'(1) The Secretary of State shall make proposals, and any necessary consequential regulations required to implement such proposals, to ensure that the ILEA receives financial compensation for the difference between the contributions it has been required to make to the costs of advanced further education on the basis:—
(2) Subsection (1) above has effect in relation to the year 1982–83 or any subsequent year.'. — [Mr. Andrew F. Bennett.]
§ Brought up, and read the First lime.11.34 pm
§ Mr. Andrew F. Bennett (Denton and Reddish)
I beg to mop c. That the clause be read a Second time.
I was told when I started to look at the Bill that it was a simple Bill, that it was non-controversial and that it was merely there to rectify anomalies. I accept that it is non-controversial. However, I do not accept that it is all that simple. What is a little more worrying is that it does not seem to have rectified all the anomalies which exist, especially in the pooling arrangements. For example, the 1981–82 pool has not yet been closed because there is doubt as to whether the Government have the legal powers to do it. In spite of pressure from the Association of Metropolitan Authorities and the Association of County Councils, the Government are still dithering. Will the Minister tell us whether he intends to deal with that in the House of Lords? It is an example of the way in which some local education authorities have been unfairly left worse off as a result of the pooling arrangements.
The new clause deals with the specific way in which the Inner London education authority has lost out within the pooling arrangements since April 1982. In fact, after quite a lot of pressure from the ILEA, through the various committees that deal with pooling, it finally took action in the courts in 1985 and, of course, it won. In Committee, the Minister said that ILEA had not complained before it took court action. I am sure that he realises now that that was nonsense, and that the ILEA had raised that issue much earlier. I have letters to establish that, but I do not think that I need to read them to the House. I am sure that the Minister will accept that point.
Since then, ILEA has been pressing not only that it should have got the money, which it did get, from the courts but that it should have got money for earlier years. Apparently the Government's argument is that they are not sure about whether they have the legal powers to make those retrospective payments. I hope that the Minister will accept that ILEA has been pressing for some time, and that letters went backwards and forwards between the Department and ILEA as early as 1983. The earlier representation was referred to in the court case, when it came on. Since ILEA was pressing much earlier, it has a 137 strong moral case for some retrospective payment. At least the new clause is an attempt to deal with the problem. The Government do not now have the excuse that there is no legislation. There is legislation before the House now. The Government have the chance to deal with it, and I hope that they will.
I hope that the Government will also make it clear that they will use the Bill to clear up the rest of the pooling problems, particularly the 1981–82 pool, either now by accepting the new clause, or in the House of Lords, where the Government could draft it in a different form but retain the spirit of it. Perhaps by introducing another new clause to deal with the 1981–82 pooling arrangements, they can get rid of all the nagging anomalies in pooling and make good use of the measure.
§ The Parliamentary Under-Secretary of State for Education and Science (Mr. George Walden)
The hon. Member for Denton and Reddish (Mr. Bennett) has ingeniously raised two points under one new clause, but as I am in a generous mood, I shall deal with both.
The first point concerning the 1981–82 pool. As the hon. Gentleman knows, advanced further education is financed through the AFE capped pool. The Secretary of State determines in advance of each financial year the total of AFE expenditure eligible for pooling. He also decides on how much of that total should be allocated to each local education authority following advice from the National Advisory Body. Exceptionally, in 1981–82, the method used involved the recalculation of the allocations once authorities' actual expenditure on AFE was known. The relevant information is now availble. But in the meantime it has come to light — this is the point that the hon. Gentleman made—that the legislation under which the capped pool is operated may not allow the recalculation to be carried through in the way that was originally envisaged. My Department is therefore examining ways forward in consultation with representatives of the local authorities in the pooling committee.
The hon. Gentleman's point was: why should we not clear up the matter in the Bill? The problem over the 1981–82 AFE capped pool has come to light only recently. The Department put a proposal to the most recent meeting of the pooling committee, which did not find favour with local authority representatives. My right hon. Friend the Secretary of State was asked to look again, and that consideration is now under way. It may or may not point to a need for new legislation in due course. I hope that the hon. Member will note that. Therefore, it would be premature to seek to cover the point in the Bill. We are seeking much more important changes to pooling legislation — changes that are needed urgently if the pooling system is to continue its function.
In other words, we must decide, first, whether legislation is needed, which is not yet established, and, secondly, whether time will allow that legislation to be appended, as it were, in another place to the Bill. Thirdly, we must beware of doing anything that for the reasons that the hon. Gentleman will be aware of could delay the progress of the Bill. There is a question of urgency which we discussed in Committee.
