given—and assisting the great accountancy firms in Britain to secure more business than they would otherwise obtain.
      I shall not go into the matter again at length, but it is worth quoting from a recent article in the magazine

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      Management Today entitled "Accountancy's Golden Goose" just to put the situation in context in relation to the big 13 private accounting firms, because the House should be aware of the types of person with whom it is dealing. The article says of the big accountancy firms:
      "Their current prosperity is breathtaking. The earnings of the upper tier of partners are of the order of £100,000 a year (some deemed to be earned abroad and so bearing tax benefits); an annual income of £1 million has been achieved by the managing partner of at least one of the four largest firms."
      We are therefore talking of moving into an area that has hitherto been dealt with by the district auditing services, none of whose members could ever have boasted an income of £1 million and most of whom live modestly in Petts Wood, if I may so put it. We are moving into this area a sector which is used to getting very substantial rewards from the private sector for its services.
      I say no more than that, but if the Comptroller and Auditor General is to have general supervision of the studies department of the new audit commission, I hope that that will prove something of a check on these characters—I know that most of them are solely devoted to their professional purposes, but some are keener on raising their incomes—so that the studies of local government do not bleed so much money out of local government that they do not give value for money. There was a spate of such studies in the 1960s when I was in local government and on many occasions I felt that ordinary councillors could have taken better decisions than highly paid accountants. That point should certainly be borne in mind.
      Broadly, I welcome the new clause and I hope that the Comptroller and Auditor General will monitor not only the studies but the degree to which they are necessary. I very much agree with my right hon. Friend the Member for Heywood and Royton. I hope that the Comptroller and Auditor General and the audit commission will show local government how to make spaces in its expenditure—not to make cuts in expenditure, but to create areas in which it can spend money more usefully.
      The Select Committee on Education, Science and Arts, of which I am Chairman, has just toured various areas of the country in an attempt to find ways of spending a little money on funding the arts in Great Britain. I believe that if the rest of local government expenditure were better supervised, the arts—the Cinderella, or poor relation of local government expenditure—could be better served within local government. I cite that as just one example.
      I welcome the new clause and I hope that if the Government cannot accept it as it stands they will give cast-iron pledges that they believe in the spirit of it.
      Mr. Michael Morris: I shall not follow the hon. Member for Lewisham, West (Mr. Price) except to say that his Select Committee might take a leaf out of the Public Accounts Committee's book and recognise that we do not have to travel anywhere to carry out our studies.
      As one who put his name to new clause 5 and who worked very closely with the Chairman of the Public Accounts Committee, the right hon. Member for Heywood and Royton (Mr. Barnett), I wish to emphasise certain points about the relationship between local government and Parliament. I do so as one who believes fervently in strong, effective and responsible local
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      government—perhaps because for one period of my career I had the privilege of being leader of the London borough of Islington, which by any yardstick is a difficult area to look after. I thought then, and I still think today, that there are two vital dimensions to successful local government.
      First, local government must recognise that it must work within the economic framework laid down by the Government of the day, whatever the policies of that Government. Secondly, however, the individual councillor is ultimately responsible to his own electorate within his own ward. The new clause violates neither of those two dimensions, but builds upon them.
      We have already listened to contributions from my right hon. Friend the Member for Taunton (Mr. du Cann) and the right hon. Member for Heywood and Royton. The House owes a great deal to both right hon. Members for the persistence with which they have followed this course and the progress that we slowly make along that path.
      When looking at the new clause, and recognising that our friends in local government have certain worries, it is worth reminding ourselves of what was contained in the first special report of the Public Accounts Committee. It is worth drawing to their attention appendix XXXIX of the Minutes of Evidence, where, in his memorandum, the Comptroller and Auditor General listed in paragraphs 14 to 18 what he called "Legitimate Parliamentary Interests".
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      In paragraph 14, he reminds us that local authority expenditure comes from powers derived from statutes from the Houses of Parliament. In paragraph 15, he reminds us that the Government have rightly taken an interest in "both efficiency and effectiveness" auditing but that equally no Government have to be accountable to Parliament for the effects of whatever intervention they choose to make. In paragraph 16, he reminds us that there is no threat to local democracy as Parliament is not suggesting that individual authorities should be accountable, rather the collective whole or a large section of it.
      The essential issues for Parliament are, first, whether the Government have taken appropriate and adequate measures to encourage efficient local administration of services that Parliament has empowered local authorities to run and, secondly, whether the financial arrangements and the Government's control of them will ensure that the money Parliament has voted is spent as approved.
      If my friends in local government are worried, I urge them to read that appendix. They will find 10 examples listed, the majority of which suggest that it would be to the benefit of local government if studies such as that were undertaken.
      How often have we who have served in local government reflected that Parliament—and this is true of all Parliaments—produces a Bill, gets it on the statute book and never adequately provides sufficient resources for local government to undertake the activity involved? How often have we complained about that? That would be a perfectly proper area for investigation.
      I do not intend to speak for long because the issue is clear. It is fair to say that in the evidence he gave to the PAC, my right hon. Friend the Secretary of State for the Environment concurred with the points raised in paragraphs 17 and 18 of appendix XXXIX. He agrees that they are the legitimate interests of Parliament.

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      The aim of every hon. Member should be better accountability to Parliament and improved efficiency in local government. I do not believe that anyone would quarrel with that as an objective.
      There is nothing in the new clause as presently drafted that affects ministerial accountability to Parliament. I readily admit that while the scope of the new clause is limited, it is an important step in the direction of the PAC's recommendations on the role of the C and AG and, indirectly, on Parliament's control of expenditure.
      I also note that for many months my right hon. Friend the former Leader of the House, now Foreign Secretary, has been wrestling with the response that the Government should make to the totality of our report. This is an advance on a small front. I hope that my right hon. Friend the Member for Oswestry (Mr. Biffen), in his new role, will urgently look at the remaining outstanding dimensions and come forward with some recommendations at an early date.
      Mr. John Garrett: I shall be brief. I speak only out of sentiment, because for me this represents the first crack in the Government's position after 10 years of campaigning. I did not originate this campaign. That began with a Dr. Normanton, who wrote a scholarly study showing that ours was the least progressive State audit system in the Western world. I was much impressed by what he said.
      I am glad to say that over the years our little caravan has grown. First, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) joined me to write a pamphlet about it in 1972. Later, we received the support of my right hon. Friend the Member for Heywood and Royton (Mr. Barnett) and the right hon. Member for Taunton (Mr. du Cann). Today, 280 hon. Members from both sides of the House support the reform of the Exchequer and Audit Department system.
      I congratulate my right hon. Friend the Member for Heywood and Royton and the right hon. Member for Taunton on tabling the new clause. It is modest, but they know as well as I do that it contains two important principles which are the beginning of a wedge to be driven into the Treasury's position. The first principle is:
      "The Commission shall undertake or promote studies of the impact on economy, efficiency and effectiveness."
      If the new clause is accepted, or if the Government bring forward another new clause that includes those words, it will be the first time that they have been included in a public stature. The economy provision has been there since 1861, but what really matters are the words "efficiency and effectiveness". The economy provision simply minimises spending and exercises good housekeeping. That is fairly innocuous. That is why our Comptroller and Auditor General and our Exchequer and Audit system are so innocuous. However, "efficiency" means examining costs in relation to output. That is interesting. The crucial provision is "effectiveness", which means studying costs in relation to output and ascertaining the effect on the community of providing or not providing a service. That information will be extremely useful to the Opposition. I believe that time and again we shall discover that while cuts may have made local authorities more efficient, they have destroyed the effectiveness of local government to provide for the local community. Therefore, the inclusion of "effectiveness" is crucial.
      The second principle is:
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      "The Comptroller and Auditor General shall have access to all documents and records held by the Commission relating to any such studies."
      That means that for the first time since 1861, audit can go outside Supply. The C and AG and his department can venture beyond money provided by the Supply procedure. Although all public expenditure came within the Supply procedure when the post of Comptroller was introduced in the 1860s, today only half of public expenditure is covered by the Comptroller, because non-Supply expenditure by local authorities, nationalised industries, quangos and so on has grown so much, particularly in the last 50 years.
      Once we have established that, it is difficult to deny the Comptroller access to other non-Supply expenditure, such as spending by private contractors, nationalised industries and others. This is a useful first step towards parliamentary accountability for all public expenditure.
      Next, we must follow the recommendations of no fewer than four Select Committees which said that the Comptroller and his staff should have the power to follow public expenditure wherever it may happen. After that, we need better information so that we can establish whether or not central Government, local authority and other public spending is effective. For that purpose, we need a change in the form of the accounts.
      Lo and behold, we have the Procedure (Finance) Committee sitting on that subject. I have no doubt that it will come forward with some fairly positive recommendations in the fullness of time. The Government may not want that, because they established the Committee for only one Session. That is a matter that we can deal with as we go along.
      The crucial thing is to make the Comptroller a servant of the House, as was intended by Gladstone. Over the years, the Treasury has drawn that power away from the House until, in the end, the Comptroller was virtually a servant of the Treasury, even though it was intended that he should be an Officer of the House. This is the first step towards a mass of reform that the House desperately needs if it is effectively to call the Government to account, and I welcome it.
      Mr. Michael Shaw: I am glad to take up the remarks of the hon. Member for Norwich, South (Mr. Garrett). Those of us who are members of the Public Accounts Committee have had the benefit of his views and we welcome and value them. He said that he was speaking only out of sentiment, but it quickly became apparent that he was speaking mainly out of enthusiasm. We must not rebuke him for that. However, I wondered whether he might be causing the Government to run away with the feeling that there is more in the new clause than they thought. I hope that my right hon. Friend will see nothing sinister in the clause. It is merely a small step forward and part of a steady progression.
      I wish to add my good wishes and congratulations to the Chairman of the PAC committee, the right hon. Member for Heywood and Royton (Mr. Barnett), and to my right hon. Friend the Member for Taunton (Mr. du Cann), who have worked happily together. This augurs well for the work of the Select Committees. Clearly they should work in harmony rather than go off on their own courses and sometimes crossing each other without proper consultation. It is good that consultation and joint purpose obviously exist.
      I welcome the new clause because I believe it right that the role of the Comptroller and Auditor General should be

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      extended. The hon. Member for Lewisham, West (Mr. Price) said that there would always be tension between local authorities and the Government. I think that that is true. However, the Bill seeks to make the auditor much more independent than he has been hitherto and it will be improved if the new clause is accepted. If local authorities understand that the purpose of the Bill is in part to give the auditor greater independence, they should welcome the measure. I see nothing in the new clause to frighten local authorities. The right hon. Member for Heywood and Royton has clearly outlined the restrictions and the limiting factors that feature in the clause.
      We do not wish to interfere with local government. However, I acknowledge that there are some who are still fearful about part III. They come to my surgeries and express the fear that there will be some form of political interference. I have sought to tell them on every occasion that that is not true, could not be true and is not intended to be true. That cannot be said too often.
      The House should be able to follow much more than it has in the past what happens to the money that it spends. It is not enough merely to follow inquiries along lines that have been laid down by the Departments. Obviously the Departments may not have been doing their job. If we examine only the Department's records, we shall often find it impossible to tell whether the job has been properly done.
      The new clause is a modest but important step and can do nothing but good. Local government need not have the slightest fear about it. There will be benefits for central Government, local authorities and Parliament from the new clause, which I hope my right hon. Friend will accept. Alternatively, he may see fit to table a similar proposal at a later stage.
      8.15 pm
      Mr. Durant: I agree with much of what my hon. Friend the Member for Scarborough (Mr. Shaw) has said. However, I have some anxieties and I think that they should be expressed. I agree with the first two terms that appear in the first subsection of the new clause, which are "economy" and "efficiency". It is the inclusion of "effectiveness" that brings us into the political arena. The determination of what is effective is a question of judgment and this is quite a delicate area. Local government has a slight anxiety about the inclusion of "effectiveness".
      If a Minister performs services for the State that we consider are ineffective, we have the right of redress at Question Time and in debate. If a local authority is found to be ineffective, it might be possible through the method set out in the new clause to produce arguments that the actions have not been effective, but there will be little redress. We are moving away from the parliamentary arena and the governmental arena to a statutory agent created by Parliament and, I accept, operated under laws passed by Parliament, but it remains a separate agency. That being so, it may make a political judgment of effectiveness.
      The hon. Member for Norwich, South (Mr. Garrett) expressed worry in an intervention that we might be getting rather near political decisions. He observed that a local authority might decide to do much more in one area of policy because of a political decision and might be
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      ineffective. He said that its actions might have the wrong effect and that they might be taken because of political decisions.
      Mr. John Garrett: Surely it is of interest to the House if a service that is provided widely throughout the country—for example, a service that is provided by local authorities to help the elderly—is ineffective. That might say something about the legislation under which it is being operated, or the capacity of local government or central government to manage. It is important for us to know whether a particular service is being managed ineffectively throughout the country. The purpose of the new clause is to make these matters comparative, which will be of great value.
      Mr. Durant: I agree with what the hon. Gentleman says, but we are still entering an area of political judgment. I am not attacking the clause, but I feel that we might be bringing in party political judgments.
      Mr. Joel Barnett: As the hon. Gentleman knows, I was not a member of the Committee that considered the Bill, so I do not know whether he supported the Bill as it stood. However, clause 9(1)(c) refers to "effectiveness" in the use of resources. I assumed that he agreed with that concept.
      Mr. Durant: We are in debate and I think that I have the right to raise an anxiety. I did not say that I intended to vote against the new clause. I was merely expressing anxieties that have been put to me by people in local government. I thought it right and proper that they should be brought to light. I do not wish to go to the stake on the matter or to move an amendment to the clause. It is not my intention to try to eliminate "effectiveness". I am merely saying that the anxieties to which I have referred should be considered by the Government as part of their reaction to the clause. It is "effectiveness" that gives rise to some anxiety. The other parts of the clause are apposite to what we are trying to do.
      The anxiety to which I have referred featured in debates in Committee. There was considerable debate about the political implications. The Opposition rightly probed the issue deeply and obtained pledges from the Government that they would table amendments to overcome the political implications. The Opposition pressed extremely hard. They felt that the audit commission would become involved politically. One or two Opposition Members referred to instances of the district auditor making pronouncements that they felt were political. This is a matter over which we shall have to exercise care. A large element of judgment is involved. I am in favour of the words "economy" and "efficiency", but I am slightly nervous of the word "effectiveness" and its implications.
      Mr. Graham: I wish to intervene briefly from the Opposition Front Bench to express our gratitude to my right hon. Friend the Member for Heywood and Royton (Mr. Barnett), the right hon. Member for Taunton (Mr. du Cann) and right hon. and hon. Members on both sides who have seized the opportunity presented at this stage of the Bill to demonstrate the need for the new clause. It remains to be seen whether the new clause eventually sees the light of day in its present form. I await the observations of the Minister. I wish also to see in what form the new clause returns to the House from the other place.
      What has been demonstrated in a non-party manner is the genuine desire of right hon. and hon. Members to

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      provide value for money in the oversight of public accounts. Political control in the House and in local councils changes frequently. It is clear, therefore, that the desire to provide value for money is genuine. Some good sense has been displayed by hon. Members on both sides. The Minister's words in Committee have already been translated into concrete deeds. I am sure that the right hon. Gentleman will have taken careful note of the feeling of the House that existing opportunities, which appear not to have been fully exercised, could be more effectively exercised instead of relying on the new role for the audit commission that appears to be in the mind of the Government.
      I have been impressed by the constant reminders to the Government to carry forward the commitments made—I believe in June 1979—by the then Leader of the House. Hon. Members on both sides are anxious to ensure that they provide value for money to their constituents and to the House. The title of the new clause "Accountability to Parliament" says it all. We want to be satisfied that, on those matters for which the House is accountable, the opportunity exists for hon. Members to scrutinise and improve the situation. Members of the PAC and of the Select Committee have demonstrated their complete grasp of the underlying themes that have run through the debate. I am pleased that hon. Members have stressed that there is no party animus in the matter. I know the Minister well enough to believe that he will take this opportunity to refashion the words of the new clause so that, when it returns to the House from the other place, it will serve our aims as Members of Parliament.
      Mr. King: I am grateful to the hon. Member for Edmonton (Mr. Graham) for his last comment. Had his right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) been speaking, he would no doubt have said that he knows the Minister well enough to know that when the words came back from the other place, they would need further amendment. Aside from that point, I am grateful to the right hon. Member for Heywood and Royton (Mr. Barnett) and to my right hon. Friend the Member for Taunton (Mr. du Cann) for the way in which both of them, as present and past Chairmen of the Public Accounts Committee, have presented the new clause to the House. I believe that the whole House is aware of the keen interest that the right hon. Member for Heywood and Royton has taken in the issues of accountability and the proper pursuit of the control of public money. The House is also aware of the interest taken by my right hon. Friend the Member for Taunton, his predecessor, in these matters. They are both keen campaigners.
      I am grateful to my right hon. Friend the Member for Taunton for his courtesy in informing me that he has to leave the Chamber early to chair a further meeting of the Treasury and Civil Service Committee. I wanted to get that on the record in case any hon. Members thought that my right hon. Friend had walked out in the middle of my speech in disgust or some other form of disapprobation. I am not sure whether what I intend to say now will not make him walk out even faster in genuine disapprobation so that no one will know whether he is going to his Committee. I understand, however, that my right hon. and learned Friend the Chancellor of the Exchequer hopes to respond shortly to the points that my right hon. Friend has pressed on me together with other points. I hope that this will be possible.
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      I agree with the remarks of the hon. Member for Edmonton that we are concerned about value for money. All hon. Members who served on the Committee are, I think, flattered by the distinguished presence of other hon. Members interested in issues of public accountability. We have been seeking to deploy the argument that these are not party political issues. The hon. Member for Norwich, South (Mr. Garrett) made the point that they are as much in the interest of an authority that is anxious to minimise the demands on its ratepayers as in the interest of an authority wishing to seek how it can expand its services for a given sum of money. Value for money is an issue in which all hon. Members should take an equal interest.
      I should like to refer to the original proposals of the Public Accounts Committee, the hearings it held and the local government evidence that was given. The right hon. Member for Heywood and Royton made the point that he thought that many local authorities or the associations may have been under a misapprehension that the Comptroller and Auditor General was in some way part of executive Government. That may be a misunderstanding among some representatives of local authorities. There are others who are under no illusion about what the Comptroller and Auditor General represents. They see him as being associated with the Public Accounts Committee and with Parliament and unacceptable on that basis. I say this straight. The right hon. Gentleman will know that this is a view advanced by local authorities. I shall refer to it later. They feel that there is a constitutional implication and that their position is in some way compromised through the Comptroller and Auditor General.
      The right hon. Member for Heywood and Royton referred to his interest in this matter and called the new clause modest. I thought that some of his case was damaged by his hon. Friend the Member for Norwich, South who had me really worried and I was almost inclined to take the advice to leave the Chamber in a hurry. The right hon. Member for Heywood and Royton added that he would have preferred to go further. I picked him up on that because it is important, if we are to find an acceptable solution to the problem—and we cannot ignore the attitude of the local authorities—that the issue of "the thin end of the wedge" and "seeking to go much further in this direction" is put on record. It obviously behoves the Government to make it quite clear what they feel is acceptable so that we do not arouse further concerns. I am talking specifically about local authorities and local government and I am leaving aside certain other targets that it would not be proper for me to comment about, although the right hon. Gentleman might have had them in mind.
      8.30 pm
      We listened to the background of the debate, which has been much worked in the past. We had a historical summary from the hon. Member for Norwich, South, who said that he was speaking out of sentiment. I was struck by the fact that this was not a sentiment shared by the previous Labour Government who made it clear that they rejected the approach of the Comptroller and Auditor General having a responsibility to local government.
      I know that we have to be careful about making party political points these days but I am intrigued to see that the official Opposition are supporting this amendment. The hon. Member for Edinburgh, Central (Mr. Cook) seemed to make it abundantly clear in the early debates on the

