HC Deb 01 February 1983 vol 36 cc202-28
Mr. Eyre

I beg to move amendment No. 4. in page 2, line 22, leave out from "charges " to end of line 24 and insert subsection (1) above shall have effect in relation to the next following accounting period as if the combined charges there referred to included an amount equal to the amount of the deficit.".

Mr. Deputy Speaker

With this it will be convenient to take Government amendments Nos. 5, 38 and 39.

Mr. Eyre

Amendment No. 4 is a clarifying amendment. It is intended to make it clear that an executive is under a duty to make good any deficit incurred in the previous accounting period. The only exception to that duty relates to a deficit that is covered by the planned appropriation of reserves as provided by clause 2(3). However, we shall deal with that in a subsequent amendment.

Amended subsection (2) will make it clear that in the year following one in which a deficit is created, the repayment of the deficit is to form an integral part of the executive's duty to break even. That duty is always subject, as is the duty in clause 2(1), to the phrase so far as is practicable", and the requirement to repay a deficit is to be achieved by making the deficit a charge on the accounts for the following year. If the executive then fails to break even in that subsequent year, it cannot lose the deficit from the earlier period. What will be required in practice is that the repayment of a deficit must be a charge on an executive's account in a new financial year. Then the executive must comply with its duty to break even. It must, so far as is practicable, achieve enough revenue, including grant, to offset its costs and any deficit brought forward from the previous years. If, at the end of the year, the account is again in deficit, it will be a new deficit carried forward for repayment in the following year.

The purpose of Government amendment No. 5 is to clarify the meaning of clause 2(3) and to achieve its intended purpose. The amendment will replace the phrase making good out of other funds with the phrase "the appropriation of reserves". That will make it clear that where a deficit or part of a deficit is covered by the appropriation of reserves proposed in a clause 3 plan, approved by the authority under clause 4, the duty under clause 2(2) to make good that deficit or that part of a deficit is disapplied. In other words, an executive can use reserves to cover a deficit.

Clause 2(3), as originally drafted, allowed for the planned use of other funds in association with the technical deficit after that deficit had been incurred and without then having to make good the deficit in the following year. It did not enable the executive to plan to use reserves in place of revenue grants and in consequence to run a technical deficit. As executives are likely to wish to plan to use and then actually to use reserves, this amendment allows them to do so. Therefore, the amendment makes it clear that where the use of reserves is planned, and the reserves are then so used, the duty under clause 2(1) to break even is disapplied in relation to that planned use of reserves.

Under clause 2(3) as amended it will be clear that an executive could plan to appropriate reserves and to run the associated deficit provided that the use of reserves is proposed and authorised in a plan prepared by the executive under clause 3 and approved by the authority under clause 4. I was hoping that the hon. Member for Keighley (Mr. Cryer) would bear with me for a moment and remain in the Chamber, because the points that I am making are relevant to one point that he raised recently. The authority and executive can agree and use reserves in substitution for revenue grant.

I am grateful to the hon. Member for Keighley for returning to the Chamber. The hon. Gentleman alleged that passenger transport executives cannot buy new buses with their reserves, but there is nothing in the Bill to prevent passenger transport executives from using their reserves for capital expenditure, which includes the purchase of buses. Protected expenditure limits relate only to the revenue branch. If a passenger transport executive accumulates a surplus—one must emphasise that so far they are not profit-making organisations—it must do so at the expense of the ratepayers. If it accumulates a reserve, that reserve would be valid for the purchase of Leyland buses, to which the hon. Gentleman referred, and I would be as keen on their buying as many Leyland buses as they justifiably can. I know that the hon. Gentleman would be happy if they could do so.

8 pm

Mr. Cryer

I am grateful for that clarification. Will the Minister also confirm that a PTA could use the money from surpluses to offset revenue in the following year to give further support to the bus services without that money being taken into account by the Secretary of State for the guidelines?

Mr. Eyre

The use of expenditure for revenue support—as distinct from capital spending, which the hon. Gentleman raised and on which I was happy to be able to produce such a good answer—can be done only on the basis of having been duly authorised under the planning process and having come within the PEL.

I referred to an authority and executive being able to agree and use reserves in substitution for revenue grant. There is also an amendment to clause 10 that will have the same effect for 1983–84 when there is no plan submitted under clause 4. However, we shall see that in a subsequent amendment.

Amendment No. 38 is included in this group and it would be for the convenience of the House if I were to explain the situation there. As the House knows, the Government are concerned that the Bill should be on the statute book by 1 April. Although the executives and authorities will not have prepared a plan for 1983–84 we intend that authorities should only be able to make revenue grants in the coming year if they have first made a determination as to the total of grants to be made. That is what clause 10(2) is intended to achieve. We had thought that the original drafting of this subsection made that clear but some doubts were expressed by Labour Members in Committee. Therefore, we made an amendment in Committee to make it absolutely clear that revenue grants for 1983–84 could be made only in accordance with the determination by the authority.

We are equally concerned that that determination should be made only in the light of guidance given by the Secretary of State. We have already announced initial guidance in the White Paper entitled "Public Transport Subsidy in Cities". We have since had discussions with most of the authorities concerned. We have looked again at the wording of clause 10(2) and have tabled this amendment to make it quite clear that authorities can only make a grant determination for 1983–84 when they have both received final guidance from the Secretary of State and also taken that guidance into account. The amendment in no way alters the spirit of the clause, but it makes it clear what is intended. Authorities will still be able to exceed the guidance if they wish, but the amendment will make clear the process to be followed if the authority is to comply with the law and, if it wishes, adopt the protection provided by clause 5(2) without, in 1983–84, having first gone through the planning cycle.

Because there was some misunderstanding on this point in Committee I shall reassure the House that the protection provided by clause 5(2) is brought into general effect on 1 April 1984, but it is also brought into effect for 1983–84 by clause 10(3) where authorities have followed the procedure in clause 10(2). The amendment is also to some extent consequential upon amendment No. 39 which will allow the use of reserves in 1983–84 to cover a deficit provided that such use of reserves has been notified to the Secretary of State before he issues his guidance. Although it does not explicitly say so, the amendment will in practice allow a brief period for completion of consultation before the guidance for 1983–84 is announced, and will enable the executive to notify the Secretary of State of any intention to use reserves.

I am grateful to the hon. Member for Penistone (Mr. McKay) for drawing the attention of the Standing Committee to the need for provison in clause 10 for the use of reserves in 1983–84, which drew the Government's attention to the need for this further clarification in clause 10(2). I am sorry that the hon. Gentleman has left the Chamber for a few moments. The amendment clarifies how clause 10(2) will operate and, therefore, how the protection of clause 5(2) is to be provided in 1983–84. That is in everybody's interest, not least of the executives, the authorities and the transport users who can benefit from the legal certainty available by complying with the Bill's requirements.

The House will recall that an amendment was made earlier to clarify the provision of clause 2(3) for the executives to use reserves to cover deficits provided that such use of reserves had been proposed in the plan approved by the authority. The hon. Member for Penistone helpfully pointed out in Committee when we touched on this subject that clause 2(3) only operates in relation to a plan and there will, of course, be no plan for 1983–84. Therefore, a specific provision is necessary to enable the planned use of reserves in 1983–84. In respect of such use we need to disapply the duty to break even—clause 2(1)—and the duty to make good a deficit in the following year—clause 2(2). That is the purpose of amendment No. 39 which requires the executives to notify the Secretary of State of any intention to use reserves before he gives his guidance to the authorities.

I believe that those amendments and the statements that I have made will helpfully clarify the situation and I hope that Labour Members will find the amendments of assistance.

Mr. Booth

I wish to speak to Government amendments Nos. 38 and 39 as they both raise serious and difficult issues for the passenger transport authorities. Before I do so, may I say that the Minister has just asserted—and it would appear to agree with the Bill's provisions—that section 5 will not operate until 1 April 1984, which follows from clause 10(1)(c). If that is the case, surely the local authorities cannot come to an arrangement with the Secretary of State in respect of 1983–84 on the basis that that will provide them with the protection of clause 5(2) which is not in operation for that year. Therefore, if they are faced with a challenge during that year they surely cannot argue in their defence that they have come to a suitable arrangement with the Secretary of State and are living within the protected expenditure limits which he has issued in guidance under the provisions of clause 10(2).

Amendment No. 38 bites upon that part of the Bill. The Bill provides: An Authority shall not make any revenue grant in the year beginning on 1st April 1983 except in accordance with a determination made by them after the passing of this Act as to the amount of the revenue grants to be made by them in that year". The amendment adds that they cannot make such a determinatin unless they have been given guidance by the Secretary of State after the passing of the Act. The effect of this is to put a block upon the payments by PTAs to their PTEs from the time of the passing of the Act until they get the formal guidance. It would be illegal to make a payment to a PTE without a determination, and if we pass the amendment it would be illegal to make the determination without having received the guidance.

The Government are asking for an effective blocking mechanism on payments if PTAs chose to operate it that way. Even if the Secretary of State wished to facilitate authorities that carried out their present statutory duty under the Bill and who were keen to do so—there cannot be many of them—I contend that the Secretary of State is under a legal obligation to consider the matter of his guidance, to be issued after the Bill is passed, in accordance with all the issues that he has to take into account in deciding upon that guidance.