§ Mr. Andrew F. Bennett
It seems to me that it would be possible to take powers to make regulations. I am not a great enthusiast for regulations. The Minister must accept 138 that, in sorting out local government finance in the year 1981–82, there is a certain measure of urgency that we do it within five or six years of the expenditure occurring.
§ Mr. Walden
The hon. Gentleman is drawing a fine distinction between retrospective urgency and the more pressing urgency today, to which we are all subjected. I hope that he will take notice that we arc having discussions on the subject. The real point of the hon. Gentleman's amendment lies elsewhere.
Last year, ILEA obtained judicial review of the decision of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) not to change, in respect of 1985–86, the formula which apportions contributions to the AIFE pools among local education authorities. The Divisional Court ruled that that was an unlawful decision in that my right hon. Friend had had regard to an irrelevant consideration. In recognition of that judgment, my right hon. Friend amended the relevant regulations to produce a new formula with effect from 1985–86. The new formula apportioned the contributions pro rata to the number of AFE students originating from each LEA area. That change had the effect of reducing (LEA's contribution by £31 million in 1985–86, and will have continuing effect. I should note, for completeness, that the new regulations are the Block Grant (Education Adjustment) (England) Regulations 1985, not 1986 as the new clause states.
Last August, ILEA asked the Department to incorporate in the new formula to be applied in 1985–86 an allowance to rectify the injustice which the authority claimed to have suffered over a number of years as a result of the operation of the formula which the court had held to be unlawful. I describe that request in the authority's terms, not my own. My right hon. Friend the Member for Leeds, North-East refused. It has been asserted today that he did so on grounds that he lacked the powers to meet the request. The hon. Member for Denton and Reddish has moved the new clause to provide the necessary powers. However, I tell the House that my right hon. Friend considered ILEA's request carefully at the time. He refused it not only because he lacked the power to accede to it, but because he did not think it right to accede to it.
Let me take the issues of law first. The primary legislation governing the education pools is schedule 10 to the Local Government, Planning and Land Act 1980. The schedule empowers the Secretary of State to make regulations specifying the "appropriate contribution" of each local eduction authority to the pools. The Secretary of State does not enjoy an unfettered discretion to determine what may be appropriate. The principle which the Divisional Court decided should be used in respect of 1985–86 was that the contribution should be related to the demand for AFE which an authority met in the discharge of its statutory responsibility. It is incompatible with that principle to incorporate in the formula a notional assessment relating to earlier years. That is not within the spirit of the court judgment which ILEA prays in aid.
A further objection in law is that schedule 10 envisages the making of regulations to deal with AFE expenditure and contributions thereto year on year. It makes no provision for re-specification of contributions paid in respect of past years. The new clause is intended to change the position, but I ask the House to consider the consequences of a change with the retrospective effect which ILEA desires. First, there would be the technical difficulty—perhaps impossibility—of collecting the data 139 necessary to re-specify contributions originally made on a different basis. Then there would be financial disruption to all other local education authorities as a result of the financial transfers stemming from the revised contributions.
What is the justification for asking other LEAs to put up with this disruption? I doubt whether the hon. Member for Denton and Reddish really means that the Secretary of State should ask them to do so. True, the new clause would put the Secretary of State under a duty to make proposals but he is under a duty also to implement them, apparently irrespective of the views of the parties to whom they are addressed. In all events, the Government must consider the effect on other LEAs, even if the Opposition apparently do not.
The regulations in force in the years before 1985–86 were made in good faith and were laid before Parliament. They were not subject to legal challenge at the time. I should like to clarify what I said in Committee. 1 meant that the regulations were not challenged during the year when they were in force.
Local authorities, including ILEA, took account of the pooling adjustments due under those regulations in fixing budgets and issuing rates or precepts for the years in question.
§ Mr. Andrew F. Bennett
I am sure that the hon. Gentleman will accept that he received a series of letters from ILEA about that point before the court judgment. Surely, he would not expect local authorities to go to court first in such a complicated matter. They would normally make representations first, and only if they did not succeed would they go to court.
§ Mr. Walden
The hon. Gentleman has answered his own question. I am grateful to him for doing so.
The Government consulted the associations of county councils and of metropolitan authorities on the matter at the time. They were clear that a retrospective refund for ILEA from the pools would disrupt the finances of their members. In the light of their responses, we do not think it right to ask other LEAs to bear this burden, which would amount in total to a loss of about £75 million for all other authorities.