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      previous report of the Public Accounts Committee that this was in no sense the view of the Opposition, and I understood that he was speaking for them. They did not seem to think that this was a proper position. It may be that speaking from the Opposition Front Bench is not necessarily speaking for the official Opposition, although that can lead to misunderstanding.
      The hon. Member for Edinburgh, Central said:
      "I do not deny that there is a role for more efficiency and effectiveness audits of local authorities, but if we attempt to achieve that effectiveness audit through an official operating in a closer relationship to Parliament and therefore to the Government, it will be resented by local authorities."
      That is correct and no hon. Member need be in any doubt about the extent to which that would be resented. He went on:
      "Nothing is more likely to cause resentment within local authorities than the suggestion that Parliament should ultimately be in charge of an efficiency and effectiveness audit of local authorities."
      Mr. Christopher Price: I take the statement as a whole but the Minister can take it from me that it is the "and therefore to the Government" bit that worries local authorities because they have hitherto associated Parliament with Government. I agree with him that if it were true that the Comptroller and Auditor General were an agent of Government I would not be in favour of the amendment. It is the hope of some of us that we can settle this with Parliament and Government. That gives us, who know people in local government, the conviction that we could persuade them that a parliamentary C and AG would be acceptable, whereas a governmental one would not.
      Mr. King: That may be the hope. I do not want to rehearse all the columns of this Official Report but the right hon. Member for Heywood and Royton tried to make that point to his hon. Friend, who said later:
      "I think my right hon. Friend will admit that he has failed to persuade the local authority associations of that view."
      It would be simplistic to suggest that that is the sole concern of local authorities. I agree with the hon. Member for Lewisham, West (Mr. Price) that they see a constitutional issue in the role of Parliament being distinct from the role of Government in this matter.
      I am not advancing any of the arguments. I happened to notice earlier that, in an intervention by my hon. Friend the Member for Northampton, South (Mr. Morris) in that debate, he asked whether the hon. Gentleman did not think there was
      "something strange in a situation where the chief inspector of audit prepares an annual report of two-thirds of the finance which is voted by Parliament and that report is not even laid before the House?"—[Official Report, 30 November 1981; Vol. 14, c. 105–6.]
      I think that will strike a chord with the hon. Member for Lewisham, West. Perhaps he will understand why I am not sympathetic to efforts to try to improve the arrangements when I say that I sent that report to the chairman or leader of every local authority in the country. I am sure many of them read it and studied it with care but the only acknowledgment that I had came from one chairman, out of 413 authorities, who complained about the cost and the quality of the envelope in which I sent it. That sometimes leads Ministers to believe that there are possible changes in the arrangements that might be made.
      This is a much-rehearsed route. The previous Government rejected the approach. This Government
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      considered representations and in the report on "The Role of the Comptroller and Auditor General" presented to Parliament in July 1981, rejected that role. They made it clear that in the case of local authorities they preferred the route of the audit commission. This is the route that we have put forward in the Bill. We rejected the route of the Comptroller and Auditor General.
      Nothing daunted—and anyone who knows the right hon. Member for Heywood and Royton knows that he is not often daunted—he has returned with a variant to involve the Comptroller and Auditor General. With his usual courtesy, the right hon. Gentleman informed my right hon. Friend and me by letter on Tuesday of last week that he would be tabling this amendment. We received it on Wednesday, and only now are we beginning to get the responses of the local authority associations to it. Obviously the right hon. Gentleman would have expected us to consult them.
      Hon. Members will have received a briefing from the Association of Metropolitan Authorities saying, effectively, that the first subsection is welcomed by the association but that the next two are not. The association says in effect that it is a good idea for there to be studies by the audit commission of the impact of Government policies on the effectiveness, efficiency and economy of local government, but a very bad idea if the Comptroller and Auditor General is then allowed access to those studies. That is the provision about which the association is concerned.
      I have a letter, which I think may have gone to other hon. Members who served on previous Standing Committees, from the Association of District Councils, which is rather more hostile to the clause. I understand that the Association of County Councils has not formed a view other than that the proposal is novel and that it needs time to consider it. It may be attracted by subsection (1) if not by the other parts of the clause.
      Right hon. and hon. Members will appreciate that the Government have certain problems in knowing how to deal with the new clause. We understand the concern about these issues and the arguments that have been advanced about Parliament's proper concern with the expenditure of public money and the proportion of public expenditure voted by the House that is involved in local government expenditure. That concern is real, and my right hon. Friend the Member for Taunton quoted the figures. Obviously there is some substance in this and a principle to which the Government are not unsympathetic. However, there are details in the new clause that need attention.
      I say immediately that it is an important new clause. It breaks new ground. It provides in statute for outside appraisal of the effects of Government policies and it gives the Comptroller and Auditor General a role in relation to local authorities which he has not had previously.
      We did not discuss these aspects in Committee, and we have not had an opportunity for any detailed consultations with the local authority associations. The Government have some sympathy with the suggestion that the Comptroller and Auditor General should have the right to examine the commission's studies showing the effect of Government policies on value for money, but our concern is partly about subsection (2).
      Mr. McWilliam: The right hon. Gentleman has just said that this principle had not been put forward in

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      Committee. However, he has to accept that I tabled detailed amendments covering this principle and extending it all the way through the Bill. We discussed the matter in detail in Committee.
      Mr. King: The proposals are well rehearsed about the Comptroller and Auditor General as an alternative to the audit commission. If the hon. Gentleman says that he moved specific amendments providing that the audit commission should have a duty to prepare studies on the impact of Government policies and that the Comptroller and Auditor General should have access to those studies, I withdraw what I said. But I am not aware that the matter was raised, and I think there must be some misunderstanding about it. I do not want to mislead the House. However, it is not a crucial part of my argument.
      The concern that arises is about access to documents, and that is dealt with in subsection (2). As the new clause is drafted, it could give the Comptroller and Auditor General access to the detailed papers of individual local authorities. This clearly could give rise to considerable concern. The hon. Member for Edinburgh, Central referred to the attitude of local government to the role of Parliament and the Comptroller and Auditor General.
      Secondly, there is the problem that the Secretary of State specifically precludes himself in schedule 1(3) from access to the detailed information. That paragraph precludes him from obtaining from the commission information relating to the discharge of its functions in respect of any local authority. An important point about accountability in the House is raised if the Comptroller and Auditor General is to have access to more detailed information than is available to Ministers, who may be accountable to Select Committees. We shall have to decide the right level at which informaion and access to documents would be appropriate.
      Another technical point is involved in the new clause. As it now reads, it would apply concurrent access to all the working papers. Clearly, that does not make sense. We believe that it should be consecutive. However, that is a point of detail.
      A further point is that we accepted an Opposition amendment to clause 20 stating that we should accept consultation not only with local authority associations but with organisations of workers, on the studies that would be done on economy, efficiency and effectiveness in local government, and comparative studies. If that were made a duty, there should be parallel consultation in this new clause, and it would be sensible to inquire into the provisions, guidance and instructions issued by Ministers, which might include consultation with Ministers by the audit commission.
      This is an important new clause, because it breaks new ground. It is a significant new step. However, I cannot recommend the House to accept it as it stands. If the right hon. and hon. Members who tabled the amendment were not to press it, I would give an undertaking that the Government see merit in its principle, but believe that it is inappropriate in its present form. I therefore propose that the new clause be withdrawn, on the understanding that the Government will then enter into immediate discussions in the light both of the substance of the new clause and of the further points raised in the debate, with a view to tabling our own amendment in another place that will achieve the main principle of this new clause but will cover the points of difficulty that I have mentioned.
      Mr. Joel Barnett: I want to get the matter absolutely clear and on the record. I note what the Minister of State said about the need for consultations and discussions. I understand that perfectly. However, the Minister of State then used the words "with a view to". I am very conscious of the use of language in these matters, as I know the right hon. Gentleman is. I should like from him a clear commitment—not "with a view to"—that he will give an undertaking. We are going through difficult times. By the time he has in mind, he may be Foreign Secretary. I do not know what he may be. This is a serious point. I want a clear commitment, not only on his own behalf but on behalf of the Government that, after his consultations, a new clause or an amendment that will achieve the main principles of this new clause will be tabled in another place. Without that, I am sure that all the right hon. and hon. Members who support the new clause—and the Public Accounts Committee—realise that there will be no other opportunity to take action, once the Bill leaves this place. I therefore want clearly on the record a firm Government commitment that after the consultations they will come back to this House, after amendments have been tabled in another place to achieve the main principles of this new clause.
      Mr. King: I am grateful to the right hon. Gentleman. As he said, I chose my words carefully. I entirely understand why he picked me up on the phrase "with a view to". Important issues, particularly about the degree of access to documents, have to be established, on which I hope to have full discussions with the right hon. Gentleman and other interested parties. Certainly, there will need to be consultations with local authority associations on the matter. If we can achieve agreement, so much the better. I hope that we shall reach agreement on the amendment that will be tabled. If we fail to reach complete agreement, we shall undertake to table an amendment that embodies the principle and approach of new clause 5. That will afford both to another place and to the House the opportunity to re-examine the question and to vote upon it. That is the most appropriate way. I understand the right hon. Member's concern that if nothing emerged there would be no further opportunity to deal with the matter. There is a timing problem. This is a major issue and we have been faced with a difficulty about time. I do not wish to deny the House the opportunity for a considered approach to what we believe is the right solution to the problem.
      8.45 pm
      Mr. Joel Barnett: I thank the Minister for those remarks. I think that it is now crystal clear that we shall have another opportunity to deal with the matter and that the Government—whoever is in charge at the time—will table an amendment or a new clause to ensure that.
      I hope that the consultations will win the local authorities' agreement. I understand their anxieties, but I think that they are misplaced. I hope that the debate will have assured local authorities that we have no wish for them to continue to be anxious. I hope that we have been able to persuade them on that score. It must be borne in mind that the Government have not always accepted everything that local authorities have wanted or not wanted to do. I hope that the consultations will go smoothly and

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      I shall be happy to take part in them with the Minister. I know that the right hon. Member for Taunton (Mr. du Cann) would do likewise.
      However, the responsibility for the new clause is not only mine. A number of right hon. and hon. Members on both sides of the House support it, because of the importance of the role of the Comptroller and Auditor General. Therefore, I do not wish lightly to withdraw such an important new clause. I should be willing to do so on the clear understanding and commitments that the Minister has given on behalf of the Government that he will table a new clause or amendments in another place to achieve the main principles of new clause 5. That is my understanding of the Minister's assurance. I hope that that will be acceptable to the House.
      Mr. Dick Douglas: Will my right hon. Friend accept that new clause 5. is a compromise on a compromise and that right hon. and hon. Members on both sides of the House who put their names to the new clause would be unwilling to compromise much further?
      Mr. Barnett: I am obliged to my hon. Friend. I am sure that the Minister will have noted his remark. We shall have an opportunity to debate the matter again. That is the important firm commitment that we now have. I made it clear that new clause 5 does not go anywhere near as far as the Public Accounts Committee or those who signed early-day motion 252 wanted. We are dealing with a fairly narrow point, although, as my hon. Friend the Member for Norwich, South (Mr. Garrett) rightly said, it is an important first step. It is on the clear understanding that there is a Government commitment to table an amendment in another place to achieve the main principles that are set out in the new clause that——
      Mr. King: I do not wish to mislead the House or resile from anything that I have said, but the right hon. Gentleman has referred to "main principles". The difficulty is that we shall need to have discussions, and we shall have to say what we think has been established. If we do not reach total agreement, we shall table an amendment setting out what we think will meet the purposes of the new clause. It will then be possible for the House to consider and debate the amendment.
      Mr. Barnett: I deliberately used the words "achieve the main principles", because the Minister used them. I hope that after the discussions, whether or not the right hon. Gentleman is able to get agreement with the local authority associations—I hope that he will, because I believe that their fears are misplaced—the House will have an opportunity to discuss the main principles of the new clause again. There is a substantial majority of hon. Members on both sides of the House in favour of not only the narrow new clause, but much more than that.
      On the basis of the clear undertaking and commitment from the Government, I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

    New Clause 6

      SPECIAL CHARGING ORDERS
      '(1) In section 147 of the Local Government Act 1972 (expenses of principal councils) the following subsections shall be inserted after subsection (3):—
      "(3A) If in any part of a district the district council is exercising as principal one or more of the statutory functions held by the parish or community councils (as the case may be) in its district, and such function or functions is elsewhere in that district being exercised by one or more parish or community councils (as the case may be) the district council shall make such charging resolution as is described in subsection (3) above as is appropriate in all the circumstances of the situation.
      (3B) The Secretary of State may by order made by statutory instrument prescribe (a) the factors to be taken into account by the district council in making any charging order under subsection (3A) above and (b) the procedure by which any parish or community councils desirous that any such charging order be made may secure the making of an appropriate order.
      (3C) Subsection (3A) of this section shall not come into force until the first day of April in the year next after the year in which the Secretary of State shall have made the first order under subsection (3B) above."
      (2) In section 54 of the Local Government Planning and Land Act 1980 after subsection (8) there shall be inserted the following subsection—
      "8A Where 'relevant expenditure' includes sums payable under precept to the councils of parishes or communities the Secretary of State may by regulations made under section 113 of the General Rate Act 1967, provide for the transfer of the amount of block grant attributable to an such precept from the local authority to the council of the parish or community as the case may be.".'.—[Mr. Alton.]
      Brought up, and read the First time.
      Mr. Alton: I beg to move, That the clause be read a Second time.
      The new clause seeks to amend the Local Government Act 1972 and the Local Government, Planning and Land Act 1980. Its intentions are well known to hon. Members and they have been debated in Committee, on the Floor of the House and in another place. The objective is to give parish councils the opportunity of receiving some of the rate support grant which the Government give to district councils, but which is not always passed on to the parishes.
      The clause is similar to one moved during the passage of the 1980 Act. At that time Lord Bellwin gave various assurances and, bearing in mind the assurances that have just been given by the Minister for Local Government and Environmental Services, I hope that hon. Members will realise that ministerial assurances are not always what they appear to be. However, I hope that the assurance just given by the right hon. Gentleman will result in an amendment being incorporated in the Bill.
      Lord Bellwin said that the problem of parish councils would be considered. Unfortunately, no results have appeared and the Under-Secretary of State for Wales said in Committee that the objective of the new clause was an impossible task. That contradicts Lord Bellwin's assurances.
      I refute the suggestion that the proposal in the new clause is an impossible task. Perhaps the best reason for my view is that some district councils already do what the new clause suggests. They pass on part of the rate support grant to parish councils, and if it is possible for some to do that I do not see why it should not be possible for others to do it. Therefore, I do not accept that it is an impossible

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      task, though I agree that it is difficult and is not as easy as was suggested by the hon. Member for Bootle (Mr. Roberts), who proposed a similar new clause in Committee.
      The new clause would apply to many parish, town and community councils which have continued to press for changes in the law. The precepts of the 8,600 parish, town and community councils, which are wholly met from rates levied on the ratepayers of those councils, are taken into account in determining the block grant payable to the local district councils, but none of that relevant grant has to be paid to the parish council and it is not credited to the parochial council to enable the parish ratepayers to benefit. Instead, the district ratepayers benefit, even though they did not have to bear the initial expenditure. That is grossly unfair.
      There have been many previous calls to amend the legislation. My hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) on 12 March 1979 asked the then Minister:
      "How can the hon. Gentleman possibly defend an arrangement under which expenditure earned by the decision of ratepayers in a parish to pay an additional rate should incur grant-aid on a general basis to the district council that does not need to be passed on to the parish? Does he recognise that a few district councils—fortunately, only a few—are actively opposed to the concept of parish councils and would much prefer parish councils to entrust all their functions to them and enable them, the district councils, to control all the grant-aid and for the parish councils to disappear?"—[Official Report, 12 March 1979; Vol. 964, c. 228.]
      The Minister said that he would consider that argument. However, since then, little has been done.
      My hon. Friend the Member for Colne Valley (Mr. Wainwright) wrote to me last week to say:
      "No Minister has ever attempted to defend this unfair situation, but the attitude has been 'wait till we have other legislation and we will include it then'."
      I have had more representations on this aspect of the Bill than on any of the other horrors perpertuated by the legislation. I have had representations from parish councils throughout the country.
      The Sussex Association of Parish Councils said:
      "Parish Councils have been inhibited from taking an initiative on local enterprises and spending money on them, because they know that although the amounts of their precepts are included in the calculation for Rate Support Grant, none of the Grant will be passed on to them."
      The Great Wyrley parish council said:
      "We … urge you to support the amendment"
      which I am proposing today
      "on the grounds of justice, as the precepts by Parish Councils are taken into account when calculating the District Council's entitlement to the Grant but the District is not compelled to pass on the Grant. Only a very few Districts do so under voluntary arrangements."
      The honorary secretary of the Derbyshire Association of Local Councils said:
      The Town and Parish Councils have fought long and hard since even before the 1972 Act for the grant to be paid to town and parish councils on the grounds of justice—their precepts, which are wholly met by parish ratepayers, are taken into account in calculating the district councils entitlement to grant but districts are not compelled to pass on the grant. Only a very few districts do so, under voluntary arrangements."
      The Yorkshire and Cleveland Councils' Association said:
      "Parish and Town Councils are the smallest tier of Local Government and without doubt the most economically efficient. With relatively modest calls on ratepayers' money they achieve marvellous results for those living within their area."
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      Mr. P. R. A. Newell, the secretary of the Wiltshire Association of Local Councils—it is interesting to note that the president of that association is the hon. Member for Devizes (Mr. Morrison)—said:
      "I have been asked to draw your attention to an amendment put down to the above Bill which would entitle Parish and Town Councils to receive an appropriate share of the rate support or block grant on their precepts."
      He hopes that I would support that. It is because of such representations, and those of my hon. Friends, that I decided to pursue this matter today.
      The Government have said that they have much sympathy with this general idea, but no Minister has ever tried to justify not doing anything about it. Therefore, I have, albeit reluctantly, picked up a suggestion made in the other place 18 months ago that the Secretary of State should make regulations as to how rate support grant attracted to district councils for parish councils expenditure should be passed on to the parish council. That is something which has been debated in the passage of successive local government Bills both by this and previous Governments.
      It is apparent, for example, in Wiltshire, that the district council will agree to make the appropriate payment only if there is legislation to force it to do so. The obvious iniquity of the present system is that parish councils are double rated. Parish ratepayers pay their parish rate and the district rate, and the rate support grant element designed for the parish is used to alleviate district council expenditure generally. Areas with active parish councils are subsidising those without them. This injustice works as a deterrent both to the initiative and the establishment of parish councils.
      Particularly now, when communities are breaking up for lack of community oriented work, the Government should respond to ensure that these efficient, locally based organisations receive adequate resources and encouragement. As one letter put it:
      "No Parish Council will eagerly undertake (in the low key and economic way which is their trade mark) new valuable local initiatives if the expenditure attracts rate support grant from which the Parish and its ratepayers get no benefit."
      9 pm
      The most recent survey by the National Association of Local Councils conducted in October 1979 produced 157 answers from 328 district councils with parish or community councils. The Association of District Councils advised its members not to reply to the questionnaire. Of the 157 which answered, 16 said that they paid the amount requested, 42 said that they gave grants of more than rate support grant resource element, 61 said that they gave less than their rate support grant resource element, two gave rate support grant resource and needs element and 38 gave nothing.
      There is no reason to suppose that the figures have changed in favour of parish councils. With the present squeeze the money is even less likely to be paid out. In Treasury terms what I am asking for is a small sum. For 1981–82 it represents about 0·16 per cent. of a total local government expenditure of about £36 million.
      The Government said in Committee that, if a way could be devised to force district councils to pay, they would adopt it. There is a solution in my proposal. It will allow the Secretary of State to make enabling regulations. Even if the Government will not accept the new clause, I hope that they will assure the House that a more acceptable amendment will be introduced in the other place.

