§ Mr. O'Neill
I beg to move amendment No. 9, in page 4, line 23, leave out from 'Act' to end. of line and insert'only that amount for that year which is necessary to meet increases in loan charges'.This amendment is an attempt to clarify the meaning of the clause. The amendment was introduced towards the end of our consideration of the Bill in Committee in response to the considerable anxiety of local authorities. There was only limited time available to consult the Convention of Scottish Local Authorities. In a letter to all hon. Members the secretary of the convention stated that the new system of cash planning would not afford to the Government the flexibility that the previous rate support grant arrangements had made available. He said that the loan charges, which were one of the variables in the old rate support grant arrangements, were anticipated for the year and the moneys were made available. He explained that if the loan charges were not as great as had been anticipated, there was a degree of flexibility and some money was available for the local authorities.
The Government maintained that the purpose of the clause was to take account of any variation in loan charges. 130 The convention felt that there were sinister undertones in the powers that the Minister was taking to himself. Since the Minister gave his explanation in Committee there h as been nothing else to suggest that his intentions are anything other than sinister. I refer to the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), the then Under-Secretary of State, who is now the Under-Secretary of State for Foreign and Commonwealth Affairs. No one was convinced by the arguments that he advanced. We are trying to state explicitly in the amendment that, if any powers of this nature are to be contained in the clause, they shall refer only to loan charges within the year concerned. It is well nigh self-explanatory. It is intended to make the Government's intentions more specific. If the Government do not accept the amendment, one can only assume that there were other intentions behind the clause. If there is no other intention and the amendment is defective I am sure that the Government will take the opportunity to correct the omission in another place. Despite their enthusiasm to amend the Bill they have not sought to do so. One can only assume—until the Minister speaks—that it is because of the clarity and the succinctness of the amendment. If that is not the case the intentions of the Government remain obscure. The suspicion was expressed by many local government finance officers—they are not politicians, they are the specialists, whose responsibility it is to guide officials in local government, including the finance officer of Central region, the senior official of Lothian region, and the finance officer of Strathclyde—that that clause went further than the Government's intentions.
I hope that the Government will take the opportunity to clarify the position because there is a great deal of confusion in local government as to what the intentions are. We hope that this modest amendment will clarify the position. If it is defective there are other means open to the Government.
§ Mr. Allan Stewart
I hope that I can clarify the position for the hon. Member for Clackmannan and East Stirlingshire (Mr. O'Neill). The amendment would remove the Secretary of State's powers to redetermine the rate support grant except in the event of an increase interest rates. The power to redetermine the aggregate amount of grant in the course of the grant year is an essential element of the cash planning system provided by clause No. 3.
Under the former system of rate support grant the Secretary of State could adjust the cash paid by an increase order to take account of cost and price increases. Under cash planning the maximum amount of grant will be determined at the main order. There will no longer be a need for an increase order because the cash figure will include an allowance for cost and price increases. The Secretary of State will still need the power to review grant during the course of the year and redetermine it if necessary. As presently drafted the clause allows the Secretary of State to increase the amount to take account of increases in loan charges resulting from changes in the interest rate. That has not been questioned, and is generally accepted. However, the Secretary of Stale cannot be limited to that power alone. He must also have the power to vary grant for other reasons. He may wish for policy reasons to reduce the grant where he is satisfied that the level of expenditure planned by local authorities is damaging to the public interest. A reduction of that nature 131 has been made by successive Governments. It was made by the Labour Government in 1976–1977. The Secretary of State may wish to reduce grant to take account of a drop in interest charges. He must have the power to vary grant to take account of changes in local authority responsibilities or unforeseen circumstances. To remove that power except in relation to interest rates, as the amendment would do, would take away essential flexibility. We cannot accept the amendment tabled by the hon. Member for Clackmannan and East Stirlingshire, but I hope that that explanation makes the position clear.
§ Mr. O'Neill
The debate has served a purpose, because the Under-Secretary has made it clear that the aim of the clause is to give the Secretary of State power to reduce the amount available and not only in respect of changes in interest rates. That was not made clear to us in Committee and the hon. Gentleman's predecessor sought to hide behind the argument that general abatement powers had been exercised by previous Secretaries of State.
It is obvious that the power can go far wider and, therefore, the fears expressed by CoSLA and local government financial officials, are justified. The power is yet another turn of the screw by the Government. It restores to the Government powers which, it was imagined, they would no longer need to have to hand. Such is the Government's fear that a local authority may exercise discretion in a way that they consider unacceptable for policy reasons that they take power to curtail, cabin and confine local democracy. It was never suggested that the powers would be used in that way. They are another weapon for the Secretary of State in his efforts to control local democracy.
§ Amendment negatived.