The Secretary of State has to consider any fresh evidence that has been put to him and any representations that have been made to him. For him to issue that guidance without having done that would leave him open to charge. These processes of consideration of something as complex as the transport plan of a metropolitan authority are bound to require careful consideration, particularly if the Secretary of State is to stay within the manpower forecasts in the Bill.

I find it hard to see how, with the limited manpower forecast contained in the memorandum of the Bill, it will be possible for the Secretary of State to examine all the plans of all the metropolitan authorities in the detail that is necessary to issue guidance as to what their protected expenditure level should be and how they should make their plans accordingly. During the time of this process of consideration, the PTE will presumably have to await payment from the PTA.

If the Secretary of State does not consider all these matters, after he has received these powers with the passing of the Bill as an Act, presumably he can be successfully sued by metropolitan authorities for failure to do so. The Secretary of State for the Environment had a case brought against him a few months ago because he failed to take matters properly into account in the determination of the rate support grant. I am certain that the Secretary of State of Transport does not wish to be involved in a parallel case over his guidance in the setting of protected expenditure limits.

Therefore, it is clear that to pass amendment No. 38 could lead to considerable difficulties and would undoubtedly give the Secretary of State power to hold up payments. He would be able to argue, properly, that he was taking time to consider properly the matters that he should take into account before issuing the guidance. He would have to tell metropolitan authorities and the PTAs that Parliament had decided that it was not proper for them to make payments until they had considered his guidance and that they would have to wait until they had it.

8.15 pm

One might be prepared to consider some way of streamlining that process if the absence of an amendment on these lines in the Bill created a problem. I listened to the Under-Secretary of State in the hope of hearing some argument for the necessity of the amendment. No such argument has been advanced. It has merely been claimed that it makes the Bill clearer. One would think, in view of all the claims that have been advanced during the proceedings of the Bill about clarification, that we had a Bill that was crystal clear from end to end and would probably be the textbook guide to future generations for the first class in a study of statute registration. It could be claimed that the Bill was a simple one that anybody could read because the House of Commons at every wage was advised by the Government as to the changes it could make to make the Bill clearer. I fear that instead it will be a textbook for those who wish to see how legislation can lead to a series of complex legal cases and can throw an important part of local government into confusion.

The absence from the Bill of amendment No. 38 would not create any problems. The justification in advance, that it would bring section 5 protection, cannot apply to the first year in any case, and it is only the first year that comes within this peculiar set of provisions. After the first year, the planning process is in operation and section 5 is in operation. A problem is not created because the PTA can pay on the basis of a determination that it has previously made, irrespective of the Secretary of State not having issued a final guidance, even if we do not pass amendment No. 38. In making that determination, the local authority will have to take into account all its legal obligations and statutory duties.

Amendment No. 38 can create a serious problem and will do nothing to solve any of the difficulties created by the Bill. Unless we hear some further explanation that shows that it has some merit hitherto undisclosed, I shall, at the appropriate time, advise my hon. Friends to oppose amendment No. 38.

Amendment No. 39 clearly applies only to the first financial year, 1983–84. It seeks to define the circumstances in which reserves accumulated in 1982–83 can be used in the year 1983–84. The Secretary of State has already said, in advance of the passing of the Bill, that he agrees that the reserves of certain metropolitan authorities can be used without this affecting the protected expenditure level figure that he will include in his guidance.

I cite as evidence of this a letter sent to Mr. R. G. Brooke, chief executive of the West Yorkshire metropolitan county council on 21 January 1983 from Mrs. J. Bridgeman at the Department of Transport. The second paragraph read: I am happy to be able to confirm that in the event of the Council transferring the sums proposed (£3.2 million and £0.6 million) from reserves, he"— the Secretary of State— will not regard that particular transfer as affecting the amount which he will give in his guidance as the appropriate level of revenue support for 1983–84.". The Secretary of State has made it clear in the case of West Yorkshire that he is willing to allow that authority to use its reserves in a particular way without affecting its protected expenditure level in the guidance—to whatever extent that may be of importance, given that section 5 will not be in operation in that year. I understand, although I have not the correspondence to prove it, that there has been a similar communication in the case of Tyne and Wear. A bargain can be struck with the Secretary of State whereby those two metropolitan authorities will be able to spend in 1983–84 part of the reserves accumulated from the 1982–83 operation without that having any bearing on the protected expenditure level that the Secretary of State will set for 1983–84 if the Bill becomes law.

Amendment No. 39, however, is not a general application of what apparently has been agreed with two metropolitan authorities. There is no condition attached to amendment No. 39 giving an assurance that the expenditure of reserves would go forward in a way which would not affect the protected expenditure level. What is more, amendment No. 39 adds to the arrangement that has been made apparently with West Yorkshire and possibly with Tyne and Wear.

A further condition is that authorities that seek to spend their reserves after the Bill becomes an Act must notify the Secretary of State of their intention before he gives his final guidance. If they notify the Secretary of State of their intention, he then has a right to include in that final guidance a protected expenditure level. There is no reason why the Secretary of State should not take into account the amounts of the reserve that are proposed to be spent.

Logically, there would not be much point in making the amendment if the Secretary of State did not intend to take that into account.

Perhaps I missed something in the Under-Secretary of State's explanation, but I heard nothing to suggest any other reason why the Secretary of State should know about any proposals to expend reserves. If the amendment were carried, the Secretary of State would take over from local authorities the right that they have had up to now to decide expenditure affecting their reserves.

There is a further difficulty in this arrangement. Presumably the Secretary of State and the Under-Secretary of State accept that there will be crucial difficulties in attempting to operate this legislation. This is probably the first time in history that there has been an attempt to change local government expenditure patterns for the financial year by legislation that cannot be on the statute book, even assuming a favourable timetable in the House of Lords, until the beginning of that financial year. It has normally been accepted that local authorities should know well in advance of the start of the financial year what would control their relationships with the Government, the amount of support that they would receive and their legal rights in respect of expenditure.

It has normally been assumed that a local authority should know within 21 days before the start of the financial year what is required of it and the legal obligations necessary to enable it to determine properly its rate precepts and revenue grant.

There is no possibility of that happening now. There is now the maximum prospect of difficulty and confusion as regards the statutory responsibilities and duties of authorities in the run-up period. No one can challenge that at present the authorities still have the duty, 21 days before the start of the financial year, to issue rate precepts calculated according to their revenue grant arrangements. Presumably they are still legally required to do that because they are not entitled to anticipate—certainly one hopes not—that Parliament will pass the Bill in its original form or even in an amended form. As we have seen today, the Bill is still being amended and it may be amended still further. Considerable doubt therefore exists.

The effect of the Government amendments will be to create even greater confusion at the beginning of the financial year. Until the Secretary of State issues his guidance, local authorities will not know their position and they will not be able to make payments to their passenger transport executives. To reduce the great difficulty in operating in the first year, the Government should at the very least withdraw the amendments and reconsider the matter. If they can find no arguments in favour of the amendments given the clear argument that the amendments will merely make the task of the passenger transport authorities more difficult and the prospects for the PTEs no better, the Government should drop the amendments now.

For those reasons, pending the advancement of an argument on the merit of the amendments or some way in which the difficulty can be overcome, I intend to advise my hon. Friends to vote against the amendments when the time comes. I understand, however, that, due to the order in which the amendments occur under the guillotine and the fact that they bite on clause 10, that time will come at a later point in our proceedings.

Mr. Race

It is crucial that the House should understand what the Government are attempting to do in amendment No. 38. We are all indebted to my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) for illustrating so clearly that this is in a way the most disgraceful part of the Bill, because the element of retrospection seeks to pinch the activities of local authorities in 1983–84. It is a bit much for the Under-Secretary of State to propose a further amendment today to destroy local authorities' freedom of action, not in two years' time or a year's time, but in a week's time, before the Bill even becomes law. If Members complain, as we sometimes do, about the attitudes of judges and about retrospective legislation, it is essential that we complain about the Bill and about this amendment, because the Government are attempting to muddy the waters so that local authorities do not know where they are.

Local authorities are now determining what precepts to set for their lower tier authorities—that is, for the district councils in the case of metropolitan authorities and for the GLC element in the London rates. They will be making those decisions in line with their views about the development of transport policy in the next 12 months. That is perfectly lawful under the present legislation, but at the very time when local authorities are carrying out that process the Government are saying that, despite the legality of the authorities' decisions, they intend to change the law so that on 1 April the authorities will not be able to pay a penny to the transport executives on the basis of those perfectly lawful determinations until the Secretary of State gives them guidance on which to make fresh determinations. That is the politics and legislative practice of wonderland. The House has a duty to vote amendment No. 38 down tonight and, if we have the opportunity, to remove some of the retrospection in clause 10.

The Government are making this change for only one reason. They want the money that local authorities have earmarked for public transport in 1983 in their war chest for the general election. They want the money so that they can hand it to their friends in the middle classes and those who are rather better off than everyone else. They want the money so that they can make tax concessions in the Budget in March. To obtain that freedom the Government are quite happy to limit the freedom of local authorities to act perfectly lawfully under the existing legislation. It is a scandal, and the House should reject this disgraceful amendment.