      767
      I commend the new clause. Its purpose is to make parish, town and community councils masters in their own homes, to ensure that funds intended for their use are passed to them and to demonstrate that Parliament fully appreciates the valuable work of small councils which are rooted in their neighbourhoods.
      Mr. Oakes: I have sympathy with what the hon. Member for Liverpool, Edge Hill (Mr. Alton) said. Parish councils have tended to be the Cinderella of local authorities since 1972, but they are important.
      When a parish council expresses an opinion to a Member of Parliament, one knows that is the opinion of elected representatives, not a pressure group. Some parish councils have been adversely affected because the parish rate does not always go to the parish but is absorbed by a district council, in much the same way as some EEC grants go into the Treasury maw rather than into the areas to which they should be directed. Parish councils feel that acutely.
      The parish of Halewood in my constituency is big and rich. Ford operates there. The parish calls itself the town council and is regarded as such by many inhabitants. It does a tremendous amount of work in Halewood. It does more than Knowsley district council can do, because it is closer to the inhabitants and more akin to their needs.
      I listened carefully to the debate. I am not sure that the new clause is the appropriate way to deal with the difficulty. I accept the Minister's view on that aspect. However, it is not beyond the wit of Her Majesty's Government to introduce an amendment in another place if the new clause is unsatisfactory.
      The clause was drafted by laymen, not by Government draftsmen. Nevertheless, the Government should accept that there is a problem and that, if possible, it should be dealt with in another place. If not, the Government may be assured that hon. Members on both sides of the House will come back to this matter to do right by parish councils, whether they call themselves parish or town councils. Parish, town or community councils are often much nearer to the wishes of an area's inhabitants than the gigantic district councils created by the Local Government Act 1972.
      Many urban and rural district councils, which were councils in their own right until 1972, opted to become parish or town councils. The hon. Member for Edge Hill referred to an urban area. Halewood has a population of between 20,000 and 30,000. If it were not in the sort of urban areas that the hon. Gentleman and I represent, it would be regarded as a major county town.
      I accept that this may not be the right new clause, but I hope that the Government will listen carefully to what the hon. Member for Edge Hill said about it. I hope that the Government will introduce a new clause in another place which will do effectively what the hon. Gentleman wants. I assure the Government that if they do not do that, the Opposition—including the Liberal and Social Democratic Parties—will put considerable pressure on them. There will also be pressure from the Government's supporters because many of these parish councils are controlled by them. Such councils do an extremely good job, no matter who controls them.
      768
      I hope that the Minister will assure the whole House that an attempt will be made in another place to remedy the defects in the present system that have existed since 1972.
      Mr. Giles Shaw: I knew that, in moving the new clause, the hon. Member for Liverpool, Edge Hill (Mr. Alton) would deploy strong arguments in favour of making this rearrangement to improve the lot of parish councils.
      Two points arise at the outset. First, the Government, and I suspect hon. Members of all parties, were aware for some considerable time of the anxieties of district councils and parish councils on this matter. Secondly, Governments of both parties, for a considerable time, have tried to find an equitable and sensible way to resolve the matter.
      I spoke at the local councils association's national conference in Harrogate recently when this matter was obviously of major concern and a topic for debate. I explained that under the existing RSG procedure the formula, albeit not entirely accepted on both sides of the House, but at least designed to provide a system of local financing based on a careful assessment of need, and spread over a national network of a substantial number of districts, is not capable of being redesigned to deal with 10,500 parish councils.
      The hon. Member for Edge Hill will understand that if some of those parish or community councils have zero ratepayers—as I believe they do—several hundred have small numbers of ratepayers or electors. Therefore, it is beyond administrative possibility to extrapolate from the present RSG system to deal with each and every parish or community precept or requirement, given that they have such variable calculations and requirements.
      I admit that that does not alter the fact that parishes and community councils exist and that where they have the right to precept against district councils, in all fairness, they should be able to obtain from the precepting authority the correct sums of money to spend on the matters for which they have statutory power. I suggest to the hon. Member for Edge Hill and to the right hon. Member for Widnes (Mr. Oakes) that it is a major obstacle to try to redefine the rate support grant and GREA systems in order to make an equitable settlement for 10,500 additional authorities, given the substantial number of authorities currently covered by the mechanism. Therefore, it is not for want of seeking to find a way, but I must say to the hon. Member for Edge Hill that I do not believe that the existing mechanism works in that way.
      We come to the question of how the parish or community council can obtain satisfaction to do what is seeks to do on behalf of its parishioners or ratepayers. In that matter we have traditionally relied on the relationship between the parish or community council and its district. There is plenty of evidence that in most cases there is an amicable arrangement whereby under precept the district will provide the required sums. The parish seeks to say that the discounted amount, not the full amount, should be levied. It regards what it does as a second rate levied on individual persons. That is the burden of the remarks made by the hon. Member for Edge Hill.
      It is true that there is a double rating point for the individual elector, who is at one and the same time a ratepayer of the parish, a ratepayer of the district and a ratepayer of the county. That is not a new position for the ratepayer. Equally it is true that in many district council areas there is now a mechanism whereby the

      769
      council can take out from its formula for charging the rate the parishes over which it has rating authority and can rate differentially. That provides part of the solution to the problem of double rating. However, there is no mechanism at the moment that will prevent the possibility of an individual community or parish being double rated if the district seeks so to do.
      The question is whether we should amend in the manner laid down by the hon. Gentleman. Should we amend the Bill at this time to achieve that objective? We shall not be able to draft an amendment that will allow the RSG mechanism to go through to the 10,500 individual communities or parish councils in such a way that it will become an effective local authority financing mechanism. I do not believe that we can do that. It would not be right for me to seek to mislead the House by assuring it that we can design an amendment in another place that will carry out that intention.
      We must rely on the relationship between the parish or community council and its precepting district. In a number of cases that is an effective instrument whereby the parish can obtain what it wishes. That is the correct way to deal with the matter.
      9.15 pm
      We are not prepared to accept the amendment. I invite hon. Members to vote against it. That is not because what the hon. Member for Edge Hill asks is so controversial and unacceptable in political terms that we would not wish to meet it. With our system of local government financing it is not possible for us to design a mechanism, based on the RSG system, which would effectively deal with every community, parish or town council requirement.
      That cannot be a satisfactory answer for the hon. Member for Edge Hill. However, I suspect that a vast majority of local authorities and their associations feel, as the Government do, that with the present system that is as far as it can be taken. It would be wrong for us to seek to legislate further by enacting the new clause so eloquently moved by the hon. Member for Edge Hill.
      Mr. A. J. Beith: I am disappointed and depressed by the Minister's reply. My hon. Friend the Member for Liverpool, Edge Hill (Mr. Alton) will no doubt wish to reply to the Minister. However, as vice-president of the National Association of Local Councils, and having been concerned about this issue for a long time, I am amazed that Ministers in successive Governments are still unable to devise a solution to what is a relatively simple problem. It cannot be an insoluble problem, otherwise those district authorities—they are not in the majority—which now transmit the earned element of the rate support grant to their parishes would be unable to do so.
      If a district council can devise a way of calculating the right amount of money and transmitting it to the authority, surely the Department of the Environment can find a way of doing so. Heaven knows, it has overturned, changed, modified and refined the system of rate support grant so many times over the past few years that its officers must have been able to address their otherwise overburdened minds to this relatively limited but specific problem.
      The Minister has confused some aspects of the situation. He referred to parish council requirements and needs as if local councils were seeking additional government finance with which to support their services. That is not the case. We are talking about simple justice
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      and ensuring that Government grant already paid to district councils on the basis of parish council precepts actually gets to the parish councils, whose precept earned it in the first place. We want to ensure that the money that the Treasury allows for local government goes to the people who should get it. We are not talking about additional resources.
      Nor are we talking about 10,500 parish councils. There are only 8,600, many of which do not levy a rate. We are referring to the active parish councils. We are not even including some councils who raise ½p and 1p rates. We are concerned with councils that raise a larger sum. I ask the Minister to consider the injustice and ludicrousness of the position. For example, the inhabitants of a parish might decide that they need a desirable amenity in their village—perhaps a bus shelter or playing fields. A combination of voluntary effort and public funds brings that about. That is the unique feature of parish councils. They draw together voluntary effort and public funds. Ministers should be encouraging, not discouraging, that. The council gets its playing fields but has to raise a 4p or 5p precept to do so. That inevitably affects the rate support grant calculations that bring grant to the district council. Meanwhile, a neighbouring parish, which has an inactive parish council, does nothing.
      However, the district council decides that it does not want other people running the playing fields in its areas and that it would rather be in charge of them itself. When the rate support grant arrives in the treasurer's office the district council duly pockets the whole amount that was effectively earned by the precepting of the active parish. At the end of the day the district council says "By the way, we shall have a district council playing fields project", and the parish that was not prepared to lift a finger to help itself also benefits. The district council will say that it will provide the playing fields, with district council funds, using the precept that was earned by the parish that was helping itself. By that process it will believe that it is teaching the council that it would be far better off if it did not have a parish council at all.
      I remind the Minister that some district councils inherited parishes from rural parts of the districts that made them up in the first place, and some district councils do not like the elements of local democracy, especially mixed urban and rural areas where the urban centre calls the tune, not the parish that was formerly in the rural area. Some district councils are determined to depress and shut out parish councils altogether.
      That is a ludicrous thing to do to the very element in local government that can minimise rate-borne expenditure and can combine voluntary and rate-borne efforts effectively to provide community services. It is ludicrous that after years of examining the problem, civil servants in the Department of the Environment, numerous though they are, have still not produced a worthwhile basis for a solution satisfactory to Ministers. It is ludicrous that Ministers have been so dilatory that they have not demanded, before the next local government Bill comes before the House, a solution in the form of an amendment that will be acceptable to all.
      Mr. Giles Shaw: I cannot help reflecting that while the hon. Member for Berwick-upon-Tweed (Mr. Beith) wants central Government support to solve the problem it is

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      extraordinary that a parish in the district council community cannot prevail on the district council to see that the matter is voluntarily put right.
      Mr. Beith: The Minister betrays scant understanding of the relationship between parish and district councils in many areas. Some district councils are opposed to the very concept of the parish council. They do not welcome parish councils but wish to see district-run services right across their area. The district councils can pursue that policy with the Minister's aid and money and can find more expensive ways of providing services, and of using the money that he has provided instead of handing over the proper grant share to the parish councils, which are trying to do things as cheaply as possible.
      With his knowledge of various parts of the country, the Minister should know better. He should know that some authorities have a definite and strong objection to parish councils and would prefer that services were centralised and run on a grand and expensive scale. That does not make good local government. Good local government is where the community is able to contribute its effort and support, where public services are used sparingly in conjunction with the voluntary resources of the local community. The Minister is penalising such people to the benefit of authorities that want to run matters centrally.
      I cannot understand why the Minister wants to do that. That is why I am sorry that he has not applied his mind and made his civil servants apply theirs to this relatively simple problem.
      Mr. Alton: The Minister may now understand the strength of feeling of the Liberal Party on the matter and why I moved the new clause. I suppose that I am unlucky to represent an inner city constituency, which is not so beautiful as those of my right hon. and hon. Friends. I am equally unlucky that my constituency does not have any town councils. That is not the fault of the city council, as some of its members tried to introduce town councils but the mover was turned down by other members of the city council. That is unfortunate as there is a role in cities for the same form of authority that my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) described.
      It is regrettable that parish, town and community councils are treated with some disdain and contempt merely because they operate on a small scale. I am disappointed that the Government have not found a formula, or even shown themselves prepared to find a formula in another place, to rectify the obvious injustice whereby parish councils desperately doing their best are penalised because rate support is not handed on to them or because other parish councils in the area are not doing the same job and so they are being discriminated against.
      It cannot be beyond the wit of the officials in Marsham Street and the people who have given us rate support grant settlements, block grants, county councils, housing investment programmes, housing revenue accounts and the rest, to find some way to ensure that parish councils receive a fair return for the efforts that they put in, usually on a purely voluntary basis. People further on in local government, on district and county councils, are often reasonably well remunerated for their services, but members of parish, town and community councils usually
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      serve in an entirely voluntary capacity, giving their time free to the local community in the very best traditions of local government in this country.
      I am therefore glad that the right hon. Member for Widnes (Mr. Oakes) and my hon. Friend the Member for Berwick-upon-Tweed both supported the new clause and accepted that there is a desperate need to do something about this, but I am disappointed that the Minister could not give the assurances that we sought. I do not intend to press the matter to a Division today, but I hope that the Minister will understand the anger that is felt, not just by many Members of Parliament but by members of the National Association of Local Councils. I conclude by reading to the House the first paragraph of a letter from the secretary of that association. He says:
      "I hope you may feel able to support the new clause, whose effect is to entitle the 8,600 parish, town and community councils in England and Wales to their fair share of the block grant paid to the district councils."
      That is what the new clause is about—a fair deal for parish, community and town councils.
      I beg to ask leave to withdraw the new clause.
      Motion and clause, by leave, withdrawn.

    New clause 11

      METROPOLITAN POLICE BLOCK GRANT
      '1980 c.65. Section 64 of and Schedule 11 to the Local Government, Planning and Land Act 1980 (Special provision for Metropolitan Police District) shall be repealed and replaced by the following—
      "64(1) Block grant shall be payable to the Receiver for the Metropolitan Police District as if the Metropolitan Police were a local authority and, subject to subsections (2) and (3) below, any reference in this Part of this Act to the method of determining a local authority's entitlement to block grant shall be deemed to apply also to the Metropolitan Police.

      (2) Section 57 shall not apply to the Metropolitan Police.

      (3) The grant-related poundage and grant-related expenditure of the Metropolitan Police shall be determined by the Secretary of State.".'—[Mr. Squire.]

      Brought up, and read the First time.
      Mr. Squire: I beg to move, That the clause be read a Second time.
      It is not unusual for me to move an amendment concerning block grant—those with long memories will remember other occasions—but the House will be relieved to hear that my remarks today will be brief.
      One of the basic principles is that the block grant is paid to each authority—notwithstanding the comments made in relation to the previous new clause—so that the accountability of each authority to its ratepayers and electors is as clear as possible.
      However, there are two anomalies in the Local Government, Planning and Land Act which weaken the application of that principle. Under subsections (2) to (5) of section 56, the possibility is admitted of block grant for the GLC, a local education authority or a county council being paid to the rating authorities in the area. Those provisions were invoked in 1981–82 in favour of the GLC and the ILEA, but they are not to be invoked in 1982–83 in favour of those authorities or of any county council. The prospect of their use in future appears, at least at the moment, to be remote.

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      The other anomaly which the new clause seeks to tackle is in section 64 and schedule 11, in which provision is made for block grants in respect of the Metropolitan Police to be paid to the rating authorities in the Metropolitan Police district. That provision reduces the accountability of the rating authorities and of the Metropolitan Police. It also causes serious accounting problems for the rating authorities. They have to include in their budgets an estimate of the block grant that they are likely to receive in respect of the Metropolitan Police, but there is no way in which they can accurately estimate what that grant will be.
      At the time of the rate support grant settlement, the Secretary of State publishes his initial estimate of the block grant entitlement of each authority, given certain assumptions, but the amount that each authority actually receives depends not only upon various determinations made by the Secretary of State, which may change, and what the authority itself spends, but on what all other authorities spend. Estimates of block grant entitlement are thus continually revised during the grant year and cannot finally be known until some months after the grant year has ended, when the actual expenditure of all authorities and the final determination of the Secretary of State are known. The latter process has become known as clawback.
      Of course, all authorities have to suffer that uncertainty in respect of their own block grant entitlement, but rating authorities in the Metropolitan Police district have to suffer it not only on their own account but in respect of the block grant entitlement of the Metropolitan Police. This is unfair, and it can have either of two results. If the rating authority takes a pessimistic view of the ultimate block grant entitlement of the Metropolitan Police, it must rate higher than it would otherwise need to do to cover any possible shortfall in that entitlement. That is not only unfair on the authority's ratepayers, but contrary to public policy which requires rate increases to be kept as low as possible. It is at least contrary to the Government's declared policy in this respect.
      9.30 pm
      The second, obvious, alternative is that, if the rating authority takes an optimistic view, it may have to dip into its own reserves to cover any shortfall in the Metropolitan Police block grant, with the real possibility that those reserves may prove inadequate to meet this and other calls upon them.
      With part I of the Local Government Finance (No. 2) Bill enacted, and local authorities losing the power to levy a supplementary rate, an authority would have to ask the Secretary of State's permission to borrow to cover a revenue shortfall, thus putting itself—through no fault of its own—under the direct control of the Secretary of State.
      The London Boroughs Association considers that section 64 and schedule 11 of the 1980 Act should be repealed and replaced by the proposed new clause. Representations to this effect have been made to the Department of the Environment, which has undertaken to consider the point. However, the association is anxious that the present legislative opportunity should not be lost.
      The proposed section 64(2) provides that section 57 of the 1980 Act
      "shall not apply to the Metropolitan Police"
      as it deals with the method of determining the grant-related poundage and expenditure of local authorities in
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      accordance with principles to be applied to all local authorities. Those principles would not be relevant to the Metropolitan Police. The proposed section 64(3) provides for the Secretary of State to make the necessary determinations in respect of the Metropolitan Police, thus replacing the equivalent provision in schedule 11.
      Mr. Giles Shaw: I listened with care to what my hon. Friend the Member for Hornchurch (Mr. Squire) said. He has moved a new clause on behalf of the London Boroughs Association, which I know has expressed concern. My hon. Friend will understand that the existing system derives from discussions that we had with the association during the passage of the 1980 Act, when it was agreed that this system should be used.
      The 1980 Act also specified that the block grant to the Metropolitan Police should reach them indirectly through the authorities on which they precepted. That was similar to the way in which all the precepting authorities in London obtained their rate support grant under the old grant system. At that time, it was not thought necessary to change it.
      We have had a year's experience of the new system, and clearly the boroughs are less than happy with the original proposals. Now that the grant entitlements are based on expenditure, it is true that they are likely to fluctuate more than they did under the old system. However, I cannot accept the new clause, although I certainly promise to look at it closely and, more important, to consider the problem that my hon. Friend has raised.
      The association and the Department had a preliminary discussion at the meeting of the grant working group on 1 April and agreed to hold further and more detailed discussions on this proposal. It undoubtedly raises technical questions of considerable complexity that could easily have repercussions outside the confines of the Metropolitan Police district.
      If there is a problem to which there is a straightforward and acceptable solution—from what my hon. Friend has said, I am by no means sure that there is—it is possible that we shall be able to do something about it. Perhaps my hon. Friend will allow me to discuss this matter more fully. We are already having discussions with the association, and I believe that it would be best to leave the matter there for the time being.
      Mr. Squire: I am grateful for my hon. Friend's expression of opinion. He is in danger of breaking my run, to which the right hon. Member for Manchester, Ardwick (Mr. Kaufman) referred in Committee, whereby it was expected that I would get my amendments accepted. My hon. Friend will therefore understand my feeling of shock and horror as a result of his answer.
      In the light of what has been said, I hope that the Government will keep these matters under review. I think that the clause would reduce uncertainty if it formed part of the Bill. However, having had the chance to air my views, I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