The hon. Member implied that there would be no need to affect other LEAs if the Government made a special payment to ILEA from the Exchequer. But pooling is a system of inter-authority payments and an Exchequer payment of the kind envisaged would be unprecedented. If, as I have argued, there is no justificaton for asking other LEAs to bear this burden, still less would there be justification for imposing such an obligation on the taxpayer.
Clauses 2 to 4 are essentially designed to enable the pooling system to continue to operate in a way that enjoys a consensus of support among local education authorities. The Bill as a whole is uncontentious and the House has treated it as such. It is not a suitable vehicle for enacting provisions which would be highly controversial among those whom they would effect, even if there were a case in principle for doing that.
For those reasons, I ask the House to reject the motion.
§ Mr. Andrew F. Bennett
I have listened to the Under-Secretary of State with considerable interest. I am not 140 certain that he is being fair to the Inner London education authority. The authority does not get credit for the good educational provision that it makes which benefits other people through the United Kingdom. It seems to have paid an undue proportion. It would have been helpful if the Government had considered a way of compensating it. The Government seem to be more enthusiastic about criticising the ILEA for what is provides rather than about meeting its finances.
I do not believe that it would be appropriate at this stage to press the clause. I beg to ask leave to withdraw the motion.
§ Motion and clause, by leave withdrawn.11.49 pm
§ Mr. Walden
I beg to move, That the Bill be now read the Third time.
The Bill deals with two separate topics. In both cases, its provisions are technical and uncontentious. I am grateful for the co-operation of the House in expediting the Bill's progress, and I shall not try hon. Members' patience by reiterating the technicalities and complexities to which the hon. Member for Denton and Reddish (Mr. Bennett) referred. I commend the Bill to the House.
§ Mr. Robert Rhodes-James (Cambridge)
Although I warmly welcome the Bill, I must repeat the point I made in Committee in relation to clause 1(2), which states:In making a grant under this section the Secretary of State may impose conditions for any purpose mentioned in subsection (3)"—which are detailed—and may also impose such other conditions as he thinks fit.As I said in Committee, that gives a Secretary of State excessive powers.
My hon. Friend the Minister may say that there are precedents. Many years ago, when I was a Clerk in the House, I was on the Consolidation Bill Committee, which discovered that there was a precedent for the £5 note being illegal. It had been made illegal in 1914 and Parliament had forgotten to repeal the legislation. Millions of people had been illegally trading in £5 notes. This is not a trivial point. Giving powers to any Secretary of State in such terms requires careful consideration. Of course, I shall support this fine Bill, but I ask my hon. Friend the Minister seriously to consider with his colleagues whether, in the future, such powers should be incorporated into any Bill.
§ Mr. Walden
I am aware from the remarks made in Committee by my hon. Friend the Member for Cambridge (Mr. Rhodes-James) and his anxiety about this phrase. In raising this matter, he is demonstrating a characteristic and commendable vigilance in relation to the way in which such phrases are used, and I sympathise with his sensibilities, to the point where I went back to my Department and asked why that wide-ranging phrase was used.
In Committee, I tried to explain that the conditions in question are set out in the financial memoranda mentioned in the Bill. The Department draws up those memoranda in advance of the payment of grant to which they relate in consultation with the bodies concerned and with the agreement of the Treasury. My right hon. Friend the Secretary of State needs power to vary the conditions over time, because the circumstances—financial and other— 141 of the grant recipient may change. So, too, may the administrative and financial practices applicable to the expenditure of public funds. But I assure my hon. Friend that the Government do not make arbitrary or retrospective changes in conditions, nor would we alter the financial memoranda without giving the body concerned an opportunity to make representations on the proposed change.
I hope that, with that assurance, my hon. Friend will be content with the clause. I have before me a formidable list of precedents with which I shall not bore the House, save to mention that the Education Act 1944 states that payment by the Secretary of State may be dependent on the fulfilment,of such conditions as may he determined by or 'n accordance with the regulations.
§ Mr. Walden
My hon. Friend says that that is different. I refer him—it will be very much to the forefront of his mind—to section 45 of the Sea Fish Industry Act 1970, concerning the herring industry board, which may make grants,subject to such conditions as may he determined.I hope that I need not continue with the three pages of precedents and that my hon. Friend will he reassured by my remarks.
§ Question put and agreed to.
§ Bill read the Third time, and passed.