8.30 pm
Mr. Peter Griffiths

I thought that we were examining a series of simple clarifying amendments that those people who have followed the Bill in detail would welcome as meeting some of the criticisms that have been made by Opposition Members. Those Opposition Members are now looking a gift horse in the mouth.

The right hon. Member for Barrow-in-Furness (Mr. Booth) destroyed his own argument extremely well when he said that it had always been the practice that local authorities should be given as much notice as possible about the way in which the rules under which they determine their expenditure might be established. That is exactly what amendments Nos. 38 and 39 do.

Mr. Booth

It is not.

Mr. Griffiths

With respect to the right hon. Gentleman, that is exactly what they do. The Bill establishes a new arrangement whereby expenditure levels will be determined by a process that is initiated locally but which will also take account of the guidance that is issued by the Secretary of State. It is intended that the Bill will become an Act in time to be effective in 1983–84.

It must be reasonable to include in that legislation amendments that make clear all the considerations that local authorities will take into account in future, such as the protection that is granted to them in clause 5. Although we are giving local authorities notice of what is to happen, it will be useful for local authorities to recognise that this year they will have to establish their expenditure pattern only after they have taken due regard of the Secretary of State's guidance.

Mr. Race


Mr. Griffiths

I shall come to the hon. Gentleman's point later. The proposal is perfectly reasonable. It is not necessary for us to raise the temperature with comments that are reminiscent of the class war, and talk about elections and gifts to party supporters. The Bill will help those people who have to make decisions to make them adequately. It is urgent.

I should have thought that the hon. Member for Wood Green (Mr. Race) would be the first to recognise, if he had had the opportunity to examine this evening's newspaper, that the Esso Petroleum Company Limited is withdrawing its headquarters from London because it can no longer bear the rate burden in central London. If an international company is moving because of its rate burden, we can see the importance of introducing this type of legislation.

Mr. Les Huckfield

It has nothing to do with rates.

Mr. Griffiths

With respect, it has everything to do with the rates. The objective of the Bill and of the amendments is to make clear the limits within which local authorities can reasonably expect to exercise their jurisdiction with regard to support for transport.

Mr. Race

If the level of rates in London is so onerous and dangerous that it is causing a mass exodus of industrial firms, will the hon. Gentleman explain why the dockland enterprise zone in London's East End has been such a lamentable failure, given that local authority rates are not levied there? Secondly, in terms of amendment No. 38, will the hon. Gentleman address himself to the problems for local authorities? Having made a determination about the precept to lower tier authorities, how can they then levy a supplementary precept if they need to change their policy in the light of the Secretary of State's guidance, given that they cannot do it lawfully?

Mr. Griffiths

You would probably not permit me, Mr. Deputy Speaker, to discuss with the hon. Gentleman during this debate the success or otherwise of an enterprise zone. If he is seeking to make the pont that there are many disincentives to establishing businesses in the City of London—transport being one of them—I agree.

We ought not to wait until next year to bring in these provisions, as seemed to be the implication in the speech of the right hon. Member for Barrow-in-Furness. There is an urgency about the matter.

In regard to the second part of the intervention by the hon. Member for Wood Green (Mr. Race), surely it is to avoid the situation that he postulates, that is, the need to carry out the procedure twice, that these amendments are being put forward. It would be utterly wasteful for the authorities to proceed to make financial plans for next year without taking into account the fact that they will be required to follow the new procedure.

Mr. Roger Stott (Westhoughton)

The Bill is not yet an Act.

Mr. Griffiths

The Bill is before Parliament. We recognise that there must inevitably be a transitional year. The Government's point is that the transitional year must begin on 1 April 1983 because it is necessary to give advanced warning. Opposition Members have said frequently that the courts and others take no notice of guidance given in speeches made by the Secretary of State or anyone else in the House but only of what the House decides. Whether Opposition Members like it or not, we are attempting to lay down the rules.

Mr. Stott

The hon. Gentleman must be aware that no Government have the God-given right to assume that their proposed legislation will be passed without amendment either by this House or by another place. The Government assume that the Bill will be passed by this House and by another place without significant amendment. That is why they have introduced the amendment at this late stage. It is an amendment in absolute retrospection and they have no right to assume that the Bill will reach the statute book without being amended substantially. If they wanted the provisions to bite in a given year, they could have had them biting in 1984–85 when the legislation had gone through both Houses of Parliament and had got the Royal Assent. They cannot and should not assume that they have the right in retrospection to do it now before the Bill becomes an Act of Parliament.

Mr. Griffiths

I think I have already made the point that it is essential that the legislation should operate from April of this year because of the financial pressures being imposed on ratepayers, domestic and others, by metropolitan counties. The proposals they are putting forward need to be restricted for the benefit of the ratepayers.

There is no attempt to prejudge the issue. If the Bill fails, which it may—Bills have failed before—so will the amendments that my hon. Friend the Under-Secretary has moved. Therefore, as the Bill would not become an Act, the local authorities would not have to take it into account. They have to take account only of what Parliament does, not of what Ministers say. Nevertheless, because we wish to meet the point made by the right hon. Member for Barrow-in-Furness, we believe that local authorities should be told that the provision is to be operative this year and not the succeeding year.

Mr. Les Huckfield

I shall not continue on the point of retrospection, which was serious. The hon. Gentleman referred to the urgency and need for the legislation. Can he understand that Esso Petroleum, to which he has just referred, was simply following a process that is now being pursued by all the major oil companies that are moving their operations out of London, not because of the rate burden but because computers and microprocessors no longer necessitate having large central headquarters in London? Unfortunately, that may happen to many other large firms. That is a problem for London. The hon. Gentleman must have come across the completely contrary evidence when Debenhams in Birmingham closed down its city centre store last year. The reason was the high level of bus fares. Debenhams moved out of Birmingham just because of that. Therefore, in spite of his example of the need for and urgency of the Bill, there are many more examples of the urgency and need to stop the Bill.

Mr. Griffiths

One can choose selective examples. The one that I chose was particularly significant as there was an announcement today. The company had enormous reserves and financial strength. It quoted the level of rates as one of the reasons for its wish to leave the centre of London. That is entirely relevant to the issue that is before us.

I agree that there are pressures in both directions on businesses. However, we are dealing with a specific area of expenditure that places a burden on ratepayers. My hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) drew attention to the enormous projected increase in expenditure by the West Midlands county council. Something had to be done to make it clear that there was a limit to the freedom of local authorities to respond to party political programmes. That is all that we are seeking to do. Therefore, it is essential that we should include the amendments in the Bill, which is excellent. The amendments will improve it further.

Mr. Cowans

Conservative Members have betrayed a remarkable lack of awareness of how local government works. I have heard the argument that the Bill will allow local authorities to reduce their rates this year. That is gobbledegook. The fact is that the metropolitan counties have a statutory duty to get their rate precepts out 21 days before the end of the financial year, on 10 March. The only thing that can be deduced from that fact is that the Secretary of State and his hon. Friends are saying, before the Bill has gone to the other place and regardless of what their Lordships want to discuss there, that these provisions must be enforced by 10 March. If that is not a betrayal of democracy, I do not know what is.

The Conservative manifesto spoke boldly of taking away the chains from local government. If this is "taking away the chains", British Steel will spring up overnight, because what it means is that more chains will be manufactured. If this is a secret plot to bring British Steel into the black, it may very well work.

8.45 pm

In Committee great emphasis was laid on consultation. I think that I am correct in saying this. The Minister and the Secretary of State are here and will leap to their feet to correct me if I am wrong. The hon. Member for Birmingham, Yardley (Mr. Bevan) made great play of the fact that a letter was sent to local authorities. The Secretary of State joined in this and asked them to come in for consultation. As the Member for Yardley rightly said, at that stage they did not respond.

In Committee the Secretary of State said ad nauseam, "I will accept representations from any local authority that wants to come and talk to me." If that is wrong, I hope that he will stand up and correct it now. I shall repeat what I said, because the right hon. Gentleman was obviously busy with that book. It must be a good story. He said that he would accept representations from any local authority that wanted to come and see him.

Let us look at that in the context of the amendment. I propose to concentrate, much to the relief of everyone, on amendment No. 38, because it is nonsense in any terms. Those who understand how local government works—and there seems to be a remarkable lack of understanding on the Government side—know that the amendment will prevent the payment of revenue grants. I think we can all agree on that. One does not have to be a BSc to work it out.

The clause relies on the Bill being out by 10 March, so we had better go to the other place and tell them before they even start to discuss it that the Minister must have the Bill by that date. There seems to be some doubt about that happening, so let us consider what will happen if it does not get through by 10 March and that the clause is carried tonight. It will mean that a local authority which makes its precept, which it is its statutory duty to do, and issues it on 10 March, will find there are no guidelines—none has been issued because this Bill is not yet law—and it cannot pay from 1 April 1983 a revenue grant to allow any buses to run or any wages to be paid. That is exactly what this says. It is nonsense in anyone's language.

There will be fleets of buses standing idle and men reporting at depots to take those buses out, but the Secretary of State made a mistake. He did not get the Bill by 10 March. The local authority will not be able to pay wages, run buses, or run the Tyne and Wear metro. Everything will stand still. The right hon. Gentleman cannot say, as he has said on previous amendments, that they can borrow, because even if they borrowed they could not pay revenue grants to the PTA. If that is not nonsense, I do not know what is. Everything hinges on the Bill going through.