    Clause 4

      ADJUSTMENTS OF DISTRIBUTION OF BLOCK GRANT
      Mr. Harry Cowans: I beg to move amendment No. 1, in page 3, line 44, at end insert—

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      "(d) shall not be exercised for the purpose specified in paragraph (cc)of that subsection so as to decrease the amount of block grant payable to a local authority where the local authority notify the Secretary of State that any such decreases will not enable them to maintain at an acceptable level the services which the local authority are by statute required to provide".
      The hon. Member for Hornchurch (Mr. Squire) referred to the Minister's response as a concession. I think that he was stretching the English language. I hope that this amendment will not be met with a similar concession.
      Mr. Kaufman: The Minister was not using "concession" in the normal way. He was using the definition on the Anglo-Heseltinese dictionary.
      Mr. Cowans: However the word was used, the hon. Member for Hornchurch had to ask to withdraw his new clause because the Minister would not accept it.
      At one stage new clause 4 and the amendment were to be linked. However, for technical reasons which I fully understand it has not been possible to link the clause and the amendment. That is unfortunate, because the clause sought to put responsibility at the door of the Secretary of State, where it should properly lie. The amendment goes some way in that direction.
      It is recognised that central Government must have some control over local authorities. There is no argument about that. However, there is a limit and if we go beyond it, the aim of central Government becomes self-defeating. Year in and year out the House places statutory duties on local authorities. The Bill takes a somewhat different approach because it will remove a financial tool from local authorities. I refer to their ability to raise a supplementary rate. The Bill replaces that tool with a piece of nonsense that states that the Secretary of State may or may not allow an authority to borrow if an approach is made to him. That is a fundamental change.
      The Bill would have been more important if Labour Members had not forced the Government to rethink their approach. At one stage the Bill would have made it possible for the Government to cut finances at any time during the financial year. That would have been much worse. It was the pressure that was mounted on the Opposition Benches that caused the Government to think again.
      On 18 January, when the Bill was given a Second Reading, I intervened in the Secretary of State's speech to tell him that he was taking away the right of local authorities to levy supplementary rates and was conferring upon himself or other Secretaries of State the right to alter grants during the financial year. At the same time, Parliament is imposing statutory duties on local authorities. It is unfortunate that the Secretary of State has not graced the Chamber with his presence today. We have been told that the Bill is vital. Surely we should have seen the right hon. Gentleman at some stage during the day.
      It seems that we have reached the stage where the Secretary of State could make it impossible, through financial restrictions, for local authorities to carry out statutory duties imposed by this Parliament or any other Parliament. It also seems that local authorities, through no fault of their own, find themselves in conflict with laws and Acts that this Parliament seeks to impose on them. One could read out a list as long as one's arm, both arms or the arms of every hon. Member, of the many duties imposed on local authorities. They include standards of
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      social services, housing provisions, educational standards and provisions, provision of efficient and adequate transport, local highways maintenance provisions and provision for children, police, planning and fire services. The list is endless. All those provisions are placed upon a local authority by statute of the House of Commons. No one complains about that.
      I am the first to agree that certain elements of grant contribute towards carrying out those statutory undertakings. I hope, however, that the Minister recognises that a burden is imposed on local authorities by Parliament in carrying out those statutory undertakings. The dead hand of a dictatorial Secretary of State seeks to cut back in such a manner that even the statutory duties placed upon local authorities are put at risk. I referred in Committee to some of the afflictions forced upon Newcastle city council by hidden costs. This translates into effects on the statutory duties that the council must carry out. There can be no other term than "cutback" for the actions of the Secretary of State. Again, in the case of the Tyne and Wear county council, these statutory duties are at risk.
      It was interesting during the debate on new clause 5 to discover the number of hon. Members who seemed to agree on certain matters. One issue germane to the amendment now under discussion was mentioned by the right hon. Member for Taunton (Mr. du Cann), other Conservative Members and a number of Opposition Members. Most agreed that there was inadequate central Government funding to carry out statutory duties placed upon local authorities by the House. There was a call for an exercise to be conducted to see how matters worked out. I submit that the Minister does not need to wait for the exercise. The wording of the amendment now before the House is precise. It is not an open cheque. The words proposed to be inserted are that the powers
      "shall not be exercised for the purpose specified in paragraph (cc) of that subsection so as to decrease the amount of block grant payable to a local authority"—
      and this is the nub—
      "where the local authority notify the Secretary of State that any such decreases will not enable them to maintain at an acceptable level the services which the local authority are by statute required to provide".
      The amendment is by no means an open cheque. It insists that local authorities notify the Secretary of State—rightly—when they cannot carry out the duties that the House has laid upon them. There can be nothing fairer than that. It seems nonsense and grossly unfair that the House should place a statutory duty on local authorities to perform functions but then withdraw funds to such an extent that that duty becomes at risk. The Secretary of State should have in the Bill a clause that allows a local authority to come to him and say that it cannot carry out his will if he carries on with decreased public expenditure at that level. That is fair, square, honest and open-handed.
      9.45 pm
      In Committee I heard one thing said many times—as I am sure did my hon. Friends—particularly from the Government Back Benches. I am drawing to a close so that I can give the Minister a chance to leap to his feet and accept the amendment, as I am sure that he will in a spirit of fairness and open-handedness. I think he is waiting to do so. In Committee Conservative Members will remember that they frequently used the phrase "He who pays the piper calls the tune." I am sure my hon. Friend will recall this vividly because it was like an everlasting

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      gramophone record—we heard it morning, noon and night at every Committee meeting. I will not argue against that, but the converse is equally true—he who calls the tune pays the piper. This is what the amendment is asking the Government to do.
      Where a statutory duty is placed on local authorities but the wherewithal to carry it out is taken away, it should at least, in all honesty and fairness, be open to a local authority to come to the Government and say that it can no longer carry out that statutory duty if the level of expenditure is decreased to that extent. To help local government to carry out duties imposed on it by the House, the Minister should accept the amendment.
      Mr. Christopher Price: The essence of the amendment is law and order. The Government talk about law and order, but there are other sorts of laws such as those passed by the House in a social context that we ask the local authorities to guarantee to implement. The Government, if they refuse to accept the amendment, are saying that monetarism comes before the law and that monetarism is more important than law and order. The Opposition are saying in the amendment that law and order is more important than the monetarist policies of the Government. That is what it boils down to.
      As my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cowans) said, many statutes simply are not being adequately implemented by local authorities because there is not the money for them to do so. Some of the duties that are being overlooked are small but I am sure that as they build up scandals will develop. An example is trading standards legislation, which was passed by the House because we wanted to protect the consumer. It is falling into disuse in local authority after local authority because the authorities do not have the money to enforce it. As so often happens the House will wake up to this only when some tragedy occurs. We shall discover that we have passed laws but have not provided local government with the money to make them effective.
      I am concerned especially about education legislation. In many local authority areas, education takes up more than half the expenditure of the authority. As was shown by the report of Her Majesty's inspector which was issued today by the Department of Education and Science, the standards which have been normal in the past and which have been assumed to exist under section 8 of the Education Act 1944 are not being kept up adequately, and we need some provision in the law to prevent ministerial interference to depress standards even further than they are at present.
      I say that only because I want to warn the House. I know that this is not a matter affecting the Department of the Environment. However, the Department of Education and Science is deep in discussion about so-called methods of reforming the rating system which will involve taking 80 per cent. of education expenditure clean out of the rate support grant and into some sort of direct grant of the kind foreshadowed in one of the appendices to the Government's Green Paper on the future of the rates.
      There are differences between the two sides of the House about this proposal. If it were put forward seriously, I should oppose it with all the power in me, because I am sure that it will not do any good and that it could do a great deal of harm. In my view, local authorities can run
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      education a great deal better than the right hon. Member fo Leeds, North-East (Sir K. Joseph) can from Whitehall. In principle, that must be true.
      I say that to emphasise that traditionally the way that we have upheld standards in local government services is by passing legislation laying down minimum standards, with the Government providing local authorities with the money to make it possible to maintain those standards. Under this Government, during the past few years we have seen that the money is no longer being provided and that the Government are conniving at the law being broken. They know it. The Department of the Environment is more and more ashamed about it but, because it is not specifically its responsibility as each block of legislation may be in some other Department, if feels able to connive at these breaches of the law.
      The amendment is essential if further breaches of the law are not to take place. I commend it to the House.
      Mr. McWilliam: In many ways, this is the most important amendment to come before the House. It is not about audit. It is not about local government accounts. It is about the will of Parliament.
      As my hon. Friends the Members for Lewisham, West (Mr. Price) and Newcastle upon Tyne, Central (Mr. Cowans) reminded us, the will of Parliament has been expressed in a great many statutes, some of which are systematically and callously being ignored.
      Assuredly this Bill will pass into law. The Government have made it clear that they are not willing to listen to reason. They respond only to brute force. They have resisted all our amendments. They see them as getting in the way of the overriding financial responsibility which they seem to regard as their first priority.
      This amendment involves a deeply held principle. It provides that the law of the land will be implemented by local authorities, despite the prejudices and predilections of any given Secretary of State. It says no more than that. It says that a Secretary of State, simply because he cannot argue sufficiently strongly with the Treasury, will be able to say to local authorities "We will give you this amount of money and if you have to break the law, you do so, but you do so at your own peril, and in my view you can manage without breaking the law". That is only his view as an individual, and ratepayers may take issue with it at some time in the future.
      Far more fundamental is the fact that, instead of the Government coming to the House with amending legislation on education, social services and housing measures—the measures that affect people in local government—they are saying "They are all very well, but we shall set them on one side, and we shall decide whether they are to be implemented. That decision will be the sole property of the Secretary of State, as advised by his civil servants". The amendment is the only way to save this legislation from becoming an unconstitutional nonsense. If the Government had the guts to say that they wanted to amend education legislation because it was too generous, or that the social services legislation needed amending because it was too generous, or that the housing legislation should be amended because it was too generous, that would be entirely acceptable. It is their right, because they are the democratically elected Government. However, they should also take the public odium for what they do.

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      Instead of that, they hide behind this tawdry legislation—as it was accurately described by my hon. Friend the Member for Lewisham, West (Mr. Price).
      Far worse than that, in constitutional terms, is the fact that a sweeping measure of this nature, in which vast powers are taken by an individual, the Secretary of State, is surely alien to the concept of the way in which we try to run the affairs of this country. It is alien to the democratic principles of which we say we are proud. It is utterly alien and against the wishes, freely expressed, of the House of Commons on many occasions in the passage of many Acts of Parliament.
      If the House does not accept this amendment, the Government are saying "We are quite prepared to put up an illusion of what we would like to do, but with these reserve powers we can take it all back again". Thus, what they say about providing services for people is not worth the paper that the Bill is written on.
      Mr. Giles Shaw: I do not know about following the speech of the hon. Member for Blaydon (Mr. Mc William), but I certainly have the guts to ask the House to reject the amendment.
      Clause 4 is concerned with a situation which has arisen from time to time under both Labour and Conservative Governments when, for overriding reasons of national economy, the Government have found it necessary to seek expenditure reductions or restraints.
      I was reminded by the way in which the amendment was moved by the hon. Member for Newcastle upon Tyne, Central (Mr. Cowans) of the debate in Committee on amendment No. 102. We had a fairly long joust on this matter of principle. The House is certainly familiar with the arguments that have been deployed on this subject in the past.
      How best can reductions be secured? The Government's best instrument is the best rate support grant. That is why we propose hold-back schemes for 1981–82 and for 1982–83. We have told each authority what expenditure reductions we expect. We propose to reduce the grants to authorities that overspend. The amendment would prevent hold-back applying to
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      authorities that claim that they will not be able to provide an acceptable level of service. What in any circumstances would be an acceptable definition of "an acceptable level of service"? It is the length of a piece of string, and it is incapable of simple definition.
      Mr. Christopher Price: Will the hon. Gentleman give way?
      Mr. Shaw: I do not say that the Government are deaf to representations. We shall listen to local authorities that feel that there are good reasons why they cannot meet targets——
      It being Ten o'clock, the debate stood adjourned.

    BUSINESS OF THE HOUSE
    Ordered,
    That, at this day's sitting, the Local Government Finance (No. 2) Bill and the Reserve Forces Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. David Hunt.]
    Question again proposed, That the amendment be made.
    Mr. Shaw: As I was saying, this does not mean that the Government are deaf to representations except, that is, to those from the hon. Member for Lewisham, West (Mr. Price). Of course, we shall listen to local authorities that feel that there are good reasons why they cannot meet targets. If there is a case that raises a general principle, it may be possible to consider exemptions. Indeed, exemptions were considered in the financial year 1981–82. Authorities will know how hold-back will be calculated before they set their rates. This is the main burden of the Bill. The abolition of the supplementary rate will mean that authorities will know exactly where they stand in relation to their main rate.
    If an authority chose to ignore targets that others had been able to meet without disastrous effects on their services, it would not be able to claim in the middle of the year that hold-back came as a surprise. Provided that the authorities keep within the law, they will be able to maintain services at an acceptable level, but whether their ratepayers and electors will agree is another matter.
    I urge the House to reject the amendment.
    Mr. Cowans: Not for the first time, I am totally disappointed with the Minister's reply. To be honest, he has not given any reply. As the hon. Member for Woolwich, East (Mr. Cartwright) said earlier, by no stretch of the imagination can I now shout "Eureka!" What the Minister has said must concern every right hon. and hon. Member in the House. The Minister has said that when the dead hand of the Secretary of State touches local authorities, the will of the House and any legislation is at risk. If that is not a negation of democracy, I do not know what is.
    Mr. Christopher Price: It is good of my hon. Friend to give way to me. The Minister churlishly refused to do so. It would be right to put the record straight. When the Minister says that the adequacy of services is the length of a piece of string, the proper judge of whether services are adequate according to the law would, in the final resort, be the House of Lords, in a case brought to decide what that adequacy was. If the courts decided, for instance, that a local authority was not providing adequate education, there would be a problem if the Government had cut back grant to the local authority and prevented it from doing what the House of Lords told it to do.
    Mr. Cowans: My hon. Friend has put the case much better than I could have done. I do not need to comment further on that except to say that sometimes local government wished that it had something as long as a piece of string. It is important that the Government have not seen fit even to examine the wording of the amendment or to consider the implications. It is a sad reflection on a Government who came to power on a manifesto that promised more democracy to local government and, by every successive word and deed, have made sure that that is impossible.
    I hope that my right hon. and hon. Friends will join me in pressing the amendment to a Division, because it is a fundamental issue that should be included in the Bill. The Minister has not given one inkling of the depth of sincerity with which the amendment was tabled or the importance of it.
    Question put, That the amendment be made:—
    The House divided: Ayes 217, Noes 279.

    Division No. 120]

    [10.04 pm

    AYES

    Abse, Leo

    Callaghan, Jim (Midd't'n&P)

    Adams, Allen

    Campbell, Ian

    Allaun, Frank

    Campbell-Savours, Dale

    Alton, David

    Canavan, Dennis

    Archer, Rt Hon Peter

    Carmichael, Neil

    Ashley, Rt Hon Jack

    Cartwright, John

    Ashton, Joe

    Clark, Dr David (S Shields)

    Atkinson, N.(H'gey,)

    Cocks, Rt Hon M. (B'stol S)

    Bagier, Gordon A.T.

    Cohen, Stanley

    Barnett, Guy (Greenwich)

    Coleman, Donald

    Barnett, Rt Hon Joel (H'wd)

    Concannon, Rt Hon J. D.

    Beith, A.J.

    Conlan, Bernard

    Benn, Rt Hon Tony

    Cook, Robin F.

    Bidwell, Sydney

    Cowans, Harry

    Booth,Rt Hon Albert

    Craigen, J. M. (G'gow, M'hill)

    Bottomley, Rt Hon A. (M'b'ro)

    Crowther, Stan

    Bray, Dr Jeremy

    Cryer, Bob

    Brocklebank-Fowler, C.

    Cunliffe, Lawrence

    Brown, Hugh D. (Provan)

    Cunningham, Dr J. (W'h'n)

    Brown, R. C. (N'castle W)

    Dalyell, Tam

    Brown, Ronald W. (H'ckn'y S)

    Davidson, Arthur

    Brown, Ron (E'burgh, Leith)

    Davies, Rt Hon Denzil (L'lli)

    Buchan, Norman

    Davies, Ifor (Gower)

    Callaghan, Rt Hon J.

    Davis, Clinton (Hackney C)

    782

    Davis, Terry (B'ham, Stechf'd)

    Mc Taggart, Robert

    Deakins, Eric

    McWilliam, John

    Dean, Joseph (Leeds West)

    Marks, Kenneth

    Dewar, Donald

    Marshall, Jim (Leicester S)

    Dixon, Donald

    Martin, M (G'gowS'burn)

    Dobson, Frank

    Maynard, Miss Joan

    Dormand, Jack

    Meacher, Michael

    Douglas, Dick

    Mikardo, Ian

    Duffy, A. E. P.

    Millan, Rt Hon Bruce

    Dunn, James A.

    Miller, Dr M.S. (E Kilbride)

    Dunnett, Jack

    Mitchell, R.C. (Soton Itchen)

    Dunwoody, Hon Mrs G.