I am waiting for right hon. and hon. Members on the Government side, who I know have had local government experience, to leap to their feet as business men and tell me how buses are run and wages are paid if the local authority cannot make a revenue grant. In my mind's eye I see thousands of them leaping up to tell us. However, the reality is that not one Conservative Member has stood up. I can assume only that they are as confused as the local authorities will be if the amendment is accepted. Even they have begun to realise that it is gobbledegook.

Let us suppose that, by some mischance, the Secretary of State gets things right and that, as he carries a lot of luck, he gets the Bill enacted on 10 March. Let us also suppose that the metropolitan counties then make their precept. That is very good. I give the Secretary of State 10 out of 10 for trying. It will then be argued that the right hon. Gentleman must issue the guidelines.

Let us imagine that the Bill has been enacted and that it contains amendment No. 38. The mandarins who work round the Secretary of State will draw up the guidelines and he will sign them and send them out. Unless the House has been misled and the guidelines already exist—although no one has told us about it—there will be a lapse of time. However, it is a distinct possibility that they exist already. Perhaps some hon. Member will leap to his feet and tell us that the guidelines have existed since the beginning of our deliberations in Committee.

I am a reasonable fellow, and I assume that that is not the case. Therefore, time will elapse. Time after time the Secretary of State and the Minister have said that they will listen to representations from metropolitan county councils that go to them with special problems about the guidelines. Not all councillors live in London. However, all the councils will have to receive the guidelines and will have to examine them before discovering whether they have a problem.

Let us assume that the authorities find that there is a problem. We must remember that we are talking about the initial year and that there is no plan. Therefore, there is nothing to go on. Not all local authority members dwell in the town hall for 24 hours a day. Therefore, meetings will have to be convened. An authority's legal personnel will have to examine the guidelines to see whether there is a problem.

On the law of averages, there will be many problems. Even if there are only half as many problems as expected, the Minister, being a man of his word, will have to listen to the representations. The local authority, being wise and having taken good legal advice, will go to the Secretary of State with the problem. However, throughout that period, no revenue grant can be made. Therefore, the buses will still be standing in the depot, and the lads will be saying that although they are not being paid, the Secretary of State will eventually let them know that they can make revenue grants.

Mr. Barry Porter (Bebington and Ellesmere Port


Mr. Cowans

The hon. Gentleman has an opportunity to change that rubbish by joining us in the Lobby. He has a great opportunity to take the rubbish out of the Bill. It may seem funny to Conservative Members, but those standing around waiting for wages are actually ratepayers. It is a vicious circle. The Secretary of State will not allow the local authority to pay revenue grant, so the local authority cannot pay its wages and the men cannot pay their rates. That is what we get from business men. No wonder there are so many bankruptcies and closures all over the country. Business is having to put up with such nonsense.

There are extreme difficulties. The Secretary of State fears that local authorities will exercise their democratic right in this first year to implement the policies for which they were elected. Therefore, he uses this method to try to stop that happening. Will he explain how a system can work if no money is put into it?

Let us assume that the Secretary of State is right, and that the Bill is enacted in time. How will a local authority pay a revenue grant? How can the Secretary of State keep his repeated promise that local authorities will have the right to knock on his door? He has said that he will consult them—those are his words, not mine. How can he do that and at the same time keep buses running? If the Secretary of State can explain that, he should not be in the House, he should be emulating Houdini.

Mr. Cryer

I am most grateful to you, Mr. Deputy Speaker, for calling me. As you know, I like to be helpful to occupants of the Chair and if anyone in the House cuts up rough, the Speaker will have my backing. I place you in that category, Mr. Deputy Speaker—it should be "Speaker".

Amendment No. 38 shows a marked contrast to previous Conservative positions. It clearly states that local authorities will not make revenue grants in the year beginning 1 April 1983. The amendment states: no such determination shall be made by an Authority unless they have been given guidance by the Secretary of State in relation to the determination". The legislation may be delayed by their Lordships. The Bill will not be delayed here because the Conservatives have a majority and have imposed the guillotine. The debate will finish at 1 am. However, Conservative Members cannot guillotine the Bill in the Lords If the Lords carry on talking, as I hope they will, and then send the Bill back to this place with amendments, time will have to be allocated to deal with the amendments. It is conceivable that the Bill will not receive Royal Assent until after 1 April.

The amendment would make retrospective the prevention of local authorities from making revenue grants, as my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cowans) has so graphically and capably pointed out. That, in effect, would grind the bus services to a halt or, yet again, force them to borrow in order to pay wage, fuel and other bills.

The proposed legislation is potentially retrospective, quite apart from the fact that local authorities should not be bound by suggested legislation. Parliament has a system of dealing with legislative proposals. They become law on a date to be specified by the Bill, following the Royal Assent. In many ways, we have seen the increasing control of central Government by the use of delegated powers, and by the guidance of those powers with statutory instruments that make codes of practice into legally enforcible documents. Now we have proposed legislation that is being forced on local authorities even though it has no validity. The reason is that the Government know that if this legislative proposal is ignored by local authorities and is subsequently passed by the House, local authorities would be placed in a difficult position in any court case. Individual councillors may find themselves facing difficulties, too, because the district auditor—or the audit commission that is coming into operation which is even more a creature of central Government than the district auditor—may deem that the local authority should have taken notice of a legislative proposal. The authority may be subject to surcharge if, for example, it decides that since the proposal is not legislation, it will go ahead and give a revenue grant. It is a serious matter.

9 pm

Mr. Race

I invite my hon. Friend to consider another aspect that is even more probable. Suppose that a local authority decides that the Bill will become law and that it should pay regard to PEL levels for 1983 as set out in the White Paper, and therefore determines its precept in early March on that basis. Assuming that it wishes to spend more than the PEL levels, it therefore precepts its district authorities for more than it would require if it met the Secretary of State's guidelines. What is to stop an aggrieved district council, perhaps under Conservative control, from taking the metropolitan county council to court and saying "You are spending more than the level of the PEL, even though you have done it quite lawfully and in anticipation of the views of the Secretary of State"?

Mr. Cryer

That shows that the legislative proposal, far from clarifying the law, will confuse it and give rise to a number of uncertainties for those who are elected on election manifestos to carry out their ideas in the service of the public.

Parliament, which has unlimited powers, is imposing legislation on councillors who do not have parity with Members of Parliament because of the fear of surcharge. There are no financial curbs on us if we alter our views. There is no possibility of a surcharge on us. But the financial obligations and the need for financial scrupulousness is far greater for councillors than for hon. Members in this place. We should end that duality of standards and have one standard both for Parliament and local authorities in financial disclosure and one standard for both in the ability to make decisions about expenditure without any threat of surcharge.

My final point concerns the dual standards of the Government. There is unquestionably a potential element of retrospective legislation in the Bill. When the Labour Government were in office in 1975, they introduced the Housing Finance (Special Provisions) Act to provide that 11 local authority councillors should be given back their civic rights. It placed them on the same basis as 400 Scottish National party and Labour councillors who benefited from the Scottish legislation. The crime of those 11 Clay Cross councillors was that they had kept down the rents. They were surcharged by the district auditor. They committed no crime, but they lost their civic rights. The Labour Government introduced legislation to give them parity of status with 400 Scottish councillors.

When the Labour Ministers came to the Dispatch Box, rank after serried rank of Tory Members howled and jeered and said, "It is retrospective legislation. It is the end of civilisation as we know it, the end of democracy and the decline of standards." Indeed, the hon. Member for Liverpool, Toxteth (Mr. Crawshaw)—who was then a Labour Member but now belongs to the SDP—was much heralded because he said that it was a slippery slope to Fascism. There were jeers from the Tory Benches, yet the Tory Government are now casting to one side all idea of consistency and saying that retrospective legislation is entirely suitable when it is convenient for them to attack Labour-controlled local authorities. It is time we remembered that the Tories have no scruples. They are prepared to bring forward any legislation that suits their book—

Mr. Porter


Mr. Cryer

I shall give way to the hon. Member because he was one of the few Tories in Committee who had the guts to air his criticisms of the legislation. I am sorry to say that, although he spoke extensively about his criticisms to Labour Herald and Labour Weekly, unfortunately, his voice did not follow his vote on many occasions. I think that discretion was probably the better part of valour because he was not present in Committee very much.

Mr. Porter

My voice cannot follow anything very much at the moment. With regard to retrospective legislation, if the Bill does not become an Act by 1 April, I for one will have nothing to do with it. It becomes retrospective only if it becomes an Act after 1 April. At the moment it is not retrospective. The hon. Member for Keighley (Mr. Cryer) knows full well my views on some of the details of the Bill. Certainly the point about retrospection is one that he takes badly.