    Morris, Rt Hon C. (O'shaw)

    Eadie, Alex

    Morton, George

    Eastham, Ken

    Moyle, Rt Hon Roland

    Edwards, R. (W'hampt'n S E)

    Newens, Stanley

    Ellis, R. (NE D' bysh're)

    Oakes, Rt Hon Gordon

    English, Michael

    O' Neill, Martin

    Evans, loan (Aberdare)

    Orme, Rt Hon Stanley

    Faulds,Andrew

    Owen, Rt Hon Dr David

    Field, Frank

    Park, George

    Fitch, Alan

    Parker, John

    Flannery, Martin

    Parry, Robert

    Fletcher, Ted (Darlington)

    Pendry, Tom

    Ford, Ben

    Penhaligon, David

    Forrester, John

    Pitt, William Henry

    Foster, Derek

    Powel, Raymond (Ogmore)

    Foulkes, George

    Price, C. (Lewisham W)

    Fraser, J. (Lamb'th,N'w'd)

    Race, Reg

    Freeson, Rt Hon Reginald

    Radice, Giles

    Freud, Clement

    Rees, Rt Hon M (Leeds S)

    Garrett, John (Norwich S)

    Richardson, Jo

    Gilbert, Rt Hon Dr John

    Roberts, Albert (Normanton)

    Golding, John

    Roberts,Allan (Bootle)

    Graham, Ted

    Roberts, Ernest (Hackney N)

    Grant, George (Morpeth)

    Roberts,Gwilym (Cannock)

    Grant, John (Islington C)

    Robertson, George

    Hamilton, James (Bothwell)

    Robinson, G. (Coventry NW)

    Hamilton, W. W. (C'tral Fife)

    Rooker, J. W.

    Harrison, Rt Hon Walter

    Ross, Ernest (Dundee West)

    Hattersley, Rt Hon Roy

    Rowlands, Ted

    Haynes, Frank

    Ryman, John

    Heffer, Eric S.

    Sandelson, Neville

    Holland, S. (L'b'th, Vauxh'll)

    Sever, John

    Homewood, William

    Sheerman, Barry

    Hooley, Frank

    Sheldon, Rt Hon R.

    Horam, John

    Shore, Rt Hon Peter

    Howell, Rt Hon D.

    Silkin, Rt Hon J. (Deptford)

    Howells, Geraint

    Silkin, Rt Hon S. C. (Dulwich)

    Hoyle, Douglas

    Silvermanjulius

    Huckfield, Les

    Skinner, Dennis

    Hughes, Mark(Durham)

    Smith, Rt Hon J. (N Lanark)

    Hughes, Robert (Aberdeen N)

    Snape, Peter

    Hughes, Roy (Newport)

    Soley, Clive

    Janner, Hon Greville

    Spearing, Nigel

    Jay, Rt Hon Douglas

    Spriggs, Leslie

    John, Brynmor

    Stallard, A.W.

    Johnson, Walter (Derby S)

    Steel, Rt Hon David

    Johnston, Russel (Inverness,)

    Stoddart, David

    Jones, Rt Hon Alec (Rh'dda)

    Stott,Roger

    Jones, Barry (East Flint)

    Strang, Gavin

    Kaufman, Rt Hon Gerald

    Straw, Jack

    Kilfedder, James A.

    Summerskill, Hon Dr Shirley

    Kilroy-Silk, Robert

    Taylor, Mrs Ann (Bolton W)

    Kinnock, Neil

    Thomas, Dr R. (Carmarthen)

    Lamborn, Harry

    Thorne, Stan (Preston South)

    Leadbitter, Ted

    Tilley, John

    Leighton, Ronald

    Tinn, James

    Lestor, MissJoan

    Torney, Tom

    Lewis, Arthur (N'ham NW)

    Varley, Rt Hon Eric G.

    Litherland, Robert

    Wainwright, E. (Dearne V)

    Lofthouse, Geoffrey

    Wainwright,R. (Colne V)

    Lyon,Alexander (York)

    Walker, Rt Hon H. (D' caster)

    Lyons, Edward (Bradf'd W)

    Watkins, David

    McCartney, Hugh

    Weetch, Ken

    McDonald, DrOonagh

    Wellbeloved, James

    McKay, Allen (Penistone)

    Welsh, Michael

    McKelvey,William

    Wheeler, John

    MacKenzie, Rt Hon Gregor

    White, Frank R.

    Maclennan, Robert

    White, J. (G'gow Pollok)

    McNamara, Kevin

    Whitehead, Phillip

    783

    Whitlock, William

    Woolmer, Kenneth

    Willey, Rt Hon Frederick

    Wright, Sheila

    Williams, Rt Hon A. (S'sea W)

    Young, David (Bolton E)

    Wilson, R Hon Sir H. (H'ton;)

    Wilson, William (C'try SE)

    Tellers for the Ayes:

    Winnick,David

    Mr. Austin Mitchell and Dr. Edmund Marshall.

    Woodall,Alec

    NOES

    Adley, Robert

    Fairbairn, Nicholas

    Aitken, Jonathan

    Fairgrieve, Sir Russell

    Alexander, Richard

    Farr, John

    Alison, Rt Hon Michael

    Fenner, Mrs Peggy

    Amery, Rt Hon Julian

    Finsberg, Geoffrey

    Ancram, Michael

    Fisher, Sir Nigel

    Aspinwall, Jack

    Fletcher, A. (Ed'nb'gh N)

    Atkins, Robert (Preston N)

    Fletcher-Cooke, Sir Charles

    Atkinson, David (B'm'th, E)

    Fookes, Miss Janet

    Baker, Kenneth (St M'bone)

    Forman, Nigel

    Baker, Nicholas (N Dorset)

    Fowler, Rt Hon Norman

    Banks, Robert

    Fox, Marcus

    Beaumont-Dark, Anthony

    Fraser, Peter (South Angus)

    Bendall, Vivian

    Fry, Peter

    Benyon, W. (Buckingham)

    Gardiner, George (Reigate)

    Berry, Hon Anthony

    Gardner, Edward (S Fylde)

    Best, Keith

    Garel-Jones, Tristan

    Bevan, David Gilroy

    Gilmour, Rt Hon Sir Ian

    Biggs-Davison, Sir John

    Glyn, Dr Alan

    Blackburn, John

    Goodhart, Sir Philip

    Blaker, Peter

    Goodhew, Sir Victor

    Body, Richard

    Goodlad, Alastair

    Bonsor, Sir Nicholas

    Gorst, John

    Bottomley, Peter (W'wich W)

    Gow, Ian

    Bowden, Andrew

    Grant, Anthony (Harrow C)

    Boyson, Dr Rhodes

    Gray, Hamish

    Braine, Sir Bernard

    Greenway, Harry

    Bright, Graham

    Griffiths, E. (B'y St. Edm'ds)

    Brinton, Tim

    Griffiths, Peter Portsm'th N)

    Brittan, Rt. Hon. Leon

    Grist, Ian

    Brotherton, Michael

    Grylls, Michael

    Brown, Michael (Brigg&Sc'n)

    Gummer, John Selwyn

    Browne, John (Winchester)

    Hamilton, Hon A.

    Bruce-Gardyne, John

    Hamilton, Michael (Salisbury)

    Bryan, Sir Paul

    Hampson, Dr Keith

    Buchanan-Smith, Rt. Hon. A.

    Hannam, John

    Buck, Antony

    Haselhurst, Alan

    Budgen, Nick

    Havers, Rt Hon Sir Michael

    Burden, Sir Frederick

    Hawksley, Warren

    Butcher, John

    Hayhoe, Barney

    Cadbury, Jocelyn

    Heddle, John

    Carlisle, John (Luton West)

    Henderson,Barry

    Carlisle, Kenneth (Lincoln)

    Hicks, Robert

    Carlisle, Rt Hon M. (R'c'n)

    Higgins, Rt Hon Terence L.

    Chalker, Mrs. Lynda

    Hogg, Hon Douglas (Gr'th'm)

    Chapman, Sydney

    Holland, Philip (Carlton)

    Clark, Hon A. (Plym'th, S'n)

    Hooson, Tom

    Clark, Sir W. (Croydon S)

    Hordern, Peter

    Clarke, Kenneth (Rushcliffe)

    Howell,Rt Hon D. (G'ldf'd)

    Clegg, Sir Walter

    Howell, Ralph (N Norfolk)

    Cockeram, Eric

    Hunt, David (Wirral)

    Colvin, Michael

    Hunt, John (Ravensbourne)

    Cope, John

    Hurd, Rt Hon Douglas

    Cormack, Patrick

    Irving, Charles (Cheltenham)

    Costain, Sir Albert

    Jenkin, Rt Hon Patrick

    Cranborne, Viscount

    Jessel, Toby

    Critchley, Julian

    Johnson Smith, Geoffrey

    Crouch, David

    Jopling, Rt Hon Michael

    Dean, Paul (North Somerset)

    Joseph, Rt Hon Sir Keith

    Dickens, Geoffrey

    Kellett-Bowman, Mrs Elaine

    Dorrell, Stephen

    Kershaw, Sir Anthony

    du Cann, Rt Hon Edward

    King, Rt Hon Tom

    Dunlop, John

    Kitson, Sir Timothy

    Dunn, Robert (Dartford)

    Knight, Mrs Jill

    Durant, Tony

    Knox, David

    Dykes, Hugh

    Lamont, Norman

    Eden, Rt Hon Sir John

    Lang, Ian

    Eggar, Tim

    Latham, Michael

    Elliott, Sir William

    Lawrence, Ivan

    Emery, Sir Peter

    Lawson, Rt Hon Nigel

    Eyre, Reginald

    Lee, John

    784

    LeMarchant, Spencer

    Roberts, M. (Cardiff NW)

    Lennox-Boyd, Hon Mark

    Roberts, Wyn (Conway)

    Lester, Jim (Beeston)

    Rossi, Hugh

    Lewis, Kenneth (Rutland)

    Rost, Peter

    Lloyd, Ian (Havant & W'loo)

    Royle, Sir Anthony

    Lloyd, Peter (Fareham)

    Sainsbury, Hon Timothy

    Loveridge, John

    St. John-Stevas, Rt Hon N.

    Lyell, Nicholas

    Scott, Nicholas

    McCrindle, Robert

    Shaw, Giles (Pudsey)

    Macfarlane, Neil

    Shaw, Michael (Scarborough)

    MacKay, John (Argyll)

    Shelton, William (Streatham)

    Macmillan, Rt Hon M.

    Shepherd, Colin (Hereford)

    McNair-Wilson, M. (N'bury)

    Shepherd, Richard

    McNair-Wilson, P. (New F'st)

    Shersby, Michael

    Madel, David

    Silvester, Fred

    Major, John

    Sims, Roger

    Marlow, Antony

    Skeet, T. H. H.

    Marshall, Michael (Arundel)

    Speed, Keith

    Marten, Rt Hon Neil

    Speller, Tony

    Mates, Michael

    Spence, John

    Mather, Carol

    Spicer, Jim (West Dorset)

    Maude, Rt Hon Sir Angus

    Spicer, Michael (S Worcs)

    Mawby, Ray

    Sproat, Iain

    Mawhinney, DrBrian

    Squire, Robin

    Maxwell-Hyslop, Robin

    Stanbrook, Ivor

    Mayhew, Patrick

    Stevens, Martin

    Mellor, David

    Stewart, A. (E Renfrewshire)

    Meyer, Sir Anthony

    Stewart, Ian (Hitchin)

    Miller, Hal (B'grove)

    Stokes, John

    Mills, Iain (Meriden)

    Stradling Thomas, J.

    Mills, Pete (West Devon)

    Taylor, Teddy (S' end E)

    Moate, Roger

    Temple-Morris, Peter

    Monro, SirHector

    Thatcher, Rt Hon Mrs M.

    Montgomery, Fergus

    Thompson, Donald

    Moore, John

    Thorne, Neil (Ilford South)

    Morgan,Geraint

    Thornton, Malcolm

    Morris, M. (N'hampton S)

    Townend, John (Bridlington)

    Morrison, Hon C. (Devizes)

    Townsend, Cyril D, (B'heath)

    Morrison, Hon P. (Chester)

    Trippier, David

    Mudd, David

    Trotter, Neville

    Murphy, Christopher

    van Straubenzee, Sir W.

    Myles, David

    Vaughan, Dr Gerard

    Neale, Gerrard

    Viggers, Peter

    Needham, Richard

    Waddington, David

    Nelson, Anthony

    Wakeham, John

    Neubert, Michael

    Waldegrave, Hon William

    Newton, Tony

    Walker, Rt Hon P.(W'cester)

    Normanton, Tom

    Walker, B. (Perth)

    Onslow, Cranley

    Walker-Smith, Rt Hon Sir D.

    Oppenheim, Rt Hon Mrs S.

    Wall, Sir Patrick

    Page, Richard (SW Herts)

    Waller, Gary

    Parkinson, Rt Hon Cecil

    Ward, John

    Parris, Matthew

    Warren, Kenneth

    Patten, Christopher (Bath)

    Watson, John

    Patten, John (Oxford)

    Wells, Bowen

    Pattie, Geoffrey

    Wells, John (Maidstone)

    Pawsey, James

    Wheeler, John

    Percival, Sir Ian

    Whitelaw, Rt Hon William

    Pink, R. Bonner

    Whitney, Raymond

    Porter, Barry

    Wickenden, Keith

    Prentice, Rt Hon Reg

    Wiggin, Jerry

    Prior, Rt Hon James

    Wilkinson, John

    Proctor, K. Harvey

    Williams, D. (Montgomery)

    Raison, Rt Hon Timothy

    Wolfson, Mark

    Rathbone, Tim

    Young, Sir George (Acton)

    Rees, Peter (Dover and Deal)

    Younger, Rt Hon George

    Rhodes James, Robert

    Rhys Williams, Sir Brandon

    Tellers for the Noes:

    Ridley, Hon Nicholas

    Mr. Robert Boscawen and Mr. Peter Brooke.

    Rifkind, Malcolm

    Rippon, Rt Hon Geoffrey

    Question accordingly negatived.

    Clause 5

      ESTABLISHMENT OF AUDIT COMMISSION
      10.15 pm
      Mr. Wyn Roberts: I beg to move amendment No. 2, in page 5, line 9, after `with', insert `(a).
      Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this we shall discuss Government amendment No. 3.
      Mr. Roberts: Amendments Nos. 2 and 3 fulfil commitments given in Committee to make mandatory consultation on membership with the appropriate professional bodies and unions. It is important for such bodies to be consulted. The accountancy profession has an obvious interest in the Commissions's work and will have valuable views on possible membership. It is also important to have the views of local authority trade unions. Such consultation will help to ensure that the audit commission has the necessary confidence of all involved in local government. The Committee believed that consultation with such bodies should be spelt out in the Bill. We are happy to agree to that.
      Mr. Kaufman: The amendments, which have been moved in response to pressure from the Opposition, represent a remarkable achievement. Local authority trade unions will be consulted about appointments to the audit commission. That is satisfactory. We support the amendments.
      Amendment agreed to.
      Amendment made: No. 3, in page 5, line 10, leave out from 'and' to end of line 11 and insert—
      '(b) such bodies of accountants, such bodies representing local authority employees, and such other organisations or persons as appear to him to be appropriate.'.—[Mr. Wyn Roberts.]

    Clause 8

      CODE OF AUDIT PRACTICE
      Mr. Giles Shaw: I beg to move amendment No. 4, in page 7, line 26, after 'prepare' insert, and keep under review'
      Mr. Deputy Speaker: With this we shall discuss Government amendments Nos. 5 and 6.
      Mr. Shaw: The amendment fulfils an undertaking given in Committee. Hon. Members stressed the importance of a code of audit practice and said that it should be subject to parliamentary approval. The Government accept that. The code is the framework in which auditors will work and we therefore tabled the amendment. The amendment provides that the code must be approved by both Houses before it comes into force and approved again at intervals of not more than five years. The hon. Member for Edmonton (Mr. Graham) in particular asked for the five-year provision. Although much of the code may be technical, I am sure that this is a sensible way to proceed with what is an important part of the commission's work. I commend the amendments to the House.
      Mr. Kaufman: It may be a sensible way, but the Government did not see that it was a sensible way until we told them that it was. We proposed that it should be a sensible way and they accepted that it was. This is yet
      786
      another Government response to pressure from the Opposition. We have achieved a major improvement in the Bill. We support the amendment.
      Amendment agreed to.
      Amendments made: No. 5, in page 7, line 32, leave out subsection (3) and insert—
      '(3) The code shall not come into force until approved by a resolution of each House of Parliament, and its continuation in force shall be subject to its being so approved at intervals of not more than five years.
      (3A) Subsection (3) above shall not preclude alterations to the code being made by the Commission in the intervals between its being approved as aforesaid.
      (3B) The Commission shall send copies of the code and of any alterations made to the code to the Secretary of State who shall lay them before Parliament; and the Commission shall from time to time publish the code as for the time being in force.'.
      No. 6, in page 7, line 34, leave out 'or revising the code' and insert
      `the code or making any alteration in it'.—[Mr. Giles Shaw.]

    Clause 11

      PUBLIC INSPECTION OF ACCOUNTS AND RIGHT OF CHALLENGE
      Mr. Wyn Roberts: I beg to move amendment No. 7, in page 9, line 15, after '(3)', insert
      'Subject to subsection (4) below,'.
      Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 8.
      Mr. Roberts: These amendments, yet again, fulfil an undertaking given in Committee to various hon. Members, especially the hon. Members for Blaydon (Mr. McWilliam) and Newcastle upon Tyne, Central (Mr. Cowans), whose tuneful voices could charm the birds off the trees.
      In the light of arguments put forward in Committee, the Government accept that local electoral objections to a council should be made in writing and sent not only to the auditor but also to the local authority concerned. It seems only right that the body being complained about should have a written record of the complaint. We also accept the point made in Committee by the hon. Member for Newcastle upon Tyne, Central that the written statement should include the grounds on which the objection was made. We hope that the hon. Members concerned will feel that these amendments meet their objectives.
      Mr. Kaufman: This is a remarkable Report stage, because practically every amendment proposed by the Government is in response to commitments made to my hon. Friends. I congratulate my hon. Friends on that achievement and congratulate, retrospectively, my hen. Friend the Member for Lewisham, West (Mr. Price) on the fact that the previous amendments involved the code being referred back to the House because of his suggestion. The Labour Party has made a constructive contribution to an unconstructive Bill.
      Amendment agreed to.
      Amendment made: No. 8, in page 9, line 21, at end insert—
      '(4) No objection may be made under subsection (3) above by or on behalf of a local government elector unless the auditor has previously received written notice of the proposed objection and of the grounds on which it is to be made.
      (5) Where an elector sends a notice to an auditor for the purposes of subsection (4) above he shall at the same time send a copy of the notice to the body whose accounts are the subject of the audit.'.—[Mr. Wyn Roberts.]

    Clause 12

      AUDITOR'S REPORTS
      Mr. Giles Shaw: I beg to move amendment No. 9, in page 9, line 30, leave out 'either' and insert
      , subject to subsection (1A) below,'.
      Mr. Deputy Speaker: With this it will be convenient to take amendments Nos. 10 to 15.
      Mr. Shaw: These six amendments are of major importance. The Opposition were totally incapable of suggesting them to the Government. We had to work with extreme care. All of the amendments were designed to clarify the workings of clause 12. However, we had the assistance of the hon. Member for Blaydon (Mr. McWilliam) on one amendment whose purpose is to meet a point he raised in Committee. He stated that, when the auditor made an immediate report to the body being audited, there was nothing to say how quickly he must send a copy to the audit commission.
      Amendment No. 14 makes it clear that such reports, which should be immediate, must be sent to the commission forthwith. That is the sort of constructive, important and monumental contribution that the Opposition have made to many aspects of the Bill. I am delighted to think that such amendments give the right hon. Member for Manchester, Ardwick (Mr. Kaufman) the satisfaction of being where he is. I commend the amendments to the House.
      Mr. Kaufman: In Committee we had to put up with a great deal of clap-trap from the Under-Secretary of State. It is a pity that the Chamber should be burdened with such rubbish. When we proposed amendments similar to amendments Nos. 13 and 14 in Committee, the Minister said that they were not necessary. He was full of derision, but he crept away into a corner and tabled precisely the amendments that he said were not necessary when we debated them in Committee. We shall not shame the Minister in public, so we shall not refer further to the matter. We shall vote for these good amendments.
      Amendment agreed to.
      Amendments made: No. 10, in page 9, line 31, leave out from 'accounts)' to end of line 32.
      No. 11, in page 9, line 32, at end insert—
      `(1A) Where an auditor makes a report to the body concerned under section 9(3) above at the conclusion of the audit, the certificate and opinion referred to in subsection (1) above may be included by him in that report.'.
      No. 12, in page 9, line 33, leave out 'subsection (1) above or section 9' and insert 'section 9(3)'.
      No. 13, in page 9, line 35, after `chairman,', insert
      'and (except in the case of an immediate report) shall be so sent not later than fourteen days after the conclusion of the audit'.
      No. 14, in page 9, line 39, at end insert
      `forthwith, if the report is an immediate report, and otherwise not later than fourteen days after the conclusion of the audit. '.
      No. 15, in page 10, line 5, leave out subsection (5).—[Mr. Giles Shaw.]

    Clause 22

      MISCELLANEOUS FUNCTIONS OF COMMISSION
      Mr. Wyn Roberts: I beg to move amendment No. 17, in page 16, line 42, at end insert
      788
      ', but before making a request under this subsection a body shall consult such associations of employees as appear to the body to be appropriate. '
      This amendment requires a body to consult its unions before requesting the commission to carry out a study into its value for money arrangements under clause 22(2). It is likely that the body concerned would consult the unions anyway, but we accept the view expressed by the Opposition in Committee that the Bill should safeguard the position by requiring such bodies to do so.
      Mr. Kaufman: This is another Labour gain. This is an important amendment that was proposed to us by one of the principal local authority trade unions. We have delivered. We hope that the unions will.
      Amendment agreed to.
      Mr. Wyn Roberts: I beg to move amendment No. 18, in page 17, line 4, at end insert "being a body which appears to the Secretary of State to be connected with local government.".
      This amendment is a response to concern voiced in Committee by hon. Members on both sides. It was suggested that the scope of the clause was too wide. There was concern that it would be open to future Secretaries of State to extend unduly the role of the commission.
      It is the Government's intention that clause 22(3) should apply only to bodies in local government. We stress that audits under that provision depend on the agreement of the body concerned. The clause is intended merely to permit the continuation of existing practice whereby the district audit service audits, by agreement, books of people such as the local government Ombudsman or bodies such as the regional tourist board.
      We recognise the merit of the point that was made in Committee. Therefore, the Government have tabled this simple amendment to restrict the scope of the clause. We hope that the House will agree that it is a sensible and desirable change.
      Mr. Kaufman: Yet another one of ours that we shall vote for with great satisfaction.
      Amendment agreed to.

    Clause 25
      WATER AUTHORITIES
      Amendment made: No. 19, in page 18, line 41, leave out clause 25.—[Mr. King.]
    Clause 26

      COMMENCEMENT OF PART III AND TRANSITIONAL PROVISIONS
      Amendment made: No. 20, in page 19, line 8, leave out "Schedule 2" and insert
      "section (Water authorities and National Water Council) and Schedule (New paragraphs for Schedule 3 to the Water Act 1973)".—[Mr. King.]

    New Schedule
      NEW PARAGRAPHS FOR SCHEDULE 3 TO THE WATER ACT I973

        Accounts of water authorities and Council
        38.—(1) It shall be the duty of a water authority and of the Council—

        (a) to keep proper accounts and proper records in relation to the accounts; and

        789

        (b) to prepare in respect of each accounting year a statement of accounts giving a true and fair view of the state of affairs and profit or loss of the body preparing the statement

        (2) Every statement of accounts prepared by a body in accordance with this paragraph shall comply with any requirement which the Ministers have, with the consent of the Treasury, notified in writing to that body and which relates to any of the following matters, namely—

        (a) the information to be contained in the statement;

        (b) the manner in which that information is to be presented;

        (c) the methods and principles according to which the statement is to be prepared.

        (3) Subject to any requirement notified to it under subparagraph (2) above, in preparing any statement of accounts in accordance with this paragraph a body shall follow, with respect to each of the matters referred to in that sub-paragraph, such course as may be for the time being approved by the Ministers with the consent of the Treasury.
        (4) Without prejudice to the foregoing provisions of this paragraph, the Minister may direct a water authority to keep such accounts and records and to prepare such statements with regard to money expended in the performance of their land drainage functions as he may think fit.
        (5) In this paragraph "accounting year", in relation to a water authority or the Council, means subject to sub-paragraph (6) below, a period of twelve months ending on 31st March.
        (6) If the Ministers so direct in relation to any accounting year of a water authority or the Council, that accounting year shall end on such other date may be specified in the direction.

        Audit of water authorities and Council
        39.—(1) The accounts of a water authority or the Council, including all statements prepared by them under paragraph 38 above, shall be audited in accordance with this Schedule by auditors appointed for each accounting year (within the meaning of that paragraph) by the Secretary of State.
        (2) A person shall not be qualified for appointment under this paragraph unless he is a member of a body of accountants established in the United Kingdom and recognised for the purposes of section 161 (1) (a) of the Companies Act 1948; but a firm may be so appointed if each of its members is qualified to be so appointed.

        General duties of auditors
        39A.—(1) In auditing any accounts in accordance with this Schedule, an auditor shall by examination of the accounts and otherwise satisfy himself that the body concerned has complied with the requirements of paragraph 38 above.
        (2) The auditor shall consider whether, in the public interest, he should make a report on any matter coming to his notice in the course of the audit in order that it may be considered by the body concerned or brought to the attention of the public, and shall consider whether the public interest requires any such matter to be made the subject of an immediate report rather than of a report to be made at the conclusion of the audit.

        Auditor's right to obtain documents and information
        39B. —(1) An auditor shall have a right of access at all reasonable times to all such documents relating to a body whose accounts are required to be audited in accordance with this Schedule as appear to him necessary for the purposes of the audit and shall be entitled to require from any person holding or accountable for any such document such information and information and explanation as he thinks necessary for those purposes and, if he thinks it necessary, to require any such person to attend before him in person to give the information or explanation or to produce any such document.
        (2) Without prejudice to sub-paragraph (1) above the auditor shall be entitled to require any officer or member of the body concerned to give him such information or explanation as he thinks necessary for the purposes of the audit and, if he thinks it necessary, to require any such officer or member to attend before him in person to give the information or explanation.
        (3) Without prejudice to sub-paragraphs (1) and (2) above, the body concerned shall provide the auditor with every facility and all information which he may reasonably require for the purposes of the audit.
        (4) Any person who without reasonable excuse fails to comply with any requirement of an auditor under sub-paragraph (1) or
        (2) above shall be liable on summary conviction to a fine not exceeding £200 and to an additional fine not exceeding £20 for each day on which the offence continues after conviction thereof.
        (5) Any expenses incurred by an auditor in connection with proceedings for an offence under sub-paragraph (4) above alleged to have been committed in relation to the audit of the accounts of any body shall, so far as not recovered from any other source, be recoverable from that body.

        Public inspection of accounts and right to make representations
        39C. — (1) At each audit or the accounts of a water authority under this Schedule any local government elector for any area to which the accounts to be audited relate may inspect those accounts and all books, deeds, contracts, bills, vouchers and receipts relating to them and make copies of all or any part of the accounts and those other documents.
        (2) At the request of any such local government elector, the auditor shall give the elector, or any representative of his, an opportunity to question the auditor about those accounts or to draw the auditor's attention to any matter on which he could make a report under paragraph 39A above.

        Transmission of documents to Ministers and local authority
        39D.—(1) As soon as the audit of the accounts of any body under this Schedule has been concluded a copy of any statement prepared by the body for the accounting year in question under paragraph 38 above, together with a copy of any report made by the auditor on the statement or on the accounts, shall be sent by the body—

        (a) to the Ministers; and

        (b) in the case of a water authority, in addition to every local authority whose area is wholly or partly situated in the area of the water authority.

        (2) The Ministers shall lay a copy of every statement and report of which a copy is received by them in pursuance of sub-paragraph (1) above before each House of Parliament.

        Right to inspect statements of accounts and auditor's reports
        39E.—(1) Any person, on application to a water authority or to the Council, shall be entitled—

        (a) to inspect and make copies of any statement prepared by them under paragraph 38 above and any report made by an auditor on the statement or on their accounts and

        (b) to be furnished with copies of any such statement or report on payment of such reasonable sum as the authority or the Council may determine.

        Regulations as to accounts
        39F.—(1) The Ministers may by regulations applying to water authorities and the Council make regulations with respect to—

        (a) the deposit of the accounts of a water authority or the Council at their offices or at any other place;

        (b) the publication of information relating to accounts and the publication of statements of accounts;

        (c) the exercise of any rights of inspection or making representations conferred by paragraph 39C or 39E above, and the steps to be taken for informing persons entitled to exercise them of those rights.

        (2) Regulations under this paragraph may make different provision in relation to water authorities and the Council respectively.
        (3) The power to make regulations under this paragraph shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

        Restriction on disclosure of information
        39G.—(1) No information relating to a particular body or other person and obtained by any auditor, or by a person acting on behalf of an auditor, in the course of any audit under this Schedule shall be disclosed except—

        (a) with the consent of the body or person to whom the information relates; or

        (b) for the purposes of any functions of an auditor under this Schedule; or

        (c) for the purposes of any criminal proceedings.

        (2) Any person who discloses any information in contravention of sub-paragraph (1) above shall be guilty of an offence and liable—

        (a) on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the prescribed sum (as defined in section 32(9) of the magistrates' Courts Act 1980) or to both; or

        791

        (b) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both.'.—[Mr. King.]

        Brought up, and read the First and Second time.
        Amendment made: Leave out paragraph 39(2) and insert:
        `(2) A person shall not be qualified for appointment under this paragraph unless he is—

        (a) a member of a body of accountants established in the United Kingdom and recognised for the purposes of section 161(1)(a) of the Companies Act 1948; or

        (b) a member of the Chartered Institute of Public Finance and Accountancy; but a firm may be so appointed if each of its members is qualified to be so appointed. '.—[Mr. Squire.]

        Schedule, as amended, added to the Bill.

    Schedule 1

      THE AUDIT COMMISSION
      Mr. Giles Shaw: I beg to move amendment No. 22, in page 24, line 13, at end insert—
      '(7) Notwithstanding sub-paragraphs (1) and (3) above, the first Controller of Audit shall be appointed by the Secretary of State who shall determine the terms and conditions on which he is to be employed by the Commission.'.
      This amendment was not suggested by the Opposition but was foreshadowed by my hon. Friend the Under-Secretary of State for Wales, who told the Committee that the Government intended to table an amendment whereby the Secretary of State would appoint the first controller of audit. The Committee understood the reasons for that, and the amendment is tabled to discharge that undertaking.

    Schedule 2
      WATER AUTHORITIES
      Amendment made: No. 23, in page 27, line 7, leave out Schedule 2.—[Mr. King.]
    Schedule 3

      CONSEQUENTIAL AMENDMENTS
      Amendments made: No. 24, in page 30, line 2, before `In' insert '(1)'.
      No. 25, in page 30, line 5 at end insert—
      '(2) For paragraph 40(1) of that Schedule there shall be substituted—
      "(1) There shall be made to the Ministers—

      (a) by each water authority and the Council as soon as possible after the end of each accounting year (within the meaning of paragraph 38 above); and

      (b) by the Water Space Amenity Commission as soon as possible after 31st March in each year,

      a report on the discharge by them of their functions during that year and of their policy and programme."'.—[Mr. King.]
      10.30 pm
      Mr. King: I beg to move, That the Bill be now read the Third Time.
      10.31 pm
      Mr. Kaufman: I understand why the Minister should wish to say no more than that about the Bill. He said about as much in favour of it in those words as can be found. It has gone through more adventures than Dick Barton or James Bond. People talk about "The Perils of Pauline". The Bill should be entitled "The Perils of Heseltine".
      792
      The Bill was introduced with great blasts on ministerial trumpets. It was then withdrawn, reintroduced, amended and reamended. The referendums—originally the centrepiece of the Bill—have gone. Selected mid-year hold-back, to which the Treasury attaches such immense importance has also gone. As the House had heard in the past few minutes, major amendments have been both in Committee and on Report in response to pressure from the Opposition. There have been important steps towards the depoliticisation of the audit.
      The words
      "and in the carrying out of its policies"
      in clause 9(1)(c)—a form of words that I told the House on Second Reading was exceptionally dangerous—have now been removed. In addition, the Minister has made an important statement on the non-political nature of the audit. We now have several amendments which provide for consultations with trade unions on the appointment of members of the audit commission. We have restored what was being taken away—public access to the accounts of water authorities.
      The Committee stage of the Bill was truly meaningful. I congratulate my right hon. and hon. Friends who served on the Committee on the way in which they worked and on the amendments that they obtained through 1,000 columns of achievement.
      It would be churlish of me not to acknowledge that our pressure met with response, from time to time at any rate, from the Minister who has now laboured three grim years in the salt mines of the Department of the Environment. We shall watch his future with interest. Moreover, we take our leave of the Bill knowing that it will not be enacted as it is now amended.
      We are still to have what may be described as the `Bedfordshire amendments", which the Government have extremely sensibly decided not to rush through, because they will get them wrong even if they do not. We are still to have the amendments in response to the new clause proposed by my right hon. Friend the Member for Heywood and Royton (Mr. Barnett), and we may still have the Government's fourth thoughts on clause 4.
      I give the Government notice now that the House can look forward to long and fruitful debates when the Bill returns after being considered in another place.
      The Bill has been mangled, changed and improved, but I say clearly on behalf of Her Majesty's Opposition that it is still unacceptable. It is unacceptable in setting up an audit commission, which we join the local authorities and their associations in opposing. It is unacceptable in banning supplementary rates, which have existed for nearly four centuries. It is unacceptable in imposing arbitrary and unfair spending limits and penalties on local authorities. It is unacceptable in its unprecedented interference with the freedom of local authorities.
      Whether the next Labour Government will repeal part III of the Bill will depend upon how the audit commission operates in the short time between its being set up and the next general election, but I state unequivocally and categorically that we shall certainly repeal parts I and II—and we shall demonstrate that by voting against the Third Reading.
      10.37 pm
      Mr. David Madel: The position of Bedfordshire county council has been the subject of

      793
      much comment and debate. As one of the county's five Members of Parliament who was not on the Committee, I should like to deal briefly with the present position.
      When the Bill was launched and announcements were made, it was stated that supplementary precepts and rates would be banned as from 1 April 1982. In Bedfordshire, however, the actual rate for 1982–83 was fixed at the end of February. Every county councillor knew that that decision was to be made then. About 10 days later, a supplementary precept was issued, because it was clearly known by county councillors at the meeting at the end of February that they could not throw out what they had done then and the only way in which they could top it up was to bring in a supplementary precept. They were told that if they did that they would bring themselves into a major collision with the Government as a result of the Bill, and that is certainly what has happened.
      I understand from the Government that, even if supplementary precepts were agreed in the year 1981–82, if they refer to a period after 1 April 1982 they will be invalidated when this legislation receives the Royal Assent. I am glad to see that the Government are further taking care of Bedfordshire's case—we have four district councils, of which two are in exceptional difficulty over this—by making amendments in the House of Lords.
      I am glad that the hon. Member for Liverpool, Edge Hill (Mr. Alton) is present on behalf of the Liberal Party. He had quite a bit to say about Bedfordshire, but he did not answer my point about the damage that supplementary precepts and rates will do to industry and commerce in the county. There will be plenty of time for debate when we have elections later, but the hon. Gentleman did not answer that point. He merely talked about services in the county. I can only point out to him that Bedfordshire is one of the highest spending authorities in the land, especially on education, as a close look at the facts will prove. The supplementary precept with which we are now threatened will be very damaging to industry.
      As I understand it, until the Bill becomes law, supplementary precepts and rates are lawful and must be paid.
      Mr. Alton: Does the hon. Gentleman support the course of action urged upon the ratepayers of Bedfordshire by the leader of the Conservative group—not to pay their supplementary rates bills and thus to break the law?
      Mr. Madel: I do not wish to become involved in a county council argument in this Chamber. I merely restate what I have just said as one of the Members of Parliament for the county. As I understand it—I know that my hon. Friend the Member for Bedford (Mr. Skeet) agrees with me on this—until the Bill becomes law, supplementary precepts and rates are lawful and must be paid.
      I hope that two things will flow from this legislation. First, Bedfordshire county council should not start spending money now that it will have to return to the districts when the Bill receives Royal Assent and becomes law. Secondly, a large amount of supplementary precept and rate money will soon start to move around Bedfordshire. When the Bill becomes law, it will have to be returned whence it came—to districts, ratepayers, industry and commerce. All I urge is that, when the Bill becomes law, the money which must now be lawfully paid will be swiftly returned whence it came.
      I hope that Bedfordshire county council will never again get itself into such a position that it knew that, by
      794
      pushing this supplementary precept, it would collide with the Government and land itself in great difficulties. Bedfordshire has enough difficulties without certain county councillors pushing their luck over this Bill.
      10.40 pm
      Mr. John Cartwright: Despite the changes referred to by the right hon. Member for Manchester, Ardwick (Mr. Kaufman), the Bill is still a considerable step along the road to central Government control and domination of local authorities. The removal of the power to levy a supplementary rate is a crude use of a sledgehammer to reduce the freedom of manoeuvre of local authorities. As to part II, I regard the whole concept of spending targets imposed by central Government as resting on the unacceptable idea that the man in Marsham Street knows best. That approach goes against the whole tradition and spirit of local government, which has always been based on the idea of diversity, innovation and widely differing policies reflecting differing needs and views in local communities. It is a great sadness that that will now be crushed in the dull, grey, centralised uniformity of grant-related expenditure assessments and centrally imposed spending targets backed up by the penal threat of the witholding of grant.
      It is against that background that I suggest that Ministers should not underestimate the suspicion with which local government will face the audit commission. That suspicion was underlined to me again this morning when I received a letter from the treasurer of the London borough of Greenwich expressing a personal view. He says:
      "I am convinced that the intention of the Secretary of State for the Environment in creating the Audit Commission is to have another means of controlling local government from the centre".
      That is not a wild, extremist councillor or a politician with an axe to grind. It is an experienced local government treasurer—one of those prudent treasurers about whom we heard a great deal in Committee. He ends his personal letter to me as follows:
      "I am thus very apprehensive that the proposed arrangements are yet another nail in the coffin of the independence of local government".
      I underline that as a reminder to Ministers that they will meet considerable suspicion from local government when it comes to the operations of the audit commission.
      As other hon. Members have pointed out, the Bill contains a major element of retrospection, sanctifying action that has already been taken by Ministers. It still leaves considerable grey areas about the legality of some of the measures affecting targets and grant systems. Its complex and complicated nature will create a field day for lawyers. It will not provide the stability that local authorities need to operate prudently and to run efficient and effective services.
      Despite the changes that have been made, the Bill is based on a philosophy of centralism and on the belief that it is right for central Government to set the levels of spending of individual local authorities. It is based on a belief that the only defence of local ratepayers against unreasonable rate demands is in central Government direction.
      My hon. Friends in the Liberal Party and the SDP totally reject that approach. We believe that local government should be made more accountable, but downwards to the electors and not upwards to the