Mr. Cryer

I have always claimed, and I thought that I made it clear in my comments, that I was referring to potential retrospection. First, the Government cannot control the process of legislation in the Lords and, secondly, their intention is that this clause will apply whatever date the Bill becomes law. Therefore they have a clear intention to bind local authorities not from the date of Royal Assent but from now. That is the important intention being displayed by the Government in the Bill. It is disingenuous for the hon. Member for Bebington and Ellesmere Port to think otherwise, although he said firmly in Committee that he does not like the Bill. My suggestion to him is that if he has any doubts he should go into the Lobby and vote against the amendment. It will take guts and determination for him to do so, but one or two hon. Members on the Opposition Benches have from time to time, when a Labour Government have been in power, experienced the knocks and difficulties that accompany minority issues. None the less it is a possibility, and since the hon. Gentleman has expressed such reservations, he should follow his voice—

Mr. Arthur Lewis

The hon. Gentleman might get some votes.

Mr. Cryer

That is a possibility. Amendment No. 38 takes away yet again local authority autonomy and its ability to make a judgment about local circumstances. I shall not pursue that matter because we are coming to a series of amendments that deal with that in some detail.

Those Tories who have any concern for their manifesto pledge to return local democracy to local authorities once again should see to it that they vote against amendment No. 38 and others.

In conclusion, Mr. Deputy Speaker, the new method of self-selection for being called to speak is a vast improvement and has my unremitting endorsement.

Mr. Les Huckfield

May I say, Mr. Deputy Speaker, that if it is my signature that you need for your nomination as Speaker, I shall follow the example of my hon. Friend the Member for Keighley (Mr. Cryer)?

Mr. Robert Hughes

Do not ruin his chances altogether.

Mr. Huckfield

I could travel down that road, Mr. Deputy Speaker, but I prefer to talk about cheap fares.

If my hon. Friends the Members for Wood Green (Mr. Race) and Keighley have been strident in their accusations, that stridency has been more than justified. Many of us regard this as potentially one of the most noxious parts of a politically malevolent Bill. One needs to examine more deeply the motives behind the Bill.

When the Secretary of State was looking for a target on which to base his reputation, he examined the Greater London Council and some of the Labour-controlled metropolitan county councils that were seeking to implement cheap fare schemes from 1 April this year. The right hon. Gentleman knew that those schemes would be politically desirable. His advisers therefore conceived a Bill that would enable the Secretary of State, in the quickest possible time, to stop cheap fare schemes coming into operation. The right hon. Gentleman admitted at the Conservative party conference last year that, given legislative time, he would have preferred to have gone further and that he would have liked to take transport decisions completely out of the hands of the metropolitan county councils. However, there was only time to introduce this measly Bill.

The worst suspicions of the Opposition were confirmed when the Secretary of State introduced the Bill and the White Paper on the same day. With the Bill in Standing Committee, the right hon. Gentleman realised that his chances of getting the measure on the statute book in time to stop Labour-controlled metropolitan county councils introducing cheap fares schemes were threatened. The Opposition hoped that this might be one occasion when the other place would prove itself to be of some use by helping to delay the passage of the Bill and so prevent its implementation by 1 April. As proceedings in the Committee became more difficult, with hon. Members unable to understand what the Secretary of State was saying and certainly, on a few occasions, unable to understand what the Under-Secretary of State was saying, we began to wonder increasingly how the Government would get the measure through the House and through the other place and see it accorded Royal Assent before 1 April.

We can now see how the Government intend that this shall happen. I have to search my memory to recall another example of local authorities being told to base their rate calculations and, what is worse, their rate precept calculations on possible future legislation. The hon. Member for Portsmouth, North (Mr. Griffiths) has stated that local authorities have to take future forecasts into account. They also have to consider population changes, economic circumstances and the rate of inflation. I have never heard previously of local authorities being legally required to take into account legislative changes that might happen in the future.

My hon. Friend the Member for Westhoughton (Mr. Stott) is correct. There could be a massive Back Bench revolt in the other place—it will not be the first time that it has happened—that would stop the passage of the Bill in its present form. One can envisage local authorities up and down the country watching events in the other place, day by day, to see whether the Bill will get through in its present form. If the Secretary of State wants local authorities, Labour-controlled or Conservative-controlled, to make sensible transport decisions and to cut out some of the excesses he alleges still occur, and if he wants transport decisions to be taken in the best possible manner, the process by which he is rail roading the Bill through the House, together with the fact that he intends to make the measure retrospective, is possibly the worst way to seek sensible decisions.

I wish to examine the position of local councillors when they take these decisions. The right hon. Gentleman knows that following the cases of the Camden councillors and of the Kensington councillors, the judgment in the High Court on the balanced fares scheme, the West Midlands county council case and the Merseyside county council case, there is already sufficient legal doubt in the minds of democratically elected Labour councils.

The Minister must understand that by introducing an element of retrospection to a measure which may only get through another place in another form, he is not serving the clarification of the law. He is only underlining the fact that the further we go through the Bill, and the more it goes through the other place, the more complex and doubtful it becomes.

I hope that we shall press the amendment to a Division. The more amendments like this we see the more we realise that the Secretary of State's intentions are political. I hope that, for the sake of good government and accurate, efficient, well-balanced and sensible future transport decisions, this is one amendment that the Secretary of State will see fit to withdraw.

9.15 pm
Mr. Eyre

In his thoughtful speech, my hon. Friend the Member for Portsmouth, North (Mr. Griffiths) said that he had no doubt that I would answer the Opposition's questions. I shall now do that, but I know well from the tone of the Opposition speeches that I shall not give pleasing answers to their questions.

The right hon. Member for Barrow-in-Furness (Mr. Booth) was correct when he said that authorities will riot be able to pay grant in 1983–84 until the Secretary of State has given his final guidance. Nevertheless, the intention is that the guidance will be given within a few days of the Royal Assent. Authorities have, of course, as the right hon. Gentleman knows, been given provisional guidance and have been invited to discuss that guidance.

I want to emphasise the fact, because it is one that the Opposition favour, that the planned use of reserves is to be provided for in the amendment, as requested by Opposition Members. Although section 5 is not brought into effect by clause 10(1)(c) until 1 April 1984—I am replying to one rather technical question put by the right hon. Gentleman—nevertheless, the protection of clause 5(2) is brought into effect for 1983–84 by clause 10(3). I know that there was some debate in Committee about this, but a great deal of thought has been given to it, and I am advised that that is the correct answer to the question.

I cannot give an assurance on the matter raised by the hon. Members for Keighley (Mr. Cryer) and for Wood Green (Mr. Race) and the right hon. Member for Barrow-in-Furness. However, the Secretary of State will take into account the planned use of reserves. The planned use is exempted only from clause 2(1) and 2(2) which lay down the duty to break even or to make good any deficit.

The Bill will give the protection of clause 5(2) to an authority in 1983–84 only if the determination of the grant is within the guidance that will be given after Royal Assent. That will avoid representation, because all necessary proceedings will take place after that time. I know that the hon. Members for Keighley and for Wood Green will be interested in that constitutional point. There will be no need for lengthy processes after Royal Assent, because the Secretary of State will, within a few days, to allow any last-minute representations and to receive formal notification of the use of reserves, give his guidance and authorities will make their determinations.

I am sure that the hon. Members for Newcastle upon Tyne, Central (Mr. Cowans) and for Nuneaton (Mr. Huckfield) will remember that the protected expenditure limits were provisionally published in the White Paper on 5 November, which means that local authorities have been aware of those limits since then. As Opposition Members know, authorities were invited to discuss and to make representations on relevant factors. My right hon. Friend and I are very willing to enter into consultations and to receive representations. Therefore, there has been an adequate basis well in advance for planning the 1983–84 budgets and the precepts that follow.

I confirm that final guidance, after taking account of representations, will be given within a few days of Royal Assent. Therefore, I have answered the questions and set out the programme that will apply as continued progress is made with the Bill.

Amendment agreed to.

Amendment made: No. 5, in page 2, line 25, leave out from '(3)' to 'for' in line 28 and insert 'For the purposes of this section there shall be disregarded any deficit or potential deficit in an accounting period to the extent to which it is or is to be covered by the appropriation of any reserves of the Executive available for the purpose if the appropriation of those reserves'.

Mr. Stott

I beg to move amendment No. 6, in page 2, line 28, leave out 'by the Executive'.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

With this it will be convenient to take the following amendments: No. 7, in page 2, line 29, leave out 'by them'.

No. 8, in page 2, line 29, leave out from 'below' to end of line 30.

No. 9, in page 2, line 40, clause 3, after 'of', insert 'an Authority and'.

No. 10, in page 2, line 40, after 'year', insert 'jointly'.

No. 11, in page 2, line 41, leave out 'and submit to the Authority'. No. 12, in page 3, line 2, leave out first 'them' and insert 'the Executive'.

No. 13, in page 3, line 2, leave out second 'them' and insert 'the Executive'.

No. 14, in page 3, line 20, leave out 'Executive' and insert 'Authority'.

No. 15, in page 3, line 31, after 'plan', insert 'the Authority and'.

No. 17, in page 3, line 40, clause 4, leave out from 'year' to 'in' in line 42.

No. 18, in page 3, line 42, leave out 'as so approved'.

No. 19, in page 4, line 18, leave out 'approve' and insert 'prepare'.

No. 23, in page 4, line 29, leave out 'approving a plan in such a form and'. No. 26, in page 5, line 29, clause 6, leave out 'submitting any plan or'.

No. 27, in page 5, line 31, leave out 'plan or'.

No. 28, in page 6, line 1, leave out 'an Executive's' and insert 'a'.

No. 29, in page 6, line 1, leave out 'approved' and insert 'adopted'.

No. 30, in page 6, line 4, leave out 'approval' and insert 'adoption'.

No. 31, in page 6, line 5, leave out 'approved' and insert 'adopted'.

No. 32, in page 6, line 9, leave out 'approved' and insert 'adopted'.

Mr. Stott

All the amendments deal with the provisions encompassed in clause 3, which sets out the preparation and submission of the financial plans that the passenger transport authority and the passenger transport executive must submit to the Secretary of State for his final approval.

In Committee, we discussed at great length the rather cumbersome approach recommended by the Government in this Bill in the way in which transport policies and plans are arrived at, and the way in which the executive and the authority must comply with the provisions of clause 3. When we debated the matter in Committee, the Under-Secretary of State, as was his wont, tried to charm us and invited us to believe that the provisions of clause 3 did not affect the relationship that has existed between the passenger transport authorities and the passenger transport executives. I told the Under-Secretary of State and the Secretary of State that at that time we did not believe what was said. We did not believe that the provisions of clause 3 meant that the relationship was unaltered. In fact, clause 3 circumscribes the way in which the passenger transport authority formulates its transport policies and programmes and is a further diminution of the local authority's powers to determine its transport policy. Almost every clause is riddled with provisions that circumscribe the local authority's right to determine its transport policy. Clause 3 brings that more into focus in the way in which the authority has to deal with the executive.

Some Conservative Members may remember the local government re-organisation in 1974 when the metropolitan authorities were set up and given their powers under a former Act. The relationship that subsequently developed between the passenger transport executive and the passenger transport authority has in many cases been remarkably good. Arguments have been advanced by my colleagues in local authorities that the passenger transport executive ought to come more directly and closely under the control of the passenger transport authority. On the other hand, arguments have been advanced by the employees of the passenger transport executive, the bus drivers and those who have been organised in the Transport and General Workers' Union, by the effect that the situation as it pertains today is preferable.

I recognise that there is a difference between the elected authority and those who work in the transport industry as to the role of the executive. However, my right hon. and hon. Friends and I believe that the relationship between the passenger transport authority and the passenger transport executive is about right. It is about right because the time-honoured practice of consultation and negotiation has produced a transport policy and programme for individual metropolitan authorities in the way in which the elected authority wanted such programmes to be produced.

In Committee I cited evidence from the Monopolies and Mergers Commission report. In the light of recent events, I fully accept that its recommendations are completely disregarded by the Government, but none the less I believe that the Monopolies and Margers Commission is a valuable public body which, given the opportunity, has closely studied the operations of the west midlands passenger transport executive. It is the firm recommendation of the commission—not mine or my right hon. and hon. Friends, not the Association of Metropolitan Authorities or individual local councillors who happen to be chairmen of passenger transport authorities—that: The Executive feels that it would benefit from less intervention by the county. With the existing statutory background, there is always the possibility of friction between a PTE and its county council. We believe, however, that on the whole the system has worked reasonably well in the West Midlands, thanks to the good sense of key individuals on both sides. That could be echoed throughout the metropolitan authorities. The relationship which has been arrived at between the authorities and the executive is about right. However, the Secretary of State produces a Bill and presents it to Parliament which fundamentally alters that relationship. The authority will be a guest at the party. It is not its party any longer. The party consists of the Secretary of State and the passanger transport executive, who decide what the plan should be. Eventually, somewhere along this convoluted series of negotiations, the elected authority is advised what the plans should be, and what the plan contains. This is a fundamental departure from what happens now.

We have tabled these amendments to preserve the status quo because in this case the status quo is worth preserving. Why the Secretary of State should want to interfere from Marsham Street in the way that these plans are arrived at, God alone knows. However, he appears to want to do so.

9.30 pm

I was interested to receive from the Chartered Institute of Transport a copy of a letter sent to the Secretary of State giving its opinions about the provisions of the Bill. I draw the Secretary of State's attention to the penultimate paragraph: Our final point concerns the position of professional transport people, particularly the Members/Directors of the Executives, within the statutory processes envisaged in the Bill. No one can have failed to observe the degree of political conflict—and indeed acrimony—the Bill has generated between the Metropolitan Authorities and the Government. These are the very bodies which, together with the Executives, the Bill engages in complex interlocking procedures of guidance, plan-making and decision about public transport policy and provision. In this context the direct links envisaged in the Bill between the Executives and the Secretary of State in various aspects of these procedures could well bring Executives into conflict with their Authorities. This would not only mutilate against the effectiveness of public transport but would also frustrate the successful operation of the system set out in the Bill and even the provisions of the 1968 and 1969 Acts. We would urge that links between the Department and the Executives should be through, or with the full knowledge of, the Authorities; Clause 6(1), in particular, should be amended on these lines. This is the professional body, that has written to the Secretary of State advising him of the acrimony that surrounds his legislation—acrimony about which there can be no doubt.

We have had a lobby down here today, although the Secretary of State might not have been aware of the fact, predominantly of people employed in public transport in the Tyne and Wear area, but from elsewhere as well, protesting about the provisions of the Bill. There can be no doubt that there is a great deal of acrimony not only from those who work in public transport but from the elected councillors who have to administer it. The Secretary of State is forcing home his inbuilt advantage of a majority in placing clause 3 before us, and is circumscribing the proper, well-tried, democratic route between the executive and the authority.

I hope that the Secretary of State will have second thoughts. If he does not believe me, perhaps he will believe the Chartered Institute of Transport in its submission to him earlier this week. It said, as we did, that this is the wrong way to go about it. The relationship between the executive and the authority is the right relationship. The Secretary of State should maintain and not destroy that relationship. The provisions of clause 3 do the latter, while our amendments try to maintain the status quo that has worked successfully over many years, and works well even today.

Mr. David Howell

I imagine that hon. Members will wish to pursue some of the points raised by the hon. Member for Westhoughton (Mr. Stott), but perhaps it would for the convenience of the House if I made some initial responses to his remarks.

The hon. Gentleman began by saying that the relationship that had developed between the PTAs and the PTEs was about right, but I am sure that, with his considerable knowledge of the different relationships in different areas, he would be the first to concede that it has developed in different ways. I was interested in the hon. Gentleman's opinion that the relationship was about right, but there has been pressure from the Association of Metropolitan Authorities, which has been campaigning in bizarre ways against the purposes of the Bill. The association said that the authorities wanted to acquire more power, to take over and establish a closer relationship with the passenger transport executives.

I do not know whether the hon. Member for Westhoughton carries his hon. and right hon. Friends with him when he says that he believes that the relationship is right, but I believe that the Association of Metropolitan Authorities is wrong in the stand that it has taken over the Bill and in rejecting my proposals for consultation from July onwards. Some of its members have been wrong in the propaganda that they have put out, making inaccurate statements about the Bill and at the ratepayers' expense. They are wholly wrong about concessionary fares and they are wrong to want to change the relationship with the passenger transport executives.

The hon. Gentleman said that the Bill changed the relationship between authorities and executives. That matter was pursued at great length through 100 hours of fun in Committee, and there is a difference of view between us. The Government contend that although the financial and other duties of the executive are modified in the Bill in relation to the 1968 and 1969 Acts, the basic relationship between the two bodies has not significantly altered.

If the hon. Gentleman wishes to challenge that, he must do more than assert that there has been a fundamental change. He must go back to the 1968 and 1969 Acts and identify exactly where any change in relationships has occurred.

There have been some additions. The Bill requires that the executives shall be responsible for the initial preparation of a three-year plan. I think that it was the hon. Gentleman, or one of his hon. Friends in Committee, who said that that was already the practice in some areas so there was no need to put it into legislation. We argue the other way. The legislation underpins that good practice in some areas and brings the benefits of sensible, stable, long-term planning for transport support and subsidies to more metropolitan areas than at present.

Under the existing legislation, the authorities have the power to appoint members of the PTE. That will remain. The power of the authorities to make grants to the PTEs also remains, as does the power to obtain information, to appoint auditors, to give directions on the form of accounts, the establishment of reserves and the provision of particular services.

The initiatives on matters such as the preparation of budgets, plans for service reorganisation and for capital expenditure are extremely important. They are undermined if money is flowing out in revenue support in every direction. Agreements with British Rail, the National Bus Company and other bus companies and the initiatives on fare levels rest with the executives, although they have to secure the approval of the authority for what they propose. That continues to be enshrined in this legislation.

The hon. Gentleman is in the same position as I in that, unlike some of the veterans of the past transport legislation, I did not take part in the debates on the 1968 and 1969 legislation. It is clear from the reports of those debates and from the legislation that emerged, however, that the intention was perfectly sensible. The executive carries out the executive function, including the preparation of plans and the carrying out of those plans to carry on the transport business.

The authorities should fulfil their political role of calling for alternatives, for which there is provision in this legislation, and making decisions on the social subsidy, the revenue grant, the additional money from ratepayers and taxpayers which will be put in in response to certain political judgments and local judgments about matters over and above those taken into account by the executives.