      795
      Secretary of State. The Bill is not a blueprint for self-confident, lively, democratic local government. It is a charter for central Government bureaucracy, and we shall vote against Third Reading tonight.
      10.45 pm
      Mr. W. Benyon: The right hon. Member for Manchester, Ardwick (Mr. Kaufman) is adept at looking the most responsive gift horse in the mouth. It would be churlish if someone such as myself, who voted against the Bill on Second Reading, did not congratulate my right hon. Friends on the changes made in Committee, especially to the provisions that allow the level of grant to be changed after the beginning of the financial year. That was the feature that stuck in my gullet more than anything else.
      I do not pretend that I regard the Bill as a particularly happy one, even in its present state. It is essentially a temporary Bill. The difficulties that we have experienced over the Bill underline more than ever the need to change the basis of local government finance so that local government becomes much more responsive to the electors and to those who actually pay the Bill. If the difficulties that we have gone through contribute in some way to bring that about and to develop a sense of urgency to produce that result, all the discussion will not have been in vain.
      10.46 pm
      Mr. King: I much appreciate the contribution of my hon. Friend the Member for Buckingham (Mr. Benyon) who, having made his views clear on Second Reading, was characteristically generous on Third Reading. I am glad that his gullet is now a little freer and that he has been able to recognise the changes that have been made. My hon. Friend will understand that the Bill consists of three parts. I hope that part III will survive and become a lasting addition to the sensible arrangement of local government affairs.
      I profoundly disagreed with one of the least valuable contributions that the hon. Member for Woolwich, East (Mr. Cartwright) has made. I have respected a number of his earlier contributions but he was far too facile tonight in his treatment of the potential contribution of the audit commission.
      I am grateful to the right hon. Member for Manchester, Ardwick (Mr. Kaufman) and his hon. Friends for their contributions in Committee. The right hon. Gentleman made some play on the number of amendments that were made in response to contributions from the Opposition. He will recall that he said on Second Reading that he hoped that it would be a constructive debate to which the Government would listen. I express my appreciation of the part that my hon. Friends played in an important and constructive consideration of the Bill in Committee. My hon. Friends were subject to the difficult quaisi-Trappist role that has to be played by Government Back Benchers in Committee. They discharged their responsibilities excellently. They reserved their comments with te ling effect for the matters where they thought that improvements were needed and supported the areas where they thought that the Government were working on the right lines.
      I think that our proceedings in Committee were responsible. We have produced a Bill that commends itself
      796
      to the House and I hope that the House will support it. The Bill will ban supplementary rates and supplementary precepts, and high time too. I am satisfied from the advice that I have been given that the supplementary precept mentioned by my hon. Friend the Member for Bedfordshire, South (Mr. Madel) will be valid if it is levied now and will prove on Royal Assent, which I trust will be achieved before too long, to be invalid. It is the responsibility of Bedfordshire ratepayers to honour their responsibilities and to pay such precepts and rate demands as they receive.
      I wish to allay the surprise of the right hon. Member for Birmingham, Small Heath (Mr. Howell). Clause 4 is very different now from the clause that he had in mind when he woke up to an intervention to discover that we were proposing a fourth amendment to the clause when he probably thought that it was unamended. It is a different amendment to the clause 4 that he had in mind. This is a sensible approach to the problem of trying to reverse the process of a progressive and continuous increase in local government expenditure and to recognise that, at a time of public expenditure restraint, it is necessary to ensure that individual local authorities to do not pre-empt resources from the more prudent.
      I welcome what the right hon. Member for Ardwick said about the proposals for the audit commission. At the time of Second Reading and in Committee, the debates on the Bill began with a knee-jerk reaction by the Opposition to the effect that the audit commission was unlikely to receive any support from them. That was my impression. I do not wish to make any political point. I believe that the audit commission has a valuable role to play.
      The hon. Member for Woolwich, East suggested that the Bill was another example of centralism. It is, therefore, odd that its introduction should be supported by the president of NALGO, by the Labour leader of the Camden authority, by Conservative leaders of local authorities and also by independent accountants and others with experience of local government. They believe that the audit commission, standing at one remove from the present district audit service, which is, in effect, part of the Department of the Environment, occupies an independent position that the House should support.
      The interesting amendments proposed by the right hon. Member for Heywood and Royton (Mr. Barnett), speaking, I think, with the full support of the PAC, may further extend the new role that may be played in this respect. I believe that the Bill will make an important contribution to local authority expenditure, its proper examination and the better pursuit of value for money, one of the most important responsibilities of central and local government. Against that background, with the greatest of enthusiasm, I commend the Bill to the House.
      Question put, That the Bill be now read the Third time:—
      The House divided: Ayes 273, Noes 212.

      AYES

      Aitken, Jonathan

      Banks, Robert

      Alexander, Richard

      Beaumont-Dark, Anthony

      Alison, Rt Hon Michael

      Bendall, Vivian

      Amery, Rt Hon Julian

      Benyon, W. (Buckingham)

      Ancram, Michael

      Best, Keith

      Aspinwall, Jack

      Bevan, David Gilroy

      Atkins, Robert (Preston N)

      Biggs-Davison, Sir John

      Atkinson, David (S'm'th, E)

      Blackburn, John

      Baker, Kenneth (St.M'bone)

      Blaker, Peter

      Baker, Nicholas (N Dorset)

      Body, Richard

      797

      Bonsor, Sir Nicholas

      Hampson, Dr Keith

      Bottomley, Peter (W'wich W)

      Hannam, John

      Bowden, Andrew

      Haselhurst, Alan

      Boyson, Dr Rhodes

      Havers, Rt Hon Sir Michael

      Braine, Sir Bernard

      Hawksley, Warren

      Bright, Graham

      Hayhoe, Barney

      Brinton, Tim

      Heddle, John

      Brittan, Rt. Hon. Leon

      Henderson, Barry

      Brooke, Hon Peter

      Hicks, Robert

      Brotherton, Michael

      Higgins, Rt Hon Terence L.

      Brown, Michael (Brigg &Sc'n)

      Hogg, Hon Douglas (Gr'th'm)

      Browne, John (Winchester)

      Holland, Philip (Carlton)

      Bruce-Gardyne, John

      Hooson, Tom

      Bryan, SirPaul

      Hordern, Peter

      Buchanan-Smith, Rt. Hon. A.

      Howe, Rt Hon Sir Geoffrey

      Buck, Antony

      Howell, Rt Hon D. (G'ldf'd)

      Budgen, Nick

      Howell, Ralph (N Norfolk)

      Burden, Sir Frederick

      Hunt, David (Wirral)

      Butcher, John

      Hunt, John (Ravensbourne)

      Cadbury, Jocelyn

      Hurd, Rt Hon Douglas

      Carlisle, John (Luton West)

      Irving, Charles (Cheltenham)

      Carlisle, Kenneth (Lincoln)

      Jenkin, Rt Hon Patrick

      Carlisle, Rt Hon M. (R'c'n)

      Jessel, Toby

      Chalker, Mrs. Lynda

      JohnsonSmith, Geoffrey

      Chapman, Sydney

      Jopling, Rt Hon Michael

      Clark, SirW. (Croydon S)

      Joseph, Rt Hon Sir Keith

      Clarke, Kenneth (Rushcliffe)

      Kellett-Bowman, MrsElaine

      Clegg, Sir Walter

      Kershaw, Sir Anthony

      Cockeram, Eric

      King, Rt Hon Tom

      Colvin, Michael

      Kitson, Sir Timothy

      Cope, John

      Knight, Mrs Jill

      Cormack, Patrick

      Knox, David

      Costain, Sir Albert

      Lamont, Norman

      Cranborne, Viscount

      Lang, Ian

      Crouch, David

      Latham, Michael

      Dean, Paul (North Somerset)

      Lawrence, Ivan

      Dickens, Geoffrey

      Lawson, Rt Hon Nigel

      Dorrell, Stephen

      Lee, John

      du Cann, Rt Hon Edward

      LeMarchant, Spencer

      Dunn, Robert (Dartford)

      Lennox-Boyd, Hon Mark

      Durant, Tony

      Lester, Jim (Beeston)

      Dykes, Hugh

      Lewis, Kenneth (Rutland)

      Eggar, Tim

      Lloyd, Ian (Havant & W'loo)

      Elliott, Sir William

      Lloyd, Peter (Fareham)

      Emery, Sir Peter

      Loveridge, John

      Eyre, Reginald

      Lyell, Nicholas

      Fairbairn, Nicholas

      McCrindle, Robert

      Fairgrieve, SirRussell

      Macfarlane, Neil

      Farr, John

      MacKay, John (Argyll)

      Fenner, MrsPeggy

      Macmillan, Rt Hon M.

      Finsberg, Geoffrey

      McNair-Wilson, M. (N'bury)

      Fisher, Sir Nigel

      McNair-Wilson, P. (New F'st)

      Fletcher, A. (Ed'nb'gh N)

      Madel, David

      Fletcher-Cooke, SirCharles

      Major, John

      Fookes, Miss Janet

      Marlow, Antony

      Forman, Nigel

      Marshall, Michael (Arundel)

      Fowler, Rt Hon Norman

      Marten, Rt Hon Neil

      Fox, Marcus

      Mates, Michael

      Fraser, Peter (South Angus)

      Mather, Carol

      Fry, Peter

      Maude, Rt Hon Sir Angus

      Gardiner, George (Reigate)

      Mawby, Ray

      Gardner, Edward (S Fylde)

      Mawhinney,DrBrian

      Garel-Jones, Tristan

      Maxwell-Hyslop, Robin

      Gilmour, Rt Hon Sir Ian

      Mayhew, Patrick

      Glyn, Dr Alan

      Mellor, David

      Goodhart, Sir Philip

      Meyer, Sir Anthony

      Goodhew, SirVictor

      Miller, Hal (B'grove)

      Goodlad, Alastair

      Mills, Iain (Meriden)

      Gorst, John

      Mills, Peter (West Devon)

      Gow, Ian

      Moate, Roger

      Grant, Anthony (Harrow C)

      Monro, Sir Hector

      Gray, Hamish

      Montgomery, Fergus

      Greenway, Harry

      Moore, John

      Griffiths, E.(B'ySt.Edm'ds)

      Morgan, Geraint

      Griffiths, Peter Portsm'th N)

      Morris, M. (N' hampton S)

      Grist, Ian

      Morrison, Hon C. (Devizes)

      Grylls, Michael

      Morrison, Hon P. (Chester)

      Gummer, John Selwyn

      Mudd, David

      Hamilton, Hon A.

      Murphy, Christopher

      Hamilton, Michael (Salisbury)

      Myles, David

      798

      Neale, Gerrard

      Spicer, Michael (S Worcs)

      Needham, Richard

      Sproat, Iain

      Nelson, Anthony

      Squire, Robin

      Neubert, Michael

      Stanbrook, Ivor

      Newton, Tony

      Stevens, Martin

      Normanton, Tom

      Stewart, A.(ERenfrewshire)

      Onslow, Cranley

      Stewart, Ian (Hitchin)

      Oppenheim, Rt Hon Mrs S.

      Stokes, John

      Page, Richard (SW Herts)

      Stradling Thomas,J.

      Parkinson, Rt Hon Cecil

      Taylor, Teddy (S'end E)

      Parris, Matthew

      Temple-Morris, Peter

      Patten, Christopher (Bath)

      Thatcher, Rt Hon Mrs M.

      Patten, John (Oxford)

      Thompson, Donald

      Pattie, Geoffrey

      Thorne, Neil (Ilford South)

      Pawsey, James

      Thornton, Malcolm

      Percival, Sir Ian

      Townend, John (Bridlington)

      Pink, R. Bonner

      Townsend, Cyril D, (B'heath)

      Porter, Barry

      Trippier, David

      Prentice, Rt Hon Reg

      Trotter, Neville

      Prior, Rt Hon James

      van Straubenzee, Sir W.

      Proctor, K. Harvey

      Vaughan, Dr Gerard

      Raison, Rt Hon Timothy

      Viggers, Peter

      Rathbone, Tim

      Waddington, David

      Rees, Peter (Dover and Deal)

      Wakeham, John

      Rhys Williams, Sir Brandon

      Waldegrave, Hon William

      Ridley, Hon Nicholas

      Walker, Rt Hon P. (W'cester)

      Rifkind, Malcolm

      Walker, B. (Perth)

      Rippon, Rt Hon Geoffrey

      Wall, Sir Patrick

      Roberts, M. (Cardiff NW)

      Waller, Gary

      Roberts, Wyn (Conway)

      Ward, John

      Rossi, Hugh

      Warren, Kenneth

      Rost, Peter

      Watson, John

      Royle, Sir Anthony

      Wells, Bowen

      Sainsbury, Hon Timothy

      Wells, John (Maidstone)

      St. John-Stevas, Rt Hon N.

      Wheeler, John

      Scott, Nicholas

      Whitelaw, Rt Hon William

      Shaw, Giles (Pudsey)

      Whitney, Raymond

      Shaw, Michael (Scarborough)

      Wickenden, Keith

      Shelton, William(Streatham)

      Wiggin, Jerry

      Shepherd, Colin(Hereford)

      Wilkinson, John

      Shepherd, Richard

      Williams, D. (Montgomery)

      Shersby, Michael

      Wolfson, Mark

      Silvester, Fred

      Young, SirGeorge (Acton)

      Sims, Roger

      Younger, Rt Hon George

      Skeet, T. H. H.

      Speed, Keith

      Tellers for the Ayes:

      Speller, Tony

      Mr. Anthony Berry and Mr. Robert Boscawen.

      Spence, John

      Spicer, Jim (West Dorset)

      NOES

      Abse, Leo

      Cartwright, John

      Adams, Allen

      Clark, Dr David (S Shields)

      Allaun, Frank

      Cocks, Rt Hon M. (B'stol S)

      Alton, David

      Cohen, Stanley

      Archer, Rt Hon Peter

      Coleman, Donald

      Ashley, Rt Hon Jack

      Concannon, Rt Hon J.D.

      Ashton, Joe

      Conlan, Bernard

      Atkinson, N.[(H'gey,)

      Cook, Robin F.

      Bagier, Gordon A.T.

      Cowans, Harry

      Barnett, Guy (Greenwich)

      Craigen, J. M. (G'gow, M'hill)

      Barnett, Rt Hon Joel (H'wd)

      Crowther, Stan

      Beith, A. J.

      Cryer, Bob

      Benn, Rt Hon Tony

      Cunliffe, Lawrence

      Bidwell, Sydney

      Cunningham, Dr J. (W'h 'n)

      Booth, Rt Hon Albert

      Dalyell, Tam

      Boothroyd, MissBetty

      Davidson, Arthur

      Bray, Dr Jeremy

      Davies, Ifor (Gower)

      Brocklebank-Fowler, C.

      Davis, Clinton (Hackney C)

      Brown, Hugh D. (Provan)

      Davis, Terry (B'ham, Stechf'd)

      Brown, R. C. (N'castle W)

      Deakins, Eric

      Brown, Ronald W. (H'ckn'y S)

      Dean, Joseph (Leeds West)

      Brown,Ron(E'burgh, Leith)

      Dewar, Donald

      Buchan, Norman

      Dixon, Donald

      Callaghan, Rt Hon J.

      Dobson, Frank

      Callaghan, Jim (Midd't'n &P)

      Dormand, Jack

      Campbell, Ian

      Douglas, Dick

      Campbell-Savours, Dale

      Duffy, A. E. P.

      Canavan, Dennis

      Dunn, James A.

      Carmichael, Neil

      Dunnett, Jack

      799

      Dunwoody, Hon Mrs G.

      Jay, Rt Hon Douglas

      Eadie,Alex

      John,Brynmor

      Eastham, Ken

      Johnson, Walter (DerbyS)

      Ellis. R. (NE D'bysh're)

      Johnston, Russell (Inverness)

      English,Michael

      Jones, Rt Hon Alec (Rh'dda)

      Evans, loan (Aberdare)

      Jones, Barry (East Flint)

      Faulds,Andrew

      Kaufman, Rt Hon Gerald

      Field,Frank

      Kilfedder, JamesA.

      Fitch,Alan

      Kilroy-Silk,Robert

      Flannery,Martin

      Kinnock,Neil

      Fletcherjed (Darlington)

      Lamborn,Harry

      Ford,Ben

      Leadbitter,Ted

      Forrester,John

      Leighton,Ronald

      Foster, Derek

      Lestor, Miss Joan

      Foulkes,George

      Lewis, Arthur (N'ham NW)

      Fraser, J. (Lamb'th,N'w'd)

      Litherland,Robert

      Freeson, Rt Hon Reginald

      Lofthouse,Geoffrey

      Freud,Clement

      Lyon,Alexander(York)

      Garrett, John (Norwich S)

      Lyons, Edward (Bradf'dW)

      Gilbert, Rt Hon Dr John

      McCartney,Hugh

      Golding,John

      McDonald,DrOonagh

      Graham,Ted

      McKelvey,William

      Grant,George(Morpeth)

      MacKenzie,Rt Hon Gregor

      Grant, John (IslingtonC)

      McNamara,Kevin

      Hamilton,James(Bothwell)

      McTaggart,Robert

      Hamilton, W. W. (C'tral Fife)

      McWilliam,John

      Harrison, RtHonWalter

      Marks,Kenneth

      Hattersley, Rt Hon Roy

      Marshall,DrEdmund (Goole)

      Haynes, Frank

      Marshall, Jim (LeicesterS)

      Heffer, Eric S.

      Martin,M(G'gowS'burn)

      Holland,S.(L'b'th,Vauxh'll)

      Maynard, Miss Joan

      Homewood,William

      Meacher,Michael

      Hooley,Frank

      Mikardo,Ian

      Horam,John

      Millan,RtHonBruce

      Howell,Rt Hon D.

      Miller, Dr M.S.(E Kilbride)

      Howells,Geraint

      Mitchell,Austin(Grimsby)

      Hoyle,Douglas

      Mitchell, R. C. (Soton Itchen)

      Huckfield,Les

      Morris, Rt Hon C. (O'shaw)

      Hughes,Mark(Durham)

      Moyle, Rt Hon Roland

      Hughes, Robert (Aberdeen N)

      Newens,Stanley

      Hughes,Roy (Newport)

      Oakes, Rt Hon Gordon

      Janner,HonGreville

      O'Neill,Martin

      800

      Orme, Rt Hon Stanley

      Stallard, A. W.