That was the pattern under the previous legislation. The only change is not in the relationship between the authority and the executive but in the process, so that the Secretary of State is involved with both bodies. The Secretary of State gives guidance to the executive, which formulates the plans, as under the 1968 and 1969 Acts, and then notifies the Secretary of State of those plans. Under clause 6, the plans are also supplied to the authorities, so everyone knows what everyone else is doing.

The hon. Gentleman feels strongly about the relationship, as should anyone who believes that it has been about right. No one wishes to see great changes in something that is about right. All that is proposed over and above that, however, is a planning process throughout the year, beginning with guidance from the Secretary of State on the level of expenditure which the Government believe, in the light of certain criteria set out in the Bill, including national resources, should be protected from any legal challenge. If authorities decide to spend above that level, there will be no protection from legal challenge.

That is the basic purpose and thrust of the Bill and it is reflected in these arrangements. There is no upheaval in the relationship between the PTEs and the PTAs. The hon. Gentleman is wasting his energy and his oratory in seeking to identify some great upheaval resulting from the Bill, because there is none. Like the hon. Gentleman, I believe that the relationship is about right. I also believe that the pattern involving initial guidance from the Secretary of State can bring nothing but advantage in creating a more stable basis on which local authorities' plans can be formulated in future years so that stability and efficiency can be built into our transport system both in the capital and in the metropolitan counties.

I hope that my hon. Friends, and, indeed, all those who want a stable and efficient transport system, will support our intention and reject amendments that seek to change it.

Mr. Stott

The Secretary of State should realise that this is a very important issue. If more Opposition Members have not sought to contribute to the debate, it is because we are very constrained by time and the House needs to discuss other important amendments.

The Secretary of State has given his point of view, as he is perfectly entitled to do. He has challenged me to explain why I and my hon. Friends believe that there is a definite and distinct divergence between the provisions of the 1969 Act and those of the Bill. I thought that I had done that in my earlier remarks, but clearly the Secretary of State has closed his mind to any argument in respect of the relationship between the PTEs and the PTAs. He, his hon. Friend the Under-Secretary of State and one or two Conservative backwoodsmen are the only people who actually believe what he says. I have met no one in the AMA, the local authorities or anywhere else who believes that the Bill and the provisions of clause 3 do not fundamentally alter the relationship between the executives and the authorities.

If the Secretary of State continues blithely to state that nothing has changed, only he will believe his own rhetoric. No one else will. If the right hon. Gentleman is not prepared now to take on board some sensible, reasonable and rational amendments, I must ask my hon. Friends and any other hon. Member who is listening to reject the Government's proposals and to vote for ours.

Amendment negatived.

9.45 pm

Amendment proposed: No. 9, in page 2, line 40, after 'of', insert 'an Authority and'.—[Mr. Stott.]

Question put, That the amendment be made:—

The House divided: Ayes 235, Noes 284.

Division No. 56] [9.45 pm
Abse, Leo Forrester, John
Adams, Allen Foster, Derek
Allaun, Frank Fraser, J. (Lamb'th, N'w'd)
Anderson, Donald Freeson, Rt Hon Reginald
Archer, Rt Hon Peter Freud, Clement
Ashley, Rt Hon Jack Garrett, John (Norwich S)
Ashton, Joe Garrett, W. E. (Wallsend)
Atkinson, N. (H'gey,) George, Bruce
Bagier, Gordon AT. Ginsburg, David
Barnett, Guy (Greenwich) Golding, John
Barnett, Rt Hon Joel (H'wd) Gourlay, Harry
Beith, A. J. Graham, Ted
Bennett, Andrew (St'kp't N) Grant, John (Islington C)
Bidwell, Sydney Hamilton, James (Bothwell)
Booth, Rt Hon Albert Hamilton, W. W. (C'tral Fife)
Boothroyd, Miss Betty Hardy, Peter
Bottomley, Rt Hon A. (M'b'ro) Herman, Harriet (Peckham)
Bradley, Tom Harrison, Rt Hon Walter
Bray, Dr Jeremy Hart, Rt Hon Dame Judith
Brocklebank-Fowler, C. Haynes, Frank
Brown, Hugh D. (Provan) Heffer, Eric S.
Brown, R. C. (N'castle W) Hogg, N. (E Dunb't'nshire)
Brown, Ronald W. (H'ckn'y S) Holland, S. (L'b'th, Vauxh'll)
Brown, Ron (E'burgh, Leith) Home Robertson, John
Buchan, Norman Homewood, William
Callaghan, Rt Hon J. Horam, John
Callaghan, Jim (Midd't'n & P) Howell, Rt Hon D.
Campbell, Ian Hoyle, Douglas
Campbell-Savours, Dale Huckfield, Les
Cant, R. B. Hughes, Mark (Durham)
Carmichael, Neil Hughes, Robert (Aberdeen N)
Cartwright, John Jay, Rt Hon Douglas
Clark, Dr David (S Shields) John, Brynmor
Clarke, Thomas (C'b'dge, A'rie) Johnson, James (Hull West)
Cocks, Rt Hon M. (B'stol S) Johnson, Walter (Derby S)
Cohen, Stanley Jones, Rt Hon Alec (Rh'dda)
Coleman, Donald Jones, Barry (East Flint)
Conlan, Bernard Jones, Dan (Burnley)
Cox, T. (W'dsw'th, Toof'g) Kaufman, Rt Hon Gerald
Crawshaw, Richard Kerr, Russell
Crowther, Stan Kilroy-Silk, Robert
Cryer, Bob Lambie, David
Cunliffe, Lawrence Lamond, James
Cunningham, G. (Islington S) Leadbitter, Ted
Cunningham, Dr J. (W'h'n) Leighton, Ronald
Dalyell, Tam Lewis, Arthur (N'ham NW)
Davidson, Arthur Lewis, Ron (Carlisle)
Davis, Clinton (Hackney C) Litherland, Robert
Davis, Terry (B'ham, Stechf'd) Lofthouse, Geoffrey
Deakins, Eric Lyon, Alexander (York)
Dean, Joseph (Leeds West) Lyons, Edward (Bradf'd W)
Dewar, Donald Mabon, Rt Hon Dr J. Dickson
Dixon, Donald McCartney, Hugh
Dobson, Frank McDonald, Dr Oonagh
Dormand, Jack McElhone, Mrs Helen
Dubs, Alfred McGuire, Michael (Ince)
Duffy, A. E. P. McKelvey, William
Dunnett, Jack MacKenzie, Rt Hon Gregor
Dunwoody, Hon Mrs G. Maclennan, Robert
Eadie, Alex McMahon, Andrew
Eastham, Ken McNally, Thomas
Edwards, R. (W'hampt'n S E) McTaggart, Robert
Ellis, R. (NE D'bysh're) McWilliam, John
Ellis, Tom (Wrexham) Marks, Kenneth
English, Michael Marshall, D (G'gow S'ton)
Ennals, Rt Hon David Marshall, Dr Edmund (Goole)
Evans, John (Newton) Marshall, Jim (Leicester S)
Ewing, Harry Mason, Rt Hon Roy
Faulds, Andrew Maxton, John
Field, Frank Maynard, Miss Joan
Fitch, Alan Meacher, Michael
Flannery, Martin Mikardo, Ian
Millan, Rt Hon Bruce Snape, Peter
Miller, Dr M. S. (E Kilbride) Spellar, John Francis (B'ham)
Morris, Rt Hon A. (W'shawe) Spriggs, Leslie
Morris, Rt Hon C. (O'shaw) Stallard, A. W.
Morris, Rt Hon J. (Aberavon) Steel, Rt Hon David
Morton, George Stewart, Rt Hon D. (W Isles)
Moyle, Rt Hon Roland Stoddart, David
Mulley, Rt Hon Frederick Stott, Roger
Newens, Stanley Strang, Gavin
Oakes, Rt Hon Gordon Straw, Jack
Ogden, Eric Summerskill, Hon Dr Shirley
O'Halloran, Michael Taylor, Mrs Ann (Bolton W)
O'Neill, Martin Thomas, Dafydd (Merioneth)
Orme, Rt Hon Stanley Thomas, Jeffrey (Abertillery)
Owen, Rt Hon Dr David Thomas, Mike (Newcastle E)
Palmer, Arthur Thomas, Dr. (Carmarthen)
Park, George Thorne, Stan (Preston South)
Parker, John Tinn, James
Parry, Robert Torney, Tom
Penhaligon, David Varley, Rt Hon Eric G.
Powell, Raymond (Ogmore) Wainwright, E. (Dearne V)
Race, Reg Wainwright, R. (Colne V)
Radice, Giles Walker, Rt Hon H. (D'caster)
Rees, Rt Hon M (Leeds S) Wardell, Gareth
Richardson, Jo Weetch, Ken
Roberts, Albert (Normanton) Wellbeloved, James
Roberts, Allan (Bootle) Welsh, Michael
Roberts, Ernest (Hackney N) White, J. (G'gow Pollok)
Roberts, Gwilym (Cannock) Whitehead, Phillip
Robertson, George Whitlock, William
Robinson, G. (Coventry NW) Wigley, Dafydd
Rooker, J. W. Willey, Rt Hon Frederick
Roper, John Williams, Rt Hon A. (S'sea W)
Ross, Ernest (Dundee West) Williams, Rt Hon Mrs (Crosby)
Ross, Stephen (Isle of Wight) Wilson, Gordon (Dundee E)
Rowlands, Ted Wilson, Rt Hon Sir H. (H'ton)
Ryman, John Wilson, William (C'try SE)
Sever, John Winnick, David
Sheerman, Barry Woodall, Alec
Sheldon, Rt Hon R. Woolmer, Kenneth
Shore, Rt Hon Peter Wrigglesworth, Ian
Short, Mrs Renée Wright, Sheila
Silkin, Rt Hon J. (Deptford) Young, David (Bolton E)
Silkin, Rt Hon S. C. (Dulwich)
Silverman, Julius Tellers for the Ayes:
Skinner, Dennis Mr. Harry Cowans and
Smith, Cyril (Rochdale) Mr. Allen McKay.
Smith, Rt Hon J. (N Lanark)
Aitken, Jonathan Brotherton, Michael
Alexander, Richard Browne, John (Winchester)
Alison, Rt Hon Michael Bruce-Gardyne, John
Amery, Rt Hon Julian Bryan, Sir Paul
Ancram, Michael Buchanan-Smith, Rt. Hon. A.
Arnold, Tom Budgen, Nick
Aspinwall, Jack Bulmer, Esmond
Atkins, Robert (Preston N) Butcher, John
Atkinson, David (B'm'th,E) Butler, Hon Adam
Baker, Kenneth (St. M'bone) Carlisle, Kenneth (Lincoln)
Baker, Nicholas (N Dorset) Carlisle, Rt Hon M. (R'c'n)
Beaumont-Dark, Anthony Channon, Rt. Hon. Paul
Bendall, Vivian Chapman, Sydney
Benyon, Thomas (A'don) Churchill, W. S.
Benyon, W. (Buckingham) Clark, Hon A. (Plym'th, S'n)
Berry, Hon Anthony Clark, Sir W. (Croydon S)
Best, Keith Clegg, Sir Walter
Bevan, David Gilroy Cockeram, Eric
Biggs-Davison, Sir John Colvin, Michael
Blackburn, John Cope, John
Blaker, Peter Corrie, John
Body, Richard Costain, Sir Albert
Bonsor, Sir Nicholas Cranborne, Viscount
Bottomley, Peter (W'wich W) Critchley, Julian
Bowden, Andrew Crouch, David
Braine, Sir Bernard Dickens, Geoffrey
Bright, Graham Dorrell, Stephen
Brinton, Tim Douglas-Hamilton, Lord J.
Brittan, Rt. Hon. Leon Dover, Denshore
Brooke, Hon Peter Dunn, Robert (Dartford)
Durant, Tony Latham, Michael
Eden, Rt Hon Sir John Lawrence, Ivan
Edwards, Rt Hon N. (P'broke) Lee, John
Eggar, Tim Le Merchant, Spencer
Elliott, Sir William Lennox-Boyd, Hon Mark
Emery, Sir Peter Lewis, Sir Kenneth (Rutland)
Eyre, Reginald Lloyd, Ian (Havant & W'loo)
Fairbairn, Nicholas Lloyd, Peter (Fareham)
Fairgrieve, Sir Russell Loveridge, John
Faith, Mrs Sheila Luce, Richard
Farr, John Lyell, Nicholas
Fell, Sir Anthony McCrindle, Robert
Fenner, Mrs Peggy Macfarlane, Neil
Finsberg, Geoffrey MacGregor, John
Fisher, Sir Nigel MacKay, John (Argyll)
Fletcher, A. (Ed'nb'gh N) Macmillan, Rt Hon M.
Forman, Nigel McNair-Wilson, M. (N'bury)
Fowler, Rt Hon Norman McNair-Wilson, P. (New F'st)
Fox, Marcus McQuarrie, Albert
Fraser, Peter (South Angus) Madel, David
Fry, Peter Major, John
Gardiner, George (Reigate) Marland, Paul
Gardner, Sir Edward Marlow, Antony
Garel-Jones, Tristan Marshall, Michael (Arundel)
Gilmour, Rt Hon Sir Ian Marten, Rt Hon Neil
Goodhart, Sir Philip Mates, Michael
Goodhew, Sir Victor Maude, Rt Hon Sir Angus
Goodlad, Alastair Mawby, Ray
Gorst, John Mawhinney, Dr Brian
Gow, Ian Maxwell-Hyslop, Robin
Gower, Sir Raymond Mayhew, Patrick
Grant, Sir Anthony Meyer, Sir Anthony
Gray, Rt Hon Hamish Miller, Hal (B'grove)
Greenway, Harry Mills, Iain (Meriden)
Grieve, Percy Mills, Sir Peter (West Devon)
Griffiths, Peter (Portsm'th N) Miscampbell, Norman
Grist, Ian Mitchell, David (Basingstoke)
Grylls, Michael Moate, Roger
Gummer, John Selwyn Monro, Sir Hector
Hamilton, Hon A. Montgomery, Fergus
Hampson, Dr Keith Moore, John
Hannam, John Morgan, Geraint
Haselhurst, Alan Morris, M. (N'hampton S)
Hastings, Stephen Morrison, Hon C. (Devizes)
Havers, Rt Hon Sir Michael Murphy, Christopher
Hawkins, Sir Paul Myles, David
Hawksley, Warren Neale, Gerrard
Hayhoe, Barney Needham, Richard
Heath, Rt Hon Edward Neubert, Michael
Heddle, John Newton, Tony
Henderson, Barry Normanton, Tom
Heseltine, Rt Hon Michael Nott, Rt Hon Sir John
Hicks, Robert Onslow, Cranley
Higgins, Rt Hon Terence L. Osborn, John
Hill, James Page, John (Harrow, West)
Hogg, Hon Douglas (Gr'th'm) Page, Richard (SW Herts)
Holland, Philip (Carlton) Parkinson, Rt Hon Cecil
Hooson, Tom Parris, Matthew
Hordern, Peter Patten, Christopher (Bath)
Howe, Rt Hon Sir Geoffrey Pawsey, James
Howell, Rt Hon D. (G'ldf'd) Percival, Sir Ian
Howell, Ralph (N Norfolk) Peyton, Rt Hon John
Hunt, David (Wirral) Pollock, Alexander
Hunt, John (Ravensbourne) Porter, Barry
Hurd, Rt Hon Douglas Prentice, Rt Hon Reg
Irvine, Rt Hon Bryant Godman Price, Sir David (Eastleigh)
Irving, Charles (Cheltenham) Prior, Rt Hon James
Jessel, Toby Proctor, K. Harvey
Johnson Smith, Sir Geoffrey Rathbone, Tim
Jopling, Rt Hon Michael Rees, Peter (Dover and Deal)
Kaberry, Sir Donald Rees-Davies, W. R.
Kellett-Bowman, Mrs Elaine Renton, Tim
Kimball, Sir Marcus Rhodes James, Robert
King, Rt Hon Tom Rhys Williams, Sir Brandon
Kitson, Sir Timothy Ridley, Hon Nicholas
Knight, Mrs Jill Rippon, Rt Hon Geoffrey
Knox, David Roberts, M. (Cardiff NW)
Lamont, Norman Roberts, Wyn (Conway)
Lang, Ian Rossi, Hugh
Langford-Holt, Sir John Rost, Peter
Rumbold, Mrs A. C. R. Thompson, Donald
Sainsbury, Hon Timothy Thornton, Malcolm
St. John-Stevas, Rt Hon N. Townend, John (Bridlington)
Shaw, Giles (Pudsey) Trippier, David
Shaw, Sir Michael (Scarb') Trotter, Neville
Shelton, William (Streatham) van Straubenzee, Sir W.
Shepherd, Colin (Hereford) Vaughan, Dr Gerard
Shepherd, Richard Viggers, Peter
Shersby, Michael Waddington, David
Silvester, Fred Wakeham, John
Skeet, T. H. H. Waldegrave, Hon William
Smith, Dudley Walker, B. (Perth)
Smith, Tim (Beaconsfield) Walker-Smith, Rt Hon Sir D.
Speed, Keith Wall, Sir Patrick
Speller, Tony Waller, Gary
Spence, John Walters, Dennis
Spicer, Jim (West Dorset) Warren, Kenneth
Spicer, Michael (S Worcs) Watson, John
Sproat, Iain Wells, Bowen
Squire, Robin Wells, John (Maidstone)
Stainton, Keith Wheeler, John
Stanbrook, Ivor Whitney, Raymond
Stanley, John Wickenden, Keith
Steen, Anthony Wiggin, Jerry
Stevens, Martin Wilkinson, John
Stewart, A. (E Renfrewshire) Williams, D. (Montgomery)
Stewart, Ian (Hitchin) Winterton, Nicholas
Stokes, John Wolfson, Mark
Stradling Thomas, J. Young, Sir George (Acton)
Tapsell, Peter Younger, Rt Hon George
Tebbit, Rt Hon Norman
Temple-Morris, Peter Tellers for the Noes:
Thatcher, Rt Hon Mrs M. Mr. Carol Mather and
Thomas, Rt Hon Peter Mr. Robert Boscawen.

Question accordingly negatived.

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