      Owen, Rt Hon Dr David

      Stoddart,David

      Park,George

      Stott,Roger

      Parry,Robert

      Strang,Gavin

      Pendry,Tom

      Straw,Jack

      Penhaligon,David

      Summerskill,HonDrShirley

      Pitt,WilliamHenry

      Taylor, MrsAnn (Bolton W)

      Powell,Raymond(Ogmore)

      Thomas, DrR. (Carmarthen)

      Price, C. (Lewisham W)

      Jhorne,Stan(PrestonSouth)

      Race, Reg

      Tilley,John

      Radice,Giles

      Tinn,James

      Rees, Rt Hon M (Leeds S)

      Tomey,Tom

      Richardson,Jo

      Varley, Rt Hon Eric G.

      Roberts,Albert(Normanton)

      Wainwright,E.(DearrteV)

      Roberts,Allan(Boote)

      Wai nwrig ht, R. (Colne V)

      Roberts, Ernest (HackneyN)

      Walker, RtHon H.(D'caster)

      Roberts, Gwilym (Cannock)

      Watkins,David

      Robertson,George

      Weetch,Ken

      Robinson, G. (CoventryNW)

      Welsh,Michael

      Rooker, J. W.

      White, Frank R.

      Ross, Ernest (Dundee West)

      White,J. (G'gowPollok)

      Rowlands,Ted

      Whitehead,Phillip

      Ryman,John

      Whitlock,William

      Sandelson,Neville

      Willey,RtHonFrederick

      Sever,John

      Williams, Rt Hon A.(S'sea W)

      Sheerman,Barry

      Williams, Rt Hon Mrs (Crosby)

      Sheldon,Rt Hon R.

      Wilson, Rt Hon Sir H.(H'ton)

      Shore, Rt Hon Peter

      Wilson,William (C'try SE)

      Silkin,RtHonJ.(Deptford)

      Winnick,David

      Silkin, Rt Hon S. C. (Dulwich)

      Woodall,Alec

      Silverman,Julius

      Woolmer,Kenneth

      Skinner,Dennis

      Wright,Sheila

      Smith, Rt Hon J. (N Lanark)

      Young, David (Bolton E,)

      Snape, Peter

      Soley,Clive

      Tellers for the Noes:

      Spearing,Nigel

      Mr. Allen McKay and Mr. George Morton.

      Spriggs,Leslie

      Question accordingly agreed to.
      Bill read the Third time and passed.

    RESERVE FORCES BILL [Lords]
    Not amended (in the Standing Committee), considered.
    Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
    Bill accordingly read the Third time and passed, without amendment.

    Statutory Instruments, &c.
    Mr. Bob Cryer rose——
    Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I must put the Question.
    Mr. Cryer: On a point of order, Mr. Deputy Speaker. I had risen, seeking to catch your eye.
    Mr. Deputy Speaker: Order. The motion cannot be debated.
    Motion made, and Question put forthwith pursuant to Standing Order No. 73A(5) (Standing Committee on Statutory Instruments, &c.).

    RATING AND VALUATION
    That the Valuation (Scotland) Order 1982, a copy of which was laid before this House on 25th February, be approved.— [Mr. Boscawen.]
    Question agreed to.

    Police Accountability
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boscawen.]
    11.4 pm
    Mr. Alexander W. Lyon: I wish to raise the issue of police accountability, which at present is clouded in a good deal of political controversy. In the short time that is available to me, I hope to clarify some aspects of the matter and take them out of the area of political controversy.
    The way in which we are policed and the effectiveness of the police force are matters of serious concern to all who are interested in the good of our society. The mere fact that the Labour Party has adopted a policy about police accountability should not make it the subject of political controversy. I hope that the Minister will judge the arguments on their merits rather than try to score points in a political debate. This is, after all, a serious matter.
    The Royal Commission on the police in 1959 said that it thought that chief constables needed to be more accountable to their police authorities, and it made recommendations about the way in which that should be done. The Police Act 1964 was designed to implement those recommendations, albeit with some changes. In his Second Reading speech, the then Home Secretary, Mr. Henry Brooke, said:
    "The Bill does not give the police authority power to issue instructions to the chief constable, but it has not got that power now. Its general responsibility is to secure the maintenance of an efficient force, and it will have every right to discuss with: its chief constable how the men and equipment with which it has provided him can be most effectively used in conducting police operations. I have no doubt that every chief constable who is up to his job welcomes discussion of this kind".—[Official Report, 26 November 1963; Vol. 685, c. 87.]
    That shows that it was intended that the powers in the 1964 Act should be used with the intention of bringing a chief constable more under the control of the police authority not by giving the police authority decisive power to make decisions, but by ensuring that the chief constable would not make decisions without consultation and be influenced by the pressure that was brought to bear on him in the course of those discussions.
    Therefore, it is not in any way wrong, either morally or politically, for people now to call for the greater exercise of the power of the police authority. There are 43 police authorities in England and Wales outside the metropolis, and in the metropolis the police authority is the Home Secretary. Outside the metropolis, those police authorities are committees of the local county council. They are not subject to the decision of the county council, even though they report to it. They are composed of one- third of magistrates and two-thirds of locally elected councillors. They are constantly told by chief officers throughout the country that they are not in any way entitled to consider the policing policy of the chief constables; they are simply to provide the finance and resources for chief officers to carry out their policies.
    That is where I take issue with chief officers and to some extent with the Home Office, which tends to support their attitude. In my view, that is not what the Police Act either said or intended. It is clear from the Home Secretary's speech at the time that he did not intend that either. Section 4 of the Act says that the police authority shall

    803
    "secure the maintenance of an adequate and efficient police force for the area".
    It is quite impossible to see how it can do that unless it has some discussion about the policing policy of the area.
    For instance, is it right that the police should be used on the beat or simply in a reactive position in panda cars? How can the police authority decide whether it has an efficient police force unless it can determine that central issue of policing policy, which is an area of serious contention between different chief officers. How can the authority decide whether it is operating an adequate and efficient police force if it does not determine whether officers should be investigating burglaries and criminal damage or should be policing traffic or football crowds? Choices have to be made in the allocation of resources. The police authority can only determine whether it has an efficient and adequate police force in its area if it is involved in policy decisions.
    Section 5 of the Act states that the police force
    "shall be under the direction and control of the chief constable."
    It is on those words that most chief constables lay their claim to be solely responsible for policing policy in their areas. The interesting provision is section 12, which was the result of the recommendations of the Royal Commission. Section 12(2) states:
    "The chief constable of a police force shall, whenever so required by the police authority, submit to that authority a report in writing on such matters as may be specified in the requirement, being matters connected with the policing of the area for which the force is maintained."
    There is no indication that the chief constable has any discretion in the matter at all. Indeed, the next subsection makes it clear that, if he does not like the request and thinks that it is not needed for the discharge of the functions of the police authority, he may request authority to refer the requirement to the Secretary of State. In other words, if the chief constable does not like it, he cannot refuse, but he can refer the matter to the Secretary of State. Only once since 1964 has any chief constable done that. The then Home Secretary turned down his request and backed the police authority.
    Therefore, the position in Manchester at a recent meeting of the police authority is a little surprising. The chairman of the police authority asked the chief constable certain questions about a policing operation at Laurence Scott. He was told by the chief constable that he had no right to ask the questions. Under section 12, in my view the chief constable was without the law. In those circumstances, he was acting illegally, not the chairman of the police authority. Nevertheless, in order to restore amity, the chairman of the police authority withdrew the questions. The chief constable then had the cheek to go out and tell the press that he was perfectly right in the attitude that he had taken, and that it was the chairman of the police authority who did not have the legal power to ask the questions. I believe that that is a breach of section 12.
    The handling of complaints from the public has now become a central feature of the argument about the police. In section 50, the police authority is responsible for ensuring that the police complaints system is adequately policed. Nevertheless, most police authorities fail to do anything more than look at the book occasionally to ensure that the complaints are recorded, but they have no machinery by which complaints can be properly monitored. That has recently been started by the
    804
    Merseyside authority, and it was considered to be something of a revolution. Nevertheless, that is part of the powers of the Police Act. I maintain that the powers, although they are not as extensive as I would wish, allow a police authority to exercise a proper degree of control of policing policy in its area as long as the chief constable recognises that he is subject to those powers.
    The Minister of State should make that perfectly plain and tell chief officers that they are not isolated dictators who can determine the policing policy in their areas without let or hindrance from police authorities. They are required by the Act to be accountable, in a general sense, to their local communities.
    However, that is not enough. The hon. Member for Bury St. Edmunds (Mr. Griffiths), who represents the Police Federation in the House, said in a recent debate that about 21 chief constables are responsible for the fate of police-community relations in our inner cities. He is right, and that is far too great a responsibility to put on the shoulders of such a small number of men. It is only right that the community should have a far greater say in what goes on in police-community relations in the inner cities. The right people for that are locally elected councillors.
    I expect the next Labour Government to ensure that police authorities have an absolute say in the control of policing policy. That is not to say that the authorities will deal with day-to-day minutiae, any more than education committees deal with the day-to-day minutiae in our schools. It is for the director of education to apply the general policy. However, police authorities would be responsible for overall policy.
    The authorities would not have a say in who should or should not be prosecuted. I should prefer to put that in the hands of a public prosecutor, but if it is to stay with the police, there is no reason why such decisions should be in the hands of a police authority.
    However, in the way that we are policed, how the police react to us and how we react to the police, there should be a focus of control—determined by the public and not by an independent official, however prestigious—so that if the people do not like the way things are going they can get rid of the decision makers and put in someone else. That is the answer on the GLC and its contemporary leadership. If people do not like Ken Livingstone they can get rid of him at the next election. If people do not like Sir Kenneth Newman they cannot get rid of him by an election. Surely that is what democracy is all about.
    London poses a special problem, because there is no police authority in the capital at the moment. It is only right that London should have such an authority. The question is: What sort of authority? Should we have a GLC police authority for the whole metropolis? I suspect that the Metropolitan Police is far too big for its own good or for our good and that we ought to carve up the force into four forces, which would be accountable to the boroughs that they policed. Perhaps we need four police authorities of a similar nature and size to the police authorities outside London. Perhaps the Home Secretary should retain the residual powers over the Special Branch and the policing of the Palace of Westminster; that is a matter for discussion.
    However, it makes no sense that those who pay for the policing of London have no say in how London is policed. It is a considerable injustice and that is not the view only of councillors Boateng and Livingstone. In 1978, Lord Marshall, a distinguished scion of the Tory Benches in

    805
    another place said in a report on the GLC that the council ought to have a police committee. Anyone who considers the justice of the matter will agree that that is the proper thing to do. It is wrong to say that the Home Secretary is adequate as a police authority, because the Home Office has less control over Scotland Yard than police authorities have over their police forces at the moment.
    The Home Office has a great many other responsibilities. It simply does not have the time to worry about what Scotland Yard is doing, unless there is a crisis, and then it can and does come in. For that reason, London should have a police authority, and it should have the powers that I have mentioned.
    I stress again that, even if the Minister does not go that far with me, he should make it clear to those chief officers who are getting just a bit too big for their boots that they have to be accountable to their police authorities in the way described by Henry Brooke in the passage that I read at the beginning of my speech.
    11.20 pm
    The Minister of State, Home Office (Mr. Patrick Mayhew): I welcome the opportunity, offered to us by the hon. Member for York (Mr. Lyon), to consider, once again, the proper position of police authorities and the whole question of police accountability.
    My right hon. Friend the Home Secretary, and preceding Home Secretaries, have repeatedly said that the police are, and must remain, accountable to the public whom they serve. The hon. Gentleman and his colleagues want local responsibility for policing placed—with the exception, as I understand it, of the Metropolitan Police to some limited extent—solely in the hands of elected representatives.
    At the same time, the hon. Gentleman and his colleagues have expressed their overall approval of the recommendations of Lord Scarman's report. It is proper to point out that that report stated that on the whole the statutory machinery under the Police Act 1964 works well. Lord Scarman recommended that consultation at local level should extend beyond elected representatives. I shall come to the detail of what the hon. Gentleman said, and to what I wish to say about the consultation, in a few moments.
    The Police Act 1964 gave effect, as the hon. Gentleman has reminded us, to the recommendations of the Royal Commission on the police. The Royal Commission identified two salient features of the structure of policing that were needed, as it thought, for each community. The first of those salient features was that chief officers of police should have complete discretion in directing and deploying their forces. The Royal Commission accepted that must be so if the criminal law was to be enforced impartially.
    The second feature was that the structure of forces was based on the local community. The Royal Commission noted that the local body responsible for administering the service—the police authority—could give advice and guidance to a chief constable on local problems, without detracting from his operational independence. The Royal Commission considered that the lack of control that this relationship implied could be offset by increasing a chief constable's accountability for his actions. It was that delicate balance of interests that the Royal Commission sought to preserve in making its recommendations. Its
    806
    conclusions were generally accepted by the Government of the day and were enshrined by Parliament in the Police Act 1964.
    That Act recognises the three elements that need to combine to provide effective policing arrangements—professional expertise, the interest of the local community and the national interest. Those are reflected in the responsibilities and powers given by the Act to the chief constable, to the police authority and to my right hon. Friend the Secretary of State. There have been many changes in our society since 1964, but those essential elements remain.
    The Royal Commission acknowleged the need for chief constables to be operationally independent. Police authorities may not instruct them to institute proceedings in a particular case, or direct them in the deployment of their forces. Neither may my right hon. Friend, except that in the interests of public safety or order, he can direct a chief constable to provide assistance to another area. Normally, such arrangements are made satisfactorily between chief officers, but this power in section 14(2) of the Police Act, reflects my right hon. Friend's overall responsibility for maintaining the Queen's peace.
    Independence from political control is one of the key elements in our policing arrangements. I believe that, there can be no room for political interference from central or local government. The operational dependence of chief officers is essential for the confidence of Parliament and the people in the police discharging their duty impartially. Subject to the point about accountability, that is the answer to the question: "Why should the electorate of London be able to dismiss Mr. Ken Livingstone but not Sir Kenneth Newman?" The answer is to be found in the desirability, insisted upon by Parliaments for more than a century, that the police administer the law impartially.
    The Royal Commission accepted that the criminal law had to be enforced impartially. In the theory of democracy, we talk about the people having control, but we must recognise that those whom the people elect to have control may be removed after three or five years at the next general or local election. A chief constable has to ensure that a police force enforces the law impartially. If he were to be dependent for the tenure of his ofice upon continuing to retain the favour of the elected council of a local authority, the greater would be the risk that the law would not be enforced impartially, but rather with an eye to keeping in favour with the local authority.
    Mr. Alexander W. Lyon: Why does that danger exist for the police, but not to the Army, Navy and Air force in relation to which the possible power of the Executive is even greater?
    Mr. Mayhew: The Army, Navy and Air Force are responsible to Parliament and to relevant Ministers and do not enforce the law. The police enforce the law and long may that distinction remain in this country.
    The hon. Gentleman asked me to remind chief constables of their duty to consult. There is no need to remind them of that because my right hon. Friend has spoken on the subject and was quoted in Lord Scarman's report at paragraph 5.64 from the lecture that he gave in Edinburgh in 1980 when he said:
    "it has become increasingly desirable that Police Authorities should see themselves not just as providers of resources but as a means whereby the Chief Constable can give account of his

    807
    policing policy to the democratically elected representatives of the community and, in turn, they can express to him the views of the community on these policies."
    Lord Scarman continued:
    "It is necessary also that Chief Officers of Police should accept and, indeed, encourage Police Authorities in their adoption of this role. A police force, the Chief Officer of which does not discuss, or allow his senior officers to discuss, matters of policing policy openly and responsibly with the community, is certain in the long run to find his efficiency undermined by loss of community support."
    My right hon. Friend has already made clear the importance he attaches to the need for consultation, and I need say nothing to amplify my right hon. Friend's remarks.
    Independence from political control is a key element in our policing arrangements. There can be no room for political interference from either central or local government. The chief constable has a statutory duty to give an account of his policies to the police authority. Ultimately, my right hon. Friend is accountable to the House for the conduct of chief constables and the police service nationally. My right hon. Friend is not, of course, responsible for statements made by individual chief officers. The police are there to serve and work with all groups in the community. If they are to achieve this, my right hon. Friend believes it is important that chief officers must be seen to be impartial. They have an onerous task. There is general agreement in the House that much attention and effort needs to be put into the training of the police to cope with the compexity of their job today. The Government are doing that. However, the hon. Gentleman's view is that police authorities should be recognised in the end as knowing better and be able to tell a professional police officer how he is to do his job. That point was dealt with in the second part of the hon. Gentleman's speech.
    That idea is contrary to our philosophy of policing in Britain. No politician or pressure group should be able to direct the police. That could lead to disaster. The police need advice, support and assistance from the police authorities and community at large in carrying out what is often a difficult task. It is to his police authority that a chief constable should look first for advice on whether the policies of the force are in tune with the needs and wishes of local people. Members of the police authority should have a deeper understanding than most of the problems that face the police and the limitations on what they can do because part of their statutory responsibility to maintain an efficient force is to sustain the morale of the police. The police are, of course, their constituents, too, and they serve their constituents.
    808
    The hon. Gentleman talked about the position in London, naturally enough. The House knows that the constitutional position under which my right hon. Friend the Home Secretary is police authority for the Metropolis is long standing, going back to the inception of the Metropolitan Police in 1829. Successive Governments of all complexions and the Royal Commission on the police in 1962 have consistently taken the view that the exceptional arrangement in London is justified by the nature of the problems of policing the capital city and seat of government and also by the fact that the force provides a number of services on a national basis. Lord Scarman recently recognised that there were good reasons for the "national accountability", as he put it, of the Metropolitan Police, adding that he did not believe that Parliament would wish to see the ultimate responsibility for policing the nation's capital transferred from a senior Cabinet Minister, accountable to Parliament, and put in the hands of a local body, however important. That is also the Government's view and my right hon. Friend has repeatedly made it clear that the Government have no intention of going down that road.
    The fundamental point is that there should be no political interference in the enforcement of the law. Thus, the Home Secretary, like other police authorities, may not give directions to the commissioner either about the way he deploys his resources for specific operations, or about the institution of criminal proceedings. Yet the powers which some appear to be seeking over the day-to-day activities and operations of the force in London would have precisely the opposite effect.
    The suggestion of an authority consisting of the Home Secretary and local authority representatives would lead to considerable confusion and would be unworkable in practise. The Metropolitan Police district covers some 40 local authorities, apart from the GLC, and it is difficult to imagine that a body of the size that would be needed truly to represent all those authorities would ever reach a conclusion. That would be dangerous.
    The full support of every law-abiding member of the community is essential to effective policing. That is why my right hon. Friend welcomed Lord Scarman's recommendation that there should be local consultation arrangements. In his view, such arrangements would in no way detract from the role of the police authority. On the contrary, improved arrangements—
    The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
    Adjourned at twenty-six minutes to Twelve o'clock.